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No person … shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law. U.S. Const. Amend. V. In Miranda v. Arizona , the Supreme Court held that no statement made by an individual during a custodial interrogation may be admitted into evidence against him at his criminal trial, unless he was first warned of his relevant constitutional rights and waived them. In New York v. Quarles , the Court later held that the Miranda rule was subject to a "public safety" exception. Throughout this period, federal law stated that following arrest a suspect should be presented to a magistrate and advised of his rights without "unnecessary delay." Confessions made during the course of any unnecessary delay are generally inadmissible at the suspect's subsequent criminal trial. The realities of contemporary terrorism are such that some have questioned whether these general rules can be, and should be, reexamined and adjusted. Before Miranda , the Supreme Court relied on the Fifth Amendment in federal cases, but had largely relied upon due process guarantees to exclude a defendant's involuntary confession from his criminal trial in cases that came to it from the states. Then, as now, the due process inquiry asks "whether a defendant's will was overborne by the circumstances surrounding the giving of a confession." Recourse to due process was no longer necessary in state cases once it became clear that the Fifth Amendment right was itself binding on the states through the Fourteenth Amendment. In Miranda , the Court provided a more specific standard than the "voluntary under the circumstances" due process test. Convinced that the coercive atmosphere of a law enforcement custodial interrogation could undermine the protection against self-incrimination, the Court declared that confessions that followed such interrogations could only be admitted in evidence against a defendant if he had been given explicit warnings beforehand. That is, the defendant must be warned that he "has the right to remain silent, that anything he says can be used against him in a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires." The warnings having been given, the defendant may explicitly waive them. When a defendant requests the presence of an attorney, questioning must stop until one is made available or until the defendant himself initiates the colloquy. Authorities may not avoid Miranda demands by extracting an unwarned confession, providing the Miranda warnings, and then eliciting the same confession, this time "for the record." Nor may authorities persistently return to questioning after an interrogation has been stopped by a defendant's claim of privilege—except upon the arrival of requested defense counsel, at the defendant's invitation, or following a break in interrogation-related custody of at least 14 days. The Court has recognized exceptions to the rule. One, discussed below in greater detail, permits admission into evidence of unwarned statements elicited in the interest of an officer's safety and that of the public. Another permits use of unwarned statements for impeachment purposes. Moreover, on a number of occasions, the Court has declined to recognize a Miranda equivalent of the Fourth Amendment's "fruit of the poisonous tree" doctrine. Shortly after Miranda was handed down, Congress sought to overturn it by statute, 18 U.S.C. 3501. For three decades, however, the provision lay dormant, for the Justice Department considered the provision constitutionally suspect, and would not assert it. Thus, when Dickerson v. United States arose in the Fourth Circuit, the Justice Department declined to defend the section's constitutionality. In spite of Justice Department reservations, the Fourth Circuit decided that Section "3501, rather than Miranda , governs the admissibility of confessions in federal court." The Supreme Court disagreed. " Miranda announced a constitutional rule," which the Court declined to overrule and which "Congress may not supersede legislatively." In Quarles , police officers pursued a rape suspect into a supermarket, frisked him, discovered he was wearing an empty holster, and handcuffed him. They asked him where the gun was; he told them, "the gun is over there" (nodding to some empty cartons); they arrested him, and then read him his Miranda warnings. The Supreme Court recognized that the "case presents a situation where concern for public safety must be paramount to adherence to the literal language of the prophylactic rules enumerated in Miranda ." It contrasted the Miranda concerns with the exigencies of the case before it. On one hand, "[t]he Miranda decision was based in large part on this Court's view that the warnings which it required police to give to suspects in custody would reduce the likelihood that the suspects would fall victim to constitutionally impermissible practices of police interrogation in the presumptively coercive environment of the station house." On the other hand, "[t]he police in this case ... were confronted with the immediate necessity of ascertaining the whereabouts of a gun which they had every reason to believe the suspect had just removed from his empty holster and discarded in the supermarket. So long as the gun was concealed somewhere in the supermarket, with its actual whereabouts unknown, it obviously posed more than one danger to the public safety." The Court perceived the exception as a "narrow" one, and believed police would have no difficulty distinguishing "between questions necessary to secure their own safety or the safety of the public and questions designed solely to elicit testimonial evidence from a suspect." The Court has yet to further refine the exception, but the lower federal appellate courts have construed it narrowly—some more narrowly than others. It has been applied in cases immediately following an arrest when officers have asked an unwarned suspect whether or where a weapon might be found in the immediate area, under circumstances when officers might reasonably believe such a weapon exists and if not secured would pose a danger to themselves or the public. Although the public safety exception, as currently understood, may only be available in limited circumstances in a terrorist context, its existence suggests that the Court might expand its application under compelling circumstances or might recognize other policy-based exceptions to Miranda . The Supreme Court has thus far not indicated to what extent, if at all, Miranda applies overseas. In fact, it has spoken only infrequently about the extent to which the Fifth Amendment applies outside the United States. The Court's most recent discussion occurred in Verdugo-Urquidez when it contrasted the difference between the extraterritorial application of the Fourth and Fifth Amendments. There, it noted a violation of the Fifth Amendment privilege against self-incrimination can only occur at trial; a violation of the Fourth Amendment occurs upon the performance of an unreasonable search or seizure—regardless of whether the fruits of the violation are ever offered at trial. For Fifth Amendment purposes, the point of violation is not the place where a statement was coerced, but the place of the criminal proceedings where the statement is offered against the defendant. The Court went on to point out that it previously "rejected the claim that aliens are entitled to Fifth Amendment rights outside the sovereign territory of the United States." Moreover, even where it had recognized that American civilians, subject to U.S. overseas court-martial proceedings, were entitled to some Fifth and Sixth Amendment protections, a majority of the Court had been unwilling to define the precise scope of such entitlement. The lower federal courts, however, have held that the Miranda warnings ordinarily do not apply to overseas custodial interrogations conducted by foreign officials. Such unwarned statements may be introduced against the defendant, if voluntary and otherwise admissible. They often identify, but rarely find, two exceptions to this general rule of admissibility—where the interrogation is a joint venture in which U.S. officials are joint participants, or where the circumstances shock the conscience of the court. Implicit in the first exception is that the privilege against self-incrimination—and the attendant Miranda requirements—apply to the admissibility in criminal proceedings in this country of statements taken overseas by U.S. law enforcement officers. A few courts have suggested that this may be said of the statements of U.S. citizens and foreign nationals alike. They have indicated, however, that "where Miranda has been applied to overseas interrogations by U.S. agents, it has been so applied in a flexible fashion to accommodate the exigencies of the local conditions." In a case in which overseas statements were offered before an overseas tribunal, a military commission tribunal has concluded that the question of the application of the Fifth Amendment extraterritorially requires a case-by-case consideration. As a general rule, Miranda applies to custodial interrogations conducted in the course of a military criminal investigation. Both by constitutional imperative and statutory command, unwarned statements are inadmissible against the defendant in any subsequent military prosecution. The statutory provisions applicable to military commissions, however, declare that the Article 831(a), (b), and (d) of the Code of Military Justice (10 U.S.C. 831(a), (b), and (d), relating to compulsory self-incrimination) shall not apply in commission trials. No one may be required to testify against himself in such proceedings. Nor may statements secured by torture or by cruel, inhuman, or degrading treatment be admitted there. Otherwise, statements of the accused may be admitted in evidence, if they are reliable, probative, and either voluntary or were "made incident to lawful conduct during military operations at the point of capture or during closely related active combat engagement, and the interests of justice would best be served by admission of the statement into evidence." One of the Guantanamo detainees, tried by military commission for the offense of providing material support for terrorism, moved to suppress statements which he contended were secured in violation of the Fifth Amendment. Based on its reading of Boumediene , the tribunal determined that when analyzing the extraterritorial application of the Constitution in Guantanamo Bay, the Commission concludes that it should consider (1) the citizenship and status of the detainee and the adequacy of the process through which the status determination was made; (2) the nature of the sites where apprehension and then detention took place; (3) whether practical considerations and exigent circumstances counsel against application of the constitutional right; (4) whether the Executive has provided the accused an adequate substitute for the Constitutional right being sought; (5) whether there is "necessity for the Constitution to apply to prevent injustice; and (6) whether application of the Constitutional right would be "impractical and anomalous." It further concluded that "[t]he preponderance of these factors analyzed weighs against application of the 5 th Amendment in Guantanamo Bay." "[T]he rule known simply as McNabb-Mallory generally renders inadmissible confessions made during periods of detention that violate the prompt presentment requirement of Rule 5(a)." In McNabb v. United States , the Supreme Court was faced with a case in which federal officers had disregarded statutory obligations to promptly present arrested defendants to a committing magistrate. The officers had instead detained and interrogated the suspects over the course of several days, until the confessions upon which the defendants' convictions were based had been extracted. The Court found it "unnecessary to reach the Constitutional issues pressed upon" it. Based instead on its supervisory authority over the federal courts, the Court announced that henceforth such confessions, voluntary or involuntary, secured without regard to prompt presentation requirements could not be admitted in evidence against a defendant. When the various statutory presentation requirements were later superseded by rule 5(a) of the Federal Rules of Criminal Procedure (requiring presentation "without unnecessary delay"), no explicit mention was made of either the McNabb exclusionary rule or any other means of enforcement. The Court, however, quickly affirmed the continued vitality of McNabb when following the promulgation of rule 5; it reiterated that McNabb applied to both voluntary and involuntary confessions. In Mallory , it made clear that any "delay must not be of as a nature to give opportunity for the extraction of confession." A second provision within Section 3501 addresses the McNabb-Mallory rule, 18 U.S.C. 3501(c). It states that a presentation delay of less than six hours does not by itself render a voluntary confession inadmissible. Recently, the question arose whether, as with Miranda , Section 3501 was intended to abrogate the McNabb-Mallory , rather than to simply limit its application to voluntary confessions made within six hours of detention. The Court held that Congress intended to modify, not repudiate, McNabb-Mallory . Thus, "[u]nder the rule as revised by §3501(c), a district court with a suppression claim must find whether the defendant confessed within six hours of arrest (unless a longer delay was reasonable considering the means of transportation and the distance to be traveled to the nearest available magistrate)." If so, the confession is admissible as Section 3501(c) provides, "so long as it was made voluntarily and the weight to be given it is left to the jury." If not, "the court must decide whether delaying that long was unreasonable or unnecessary under the McNabb-Mallor y cases, and if it was, the confession is to be suppressed." The following Miranda -related legislative proposals were offered in the 111 th Congress. Comparable provisions do not appear to have been introduced since. Section 1040 of the National Defense Authorization Act for Fiscal Year 2010, P.L. 111-84 ( H.R. 2647 ), 123 Stat. 2454 (2009), prohibited members of the Armed Forces as well as Defense Department officers and employees from providing Miranda warnings to foreign nationals captured, or held in Defense Department custody, outside the United States as enemy belligerents. The prohibition does not apply to the Justice Department. The section also directed the Secretary of Defense to report to the Armed Services Committees within 90 days on the impact of providing the warnings to detainees in Afghanistan. Section 504 of the Intelligence Authorization Act for Fiscal Year 2010 ( H.R. 2701 ), as reported out of the House Select Committee on Intelligence ( H.Rept. 111-186 ), would have prohibited the use of funds authorized for appropriation under the bill to provide Miranda warnings to foreign nationals outside the United States who were either in the custody of the Armed Forces or believed to have terrorist-related information. The House passed H.R. 2701 , as amended and with the Miranda provisions as Section 503, on February 26, 2010, 156 Cong. Rec. H946 (daily ed. February 26, 2010). The provision was dropped before final passage of the bill as P.L. 111-259 , 124 Stat. 2654 (2010). Section 744 of Financial Services and General Government Appropriations Act, 2010 ( H.R. 3170 ), as reported out of the House Appropriations Committee ( H.Rept. 111-202 ), would have called upon the Administration to supply Congress with information relating to Miranda warnings provided by the Justice Department to foreign nationals who are either in the custody of the Armed Forces or suspected of terrorism. The Consolidated Appropriations Act, 2010 ( H.R. 2847 ), P.L. 111-117 , 123 Stat. 3034 (2009), which absorbed many of the provisions of H.R. 3170 , had no comparable provision. The National Defense Authorization Act for Fiscal Year 2011 as passed by the House would have extended the Miranda provision found in the FY2010 authorization bill. The provision was dropped before final passage of its successor ( H.R. 6523 ) as P.L. 111-383 , 124 Stat. 4137 (2011). Section 3(b)(3) of the Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010 ( S. 3081 ), as introduced, would have directed that an unprivileged belligerent, interrogated under the bill's procedures relating to high-value detainees, not be given Miranda or comparable warnings. Section 3(a)(1)(D) of the Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010 ( H.R. 4892 ), as introduced, would have required the approval of the Director of National Intelligence before Miranda warnings could have been provided to high-value detainees believed to have terrorism-related information and captured, held, or questioned by an entity with an intelligence community element. H.Res. 537 , as adversely reported by the House Judiciary Committee ( H.Rept. 111-189 ), would have called upon the Administration to supply Congress with information relating to Miranda warnings provided by the Justice Department to foreign nationals who were in the custody of the Armed Forces in Afghanistan and suspected of terrorism. H.Res. 570 would have directed the Secretary of Homeland Security to provide the House with information relating to the immigration status of any foreign national captured in Afghanistan who was given Miranda warnings by the Justice Department, was in the Defense Department's custody, was suspected of terrorism, and might have been subject to a transfer or release into the United States for civilian or military proceedings. H.Res. 602 would have called upon the Administration to provide the House with information, generated on or after January 1, 2005, and relating to the impact of providing Miranda warnings to Defense Department detainees in Afghanistan suspected of terrorism.

The Fifth Amendment to the United States Constitution provides in part that "No person ... shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law." In Miranda v. Arizona, the Supreme Court declared that statements of an accused, given during a custodial interrogation, could not be introduced in evidence in criminal proceedings against him, unless he were first advised of his rights and waived them. In Dickerson v. United States, the Court held that the Miranda exclusionary rule was constitutionally grounded and could not be replaced by a statutory provision making all voluntary confessions admissible. In New York v. Quarles, the Court recognized a "limited" "public safety" exception to Miranda, but has not defined the exception further. The lower federal courts have construed the exception narrowly in cases involving unwarned statements concerning the location of a weapon possibly at hand at the time of an arrest. The Supreme Court has yet to decide to what extent Miranda applies to custodial interrogations conducted overseas. The lower federal courts have held that the failure of foreign law enforcement officials to provide Miranda warnings prior to interrogation does not preclude use of any resulting statement in a subsequent U.S. criminal trial, unless interrogation was a joint venture of U.S. and foreign officials or unless the circumstances shock the conscience of the court. They suggest that warnings are a prerequisite for admissibility in U.S. courts following overseas interrogation by U.S. officials. Miranda applies to courts-martial that are subject to a requirement for an additional warning under the Uniform Code of Military Justice. The statutory provisions governing military commissions call for the admission of some unwarned, involuntary custodial statements. At least one tribunal operating under those provisions has concluded that the Fifth Amendment protections do not apply in the commission trial at Guantanamo Bay of an unprivileged foreign belligerent. Rule 5 of the Federal Rules of Criminal Procedure requires that federal arrestees be brought before a committing magistrate without unnecessary delay. In the McNabb v. United States and Mallory v. United States cases, the Court declared inadmissible confessions extracted during a period of unnecessary delay. The cases were decided under the Court's supervisory authority over the lower federal courts, and in Corley v. United States, the Court held that McNabb-Mallory had been statutorily supplemented with a provision that made admissible voluntary confession given within six hours of presentment. Neither Miranda nor McNabb-Mallory violations preclude the subsequent prosecution of the accused; they simply preclude the uninvited use of any unwarned, unwaived statements in such prosecutions. The 111th Congress featured a number of proposals, some of which would have prohibited the use of funds to provide Miranda warnings; others would have restricted their use in the interrogation of high-value detainees overseas; and still others would have called upon the Administration to provide Congress with information related to the use of Miranda warnings in such circumstances. No comparable proposals appear to have been introduced in later Congresses. A related discussion can be found in a Legal Sidebar entitled, Miranda Warnings: The Public Safety Exception in Boston.

O ver the past few years policymakers have shown an interest in addressing the backlog of testing of sexual assault kits (SAKs, also ref erred to as "rape kits") in many jurisdictions across the United States. The backlog of SAKs has raised concerns over justice for assault victims and that additional victimizations could have been prevented had the evidence from any given kit been tested and the perpetrator apprehended in a timely manner. This report provides background on the SAK backlog and information on federal efforts to reduce it. SAKs include tools used by a nurse examiner or another trained professional to collect evidence during a forensic medical exam of a sexual assault victim. Many jurisdictions create their own sexual assault evidence collection kits while others purchase them from commercial vendors. As such, the content of a kit can vary across jurisdictions. In general, sexual assault evidence collection kits include (1) instructions; (2) bags, sheets, and envelopes for evidence collection; (3) swabs for collecting fluids or secretions that could contain a perpetrator's DNA (deoxyribonucleic acid); (4) a comb for collecting hair samples; (5) blood collection devices; and (6) documentation forms. A forensic medical exam involves collecting a complete medical history from the victim and completing a full-body physical examination. This may include collecting blood, urine, hair, and other body secretion samples; photo documentation of any injuries sustained during the assault; collecting the victim's clothing, especially undergarments; and securing any possible physical evidence that may have transferred onto the victim from the crime scene. Upon completion of forensic medical exams, kits are transferred to law enforcement, who log the kits into evidence. Procedure and protocol regarding when and where kits are sent, however, vary across jurisdictions. Some law enforcement agencies automatically send the kits to forensic laboratories for testing while others wait for varying amounts of time, in some cases depending on when/if a police officer or prosecutor requests forensic analysis. Laboratories also vary on how items are screened, which items are tested, and the length of time taken to complete testing. In a 2007 study of crime laboratories in the United States, over 75% of laboratories reported that DNA analysis requests were completed within four months or less while the other 25% required more than four months to complete the analysis. Twenty laboratories reported that more than nine months were needed. Evidence obtained through a rape kit can be used for several criminal justice purposes. It may be used to establish elements of a crime including the time at which an alleged attack occurred. It can establish a DNA link between two individuals, and this link may help identify, convict, or exonerate an offender in court. Evidence may also be stored in DNA databases for use in other cases. Forensic testing of SAK evidence can take several days. In some cases, rape kits remain in police custody and are not submitted to a laboratory for testing. In others, kits may be submitted to the laboratory but remain untested. The latter is generally referred to as a "backlog." When people refer to a "rape kit backlog," they are referring either to untested kits that reside with law enforcement having never been submitted to a laboratory for testing, or to untested kits that have been submitted to crime labs but are delayed for testing for longer than 30 days. Some research organizations state that the problem more typically resides with those kits that were submitted to a crime laboratory but remain untested; however, the definition of backlog appears to vary across jurisdictions. For example, in a study of the Detroit rape kit backlog, over 75% of the 11,219 backlogged kits had never been submitted to a laboratory for testing (see " Detroit Project "). While the status and location of the kits vary, the binding element of the backlogged kits is that they have never been tested. Rape kits remain untested for several reasons including limited resources of laboratories and law enforcement as well as police discretion. In some cases involving older rape kits, the statute of limitations may have expired. Some forensic laboratories face backlogs not only for SAKs but also other types of DNA evidence collected at crime scenes such as hair and blood samples. As demand for DNA testing rises with increasing awareness of its potential to help solve cases, so does the increase in demand for resources from both law enforcement and laboratories. Law enforcement agencies and laboratories have a shortage of resources to manage backlogs of rape kits, and this may be magnified during times of increased fiscal austerity. There is no standard cost to test a rape kit, as this seems to vary from jurisdiction to jurisdiction. The Joyful Heart Foundation, an organization that advocates for the elimination of SAK backlogs, reports that it costs between $1,000 and $1,500 to test a rape kit. The National Center for Victims of Crime reports that it costs between $400 and $1,500 to test a kit. Police may opt not to pursue a forensic investigation due to a variety of reasons including perception of victim cooperation or consideration that the results of the kit would not be pertinent to the overall investigation. Not all evidence collected in an alleged sexual assault has probative value. If consent is an issue in a particular case (the suspect admits sexual contact but contends it was consensual), detectives may consider that the SAK does not add any essential information to the investigation. Also, evidence may not be sent to a lab for analysis if charges against the alleged perpetrator have been dropped or the suspect has pled guilty. Some law enforcement agencies might not submit SAKs to crime laboratories because the identity of the perpetrator was not in question from the beginning of the investigation, detectives identified the suspect through other evidence not included in the kit, or the victim chose not to proceed with the case. SAKs might not be submitted to a lab because police may not understand the potential value of testing SAKs. In 2009, the National Institute of Justice (NIJ) reported that 44% of law enforcement agencies did not submit SAKs for testing because a suspect had not been identified, and 15% did not submit SAKs because analysis had not been requested by a prosecutor. In addition, procedures for analyzing the evidence collected using SAKs can vary from jurisdiction to jurisdiction. In some jurisdictions, all sexual assault evidence collection kits are forwarded to a crime laboratory for analysis. In other jurisdictions, it may be months or even years before the kit is tested, if at all. Some law enforcement agencies might have a problem working through their backlog of old kits because crime laboratories are operating at full capacity analyzing DNA evidence collected from current cases. According to NIJ , "it is unknown how many unanalyzed [SAKs] there are nationwide." NIJ notes that while there are many reasons for why there are no data on the number of untested SAKs in law enforcement's possession, one contributing factor is that there is no national system for collecting these data. Also, tracking and counting SAKs is an antiquated process in many jurisdictions (often done in non-electronic formats), and the availability of computerized evidence-tracking systems has been an issue for many jurisdictions for years. One grassroots organization addressed the data void by attempting to count the backlog (through public records requests) and track data in cities and states across the country. While the organization's data are incomplete, they have some estimates of rape kit backlogs for various cities and states. Thus far, the Joyful Heart Foundation has identified approximately 40 municipal and county jurisdictions with known rape kit backlogs ranging from several hundred to thousands of rape kits. The discovery of hundreds or even thousands of untested SAKs might lead to calls for all of the kits to be tested; however, this might not be the most efficient use of limited resources. There are several issues that might be considered when working through a backlog of untested kits, including the following: Should all SAKs be tested, even the ones that might be from cases that are a couple of decades old, or should there be a triage process to determine which SAKs will be tested? Should evidence be tested in cases in which the statute of limitations has expired? Do law enforcement agencies give preference to testing kits in cases in which someone was assaulted by a stranger as opposed to sexual assaults perpetrated by an acquaintance? Do police and prosecutors have the resources they need to follow up on all of the leads that could be generated from widespread testing of backlogged SAKs? Should all victims be notified about the results of their SAK tests? If so, how and when should victims be notified? Should victims have a say in whether their SAKs will be tested? How will victims be linked with services, if needed? In recent years, the federal government has addressed the SAK backlog by providing financial support, conducting or funding research to address the backlog, and testing a limited number of SAKs from local law enforcement agencies that had not been submitted previously. In FY2015, Congress appropriated $41 million for the Community Teams to Reduce the Sexual Assault Evidence Kit Backlog and Improve Sexual Assault Investigations program. Administered by the Department of Justice, Bureau of Justice Assistance, the goal of the program is to create a "coordinated community response that ensures just resolution to these cases whenever possible through a victim-centered approach, as well as to build jurisdictions' capacity to prevent the development of conditions that lead to high numbers of unsubmitted SAKs in the future." The program provides funding to state and local governments to help address the backlog, test, and track SAKs; create and report performance metrics; access training to increase effectiveness in addressing complex issues involved with SAKs and associated cases; engage in multidisciplinary policy development, implementation, and coordination; and improve practices related to the criminal justice process and victim engagement and support. NIJ also provides funding to state and local crime laboratories through its DNA Backlog Reduction program. Funding under this program can be used to (1) process, record, screen, and analyze forensic DNA and/or DNA samples from convicted offenders or eligible arrestees; and (2) increase the capacity of public crime laboratories to process more DNA samples. While this funding cannot be used to help state and local governments work through their backlogs of SAKs that have not been submitted to a crime laboratory for analysis, it could be used to help process biological evidence collected through SAKs that have been submitted to a crime laboratory for analysis. NIJ notes that there has been little research on SAK backlogs, and there are few evidence-based "best practices" to help jurisdictions make decisions about how to work through their backlogs and prevent backlogs from developing again in the future. In 2011, NIJ funded research in Houston, TX, and Detroit, MI, to try to help address these issues. NIJ reported that one of the important lessons learned from the two projects was the value of forming multidisciplinary teams when addressing the issue of the large number of SAKs that had not been submitted. Prosecutors' offices in both jurisdictions formed multidisciplinary teams to look at this issue. The teams included police officers, crime lab analysts, prosecutors, and victim advocates. NIJ notes that solving sexual assault crimes is a complicated process—it is more than simply testing biological evidence in the SAK—and the multidisciplinary teams can help facilitate the process. For example, the multidisciplinary teams can help exchange information about Combined DNA Index System (CODIS) "hits" (e.g., a match between a sample profile from a SAK and an offender profile in the National DNA Database) among police, prosecutors, and crime labs in a seamless and real-time manner. The Detroit team conducted a census of all SAKs in the possession of law enforcement. Team members manually counted approximately 11,300 SAKs collected from 1980 through November 1, 2009, while recording the name and date of birth of the victim, and date of the assault. The census took 15 weeks and 2,365 person-hours. The team found 2,512 SAKs with lab numbers but could not determine how many of these had been tested; 8,707 had never been submitted to the lab. A total of 1,595 SAKs were tested in Detroit as a part of the NIJ-sponsored program, and nearly half (785 SAKs) yielded DNA profiles that could be uploaded to CODIS. Of the 785 profiles uploaded to CODIS, there were 455 "hits," meaning that 28% of the SAKs tested in the Detroit action-research project revealed the DNA identification of the suspect. Among these, 127 serial assaults were identified. There were an estimated 16,000 rape kits in police storage in Houston. The Houston Police Department (HPD) was already performing an audit of all SAKs in their custody because the NIJ-sponsored research was taking place when the police department was moving to a new evidence-storage facility. HPD determined that 6,663 SAKs had not been tested previously, including approximately 4,000 kits stored in the property room freezer. Of these 4,000 SAKs, the Houston team randomly selected a sample of 500 to be studied in the NIJ-sponsored project. Results from these analyses have not yet been publicly released by NIJ. NIJ has partnered with the FBI crime laboratory to process and test a limited number of SAKs from local law enforcement agencies that had not been submitted previously. NIJ will collect and analyze data about these SAKs. The goal of this partnership is to better understand the issues related to how SAKs are handled and suggest ways to improve the collection and processing of them. SAKs in the possession of law enforcement or public crime laboratories can be submitted to the FBI for analysis if the SAKs are from an incident that took place more than one year from the time of submission; no biological testing has been conducted on the SAKs; and an incident or police report is enclosed for each SAK being submitted. In February 2013, Congress passed the Violence Against Women Reauthorization Act of 2013 (VAWA 2013; P.L. 113-4 ) which, among other things, included new provisions to address the SAK backlog in states. VAWA 2013 expanded the purpose areas of several VAWA grants to address the needs of sexual assault survivors to include strengthening law enforcement and forensic response and urging jurisdictions to evaluate and reduce rape kit backlogs. It also established a new requirement that at least 20% of funds within the STOP (Services, Training, Officers, Prosecutors) program and 25% of funds within the Grants to Encourage Arrest Policies and Enforce Protection Orders program be directed to programs that meaningfully address sexual assault. In addition, VAWA 2013 incorporated the Sexual Assault Forensic Evidence Reporting Act of 2013. Congress amended the authorizing legislation for the Debbie Smith DNA Backlog Grant Program by passing the Sexual Assault Forensic Evidence Reporting Act of 2013 (the SAFER Act of 2013, Title X of P.L. 113-4 ). The SAFER Act added two new purposes for which Debbie Smith grants can be used: (1) to conduct an audit of the samples of sexual assault evidence in the possession of a state or unit of local government that are awaiting testing, and (2) to ensure that the collection and processing of DNA evidence by law enforcement is carried out in a timely manner and in accordance with the protocols and practices the FBI is required to develop under the act. Prior to the passage of the SAFER Act, Debbie Smith grants could only be used to test biological evidence that had been submitted to a crime laboratory for analysis and to enhance the capacity of crime laboratories to conduct DNA analysis. Congress may wish to assess the SAK backlog and debate if the federal response should be changed as the issue evolves and agencies, including NIJ, capture the breadth of the problem. For example, Congress may design preventative measures in attempting to prevent future backlogs. This may be done through grants to states and local entities by funding preventative measures and/or conditioning grants on the requirement that states and local governments establish a set time in which SAKs must be tested. Congress may also wish to request research on the impact of the backlog reduction and determine how efforts to address the issue have affected crime victims.

Sexual assault kits (SAKs, also referred to as "rape kits") are used by medical professionals to collect evidence during a forensic medical exam of a sexual assault victim in order to establish elements of a crime. Generally, upon completion of the medical exam the kit is transferred to an authorized law enforcement agency that logs the kit into evidence. Procedure and protocol regarding when and where kits are sent, however, vary across jurisdictions. Some law enforcement agencies automatically send the kits to forensic laboratories for testing while others wait for varying amounts of time; in some cases depending on when/if a police officer or prosecutor requests forensic analysis of the kits. Evidence from these kits may help identify, convict, or exonerate an offender. Evidence may also be stored in DNA databases for use in other cases. When people refer to a "rape kit backlog," they are referring to untested kits that either reside with law enforcement having never been submitted to a laboratory for testing, or referring to untested kits that have been submitted to crime labs but are delayed for testing for longer than 30 days. Some research organizations state that the problem more typically resides with those kits that were submitted to a crime laboratory but remain untested; however, the definition of backlog appears to vary across jurisdictions. While the status and location of the kits vary, the binding element of the backlogged kits is that they have never been tested. The backlog of SAKs has raised concerns over justice for assault victims and that evidence in untested kits could be used to prevent suspects from victimizing others. SAKs may remain untested for reasons such as limited resources of laboratories and law enforcement and police discretion. Police may opt not to pursue a forensic investigation for a variety of reasons including perception of victim cooperation or a decision that the results of the kit would not be pertinent to the overall investigation. In recent years, the federal government has addressed the SAK backlog by providing financial support, conducting or funding research to address the backlog, and testing a limited number of SAKs from local law enforcement agencies that had not been submitted previously. Congress has passed legislation that addresses aspects of the SAK backlog. In February 2013, Congress passed the Violence Against Women Reauthorization Act of 2013 (VAWA 2013; P.L. 113-4) which, among other things, included new provisions to address the backlog in the states. VAWA 2013 incorporated the Sexual Assault Forensic Evidence Reporting Act of 2013 (SAFER Act). The SAFER Act added two new purposes for which authorizing legislation for the Debbie Smith DNA Backlog Grant Program funds can be used: (1) to conduct an audit of the samples of sexual assault evidence in the possession of a state or unit of local government that are awaiting testing and (2) to ensure that the collection and processing of DNA evidence by law enforcement is carried out in a timely manner and in accordance with the protocols and practices the Federal Bureau of Investigation (FBI) is required to develop under the act. Congress may wish to assess the SAK backlog and debate if the federal response should be changed as the issue evolves and agencies, including the National Institute of Justice (NIJ), capture the breadth of the problem. For example, Congress may design preventative measures in attempting to prevent future backlogs. This may be done through grants to states and local entities by funding preventative measures and/or conditioning grants on the requirement that states and local governments establish a set time in which SAKs must be tested. Congress may also wish to request research on the impact of the backlog reduction and determine how efforts to address the issue have affected crime victims.

China's greenhouse gas (GHG) emissions have drawn attention in the United States because of their environmental and economic implications. China's actions to address climate change also hold implications for broader economic and security concerns in the United States. Scientific evidence that the Earth's climate is changing, and that human-related GHG emissions are a major driver of that change, has led to debate over whether and how to control GHG emissions. Once emitted, GHG persist in the atmosphere for years to centuries (and for some gases, millennia). They allow solar radiation to enter the Earth' system, but prevent much of the absorbed energy from escaping back out to space. Scientists agree that the Earth's atmosphere serves as a "blanket" that warms the Earth's surface and that a certain concentration of GHG is essential to maintain the planet at habitable temperatures. There is less agreement on how much warming would result from the higher atmospheric GHG concentrations expected if emissions from fossil fuel use, deforestation, and some agricultural and industrial processes continue. Scientific concerns in the 1980s led to initiation of inter-governmental discussions in 1989 to stabilize GHG concentrations and avoid potentially "dangerous" global temperature rise. These concerns led to negotiation of the United Nations Framework Convention on Climate Change (UNFCCC). In the late 1980s, climate experts broadly understood that climate change driven by human-related GHG emissions was a global challenge: all major emitting countries would need to engage in slowing then reducing their emissions of GHG as well as increasing GHG removals by "sinks" (e.g., growing forests). When the UNFCCC was opened for signature in 1992, the already industrialized countries emitted almost 80% of the global carbon dioxide (CO 2 ) from energy and industry. , The CO 2 emissions of the United States and the European Union were about 23% and 20%, respectively, of the global total. China's were about 11%. All the "developing" countries at the time contributed about one-third. Low income countries saw GHG-driven climate change as a problem made by the industrialized countries. Considering low income countries' challenged financial, technological, and governance capacities, they were not included in the UNFCCC's Annex I, which lists countries with quantitative GHG control targets for the 1990s. Nonetheless, the UNFCCC contained a principle of "common but differentiated responsibilities" among its Parties, with consensus that the already industrialized countries should lead in controlling their emissions and that all countries have obligations to address climate change. Annex I established a bifurcation between the Parties listed in Annex I and the Non-Annex I Parties. (Countries are frequently referred to as "developed" versus "developing," although the distinction is undefined and arguably a misleading simplification of the spectrum of differences among countries). Scientific analyses have concluded that rising GHG concentrations in the atmosphere cannot be stabilized unless all major emitting countries abate their net emissions to near zero. Despite efforts of many countries to reduce their GHG emissions, the continued and rapid growth of emissions from such large emitters as China and the United States has called into question the efficacy of the UNFCCC in meeting its objective of stabilizing concentrations of GHG in the atmosphere. As China's share of global GHG emissions has grown from about 11% in 1990 to about 21% today, and continues to grow, a broad set of observers have concluded that effectively slowing human-induced climate change depends on Chinese reductions of its emissions, as well as reductions from the United States and all other large emitters. U.S. congressional debate on potential climate change policies in the United States frequently invokes China's (and other emerging economies') surging greenhouse gas (GHG) emissions as well as skepticism over whether, how, and when China might alter that trend. Some are concerned that U.S. investment in GHG controls without comparable Chinese actions would unfairly advantage China in global trade, and fail to slow human-induced climate change. In contrast, others point to China's announced aggressive actions to reduce GHG emissions by deploying efficient and non-fossil fuel technologies, and warn that U.S. businesses could fall technologically and competitively behind China in the energy sector and international trade. Moreover, some suggest that Chinese policies may help buffer their production from rising and volatile fossil fuel prices, while the United States' production costs could remain subject to fluctuating world energy prices. Some experts point to the connections of China's GHG control policies to broader congressional concerns: China's role in world markets for energy, forest products, rare earth metals, and other strategic resources. Some analysts have noted that potential impacts of climate change on China's ecosystems, agriculture, water resources, and coastal zones could affect that nation's economic and political prospects, with both economic and security risks for the United States. This report lays a groundwork for congressional consideration of China's GHG policies. It describes the underlying economic and environmental context for China's GHG emissions then provides the magnitude and uncertainties of available estimates. It discusses the factors driving China's emissions and summarizes some of the best described elements of China's strategy to mitigate its GHG emissions. A brief section identifies key points on China's status in international cooperation. Over the past decade, the Chinese people and its leadership have come to view the country's economic well-being and its environmental quality as inextricably correlated. Figures for Gross Domestic Product without accounting for losses to air and water quality, human health, etc. exaggerated actual improvements in living standards. This has resulted in a shift to "harmonious growth" that tries to balance GDP growth with improving living standards. Between 1980 and 2009 the Chinese economy grew at an average annual rate of 10% (growing by factor of 16 over the period). In the past decade, China's annual growth rates varied between 8% and 14%, over which time its economy has tripled in size. China is now the second largest economy in the world, behind the United States. The country held $3.2 trillion in foreign exchange reserves by the June 2011. , Hundreds of millions of Chinese have improved their standards of living. These facts lead some to contend that China is no longer a developing country. Still, a recent World Bank report estimates that up to 200 million people (out of 1.3 billion) in China continue in poverty, living on less than $1.25 a day in 2005. The Chinese government perceives that its legitimacy depends on continuing to improve the living standards of its population. Its economic policies are stated to be strongly aimed at eliminating poverty and raising average incomes. China's achievements so far are reflected in Gross Domestic Product (GDP) per capita in 2009 of $6,800 in international dollars (int$), up 22% from 2007 and up 289% from 2000, according to the World Bank's World Development Indicators. Still, per capita incomes in China were about one-eighth those of Americans levels (respectively, int$5,594 and int$46,628). Table 1 provides selected economic, energy, and greenhouse gas statistics for China and the United States. In 2009, China's population was more than four times that of the United States, while its economy, as measured using "purchasing power parities," was just over half as large. Even with relatively slow population growth (0.5% annually) and high projected economic growth rates of at least 7% annually, it likely would take many years for the living standards of average Chinese to reach those of average Americans. China's national plans call for structural shifts in its economy. Much of China's recent growth occurred in industrial production, especially of goods for export. In the past few years, China's policies have attempted to shift from emphasizing heavy industry (such as steel) and production for export to stimulating domestic consumption and meeting domestic demands for improved quality of life. China has reduced its incentives for export-oriented production and increased incentives for investments in higher value-added goods and services. These policies, combined with increasing economic integration in Southeast Asia, could decrease the share of heavy manufacturing in China's economy, although preliminary data from early 2011 show that heavy manufacturing remains strong. Historically, China's promotion of monetary economic growth has led to severe environmental degradation. Many Chinese policymakers appear now to realize, however, that they cannot sustain an "unbalanced" approach that emphasizes industrialization at any cost, especially not in the developed regions of the country. Environmental pollution has become so bad in places that social and political stability are at risk. Officially recognized "public order disturbances" grew from 58,000 in 2003 to 87,000 in 2005, many due to environmental pollution and land-takings stemming from government corruption. Chinese officials have indicated that they seek a "harmonious society" that would entail slower GDP growth with less environmental degradation. In 2007, the World Bank, working with the Chinese government, estimated that the cost of outdoor air and water pollution to China's economy totaled around US$100 billion annually, or 5.8% of China's GDP. In other words, if non-monetized losses to China's resource assets (e.g., clean water, etc.) were netted from the current (financial) accounts, GDP would have been 5.8% lower. Related to such findings, the Chinese government raised the stated priority of environmental protection in its 11 th Five Year Plan (2006-2010). Chinese central government officials have over the past decade pursued a combination of measures to control air, water, and soil pollution, and state that they are striving to build a "recycling" industrialized economy to ease environmental pressures. Their efforts have met with mixed success. Even when national officials genuinely want to encourage environmental improvement, local officials may seek to avoid enforcement of environmental regulations (and may not report accurate data) in order to maximize industrial growth and employment. As will be reflected later in this report, the degree to which national goals and measures will be achieved remains an important question. Controlling local and regional pollutants like oxides of sulfur and nitrogen, particulates, and mercury has been difficult because of the difference in priorities of local and central government officials, as well as insufficient monitoring data and enforcement of national requirements. Controlling GHG emissions in China is even harder. For conventional pollutants (e.g., particulate matter or water contamination), both mitigation costs and impacts are local or regional; averaged nationally, polluting nations will largely pay the costs of that pollution either financially or in lower well-being. But with GHG emissions, mitigation costs may be local, while climate impacts are global. Without shared international action, this can lead to a "tragedy of the commons" phenomenon where the shared resource is not adequately stewarded, or where some people take responsibility while others, who do not control their emissions, become "free riders" on the efforts of those who do. Over the past three years, China's leadership has demonstrated an increasing realization that it has ownership in the outcomes of a warming world. Increasingly, it recognizes that it too would bear potential climate change costs—of increasing storm intensity, rising sea levels, shifting water availability, challenged agricultural productivity, changing disease patterns, as well as other anticipated impacts. China's recently announced 12 th 5-Year Plan, covering 2011-2015, says the nation should act to balance economic growth with environmental protection. How China reconciles domestic politics with international relations, and "fairness" arguments with pledges of actions to suppress its GHG emissions (to be discussed later), remains to be seen. Data from China are equivocal. No one knows precisely the scale of China's GHG emissions or its removals of CO 2 from the atmosphere by vegetation. China has not reported its emissions estimates for any year later than 1994 , although an unofficial estimate for 2004 was released ( Figure 1 ). (By comparison, the United States and most industrialized countries have been reporting officially and annually according to internationally agreed guidance since 1995.) The lack of China's reporting, transparency, and acceptance of international review of GHG emissions estimates (and underlying data) has been a major point of contention between China and the United States (and other countries) in the UNFCCC negotiations. While China may not have reliable information at this time, its insistence that reporting should be a point of "differentiation" among countries has not helped China convince others of its sincerity in undertaking domestic actions to slow its GHG emissions growth. China has alleged that international review of its emissions estimates could be "intrusive"; other countries, including the United States, already engage in such reviews, including in-country reviews and discussions with independent third-parties. Since the Copenhagen Accord in 2009, China has agreed to biannual reporting and "consultations," though the terms of those agreements are yet to be defined. The government is currently preparing its second ever GHG emissions inventory, expected to be released in 2012. Based on activity data of varying quality, estimated GHG emissions in China in 2005 were around 7-7.5 billion metric tons of CO2-equivalent, with CO 2 constituting 78-84% of the total. Methane (CH 4 ) emissions were around 11-13%, nitrous oxide (N 2 O) about 1%, and the synthetic gases (sulfur hexafluoride—SF 6 , perfluorocarbons—PFC, and hydrofluorocarbons—HFC) together less than 1%. (These are the six GHG covered by the Kyoto Protocol.) The Chinese government estimates that the country offset a portion of its GHG emissions with removals (sequestration) by forests: "from 1980 to 2005, a total of 3.0 billion tons of CO 2 were absorbed by afforestation, a total of 1.6 million tons of CO 2 were absorbed by forest management, and 0.430 million tons of CO 2 from deforestation were saved." Removals of CO 2 from the atmosphere by land use, land use change and forestry are much more difficult to quantify in all countries than emissions by other human activities. Figure 2 ranks the IEA's estimates of the world's leading GHG emitters in 2005, the latest year for which non-CO 2 GHG data are available for many countries, including China. According to IEA's estimates for the six GHG, China and the United States were each responsible for about 17% of global GHG emissions in 2005. Using data for energy and cement CO 2 only, China and the United States in 2009 emitted about 21% and 19%, respectively, of the global total. Chinese GHG emissions have grown rapidly. According to unofficial GHG estimates from China, from 1994 to 2004, China's annual average GHG growth rate was around 4%. In this period, the share of carbon dioxide in total GHG emissions increased from 76% to 83%. The most recent estimates come from BP are somewhat higher than IEA's, globally and for China. According to BP's estimates for 2010, China's and the United States' CO 2 emissions were 8,333 and 6,145 MMT CO 2 , respectively. BP estimates that China's CO 2 emissions grew 339% from 1990 to 2010 ( Figure 3 ). (This compares with U.S. CO 2 emissions growth of 13% from 1990 to 2010.) Since China has not officially released a GHG inventory since 1994, it is difficult to know how sectors contribute to national emissions. The Pew Center on Global Climate Change estimated that, in 2003, electricity and heat made up 42% of China's GHG emissions, industry 21%, agriculture 20%, households and services 9%, transportation 5%, and waste 3%. According to IEA estimates, of China's 2005 GHG emissions, about 68% came from fuel combustion in all sectors ( Figure 4 ). About 5% evaporated as methane from energy related systems. Another 10% came from industrial processes, and about 14% came from agriculture. Waste and miscellaneous sources accounted for the remaining 4% of China's GHG emissions that year. China's GHG emissions are the highest in the world because of its very large economy, the high share of the economy generated by energy-intensive (and GHG emitting) industry, and the high share of coal in China's energy mix. China's GHG emissions are the highest in the world primarily because of the size of its economy, which is, in turn, due in large part to its vast population of 1.3 billion people. (Per capita, production is much smaller than that of the United States. But multiplying China's low per capita production by its large population makes the China's economy is the second largest globally.) China exercises strong policies to slow population growth; the growth of population in 2005 was approximately 0.6%, down from an average rate of about 1.1% in the 1990s and 1.4% in the 1980s. The relatively slow rate of population growth helps to diminish the corresponding growth of national GHG emissions. China's population policies are clearly not aimed at mitigating GHG emissions, but observers note that without them emissions would have increased substantially. Though China's population has been growing relatively slowly, production per capita has grown rapidly. China's economy has experienced annual growth rates from 8 to 14% over the past decade. The Chinese economy is now the second largest economy in the world: int$9.1 trillion in 2009—two-thirds as large as the int$14.1 trillion U.S. economy (compared using Purchasing Power Parities), and more than twice the size of Japan's (the third largest economy). Figure 5 provides one estimate of the economic activities that have driven recent growth of Chinese GHG emissions. It concludes that the emissions associated with exports have grown rapidly in the past few years, as well as capital investment (construction of buildings, roads, etc.) and increasing consumption by the population and their rising incomes. Energy production and use emit roughly three-quarters of all GHG in China, as in most other countries ( Figure 4 ). China's rising GHG emissions have been primarily due to expansion of energy-intensive industrial activity—largely in manufacturing for export and in construction of new infrastructure ( Figure 5 ). China's continuing heavy reliance on coal also results in high CO 2 intensity of its economy. Chinese energy demand has surged since 1990, growing at a rate sometimes faster than the economy ( Figure 6 ). Years of government control over the energy sector, as well as incremental moves to decentralize the system, led to important distortions and inefficiencies. In the early 2000s, a decades-long reduction in energy intensity of the economy halted and reversed ( Figure 7 ), increasing China's dependence on energy to fuel its economic growth. Simultaneously, energy shortages forced stoppages at some enterprises. Though demand for oil for electricity production peaked then declined, demand by vehicle use soared, aggravating concerns about access to supplies from the Middle East and Russia, and about vulnerabilities to price fluctuations. By 2007, China became a net importer of coal. Also, choking levels of pollution, much from the energy sector, triggered public protests, while international pressure increased on China to control its related emissions of air pollutants and GHG. Though reforms were promoted from the 1990s, weak implementation, unreliable data and monitoring, and a predominant emphasis on economic expansion limited their effectiveness. These factors focused the attention of the central government on revising national energy policies in China's 11 th and 12 th (current) 5-year plans. (Policies will be discussed in " China's GHG Abatement Policies and Programs .") China uses a high portion of coal in its fuel mix ( Figure 8 )—another reason that its CO 2 emissions are high relative to the size of its economy (its CO 2 intensity). Coal emits far more CO 2 for the amount of energy it provides than other fossil fuels. Coal's "emission factor" is about 30% higher than that of crude oil, and about 70% more than natural gas, on average. So the high use of coal, and of fossil fuels more generally, in the Chinese economy explains why China's GHG emissions are proportionately high. Compare the United States and China: In 2009, the United States' fuel mix comprised about 23% coal and 37% petroleum. Nuclear, hydroelectric, and other renewable sources contributed another 13%. In China, however, coal provided 70% of total energy, with petroleum contributing 18%, gas 4%, and nuclear, hydroelectric, and renewables providing the remaining 8%. , China now consumes about three times as much coal each year as the United States, even though its total energy demand in 2009 was about 6% higher, according to BP data. The next biggest difference between China and the United States after China's greater reliance on coal is China's limited quantities of domestic natural gas, and its lower use of petroleum. (However, while oil is being backed out of electricity generation in China, demand for oil for transportation is surging with automobile use.) China also has many fewer nuclear power plants. Although not reflected in China's CO 2 emissions estimates, the energy sector also emits a large portion of methane (CH 4 ) from coal production. Due to the dangers of uncontrolled methane leaks in mines, the government has tried to force capture and abatement of those methane emissions, but rates are thought to remain high (based, in part, on continuing frequency of coal mine explosions). Agriculture is the next most significant sector for GHG emissions, although recent estimates are not available. In 1994, China's agriculture sector contributed 17% of all GHG emissions, 50% of all methane emissions (especially due to rice cultivation, and pig and sheep production), and about 92% of estimated nitrous oxide emissions (due to fertilizer application). It is likely that these percentages have shifted significantly in the intervening years, however. China has increasingly strengthened its policies and programs to curtail GHG emissions, culminating in a pledge under the 2009 Copenhagen Accord to achieve a 40 to 45% reduction in its carbon intensity by 2020. The government has sought to enforce and incentivize many programs to improve energy efficiency and expand the shares of non-emitting sources of energy. In addition, it has promoted policies in agriculture and other sectors to abate GHG emissions. Still, some critics are skeptical of China's ability to achieve its targets, while others believe that China's efforts are little more than "business-as-usual." One recent analysis concluded that achieving the carbon intensity target is feasible, but would require strengthening of existing policies to stimulate energy efficiency in multiple sectors and to increase shares of renewable and nuclear electricity generation. Under existing policies, most analysts expect China's GHG emissions to slow their rate of growth but to continue to increase until around 2030. As discussed earlier, China's government has felt pressure to abate choking levels of local pollution as well as to engage with other large GHG emitters in international cooperation to reduce its emissions. China had policies for many years to improve efficiency, and even to tax polluting emissions, but enforcement and effectiveness of those policies were less than anticipated. By 2007, when China was under strong international pressure to negotiate GHG reduction targets under the UNFCCC for the period beyond 2012, China released its National Climate Change Program, a plan to address climate change. The most challenging aspect of China's policy, arguably, was its goal to lower energy intensity 20% by 2010. By 2010, the government says the nation fell just short of that goal, with a 19.1% improvement. However, under severe scrutiny towards the end of 2010, it appears that many energy managers met their goals by stopping or slowing production rather than improving efficiency. This seems to have resulted in a slight "rebound" of energy intensity early in 2011. Chinese leadership has warned against such tactics to reduce energy intensity and tightened its objectives in the 12 th 5-Year Plan, from 2011-2015. Besides the improvement in energy intensity, measures in the 11 th 5-Year Plan resulted, according to China's claims, in the following: The closure of thousands of small, inefficient, and polluting coal-fired power plants, iron and steel mills, cement kilns, aluminum plants, and others. China reports closures of old coal-fired power plants exceeding 71 GW of capacity in 2006-2010, and another 11 GW in the first half of 2011. The government says these plants would otherwise have emitted 164 MMTCO 2 annually. The share of non-fossil energy reached 9.6% in 2010, up from about 7% in 2005. China became the largest wind power market by 2010, for both supply and use. The stock of carbon stored in forests increased by an estimated 13 billion cubic meters. The Chinese government has stated that some of the policies put in place to achieve China's targets for 2010 will likely continue into the future. Examples include investment in ultra-efficient coal fired electricity generation; improvement of existing coal-fired industrial boilers; closure of inefficient energy and industrial production capacity; expansion of combined heat-and-power; improvements of industrial motor efficiencies; standards for energy efficient lighting, buildings, and appliances; efficiency labels for appliances; improved enforcement of standards; financial incentives to build renewable energy capacity; requirements of feed-in tariffs to promote renewable energy generation; monetary awards for energy-saving achievements by companies and public institutions; vehicle efficiency standards that exceeded those of the United States; tightened efficiency standards for buildings and appliances, and forest coverage expanded to 20%. Regarding CO 2 emissions and energy policies, the details of China's 12 th 5-Year Plan (covering 2011 to 2015) and its implementing measures are still in draft. The national government has announced a number of its targets that, if achieved, would reduce growth of GHG emissions. By 2015, energy intensity should improve by 16% by 2015; carbon intensity should improve 17% by 2015, reaching 40-45% relative to 2005 levels by 2020; the share of non-fossil energy should reach 11.4% by 2015 and 15% by 2020; Forest coverage should increase by 12.5 million hectares (31 million acres) by 2015, and 40 million hectares (99 million acres) by 2020, compared to 2005 area; Nine pilot CO 2 cap and trade programs have been established across several cities; The length of high-speed railways is planned to increase to 45,000 km (27,962 miles). Comprehensive laws to facilitate meeting those targets are now under consideration by the legislature. A variety of statements from the government indicate that some of the main policies China would use to achieve its goals are continued economic restructuring toward higher value-added and less energy intensive production; financial awards to companies and public institutions for quantitative goals for saving energy and substituting alternative for fossil fuels in the transport sector; and expansion of the "energy-saving service sector" with a focus on the transport and construction sectors, making energy efficiency a "criterion for market entry" and setting benchmarks for energy performance. Just as China has not provided estimates of historical or current GHG emissions, it has not provided projections of future emissions. A variety of organizations have produced their own projections, with different assumptions about underlying "business as usual," efficacies of Chinese policies and programs, and rates of technological advance. In the longer term, Chinese officials are signaling possible absolute reductions in China's GHG emissions. As reported by the Xinhua news agency, a recent report by the Chinese Academy of Engineering concluded that "China's energy development is projected to experience a 'historic transition' around 2030 when its consumption of coal becomes restrained, the emission of carbon dioxide reaches its peak and energy-saving capacities around the world reaches an advanced level." This conclusion is consistent with other analyses and official statements suggesting that 2030 could mark the high point of Chinese CO 2 emissions if current policies continue. One analysis that seemed linked to the Chinese pledge to improve carbon intensity by 40-45% by 2020 is illustrated in Figure 9 . (A very similar figure was made available at the time China announced its pledge.) Another recent analysis by Lawrence Berkeley National Laboratory (LBNL) concludes similarly that China's CO 2 emissions could begin to level off around 2030, due to saturation of some demand for greater energy services, as well as standards and incentives for more efficiency and non-fossil technologies. An alternative view is represented by the International Energy Agency's World Energy Outlook 2009. It suggests that China's current policies (before the 12 th 5-Year Plan) would result in continually rising CO 2 emissions, reaching 12.6 MMTCO 2 by 2035. That would be almost a doubling of China's 2005 emissions. China and other countries that had low incomes in 1992 were exempted in the United Nations Framework Convention on Climate Change (UNFCCC) and the 1997 Kyoto Protocol from taking on quantified GHG reduction obligations, based on the principle of "common but differentiated responsibilities" contained in the Convention. While Parties agreed that the already industrialized Parties ("Annex I Parties") should take the first steps in abating their GHG emissions, it has been clear from a scientific standpoint that the objective of the UNFCCC—to stabilize atmospheric concentrations of GHG at a level that would avoid dangerous anthropogenic interference with the climate system (in Article 2)—could be met only when all significant emitters reduce their net emissions (i.e., emissions minus removals by photosynthesis) to near zero. China and other low income economies, however, resisted any discussion of when and how they might take on GHG obligations. At the same time, the United States and a few other countries rejected taking on GHG mitigation commitments unless all major emitters take on commitments. Impasse continued until agreement was reached on the 2009 Copenhagen Accord: countries associated with the Accord submitted pledges to GHG targets and mitigation actions they would take. These pledges are politically but not legally binding. Agreement on legally binding commitments under the UNFCCC or the Kyoto Protocol seems unlikely for the foreseeable future. China's stance against legally binding obligations rests on several points. First, China argues that the existing, elevated concentrations of GHG in the atmosphere are due to historical emissions from the already industrialized countries, such as the United States. (The "Brazil Proposal" of 1997 suggests that developing countries should not take on GHG abatement requirements until their accumulated contributions to atmospheric concentrations equally the contributions of the Annex I Parties—in other words, not for decades.) China's large and rapidly growing emissions, however, may soon places its contributions to atmospheric concentrations on a par with the historic contributions of many smaller Annex I Parties. Also, China has extended its position on differentiation of obligations to cover GHG emission reporting and review, not just abatement responsibilities. As discussed earlier in the section on China's GHG emissions, that country's reticence to be transparent about its emissions and sequestration and quantification of its policies and programs, has been an important point of conflict in the UNFCCC negotiations. Second, China and other lower income countries point out that the industrialized economies benefited from essentially unconstrained use of energy to fuel their growth; lower income countries should also be exempt from constraints on their use of energy until their incomes have caught up. They also contend that, if global carbon emissions must be limited, each person should have an equal "right" to emissions; this would imply that the "rights" of each American would be small fraction of their current actual emissions, while citizens of developing would be allowed to expand their average emissions. (Even under this line of argument, however, China would need to reduce its per capita GHG emissions in scenarios that would stabilize GHG concentrations at many moderate, proposed targets.) An "equity" proposal rumored to be forthcoming from India, China, Brazil and South Africa would set a principle in the negotiations that a country would not take on GHG abatement obligations until each of its citizens had access to energy and had emerged from poverty. Such a proposal could illuminate the widely varying conceptions of "equity" among Parties and individuals, as well as perhaps being inconsistent with achieving the UNFCCC's objective of stabilizing GHG concentrations. In addition, China and other non-Annex I Parties have underscored the greater financial capabilities of the wealthier countries to undertake GHG abatement, while China's priority must be to alleviate poverty and to raise average incomes towards those of the Annex I Parties. China, for decades, has sought financial and technological assistance as part of nearly every international issue. China's robust economy, large foreign reserves, and leading experience in manufacturing and deploying many advanced technologies have reduced the credibility of its requests. In contrast, China has increased its engagement in technology cooperation in recent years, including with the United States. For many years, China and other non-Annex I Parties allied to block discussion of new commitments for non-Annex I Parties. By 2009 and the Copenhagen negotiations, however, some countries that feel vulnerable to the impacts of climate change began to perceive that it would not be in their interests to sustain the "no new commitments for developing countries" mantra. The fractious negotiations in Copenhagen spotlighted these diverging interests and added to pressure for China and others to agree to the political pledging processes that have emerged. For the foreseeable future, however, China is likely to continue its opposition to taking on legally binding GHG targets, as well as to enhanced requirements for GHG reporting and international review of its policies and progress.

The 112th Congress continues to debate whether and how the United States should address climate change. Most often, this debate includes concerns about the effects of U.S. greenhouse gas (GHG) emissions controls if China and other major countries were not to take comparable actions. China recently surpassed the United States to become the largest emitter of human-related GHG globally, and together, the two nations emit about 40% of the global total (with shares of 21% and 19%, respectively). China's GHG emissions are growing rapidly and, even with policies adopted by China, are expected to rise until at least 2030. The emissions growth is driven by China's rapid economic and industrial growth and its reliance on fossil fuels despite measures to raise the shares of non-fossil energy sources. China requires 50% more energy to produce one billion dollars of GDP (its "energy intensity") compared with the United States. Over the past two decades, strong government directives and investments have dramatically reduced the energy and GHG intensities of China's economy, though the rates of improvement leveled off in the 2000s, and even reversed in subsequent years. A renewed emphasis on improving energy and GHG intensity emerged in the 11th 5-Year Plan, from 2006-2010, and the government says the nation nearly achieved its aggressive goal to reduce by 20% the energy required to produce GDP. In the context of China's 12th 5-Year Plan, from 2011-2015, leaders have set targets to further reduce energy intensity by 16% by 2015. Along with measures to reduce pollution and increase the shares of non-fossil fuels in the energy sector, China has set goals to improve its CO2 intensity by 40-45% by 2020, with an interim target in the 12th 5-Year Plan of 17% by 2015. Even if these targets are achieved, China's GHG emissions are expected to rise in absolute terms. In addition, the frequency, transparency, and data quality of China's reporting of its GHG emissions and mitigation actions (including underlying energy and other data) have been a challenging diplomatic issue between the United States and China and in the climate change negotiations. China has resisted reporting and reviews comparable to what other industrialized nations or what many developing countries accept. While technical bilateral cooperation on data has been productive and China has moved politically toward better information sharing, the continuing lack of transparency is apparent in uncertain emissions estimates and projections. Chinese negotiators adhere to the principle of "common but differentiated" responsibilities, agreed in the United Nations Framework Convention on Climate Change (1992). They argue that emissions per person in China are low, that raising incomes must be their highest priority, and that industrialized countries bear primary responsibility for the historical buildup of GHGs in the atmosphere; therefore the industrialized countries should lead in mitigating emissions domestically. Industrialized countries also, they say, should assist developing countries with financial and technological support to mitigate emissions and adapt to coming change. Debate on potential climate change legislation in the United States has been influenced by China's surging GHG emissions, and uncertainty over whether, how, and when China might alter that trend. There is concern that strong U.S. domestic action taken without Chinese reciprocity would unfairly advantage China in global trade, and fail to slow significantly the growth of atmospheric concentrations of GHGs. The governments of both China and the United States have indicated some closure of their gap on future actions to address climate change by agreeing on national pledges to GHG targets and mitigation actions rather than binding international obligations. China is also engaged with many other countries in bilateral programs to build its governance and technological capacities to abate its GHG emissions.

U.S. farmers are widely adopting biotechnology, growing genetically engineered (GE) crops-- mainly corn, soybean, and cotton varieties -- to lower production costs and reduce laborrequirements. (1) In 2002, 66% of an estimated 145million acres planted to GE crops worldwide werein the United States, according to the International Service for the Acquisition of Agri-biotechApplications (ISAAA). (2) U.S. crops where GE varieties are common are highly dependent upon export markets. According to USDA, approximately 40% of all U.S. soybeans, 20% of all corn, and 45% of allupland cotton production is exported. These crops and their major products accounted for more thana fourth ($13.3 billion) of the total annual average annual value of $52.6 billion for all U.S.agricultural exports during calendar years (CY) 2000 to 2002. Not all of these soy, corn, and cottonexports were GE varieties, but the U.S. marketing and regulatory systems do not distinguish between(approved) GE and non-GE varieties. Commingling bulk commodity shipments provides animportant cost competitive advantage for U.S. handlers in domestic and world markets, accordingto industry analysts. These analysts observe that U.S. adoption of agricultural biotechnology has been facilitated bythe current U.S. regulatory system. The basic federal guidance for regulating biotechnology productsis the Coordinated Framework for Regulation of Biotechnology (51 Fed. Reg. 23302) published in1986 by the White House Office of Science and Technology Policy (OSTP). One of its keyprinciples is that genetically engineered products should continue to be regulated according to theircharacteristics and unique features -- not according to their method of production. Thus, if a foodproduct produced through biotechnology is determined to be substantially equivalent to oneproduced by more conventional means, that food is subject to no additional (or no different)regulatory processes. Once approved, food products do not have to be labeled as to whether or notthey contain any genetically modified organisms (GMOs), except to the extent a GE food issubstantially different (e.g., contains an allergen or has a changed nutritional content). However,marketers are free to make such claims, one way or the other, so long as the labeling is truthful. Theframework maintains that new biotechnology products are regulated under existing federal statutoryauthorities, all of which were conceived and enacted before the advent of commercial agriculturalbiotechnology. (3) The problem for U.S. agriculture is that many countries remain wary of agricultural biotechnology, including those in the European Union (EU), where consumer and environmentalorganizations have been vocal in expressing concerns about the safety of GE crops and animals. TheEU and other important U.S. trading partners have adopted widely divergent approaches toregulating biotechnology. As a result, U.S. exporters are encountering barriers to their products inthese markets. For example, since 1998, the EU, the fourth largest foreign market for U.S. agricultural products, has maintained a de facto moratorium on approvals of new GE crop varieties. In May2003, the United States, Canada, and Argentina began a formal challenge of the EU policy in theWorld Trade Organization (WTO), contending that it violates international trade agreements and alsohas fueled unwarranted concerns about the safety of agricultural biotechnology throughout the world(see page 9 ). The EU counters that it must protect its consumers by exercising the so-calledprecautionary approach, which says that if scientific evidence is insufficient or inconclusiveregarding a practice's or product's potential dangers to human or environmental health, it should bemore vigorously regulated or even prohibited if there are reasonable grounds for concern, thusproviding a safeguard against future unforeseen problems. Under this approach -- which is alsobeing emulated somewhat in other important U.S. markets such as Japan and South Korea, forexample -- the products of biotechnology are deemed to be inherently different than theirconventional counterparts. Even some countries that grow GE crops are imposing their own approval and labeling regulations for GMOs. For example, China is planting its own GE cotton and other crops, but hasimposed a temporary GMO import regime while it develops permanent new rules for approval andlabeling of GMO farm products. This has created uncertainty about continuing access to thisimportant U.S. export market. Some U.S. producers, who otherwise generally have supported biotechnology, have expressed trepidation about expansion to more GE varieties due to such foreign market uncertainties. Theirconcerns have been evident as biotechnology companies work toward government approvals of GEwheat. Although some growers are eager to plant the new varieties when they become available,others do not want commercialization approvals until there is wider global acceptance. (4) Wheatgrowers, too, depend heavily on exports; USDA reports that 56% of production is exported. Theaverage annual value of U.S. wheat exports was $3.6 billion (7% of all agricultural exports) inCY2000-2002. Around the world, countries have taken widely divergent approaches to regulating the products of agricultural biotechnology. Critics have noted that many, particularly in the developing world,have adopted no coherent policy at all. (6) Amongthose that do, each has its own system. Althoughmultilateral attempts to harmonize GMO regulation have been under way for several years,internationally recognized standards still are evolving. The disparity of national regulatory responses has been characterized as a "renationalization" of agri-food safety regulation, and "a sharp break from the international food safety system thatevolved over the past 100 years, where importers tended to accept the food and environmental safetyjudgments of regulators from those countries developing and exporting the products." (7) Others arguethat scientific knowledge about biotechnology's effects on food and environmental safety is stillincomplete. In the meantime, they argue, countries have a right and obligation to take the"precautionary approach" to regulation. Various countries' national biotechnology regulation isoccurring within two broad categories: Approval to commercialize new products of agricultural biotechnology. The United States,Canada, Japan, Mexico, Argentina, and South Africa are among the countries where developersseeking approvals of new GE products have found a relatively flexible regulatory environment. Tothis list might be added India and China, where considerable research has been conducted onagricultural biotechnology and domestic approvals appear to be increasing, but where, nonetheless,imports of GE crops may face obstacles. (8) InAustralia, the EU, and New Zealand, approvals haveslowed. A total of nearly 30 countries reportedly have developed relatively coherent (although inthe case of some countries, either somewhat ambivalent or not necessarily fully transparent) policieswith regard to GE approvals. Systems for labeling and traceability. In Argentina, Canada, Hong Kong, and the UnitedStates, labeling products as to whether or not they are from GE-derived crops generally is voluntary. However, the EU and more than 20 countries have either adopted, or announced plans for,mandatory labeling of GMO products. A number of them, for example, Australia, Brazil, China,Indonesia, Japan, New Zealand, Saudi Arabia, South Korea, and the United Kingdom (an EUmember), have formally implemented their mandatory labeling regimes. Many others, however,have not fully outlined their proposals or indicated when they might take effect; some also apparentlylack implementing structures. (9) Generally, mandatorylabeling also necessitates accompanyingtraceability requirements, meaning that the marketing system must have documentable ability totrace the presence or absence of GMOs through each step from farm to point of sale (see also page 10 ). The wide range of national approaches to GMO regulation is in part due to the fact that an international consensus on how to regulate agricultural biotechnology is still evolving. Agriculturalbiotechnology and trade policy analysts throughout the world generally agree that an internationalconsensus on how best to regulate agricultural biotechnology is not only desirable but necessary. Attempts have been under way for some years in a variety of multinational institutions to developmore harmonized standards for ensuring the safety of GE crops and foods, and to establish groundrules for testing, enforcement, and dispute resolution. It is not yet clear which of these internationalbodies will have the greatest influence in resolving these questions, although it appears likely thatmost, if not all, will have some role. The IFPRI/Phillips paper (see footnote ?) observed that "Despite the substantial effort being undertaken, there is no common view on the goal of international regulation. While most agree thatsafety is the bottom line, few can agree on what that means, whose opinions should hold the mostweight (scientists' or citizens'), or how to handle nonsafety issues such as social, economic, orethical concerns." A wide array of multinational bodies has, or claims, a role in some facet of biotechnology regulation and standard-setting (see Table 1 ). Several are longstanding and largely science-basedorganizations, including the U.N. World Health Organization (WHO), the U.N. Food andAgriculture Organization (FAO), the food standards-focused Codex Alimentarius Commission, theInternational Plant Protection Convention (IPPC), and the International Epizootics Organization(OIE). The WTO and the Organization for Economic Cooperation and Development (OECD) areprimarily (although not necessarily exclusively) concerned about free trade. Codex, for example, was created in 1963 by FAO and WHO to develop internationally recognized, science-based food standards and guidelines and related materials. Its main objectivesare to protect consumer health, ensure fair trade, and promote coordination of food standards workundertaken by governmental and non-governmental organizations. Codex standards are used toevaluate national food regulations and to settle sanitary and phytosanitary (SPS) related tradedisputes in the WTO. In 1999, the Codex established the ad hoc Intergovernmental Task Force on Foods Derived from Biotechnology. The task force was charged with considering health and nutritionalimplications, and with developing standards, guidelines or recommendations, as appropriate, for suchfoods. The task force held its fourth and final meeting in March 2003, when it completed work onthe last of three framework documents, Draft Principles for the Risk Analysis of Foods Derived fromRecombinant-DNA Microorganisms . The task force's documents were to be presented for approvalby the full Commission at its July 2003 meeting. U.S. officials expressed satisfaction with the outcome of the final session, althoughdeliberations over the guidelines often were contentious. At the last meeting, for example, an opendiscussion was held on rules for traceability of GE products. The EU led by France was advocatingthat they encompass rules for full traceability of GE products. The United States was arguing thattraceability is acceptable only for food safety/public health purposes, not merely to preserve theidentity of specific products, including those resulting from biotechnology. The U.S. view is thatthese types of questions should be considered in other Codex committees because they are notunique to biotechnology. (10) The 2000 Cartagena Biosafety Protocol is a newer, environmentally-focused effort devoted to the safe transfer, handling and use of bio-engineered products crossing international borders. TheUnited States is not a party to the Protocol but is participating to ensure that its provisions do notundermine such trade in GM-derived products (see page 11 ). Table 1. Multinational Institutions Involved inBiotechnology Sources: IFPRI; USDA. Agricultural biotechnology was not a major element of international trade during the last comprehensive round of multilateral trade negotiations and therefore is notdirectly addressed in the 1994 Uruguay Round (UR) agreements. However, the U.S.position has long been that the UR Agreement on Agriculture, the Agreement on theApplication of Sanitary and Phytosanitary (SPS) Measures, and the TechnicalBarriers to Trade (TBT) Agreement provide adequate guidance for dealing with tradein GMOs. Taken together, these agreements seek to reduce or eliminate allunnecessary or arbitrary barriers to trade, and ensure that SPS or technical measures(e.g., GMO labeling) are transparent, scientifically defensible, and based on acceptedinternational standards. (11) The U.S. proposal inthe current Doha round ofnegotiations in the WTO is silent on biotechnology itself but presumes a continuationof this position. U.S. officials say they are actively engaged multilaterally and bilaterally toensure that any national or international standards are consistent, transparent, basedon scientific principles, and compliant with international trade rules (e.g., thoseadministered through the WTO). However, they face difficulties in reconciling thecurrent U.S. approach with the opposing perspectives of other influential countrieslike those in the EU and elsewhere. Following are discussions of selected issues inthe international arena which have challenged U.S. supporters of agriculturalbiotechnology. On May 13, 2003, the U.S. Trade Representative (USTR) and the U.S. Secretary of Agriculture announced that the United States, Canada, Argentina, and Egypt werefiling a case before the World Trade Organization against the EU's de facto 5-yearmoratorium on approving new agricultural biotechnology products. (Egyptsubsequently decided against filing with the United States.) The Administration wasunder increasing pressure from key Members of Congress and farm groups to launchsuch a case. U.S. agricultural interests contend that not only have these policiesblocked their exports to the EU, but also fueled unwarranted concerns about thesafety of agricultural biotechnology throughout the world. EU officials say they have been moving as quickly as possible to reinstate biotechnology approvals while trying to reassure their consumers regarding safetyissues. There is concern among some policymakers that the filing of a WTO casewill only escalate trade tensions between the United States and the EU, where thevalue of two-way agricultural trade amounts to more than $14 billion annually. Background. With minor exceptions, the EU has approved no agricultural biotechnology products since 1998, even thoughit has an elaborate approval process in place, and, in October 2002, implementedrevisions to that process aimed at reassuring its member states and the public aboutthe safety of its regulatory system. Approximately 13 products in early 2003 wereawaiting approval, some for as long as 6 years. A majority of EU states haseffectively blocked the release of any new GE crops into the environment. Thesestates -- France, Belgium, Luxembourg, the Netherlands, Germany, Austria, Italy,Ireland, Greece, Spain, Portugal, and Finland -- say they will not implement theEU-wide legislation for approvals until new, stricter, regulations for labeling andtracing GM-containing products also are adopted. Although the EuropeanCommission first approved these separate proposals in July 2001, the lengthy EUdecision-making and implementation process make it unlikely that these proposalswill come into force any earlier than some time in 2004. In the 3 years before the de facto ban, U.S. corn exports to the EU averaged approximately $300 million annually (Spain and Portugal were the largest EUimporters). Since then, they have declined to less than one-tenth of that valueannually -- the result, according to analysts, of the EU's moratorium on the approvalof new corn varieties already approved in the United States. Although one varietyof biotech corn was approved by the EU prior to the moratorium, other approvedvarieties are being grown in the United States, making exports of any U.S. corn(which is not separated as to GM or non-GM varieties) to the EU impractical. U.S.soybean exports to the EU have declined, too, from an average value ofapproximately $2.2 billion in the 3 years before the ban to about $1.2 billion annually (2000-2002), according to USDA data. Unlike biotech corn, only onevariety of biotech soybeans has been widely grown in the United States; the EU hadapproved this GE crop under its regulatory process prior to the moratorium. (The EUalso had approved a number of other GMOs prior to the 1998 moratorium.) The WTO Case. The U.S.-led case began with a request for 60 days of formal consultations with the EU. In addition tothe three main filers, Australia, Chile, Colombia, El Salvador, Honduras, Mexico,New Zealand, Peru, and Uruguay expressed their support for the case. On June 19,2003, a USTR spokesman issued a statement announcing that the consultations werenot successful, and that the WTO will now be asked to establish a dispute settlementpanel, the next step. At any rate, resolution of the dispute could take up to 18months. The United States and its allies argue in part that the EU moratorium violates the WTO Agreement on the Application of Sanitary and Phytosanitary (SPS)Measures. The SPS agreement permits countries to regulate crops and food productsto protect health and the environment, but their rules must be scientifically justifiedand approval procedures must be operated without undue delay. U.S. interestscontend that there is no scientific evidence that GM-derived food and feed crops aresubstantially different from, or any less safe than, conventional varieties, a conclusionthey say even European scientific authorities have reached. The moratorium has notonly impacted U.S. exports to the EU, but also caused other countries -- particularlyin the developing world -- to shun biotechnology, which, the United States hasargued, holds great promise for vastly improving agricultural productivity andfeeding growing populations (see also page 12 ). EU officials counter that they have shown good faith in moving as quickly as possible to restart the approval process. In early April 2003, the EC threatened totake legal action at the European Court of Justice against the 12 member states if theyfail to implement the GE approval legislation once the new labeling and tracing rulesare approved. Nonetheless, EU officials have told the United States that theircautious approach to regulating agricultural biotechnology is necessary to restoreconfidence among European consumers, who may be more wary of changes in howtheir food is produced due to a series of recent food safety crises. (13) It is unclear how a WTO dispute panel might rule on the U.S.-EU case, in part because agricultural GMOs are not explicitly recognized in the Uruguay Round tradeagreements, which were concluded before the advent of widespread agriculturalbiotechnology. If the United States wins, it would validate the basic principles of theSPS agreement and could discourage other countries from emulating the EUregulations. The United States has pointed out that many EU farmers themselveswould like to be planting and selling GE crops. However, a win might not open EUmarkets to more GE imports; the United States might simply have to settle for someform of alternate compensation. Some have suggested that a win could create abacklash among the European public and governments who view the United Statesas forcing biotechnology on unwilling consumers. As noted, a number of foreign markets for U.S. farm products have been developing systems that will require most or all GE-derived products to be labeledas to their GE content. In the U.S.-EU biotechnology dispute, the U.S.-led WTOchallenge to the EU moratorium on GM approvals does not involve the emerging EUlabeling regulations. These regulations, if approved as proposed, would require allfood, feed and processed products from GMOs to be labeled, even if they no longercontain detectable traces. A tolerance level for non-GMO foods, feeds, andprocessed products of 0.9% is set for allowable "adventitious presence" (AP) -- thatis, unintended, low-level presence -- of an EU-approved GE substance. All productswith more than 0.9% must be labeled as GM. The allowable level for unapprovedGE varieties that received a positive EU risk assessment during the moratorium is0.5% for 3 years, after which it drops to 0%. (The current EU regime requireslabeling if ingredients contain more than 1% GMO protein or DNA.) U.S. officials so far have challenged formally only the EU moratorium, but asimilar effort against the labeling and traceability rules is possible in the future. U.S.agricultural interests argue that, even if the GMO approval moratorium is lifted, thenew labeling and traceability rules are themselves unworkable and unnecessary, andwill continue to discriminate against U.S. exports. Compliance with the EU labelingrule would require segregation of GE crops and foods derived from them from thetime they are planted all the way through the processing and marketing chain. Thiswould entail prevention of pollen drift from GE to non-GE fields; and difficult andcostly handling procedures such as using separate equipment, storage, and shippingcontainers, or at least painstakingly cleaning them. U.S. interests argue that foodcompanies forced to label accurately all GE products could face huge risks andliabilities. All of these problems would discriminate against U.S. shipments, theyadd. Material from Virginia Cooperative Extension asserts: Segregating crops at every step during growth, storage, transportation, processing, and exporting would be very difficult andcostly to implement. Dr. Susan Harlander, a former vice president of PillsburyCompany, illustrated the situation with the following example: a medium-sized foodcompany can have more than 6,000 products that contain 8,000 ingredients from1,000 suppliers that move through 30 processing plants on their way to beingexported to as many as 100 countries. Implementing a system to track all of theseingredients from their source (as far back as the farm) to the final destination is adaunting task that would cost billions of dollars and even then it may not beinfallible. (14) According to Virginia Extension, among the issues to be resolved on labeling and detection of GE material in crops and foods are: the scientific methods used toscreen the product; the sensitivity of the detection system; what would actually bedetected (DNA or protein); what agency would manage and regulate the testing; andwho would be held accountable if a product were mislabeled. The Cartagena Biosafety Protocol, an outgrowth of the 1992 Convention on Biological Diversity (CBD), was adopted in January 2000 and will take effect thisyear, now that the required 50 nations have ratified it. The United States is not aparty to the 1992 CBD, and therefore cannot be a party to the Protocol. However, ithas actively participated in the negotiations over the Protocol text and in countries'preparations for implementation. The Protocol addresses a major area of concern not resolved by the parent CBD in 1992 -- the safe handling, transfer and transboundary movement of bio-engineeredorganisms and products. It enables countries to obtain information about biotechorganisms (i.e., "living modified organisms" or LMOs) before they are imported intothose countries. It recognizes each country's right to regulate such organisms so longas they are consistent with existing international agreements, and provides for aninternational clearinghouse for the exchange of LMO information. The Protocol establishes the use of "Advance Informed Agreements" (AIA) between the importing and exporting parties that cover the first transboundarymovement of any GMO. The purpose of AIAs is to ensure that recipient countrieshave the opportunity to assess environmental risks associated with the importationof biotechnology products. The Biosafety Protocol creates the procedure by requiringexporters to seek consent from importers before the first shipment of a GMO isintroduced into the environment (applies to seeds for planting, fish for field release,and microorganisms for environmental bioremediation). In addition, article 11 alsorequires that bulk shipments of GMO commodities for food, feed, or processing beaccompanied by declarations stating that such shipments "may contain" GMOs andare "not intended for intentional introduction into the environment." One section of the Protocol states that "Lack of scientific certainty due to insufficient relevant scientific information and knowledge regarding the extent of thepotential adverse effects of a living modified organism on the conservation andsustainable use of biological diversity in the Party of import, taking also into accountrisks to human health, shall not prevent that Party from taking a decision, asappropriate, with regard to the import of that LMO ... in order to avoid or minimizesuch potential adverse effects." Defenders of the application of this approach(essentially the "precautionary principle") maintain that it is only "a temporarymechanism" that gives time for scientific inquiry. Policymakers in Europe recognize,as do those in the United States, the need for an assessment of risks based onaccepted scientific facts. However, critics worry that adopting the precautionaryprinciple in formal agreements like the Protocol may create false public expectationsof absolute safety and the demand for zero environmental risks. Further, some criticsmaintain, the precautionary approach can be used as disguised protectionism -- asthey say already has occurred on the part of the EU in blocking U.S. beef importscontaining growth hormones and in delaying approvals of new GMOs. Implementation of the AIAs, and of provisions on documentation that countries can require for GMOs and GM-containing shipments, also are of major concern tothe United States and other GMO exporters. Government and industry officials fromthe exporting countries have been meeting with each other, and with the ratifyingcountries, to ensure that bulk grain shipments, processed foods, and other trade inproducts that may contain GMOs are not disrupted due to confusing, repetitive, orinconsistent new requirements, shipping delays, burdensome paperwork, and the like. Six countries in southern Africa -- Lesotho, Malawi, Mozambique, Swaziland, Zambia, and Zimbabwe -- are experiencing continuing severe food shortages. In2002, the United Nations World Food Program (WFP) announced an appeal for foodaid to meet the needs of some 14 million people in the six countries. However,provision of food aid to meet the needs of food-short people in the region has beenmade more difficult and costly by a debate over the presence of genetically modifiedcorn in U.S. food aid shipments. Some of the countries expressed reluctance toaccept GE corn on account of perceived environmental and commercial risksassociated with potential introduction of GE seeds into southern Africa agriculture. One, Zambia, refused all shipments of food aid with GE corn out of health concernsas well. A concern of the southern Africa countries is that corn contained in U.S. food aid shipments could be planted either accidentally or intentionally by African farmersand damage future trade with the European Union. Introduction of geneticallymodified corn into their food systems could mean that crops grown for export or usedin livestock feed would contain genetically modified components. As noted, the EUhas approved and permits imports of genetically modified soybeans, but has not yetapproved imports of most varieties of genetically modified corn. The EU is expectedsoon to put in place a system of tracing and labeling of food products as to their GEcontent. While livestock products will be exempted from such labeling, some of theAfrican countries express fears that EU consumers already antipathetic to GE foodswill reject meat products that might have been produced from animals fed GE grain. The governments of Zimbabwe and Mozambique have accepted U.S. food aidshipments of corn only if it is milled prior to distribution. Malawi has requested thatcorn be milled, but according to the U.S. Agency for International Development(USAID), is allowing distribution of whole grain corn due to limited millingcapacity. Swaziland and Lesotho have expressed reservations about food aidshipments of GE corn, but are accepting them. Only Zambia has rejected any foodaid containing bio-engineered grain. The United States has blamed EU policies for southern Africa countries' views on food aid containing GE products. President Bush, for example, has stated that EUgovernments, because of their policies on GE products, are hindering the cause ofending hunger in Africa. (16) The United Statesmaintains that genetically modifiedcrops are safe to eat; and that there is little likelihood of GE corn entering the foodsupply of African countries for several reasons, including the fact that bio-engineeredvarieties of corn are not well adapted to African growing conditions. (17) Relatedly, there is considerable debate over the potential contribution of biotechnology to food security and agricultural development in developing countries. Critics of biotechnology argue that the benefits of biotechnology in developingcountries have not been established and that the technology poses unacceptable risksor problems for developing country agriculture. (18) They argue that bio-engineeredcrops could adversely affect the health of consumers and that genetically engineeredcrops pose unacceptable environmental risks for agriculture in developing countries. Critics suggest that intellectual property rights (IPR) protection impedes developmentand dissemination of GE crops in developing countries and also gives multinationalcompanies control over developing country farmers. Proponents, however, say thatthe development of GE technology appears to hold great promise, with the potentialto complement other, more traditional research methods, as the new driving force forsustained agricultural productivity in the 21st century. They maintain that GE foodsare safe to consume, that environmental risks are both negligible and manageable,and that IPR difficulties have been exaggerated. (19) Members of the House and Senate Agriculture, House Ways and Means, HouseScience, and Senate Finance Committees are among those in the 108th Congress whoare closely monitoring biotechnology developments in the international arena, as wellas the Administration's response. If this Congress follows the lead of itspredecessors, it is more likely to be supportive of agricultural biotechnology ininternational trade than to seek constraints on GE commodities traded internationallyand domestically. For example, the Senate on May 23, 2003, passed, by unanimousconsent, a resolution ( S.Res. 154 ) supporting the U.S. action against theEU; a similar House measure ( H.Res. 252 ) was passed June 10, 2003,by a suspension vote of 339-80. Separately, H.R. 2447 , introduced June12, 2003, would establish a federal interagency task force, composed of seniorAdministration officials, to promote the benefits, safety, and uses of agriculturalbiotechnology The House Agriculture Committee held a hearing on March 26, 2003, where the theme was the EU's moratorium on GMO approvals and its possible influence ondecisions by developing African countries to reject or delay U.S. food aid. (20) TheHouse Science Subcommittee on Research held a hearing on June 12, 2003, toexamine plant biotechnology research and development challenges and opportunitiesin Africa. Earlier, the 107th Congress included biotechnology provisions in the 2002 farm bill ( P.L. 107-171 ) including: a biotechnology and agricultural trade program, aimedat barriers to the export of U.S. products produced through biotechnology (Section3204); competitive grants for biotechnology risk assessment research (Section 7210);agricultural biotechnology research and development for developing countries(Section 7505); and a program of public education on the use of biotechnology inproducing food for human consumption (Section 10802). In addition, legislation thatgives the President Trade Promotion or "fast track" authority ( P.L. 107-210 ) containslanguage providing that U.S. trade negotiators should seek to negotiate rules anddispute settlement procedures that will eliminate unjustified restrictions andrequirements, including labeling, of biotechnology products. Bills also were introduced in the 107th Congress that took other approaches to regulating agricultural biotechnology, and some could reappear in the 108th. Theyincluded H.R. 4814 , which called for mandatory labeling of GE foods;and other bills in the 107th ( H.R. 4812 , H.R. 4813 , and H.R. 4816 ) which dealt respectively with legal issues raised bycross-pollination with GE plants, a study of the safety of GE foods, and liability forinjury caused by GE organisms. No comparable bills had been introduced as of earlyJune 2003. Responsibility for biotechnology trade issues and activities is shared by numerous federal agencies and departments. Officials who deal with them on aday-to-day basis say they communicate often, either individually or in workinggroups, to share information, resolve jurisdictional questions, and coordinate efforts. As more difficult or controversial trade-related issues arise, officials from relevant agencies may meet at successively higher levels to discuss how to formulateand implement a policy response. According to U.S. officials, years of experience-- along with established statutory authorities and the 1986 Coordinated Framework-- have provided them with a strong, if somewhat tacit, understanding on how theywill handle any given problem, including which agency should take the lead role. Such experience has fostered an increasingly coordinated, if not yetwidely-enunciated, formal approach to biotechnology trade policy, several U.S.officials argued. Nonetheless, some agencies are more prominent than others. The Office of the U.S. Trade Representative (USTR) is generally regarded as the lead agency onbiotechnology trade issues as part of its overall mandate to coordinate U.S. tradepolicy, including negotiating trade agreements and dealing with major disputes. USTR leads the U.S. delegation of agency representatives at quarterly SPS and TBTmeetings convened by the WTO, where biotechnology matters generally are covered.Back home, biotechnology questions pass through the USTR staff-level offices thathandle agricultural, SPS, and TBT matters. USTR convenes and coordinates aninteragency SPS Trade Policy Staff Committee consisting of representatives fromagencies throughout government. This committee meets frequently, but on an"as-needed" basis, on biotechnology trade issues, some of which may arise fromongoing bilateral or multilateral negotiations, and others from disputes with tradingpartners. USTR also convenes a higher-level SPS Trade Policy Review Group,composed of more senior agency officials, to discuss and resolve more controversialSPS questions, including those on biotechnology. (22) However, other agencies take the lead on specific biotechnology issues. The State Department, for example, is at the forefront in dealing with countriesimplementing the Cartagena Biosafety Protocol. FDA, supported by USDA's FoodSafety and Inspection Service (FSIS), leads on Codex matters (see Table 1 ). On occasion, particularly thorny issues and/or jurisdictional disputes must be resolved at the White House level, which ultimately decides overall U.S.biotechnology policy with input from its Office of Science and Technology Policy(OSTP). The President's Special Assistant for Agricultural Trade and Food Aid, anda biotechnology working group composed of high-level officials under the aegis ofthe White House National Economic Council (NEC), periodically may be calledupon to discuss or referee such issues. The National Security Council also has beeninvolved in discussions, e.g., those concerning whether to challenge formally the EUover its de facto moratorium on new GMO approvals. Some critics assert that the U.S. response to biotechnology remains largely reactive, ad hoc, and not well coordinated. Thus, on any issue, jurisdictionaldiscussions may precede substantive action, they contend, arguing that a morecomprehensive long-term strategy is needed. The Biotechnology IndustryOrganization (BIO) has reported on its website that USTR has circulated amonginterested agencies a draft paper spelling out such a strategy. However, as of earlyJune 2003, the paper had not emerged publicly. (23) Biotechnology issues and activities, including international ones, are addressed both at the departmental level (across agencies) and within the various agenciesthemselves. USDA's Biotechnology Coordinating Committee is a staff-levelinteragency group that has met periodically to share information and work onbiotechnology issues of mutual concern (both domestic regulatory as well astrade-related matters). A higher-level Biotechnology Policy Group is convened atleast several times monthly by the Secretary of Agriculture's special counsel on tradeto discuss policy, receive updates, and map plans for upcoming interdepartmental andinternational meetings. Secretary of Agriculture Ann Veneman, on April 8, 2003,named 18 people to a new Advisory Committee on Biotechnology and 21st CenturyAgriculture (authority for a previous advisory committee expired in 2001). Elevenof the members represent agribusiness companies or agricultural producer groups;the rest are from academia or consumer advocacy organizations. Section 3204 of the 2002 farm bill ( P.L. 107-171 ) created a new Biotechnology and Trade Program to provide grants for public and private sector projects that willaddress nontariff barriers to U.S. agricultural exports involving biotechnology, foodsafety, disease, or other SPS concerns; or that will develop, through bilateralnegotiations, protocols on animal health, grain quality, and GMOs. The measureauthorizes appropriations of up to $6 million annually through FY2007. USDA's FY2004 budget proposal recommends new funding of $6.6 million and 20 new staff positions "to support a number of important cross-cutting, trade-relatedand biotechnology activities of the Department and to ensure that adequate funds areavailable to address them effectively." Of this amount, $2.1 million would bespecifically for work on GMO trade issues, presumably approximately a third of theauthorized funding under Section 3204. Of this amount, $600,000 would be for theForeign Agricultural Service's new biotechnology unit (see below), and the other$1.5 million for U.S. activities in other countries, according to a Departmentofficial. (24) (Congress had not yet acted on theFY2004 USDA appropriation bymid-June 2003.) The budget documents note that USDA "faces a growing array ofchallenges related to biotechnology, including a rapidly expanding number ofregulatory, market access, and trade barrier issues." The funds would be appropriateddirectly to the Secretary to provide her with flexibility in allocating them amongvarious agencies. At the agency level, the Foreign Agricultural Service (FAS) facilitates and promotes agricultural trade, including trade in the products of biotechnology. FASactivities include education, training, technical assistance, and issue resolution. Inrecent years, FAS attention has been shifting increasingly from biotechnologycapacity building (e.g., technical assistance on the science and application ofbiotechnology in agriculture), to monitoring and dealing with foreign regulatorypolicies and restrictions on trade in GMO products. FAS programs include: (25) An Overseas Biotech Training/Education Program involving seminars, symposia, and educational materials on various biotechnology issues aimedat foreign educators, public officials, and others; Cochran Fellowship Program Biotechnology Training, offeringshort-term U.S. training for foreign scientists, regulators, journalists, andpolicymakers, to provide information about the technology's benefits and about U.S.regulation; Biotechnology Short Courses, a new series of quarterly,two-week programs in the United States for foreign participants intended primarilyto impart "biotechnology's relationship to market access and trade in agriculturalproducts, and the factors influencing that relationship"; Capacity Building for the Seed Trade Industry to expand seedtrade with Eastern Europe, Africa, and Asia; Biotechnology Research Capacity Building, supporting thedevelopment of science-based research and regulatory programs and promotingglobal food security, particularly in developing and newly emergenteconomies; Biotechnology Activities With International Organizations,utilizing a variety of approaches like briefings staged at multinational meetings (e.g.,at Codex and at the Rome World Food Summit in 2002) and at regionalworkshops. FAS generally convenes a USDA interagency team weekly to review SPS and TBT problems in agricultural trade, including those in GE products; is involved indeveloping policy on matters requiring higher-level decisions; and leads oraccompanies other agency officials on overseas missions to discuss and resolveissues. FAS staff have long been engaged in biotechnology trade issues, but generally not on a full-time basis. Seeking to improve its focus and work, the agency in 2002established a new Biotechnology Office reporting to the Administrator and AssociateAdministrator. The office hopes to have 10 full-time staffers on board by August2003 organized around four teams devoted exclusively to biotechnology work:bilateral relations in Asia and the Americas; bilateral relations in Europe, the MiddleEast, and Africa; international organization work (e.g., with WTO, FAO, etc.); andone devoted to technical assistance, capacity building, and outreach. USDA's Animal & Plant Health Inspection Service (APHIS) regulates the movement, testing, and commercialization of new GE crop varieties (and GEveterinary biologics) in the United States. In addition, as the lead federal agencyregulating commodity imports and exports, APHIS works to minimize tradedisruptions caused by animal and plant health issues, including those related tobiotechnology. APHIS staff participate, and sometimes take the lead, in U.S.negotiations with trading partners and in multinational forums to resolve SPS-relateddisputes and to harmonize international standards, to ensure that such issues are notused as unfair barriers to trade. An increasing share of APHIS harmonization work revolves around trade in GE products. The agency has sought both to ensure that international biotechnologypolicies are science-based, and to promote the global credibility of the U.S. GEregulatory process. It is involved in Codex, IPPC, OIE, the Cartagena Protocol, andthe OECD, among other organizations, and is in ongoing negotiations with Canadaon harmonization, which led recently to a draft bilateral agreement on environmentalassessment criteria for transgenic plants. In FY2002, APHIS consolidated itsbiotechnology personnel under a single new office, Biotechnology RegulatoryServices, covering both domestic regulatory activities; and international trade, policy,and capacity building. The office was assigned 46 staff slots in FY2002. (26) The Federal Grain Inspection Service of USDA's Grain Inspection, Packers & Stockyards Administration (GIPSA) spells out official grain quality standards,establishes standard testing methodologies, and, for a fee, tests grain (a requirementfor most exports) to ensure they meet such standards. GIPSA has articulated abiotechnology program in response to the "emergence of value-enhanced grains andoilseeds, development of niche markets for non-biotech commodities, andestablishment of new regulatory requirements by U.S. trading partners [which] hascreated a need for greater product differentiation in the marketplace." (27) GIPSA has been evaluating the performance of tests to detect the presence of GMOs in grains and oilseeds and offering a proficiency program for organizationstesting for biotechnology-derived grains and oilseeds to improve reliability. Theagency also has developed sampling guidelines for the industry, among otherservices. GIPSA itself has not been testing for GMOs in shipments, except for thepresence of StarLink TM corn, as a voluntary fee-based service. (28)

U.S. farmers have been rapidly adopting genetically engineered (GE) crops -- mainly corn, soybean, and cotton varieties -- to lower production costs and improve management. However, theU.S. agricultural economy is highly dependent upon exports, at a time when many foreign consumersare wary of the products of agricultural biotechnology. As a result, U.S. exporters often haveencountered barriers to trade in these markets. Among the most controversial barriers is in the European Union (EU). The EU, the fourth-largest foreign market for U.S. agricultural products, since 1998 has maintained a de factomoratorium on approvals of new GE crop varieties. In May 2003, the United States launched aformal challenge of the EU policy, contending that it both violates international trade agreementsand causes unwarranted concerns about the safety of agricultural biotechnology throughout theworld. The EU and other important U.S. trading partners around the world have adopted widely divergent approaches to regulating biotechnology. The wide range of approaches to GE productregulation is in part due to the fact that an international consensus on how to regulate agriculturalbiotechnology is still evolving. U.S. officials say they are active globally to ensure that national andinternational standards for genetically modified organisms (GMOs) are consistent, transparent, basedon scientific principles, and compliant with international trade rules (e.g., those administered throughthe World Trade Organization). For example, they have been working to ensure that the so-calledCartagena Biosafety Protocol, a multilateral agreement on the safe handling, transfer, andtransboundary movement of living modified organisms, does not present new obstacles to U.S.exports of such products. Another issue involves recent difficulties in moving U.S. food aid to certain African countries due to what U.S. officials said were unwarranted, EU-provoked concerns that such aid's possible GEcontent could pose safety problems for recipients. Debate also revolves around the potential benefitsand problems of introducing GE crops to developing countries. Congress continues to follow these issues closely. For example, a number of leading lawmakers pressed hard for the Administration to aggressively challenge the EU moratorium. Following theAdministration's decision to do so, the Senate and House passed resolutions ( S.Res. 154 ; H.Res. 252 ) in support of the action. Several House hearings have been held toreview barriers to the adoption of, and trade in, GE agricultural products; and to review challengesand opportunities for plant biotechnology development in Africa. Additional hearings are possible. Whether the 108th Congress will consider other legislation affecting agricultural biotechnology wasuncertain in June 2003. This report will be updated if events warrant.

Under the United States Constitution, Congress has little direct authority to legislate in the field of domestic relations. Generally, state policy guides these decisions. Despite the lack of direct authority to legislate domestic relations issues, Congress continues to utilize a number of indirect approaches to enact numerous federal laws which impact on family law questions. The Constitution's framers felt that states, rather than the federal government, should maintain jurisdiction over most family law questions. Thus, the final document reflects that view. As summarized by the Supreme Court in Hisquierdo v. Hisquierdo : Insofar as marriage is within temporal control, the States lay on the guiding hand. "The whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States." In re Burrus , 136 U.S. 586, 593-94 (1890).... On the rare occasion when state family law has come into conflict with a federal statute, this Court has limited review under the Supremacy Clause to a determination whether Congress has "positively required by direct enactment" that state law shall be preempted. Wetmore v. Markoe , 196 U.S. 68, 77 (1904). Thus, the individual states have the primary authority and responsibility to legislate in the domestic relations arena, which includes incidents of marriage, divorce, and child welfare. The rationale behind this approach is the lack of overriding national considerations in the family law area. Therefore, states generally have the freedom to legislate as they see fit on these questions. However, states' freedom to legislate has led to substantial variation between the individual states on many of these topics, although more uniformity now exists than at any time in the past. Thus, similarly situated spouses, parents and children may have different legal options depending on where they reside. For example, the community property concept of marital property adopted by nine states is quite different from the common law property system in the other forty-one states. While all states have some form of no-fault divorce, based either on grounds such as "irreconcilable differences" or some period of separation, many authorize divorces based on fault or consider marital fault as a factor when awarding spousal support or dividing marital property. In addition, states have varying rules regarding the "who, what, when and where" of marriages and/or divorces. Adoption is another area in which states have diverse regulations. For example, state statutes concerning the eligibility of homosexuals to adopt range from Florida's statutory prohibition to Mississippi's statute barring adoption by same-sex couples to Utah's prohibition on unmarried couples, heterosexual or homosexual, from adopting. In addition, states have different statutes regarding the rights of adopted adults, birth parents, adoptive parents, birth siblings and birth relatives to gain access to identifying and non-identifying information about the adoptee or birth relatives. For example, a few states permit adoptees to gain access to their birth and/or adoption records, but most require a court order issued for "good cause" (usually a medical crisis or some comparably serious situation) before unsealing such information. Although many states use similar procedures, the laws and processes surrounding access in any one state are unique. During the first half of the twentieth century, numerous constitutional amendments were proposed which, if adopted would have authorized Congress to enact uniform national marriage and divorce laws. However, none of these proposals received the requisite two-thirds vote of each House of Congress necessitating submission to the states for ratification. This approach now appears disfavored , in part due to a continuing view that the federal government should refrain from intervening in most family matters and in part because other approaches (all discussed infra ) have led, or have the potential of leading, toward the same result in those areas where uniformity is thought desirable. For example, the National Conference of Commissioners on Uniform State Laws (NCCUSL), a non-governmental entity, has proposed uniform laws on a number of family law topics, many of which have been widely adopted by the states. A more expansive view of congressional power to legislate under its commerce clause authority has led to federal legislation such as the Parental Kidnapping Prevention Act (PKPA), which authorizes federal intervention into certain custodial interference cases where applicable state law classifies such action as a felony. Also, Congress has enacted legislation under the Full Faith and Credit Clause. Legislation under this clause directs sister states to give full faith and credit to child custody, child support and protection orders of other states. Congress passed the Defense of Marriage Act (DOMA), which permits sister states to give no effect to the law of other states with respect to governing same-sex marriages. Congress has also established a number of funding programs whereby states must comply with detailed requirements in such areas as child abuse and the adoption of hard-to-place children before they can receive federal money to help deal with these problems. This report discusses the extent to which Congress is constitutionally authorized to legislate on family law questions, and includes examples of present laws utilizing the various approaches available in this area. There are generally applicable constitutional principles which limit the authority of all governmental entities (federal, state, and local) to legislate on family law questions. The Fourteenth Amendment's Due Process Clause has a substantive component which "provides heightened protection against government interference with certain fundamental rights and liberty interests," including parents' fundamental rights to make decisions concerning the care, custody, and control of their children. Although the Constitution does not specifically mention a fundamental right to privacy, courts recognize this right to encompass contraception, abortion, marriage, procreation, education (elementary level) and interpersonal relations. These aspects broadly termed "private family life" are constitutionally protected against government interference. As such, a governmental entity must demonstrate a compelling interest to regulate or infringe on an individual's fundamental right. As summarized by the Supreme Court in Moore v. City of East Cleveland : "This Court has long recognized that freedom of personal choice in matters of marriage and family life is one of the liberties protected by the Due Process Clause of the Fourteenth Amendment." Cleveland Board of Education v. LaFleur , 414 U.S. 632, 639-40 (1974). A host of cases, tracing their lineage to Meyer v. Nebraska , 262 U.S. 300, 399-401 (1923), and Pierce v. Society of Sisters , 268 U.S. 510, 534-35 (1925), have consistently acknowledged a "private realm of family life which the state cannot enter." Prince v. Massachusetts , 321 U.S. 158, 166 (1944). The LaFleur decision struck down various local maternity leave rules which required pregnant teachers to begin leave at specified stages of their pregnancies and not to return to work until some specified point in the school year after their children were born or attained a certain age. Meyer and Pierce invalidated statutes which were held to interfere with parents' right to educate their children as they see fit; the Meyer statute prohibited instruction in foreign languages before the eighth grade, while the statute in Pierce required children to attend public schools. Moore stuck down a local ordinance that specified which members of extended families could reside together in common households—in the particular household which formed the basis for the suit, two grandchildren could have legally resided with their grandmother under the ordinance were they siblings, but were prohibited from doing so because they were first cousins. The Court noted that while the family is not beyond regulation, "when government intrudes [into family matters], this Court must examine carefully the importance of the governmental interests advanced and the extent to which they are served by the challenged regulations." In Griswold v. Connecticut , the Supreme Court recognized an additional tenet of privacy: the right of married couples to use contraceptives. The Court extended this right to minors, married or unmarried, in Carey v. Population Services International. Also, In Roe v. Wade , the Supreme Court substantially limited governmental authority to regulate abortions, holding that a mother's personal privacy right prevented a state from intervening at the first trimester of pregnancy, and permitted intervention during the second trimester only as needed to protect the mother's health. The Court reasoned that a state's interest fails to become compelling enough to justify extensive regulation until a fetus becomes viable, at approximately the end of the second trimester. This ruling was clarified, but retained in three companion cases decided in 1983: Akron Center for Reproductive Health, Inc. v. City of Akron ; Planned Parenthood Association of Kansas City, Missouri, Inc. v. Ashcroft; and Simopoulous v. Virginia . In 1992, the Supreme Court reaffirmed Roe ' s essential holding that before viability of the fetus, a woman has the right to choose to have an abortion and has the right to obtain an abortion without undue interference from the state. In Planned Parenthood of S.E. PA v. Casey , the Court held that a statute requiring spousal notification before a woman could have an abortion constituted an undue burden, thus violating the due process clause of the Fourteenth Amendment. However, the remaining four challenged aspects of the Pennsylvania Abortion Control Act of 1982 were found to be constitutional and not undue burdens. The Court held valid: (1) the act's definition of a "medical emergency," a condition warranting exemption from the act's other limitations; (2) record keeping and reporting requirements imposed on facilities that perform abortions; (3) an informed consent and 24-hour waiting period requirement; and (4) a parental consent requirement, with the possibility for a judicial bypass. A right to marry has also been judicially accepted as a guarantee of due process. Thus, the Court struck down miscegenation statutes in Loving v. Virginia, finding that the state lacked a compelling interest in prohibiting persons from marrying based solely on their race. The Equal Protection Clause is another constitutional limitation on governmental entities' authority to legislate on domestic relations issues. When legislation or government policy discriminates between classes or deprives a group of a particular right, the level of scrutiny applied under an equal protection challenge turns on the nature of the group allegedly discriminated against. As a general rule, courts will uphold the challenged governmental action if the classification drawn by the statute is rationally related to a legitimate state interest. For example, states can legislate to protect minors, prevent close relatives from marrying, require blood tests before marriage and impose other marriage restrictions so long as the restrictions are reasonably related to a valid state interest. Where the statute targets a quasi-suspect class, namely those based upon gender or illegitimacy, a heightened level of scrutiny applies. Under this intermediate scrutiny test, the statute is presumed invalid unless it is substantially related to a sufficiently important governmental interest. For example, in Orr v. Orr , the Supreme Court applied this standard and found a statute which imposed alimony obligations on husbands, but not on wives unconstitutional as violative of the Equal Protection Clause. However, where a statute targets a suspect class, including race, alienage, or national origin or burdens a fundamental right, the statute in question will only be sustained if it is narrowly tailored to serve a compelling state interest. Under this standard, the Court has stuck down statutes in Eisenstadt v. Baird and Skinner v. Oklahoma as violative of the Equal Protection Clause. Conversely, in Nguyen v. INS , the Supreme Court found a statute which provided different rules for attainment of citizenship depending upon whether the one citizen parent was the father or mother, did not violate the Equal Protection Clause. One instance where these arguments have been unsuccessful involves adult adoptees seeking to obtain information on their birth parents. Such adoptees have advanced both personal privacy and equal protection claims when challenging closed records statutes. However, courts consistently ruled that the privacy rights of the birth parents, as well as the state's interest in maintaining a smoothly-functioning adoption system (parents might become reluctant to place children for adoption if they thought the children would later seek them out), justify these laws. However, the Supreme Court has yet to rule on this question so the issue of closed records statutes remains unsettled. As opposed to the general constitutional restraints discussed above, Article I, Section 8, of the Constitution, the enumerated powers clause, limits congressional authority to act by specifying general subject categories where federal action is permissible. These categories encompass those topics the Constitution's framers thought could best be handled on the national level, such as war-making and defense, interstate and foreign commerce, coinage and currency, the post office, bankruptcies, copyrights, and the judicial system. Under this clause and the Tenth Amendment, categories other than those enumerated are reserved for state action. These enumerated powers do not readily encompass most family law questions. As such, federal legislation in this area is usually hinged on some other federal interest. For example, while states have the primary authority to legislate on adoption, alien children less than sixteen years of age adopted by unmarried United States citizens have been granted immigrant status. Legislation such as the Indian Child Welfare Act is based on congressional authority over Indian questions. States retain general authority over child pornography, but the federal government can regulate that portion which moves in interstate or foreign commerce, and/or which is shipped through the mail. Where Congress has authority to act in a given area, it can exercise one of three options: Congress can (1) supersede all state action on the question; (2) defer entirely to individual state judgments; or (3) legislate somewhere between these two extremes. Congress's options can best be illustrated by looking at its handling of former spouses' entitlements to pensions paid under a federal retirement program. Under Social Security and the Railroad Retirement System, a former spouse who meets specified conditions is entitled to 50% of the covered spouse's benefit, while federal civil service and military pensions are divisible at the option of the individual state hearing the matter (i.e., states are authorized to treat civil service and military retirement payments the same way they treat other pensions for this purpose). The acts governing foreign service and Central Intelligence Agency pension division are hybrids between these two approaches, as they suggest a pro rata division formula predicated on length of marriage/length of service, but permit deviation from this formula by court order or if the parties agree to some other arrangement. Where congressional intent is unclear or ambiguous, as was the case pertaining to the possible division of military pensions in divorce cases for some time, or where Congress fails to act in a certain area when it has the authority to do so, individual states are free to act and/or interpret the applicable federal statutes as they see fit, subject to the constitutional considerations discussed above. However, once Congress acts to clarify its intent, states are bound by this interpretation and are no longer free to vary their approaches. Congress has plenary legislative authority over federal salaries, pensions, and other benefits, including those aspects which touch on family law questions. The State of California advanced a strong argument in McCarty v. McCarty , that its interest in its residents' well-being, along with general state authority over divorce law, was sufficient to confer upon its courts the authority to grant a divorced wife a share of her husband's military pension. The Supreme Court disagreed, citing congressional power under Article I, Section 8, Clause 14 of the Constitution "[t]o make Rules for the Government and Regulation of the land and naval Forces." The military system was enacted pursuant to this grant of constitutional authority, and the Court found that the application of state community property law as envisioned by the lower court McCarty rulings (which divided the pension) could potentially frustrate the congressional objectives of providing for retired personnel and meeting the management needs of the active forces. However, the McCarty court recognized the serious plight of an ex-spouse of a retired service member, and invited Congress to change the situation legislatively if so desired. Congress shortly thereafter enacted the Uniformed Services Former Spouses' Protection Act (FSPA), which authorized states to divide, or not divide, these pensions in accordance with applicable state laws and precedents. As discussed in the preceding section, Congress has for the most part deferred to state judgments in those divorce cases which involve pensions paid to federal employees. Of the pertinent statutes, only the Foreign Service Act and the CIA retirement Act contain suggested division formulas. These optional formulas take into account the particularly disadvantageous economic position of many of the wives whose husbands served in the Foreign Service or with the CIA. Under the Social Security Program, a former spouse who was married to an annuitant spouse with ten or more years of covered service is entitled to 50% of the annuitant's pension at the time he or she reaches age 62, provided the former spouse has not remarried prior to that time. This is a separate entitlement which does not reduce or affect the annuitant spouse's payment. Even in the absence of these statutes, voluntary division of annuities was possible if the parties so agreed. However, as might be imagined, such action occurred infrequently. Certain former spouses of Social Security, Civil Service, military, railroad, CIA, and Foreign Service annuitants are entitled to survivor annuities (annuities which continue after the annuitant spouse's death). Moreover, federal payments, including wages, pensions, tax refunds, and most other benefits, can be garnished for alimony and child support payments. Nearly every tax imposed by Congress has at least a tangential impact on family life, if only because it determines how much money the family might have available to it under specified circumstances. This topic is much too complex to provide more than a brief overview of possibly relevant provisions and approaches. Congress frequently uses its taxing power to establish social policies, as shown in its determinations that people should be encouraged to adopt, to contribute to charitable organizations, or purchase their own homes. To promote marriage neutrality, Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001. Another tax provision frequently thought to have major social policy implication involves tax deductions for certain child care expenditures. However, these deductions may show congressional recognition that both parents often must work for financial reasons, or there is only one parent to support the family, rather than a congressional belief that both parents should necessarily be encouraged to work outside the home. Furthermore, there are numerous tax provisions which become operable when couples divorce. Frequently those negotiating a financial settlement can choose among several options which can have a substantial impact on the amount of money available to each spouse following the divorce. Tax laws treat child support and alimony differently. For example, alimony or separate maintenance payments from one spouse to another are deductible by the person making the payments and treated as taxable income to the recipient, while child support payments are neither taxable income to the recipient nor deductible by the payer. There are also a number of tax laws which reference adoption. For the most part, these statutes provide that adopted children are to be treated the same as natural born children for whatever purpose is involved. Article I, Section 8, Clause 4 of the Constitution authorizes Congress to establish "uniform Laws on the subject of Bankruptcies throughout the United States." As with taxation, the entire Bankruptcy Code, codified as Title 11 of the United States Code, can have an effect on the family lives of those involved in personal or business-related bankruptcies. However, for family law purposes, the most important provision prohibits individuals from discharging alimony and/or child support payments. Other provisions may affect such situations as the timing of a bankruptcy petition vis a vis the filing of a divorce suit, or interspousal transfers prior to the filing of a bankruptcy petition or while such a petition is pending. Generally, Indian tribes have extensive power to regulate domestic relations among tribal members. As summarized in the authoritative text on this subject: Indian tribes have been accorded the widest possible latitude in regulating the domestic relations of their members. Indian custom marriage has been specifically recognized by federal statute, so far as such recognition is necessary for purposes of inheritance. Indian custom marriage and divorce has been generally recognized by state and federal courts for all other purpose.... No law of the state controls the domestic relations of Indians living in tribal relationship, even though the Indians concerned are citizens of the state.... Property relations of husband and wife, or parent and child, are likewise governed by tribal law and custom. However, some tribes specifically defer to state authority in this area, recognizing as valid marriages and divorces where pertinent state statutes have been followed. Federal law permits states to assume jurisdiction over civil causes of action between Indians or to which Indians are parties, and which arise in Indian country, as long as the tribe occupying the particular Indian country specifically consents to the exercise of jurisdiction. Once the tribe consents, this authority encompasses such civil actions as marriage, divorce, and adoption. These various approaches are recognized under 25 U.S.C. § 372a which states that "heirs by adoption" for purposes of certain probate matters shall include adoptions entered by a state court or an Indian court; those approved by the superintendent of the agency having jurisdiction over the tribe of either the adoptee or the adoptive parent; and adoptions handled in accordance with procedures established by the tribal authority of the tribe of either the adoptee or the adoptive parent. Rights of parties to marriages between Indians and non-Indians are set forth at 25 U.S.C. § 181-184. The Indian Child Welfare Act (ICWA) is a comprehensive measure designed to "protect the best interests of Indian children and to promote the stability and security of Indian tribes and families." Establishment of minimal federal standards for the removal of Indian children from their homes and procedures for their foster or adoptive placement, and funding a variety of Indian child and family welfare programs help facilitate the act's goals. Indian tribes retain jurisdiction over custody proceedings involving Indian children unless they specifically decline to exercise it. Upon attaining age 18, Indian adoptees are entitled to receive information as to their birth parents' tribal affiliation and other information necessary to protect rights flowing from their tribal relations. This is the only federal statute dealing with the confidentiality of adoption records. Congress utilizes indirect approaches in instances where it lacks direct authority to legislate in the domestic relations field. These indirect approaches include (1) the Commerce Clause; (2) a funding nexus or spending power; (3) Uniform State laws; (4) "Sense of Congress" resolutions; and (5) the Full, Faith & Credit Clause of the Constitution. Article I, Section 8, Clause 4 of the Constitution authorizes Congress "to regulate Commerce with foreign Nations, and among the several States." There are three categories of activities subject to congressional regulation under the commerce clause. Congress may regulate the use of the channels of interstate commerce, or persons or things in interstate commerce, although the threat may come only from intrastate activities. Finally, Congress may regulate those activities having a substantial relation to interstate commerce. Thus, Congress can regulate interstate aspects of certain family law matters even in the absence of direct legislative authority in the area. For example, the Federal Parent Locator Service, an office in the Department of Health and Human Services (HHS) helps states locate non-custodial parents who fail to make court-ordered child support payments, once states have exhausted their own efforts to locate these individuals. Under the Parental Kidnapping Prevention Act of 1980 (PKPA), this office also acts on requests from authorized persons to locate non-custodial parents who have abducted their children from custodial parents in violation of valid court orders. The PKPA also makes the Federal Fugitive Felon Act applicable to cases involving parental kidnapping and interstate or international flight to avoid prosecution under applicable state felony statutes. This provision again defers to state judgments inasmuch as the provision fails to become operable unless the state where the violation occurred has classified such action as a felony. A parent whose child has been taken out of the country has greater difficulty in locating the child and arranging for his or her return than if the child remains in this country. However, if the taking is classified as a felony, extradition treaties can sometimes be used to effectuate this result. The Hague Conference on Private International Law completed work on a Convention on the Civil Aspects of International Child Abduction, which the Senate consented to October 9, 1986. Congress adopted legislation to clarify how the Convention would be implemented in this country. The Commerce Clause also serves as the basis for federal regulation of child pornography that moves in interstate or foreign commerce. In 1992, Congress passed the Child Support Recovery Act (CSRA) which created a federal criminal offense for any willful failure to pay past child support obligations to a child who resides in a different state than the parent. Appellate courts that have thus far heard appeals of the CSRA decisions have unanimously declared the CSRA a constitutional exercise of congressional authority, pursuant to the Commerce Clause. The Second Circuit pointed to the fact that various state courts attempted to make the defendant pay his child support, but failed. Because the Commerce Clause gives Congress the authority to pass legislation which aids the states in matters that are beyond their "limited territorial jurisdiction," the court concluded that Congress has the authority to intervene and help the states. Further, it held that if Congress can use the Commerce Clause to promote interstate commerce, then "it surely has power to prevent the frustration of an obligation to engage in commerce." Merely because the obligation comes from a court order, and not a contract, does not alter the outcome; the obligation is, nevertheless, a result of interstate economic activity among the states. The Supreme Court has yet to rule on this question. The public child welfare system is society's mechanism for protecting children whose families are unsafe or unable to care for them. States have the primary responsibility for administering child welfare services and establishing policy. However, the federal government plays a significant role in child welfare, by providing funds to states and attaching conditions to these funds. Provision of these funds is a valid exercise of Congress's spending power as Article 1, Section 8 of the Constitution authorizes Congress to use federal monies to provide for the common defense and the general welfare. These programs have been judged not to violate the Constitution due to the voluntary nature of states' participation. States and localities remain free to reject the federal monies; but if accepted, they are taken subject to the conditions imposed by Congress. Most federal funds specifically targeted toward child welfare activities flow to the states through the Social Security Act, which authorizes capped grants for various child welfare services (Subparts 1 and 2 of Title IV-B), and open-ended entitlement funding for foster care maintenance and adoption assistance on behalf of children removed from their biological homes (Title IV-E). In addition, the freestanding Child Abuse Prevention and Treatment Act (CAPTA) authorizes formula grants to help states support their child protective services systems. As such, the Federal Child Abuse Prevention and Treatment Act imposes detailed requirements on state participants, including, inter alia , implementation of state programs which mandate the reporting of known or suspected instances of child abuse or neglect; investigation of such reports by properly constituted authorities; the provision of protective and treatment services to endangered children; immunity provisions for persons making good-faith reports of suspected instances of abuse and neglect; confidentiality of records, with criminal sanctions for those who illegally disseminate protected information; cooperation between agencies dealing with child abuse and neglect cases; and other topics which would assist in identifying, preventing and treating child abuse and neglect. This law is not aimed at those guilty of the abuse; but, rather is intended to help discover, treat and prevent as many child abuse cases as possible. In the case of the Federal Child Support Enforcement Program (CSE), the federal nexuses are the federal matching funds obtained by the states. All fifty states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands operate CSE programs and they are entitled to the matching federal funds. This program provides seven major services on behalf of children: (1) parent location, (2) paternity establishment, (3) establishment of child support orders, (4) review and modifications of support orders, (5) collection of support payments, (6) distribution of support payments and establishment and enforcement of medical support. To provide these services to children, requirements are put upon the states and participants alike. State requirements include automated registries of child support orders along with a centralized automated state collection and disbursement unit. Likewise, applicants and recipients are required to cooperate in establishing paternity or obtaining support payments or risk penalties for noncompliance. If a determination is made that an individual is uncooperative without any good cause or other exception, then the state must reduce the family's benefit by at least 25% and may even remove the family from the program. Collection methods used by CSE agencies include income withholding, intercepts of federal and state income tax refunds, intercepts of unemployment compensation, liens against property, security bonds, and reporting child support obligations to credit bureaus. Moreover, all jurisdictions have civil or criminal contempt-of-court procedures and criminal non-support laws. P.L. 105-187 , the Deadbeat Parents Punishment Act of 1998, established two new federal criminal offenses (subject to a two-year maximum prison term) with respect to non- custodial parents who repeatedly fail to financially support children who reside with custodial parents in another state or who flee across state lines to avoid supporting them. Furthermore, P.L. 104-193 , officially known as the Personal Responsibility and Work Reconciliation Act of 1996, required states to implement expedited procedures to allow them to secure assets to satisfy arrearages by intercepting or seizing periodic or lump sum payments (such as unemployment and worker's compensation), lottery winning, awards, judgments, or settlements, and assets of the debtor parent held by public or private retirement funds, and financial institutions. In addition, the law required states to implement procedures under which the state would have authority to withhold, suspend or restrict use of driver's licenses, professional and occupational licenses, and recreational and sporting licenses of persons who owe past-due support or who fail to comply with subpoenas or warrants relating to paternity or child support proceedings. The National Conference of Commissioners on Uniform State Laws is a non-governmental entity formed in 1982 "to promote uniformity in state laws on all subjects where uniformity is deemed desirable and practical." Since the entity's inception, it has drafted and approved several uniform acts, which have met with varying degrees of success in terms of enactment by state legislatures. Three uniform domestic relations acts which have gained widespread acceptance deal with the enforcement of child support orders (UIFSA) and recognition of child custody decrees (UCCJEA and UCCJA) entered in other states. All states adopted the Uniform Interstate Family Support Act (UIFSA) under which state courts basically treat valid child support orders entered in another state as having been entered in their own state (the state which has jurisdiction over the person required to pay the support) for enforcement purposes. The states' adoption of the UIFSA was due to Congress's enactment of welfare reform, officially known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. In this act, Congress mandated enactment of UIFSA for a state to remain eligible for the federal funding of child support enforcement. UIFSA provides procedural and jurisdictional rules for essentially three types of interstate child support proceedings: (1) a proceeding to establish a child support order; (2) a proceeding to enforce a child support order and (3) a proceeding to modify a child support order. UIFSA implements the "one-order system." This means that only one state's order governs, at any given time, an obligor's support obligation to any child. Further, only one state has continuing jurisdiction to modify a child support order. This requires all other states to recognize the order and to refrain from modifying it unless the first state has lost jurisdiction. UIFSA only governs jurisdiction to hear interstate child support proceedings. The Uniform Child Custody Jurisdiction Act (UCCJA) (or the Uniform Child Custody Jurisdiction and Enforcement Act [UCCJEA]) and the Parental Kidnapping Prevention Act (PKPA) govern jurisdiction to hear custody proceedings. Thus, the forwarding of a UIFSA proceeding to a state that would not normally have jurisdiction over custody issues does not subject the petitioner to custody claims the respondent might make. Further, a court properly hearing a UIFSA proceeding "may not condition the payment of a support order issued under (UIFSA) upon compliance by a party with provisions for visitation." One would think that a final domestic relations decree entered in one state should be uniformly recognized and enforced throughout the other states. However, this was frequently not the case, because in many instances a second state would assert its own jurisdiction to modify the original decree or enter a new decree which in its view supersedes the original one. That is why, for example, the UCCJA, as discussed above, failed, despite its widespread adoption by the states, to result in the broad national recognition of child custody decrees its sponsors anticipated and desired. Rather, non-custodial parents would take the child to another state, and that state, by virtue of its jurisdiction over the party seeking the modification, would enter a new decree changing the custody arrangement because circumstances changed since the entering of the original decree. This meant that the child's mother could have a valid decree in one state, granting her custody, while the father had an equally valid decree in another state, granting him custody—with concomitant frustration and expenditures of time and/or money by both parents, yielding unfortunate results to the child. The Parental Kidnapping Prevention Act of 1980 (PKPA) has now largely taken care of the problem. However, it must be noted that the PKPA does not confer jurisdiction on the federal courts. This act merely delineates which jurisdiction may modify child support and custody orders. As such, the PKPA is inapplicable to instate disputes and only relevant in interstate disputes when the jurisdictions have conflicting laws. Under the Supremacy Clause, the jurisdictional guidelines set forth in the PKPA supersede any conflicting state law. As such, parents are bound by state court decisions regarding custody, visitation and support. "Uniform acts" such as UIFSA, UCCJA, UCCJEA fail to specify what court orders must contain or what courts must consider when drafting them, but deal exclusively with their enforcement once finalized. Other proposals, such as the Uniform Marriage and Divorce Act (UMDA) and the Uniform Adoption Act, include specific guidelines for courts to follow in drafting these various orders. Even when domestic relations laws are drafted with great specificity, they fail to yield comparable results in seemingly comparable cases. Each domestic relations case presents a unique fact pattern which gives judges and hearing examiners wide discretion in determining an equitable ruling in each case. Thus, it is difficult, if not impossible to talk in terms of "average" alimony awards or predict with any degree of accuracy what custodial arrangement a judge will order in a particular divorce case. Generally, a party who receives an adverse ruling can only appeal on an "abuse of discretion" ground, an extremely difficult standard to meet. For this reason, reported domestic relations cases have little precedential value except when cited for general policy considerations. However, courts can modify alimony, child support and/or child custody (not marital property division) provisions, upon a showing of changed circumstances. Adoption of uniformed laws such as UIFSA, UCCJEA and UCCJA has aided in fostering consistency and efficiency in the enforcement of interstate child support and custody orders. Another indirect approach which Congress utilizes to obtain desired results are "Sense of the Congress" resolutions. These resolutions lack any legally binding force or effect, but are introduced in the hope that if Congress goes on record as favoring a certain policy, the individual states will be encouraged to adopt legislation advancing that policy. For example, H.Con.Res. 67 expressed the sense of the Congress that: [A] uniform State act should be developed and adopted which provides grandparents with adequate rights to petition State courts for privileges to visit their grandchildren following the dissolution because of divorce, separation, or death of the marriage of such grandchildren's parents, and for other purposes. This resolution passed the House of Representatives on April 22, 1985, and passed the Senate on September 29, 1986. Consequently, some states have enacted specific grandparent visitation statutes, while others include grandparents within a broader third-party visitation statute. The content of these visitation laws varies greatly. Several states limit visitation to cases involving deceased parents. Others specifically extend the right to cases of divorce, annulment or separation. A few states allow grandparent visitation even over the objections of both parents in an ongoing family, and even against the argument that parents have the constitutional right to raise their child as they see fit. Most states, however, hold by statute or court decision that the ongoing family is not subject to enforced intrusion by grandparents, if both parents are fit and object. Article, Section 1 of the Constitution, the Full Faith and Credit Clause, states: "Full Faith and Credit shall be given in each state to the public Acts, Records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such Acts, Records, and Proceedings shall be proved, and the effect thereof." This clause applies principally to the interstate recognition and enforcement of judgments. It is settled law that final judgments are entitled to full faith and credit, regardless of other states' public policies, provided the issuing state had jurisdiction over the parties and the subject matter. Judgments subject to future modification, such as child support and child custody orders, are not considered final. Therefore, they are not entitled to full faith and credit. As discussed below, however, Congress enacted the PKPA and the Full Faith and Credit for Child Support Act to accord full faith and credit to child custody and support orders. The Full Faith and Credit Clause has rarely been used by courts to validate marriages because marriages are not "legal judgments." However, courts routinely recognize out-of-state-marriages. Questions concerning the validity of an out-of-state marriage are generally resolved without reference to the Full Faith and Credit Clause. As previously discussed, marriages are not regarded as judgments. In the legal sense, marriage is a "civil contract" created by the States which establishes certain duties and confers certain benefits. Validly entering the contract creates the marital status; the duties and benefits attached by a State are incidents of that status. The general rule of validation for marriage is to look to the law of the place where the marriage was celebrated, lex celebrationis . A marriage satisfying the contracting state's requirements will usually be held valid everywhere. Many states provide by statute that a marriage validly contracted elsewhere is valid within the state. At least twenty-three states have adopted language substantially similar to the Uniform Marriage and Divorce Act (UMDA), which states: "All marriages contracted ... outside this State, that were valid at the time of the contract or subsequently validated by the laws of the place in which they were contracted ... are valid in this State." Several states provide an exception to this general rule by declaring out-of-state marriages void if against the state's public policy or if entered into with the intent to evade the law of the state. As such, eleven states have passed legislation prohibiting recognition of out-of-state same-sex marriage. Moreover, Congress passed the Defense of Marriage Act (DOMA), which prohibits the federal recognition of same-sex marriages and allows individual states to refuse to recognize such marriages performed or recognized in other states. The Full Faith & Credit clause is applicable to divorces. In two related cases known as Williams I and Williams II , the Supreme Court articulated the extent to which the Full Faith and Credit Clause applies in divorce cases. Both cases arose out of the following scenario: a man and a woman, both domiciliaries (permanent residents) of North Carolina and married to other people, moved to Nevada. They lived there for six weeks to satisfy the Nevada durational residency requirement for divorce, at which time they obtained divorces upon substituted service (i.e., their spouses were notified by publication only and failed to participate in the proceedings), married each other, and returned to North Carolina. North Carolina then began prosecution under its bigamous cohabitation statute. In Williams I , the Supreme Court held that in granting the divorce, Nevada was justified in assuming that the parties were bona fide Nevada domiciliaries (a jurisdictional requirement). Thus, the divorce was valid and warranted recognition as such by the other states including North Carolina. However, in Williams II , the Court held that a divorce decree issued in one state could be collaterally impeached in another by proof that the court which tendered the decree lacked jurisdiction. In this particular case, the fact that the new Mr. and Mrs. Williams returned to North Carolina immediately following their marriage was sufficient to justify the North Carolina court's conclusion that the couple was not domiciled in Nevada at the time their divorce was granted. As such, the divorce was void because the issuing court lacked proper jurisdiction. In Williams II , the rule remains in effect today, as modified by the Supreme Court's holding in Sherrer v. Sherrer that a divorce cannot be subsequently attacked by a spouse for lack of jurisdiction if the spouse participated in the divorce proceeding and the divorce court specifically ruled that it had jurisdiction. Under this ruling, if both parties participate in a divorce proceeding and/or consent to the court's jurisdiction (i.e., obtain a "bilateral" divorce, neither party can attack the decree for lack of jurisdiction). Due to the increased uniformity of divorce laws, states' adoption of no-fault divorce statutes and shorter durational residency requirements situations such as the ones mentioned above continue to decrease. These reasons reduce a party's need to seek out what may be viewed as a more favorable divorce jurisdiction. While the situation has minimized with domestic divorce decrees, a comparable situation now exists regarding certain foreign divorce decrees (e.g., those where only one party appears briefly in the issuing jurisdiction). The Full Faith and Credit Clause does not govern the domestic validity of divorce judgments from foreign countries. The rule of comity, which generally provides for recognition of foreign decrees issued by courts of competent jurisdiction, governs. However, the jurisdictional tests applied are usually those of the United States, rather than the divorcing country. As such, a divorce obtained in a foreign country will be invalid in the United States if neither spouse was domiciled in that country, even if domicile is not required for jurisdiction under its law. New York is the only state which recognizes bilateral foreign divorces (where both parties participate) even where its own jurisdictional requirements are not satisfied. No state recognizes such unilateral divorces (where only one party appears). Justice Frankfurter, in a concurring opinion in Williams I , noted that Congress had the authority under the Full Faith and Credit Clause to require national recognition of divorce decrees, but had not yet chosen to exercise such authority: ...[I]t is clearly settled that if a judgment is binding in the state where it was rendered, it is equally binding in every state. This rule of law was not created by the federal courts. It comes from the Constitution and the Act of May 26, 1790, c. 11, 1 Stat. 122. Congress has not exercised its power under the Full Faith and Credit Clause to meet the special problems raised by divorce decrees. There will be time enough to consider the scope of its power in this regard when Congress chooses to exercise it. 317 U.S. at 306. In response to this dicta, Senator Pat McCarran introduced bills in the 80 th through the 83 rd Congresses which, if enacted would have required all states to recognize divorce decrees where: (1) the decree was final as to the issue of divorce; (2) the decree was valid in the state where rendered; (3) the decree stated that the jurisdictional prerequisites of the issuing stated had been met; and (4) the issuing state was the last state where the spouses were domiciled together as husband and wife; or the defendant was personally subject to jurisdiction in that state, or appeared generally in the divorce proceedings. The only exceptions included fraud of the successful party which misled the defeated party. Two of these bills passed the Senate, in 1952 and 1953, but neither became law and no such measure is presently pending. Congressional action under the Full Faith and Credit Clause has been minimal, "[i]ndeed, there are few clauses of the Constitution, the merely literal possibilities of which have been so little developed as the full faith and credit clause." Only on five occasions has Congress enacted legislation to require States to give full faith and credit to certain types of acts, records and proceedings. Three of the enactments pertain to family law concerns. To date, the major legislative initiative in this area is 28 U.S.C. § 1738A, a provision of the PKPA which requires states to give full faith and credit to child custody decrees entered in other states unless the state asked to modify the original order has jurisdiction to do so, and the state which issued the original order lacks jurisdiction to modify the order or declines to exercise its jurisdiction. In addition, under 42 U.S.C. § 666(a), states must grant full faith and credit to each other's child support orders, to the extent of not modifying them retroactively. In 1994, the 103 rd Congress passed the Full Faith and Credit for Child Support Orders Act, requiring each state to enforce child support orders issued by the child's home state if done in compliance with the act's provisions. The law was designed so that a person with a valid child support order in one state would not have to obtain a second order in another state should the debtor parent move from the issuing court's jurisdiction. Rather, the second state must recognize the first state's order as valid, but can modify it only when the child and the custodial parent have moved to the state where the modification is sought or have agreed to the modification. Retroactive modification is prohibited, and prospective modification is authorized if the court finds that circumstances exist which justify a change. Also in 1994, Congress passed the Safe Homes for Women Act of 1994, requiring states to recognize domestic violence protection orders issued by sister states. Any protection order issued by one state or tribe shall be treated and enforced as if it were an order of the enforcing state. The act extends to permanent, temporary, and ex parte protection orders. Full faith and credit is afforded during the period of time in which the order remains valid in the issuing state. Protection orders are only afforded full faith and credit if the due process requirements of the issuing state were met. In the previous instances, Congress's exercise of its full faith and credit enforcement power was necessitated by the failure of sister state courts to give full faith and credit to orders not regarded as final judgments. Congress directed sister states to give full faith and credit to child custody, child support, and protection orders from other states. In effect, Congress required each state to give the child custody, child support, and protection orders of other states the same faith and credit it gives its own such orders. Conversely, in 1996, Congress passed the Defense of Marriage Act (DOMA). This act differs in one critical aspect from the other legislative enactments passed by Congress under its full faith and credit power: the DOMA permits sister states to give no effect to the law of other states. Congress enacted DOMA in response to claims by advocates of same-sex marriage that, if any state legalizes same-sex marriage, all states and federal agencies will have to recognize as valid all same-sex marriages performed in that same-sex-marriage-permitting state. Congress recognized that the legalization of same-sex marriage in any jurisdiction would have far-reaching potential effects upon all people and upon a wide spectrum of laws in the jurisdiction, ranging from marriage law to public school curricula, from custody law to public finances, from adoption to insurance issues, from alimony and property division to employment regulations. Moreover, these potential effects involved a policy issue of great importance to the people of each jurisdiction warranting decision by each jurisdiction. Between 1917 and 2001, 33 constitutional amendments were proposed to give Congress authority to legislate on marriage and divorce questions. In addition, 12 bills were introduced during this period to provide for uniform marriage and divorce laws throughout the United States, presumably in anticipation that such a constitutional amendment would be ratified. Eleven of the proposed constitutional amendments and all of the implementing bills introduced in the Senate were sponsored by Senator Arthur Caper. The text of his proposed amendments uniformly stated: The Congress shall have power to make laws, which shall be uniform throughout the United States, on marriage and divorce, the legitimization of children, and the care and custody of children affected by annulment of marriage or by divorce. However, none of these proposed amendments ever received congressional action. Beginning in the 107 th Congress, legislation has been introduced proposing a constitutional amendment to define marriage as the "union of a man and a woman." In the absence of a constitutional amendment providing general authority for Congress to legislate in the field of domestic relations, its direct authority is limited to those areas specifically reserved for congressional action under Article I, Section 8, of the Constitution. However, various indirect approaches, most notably those tied to congressional authority under the commerce clause and Congress's appropriations powers, have resulted in significant federal impact on a myriad of family law questions. Currently, there appears to be little sentiment in favor of a national marriage and divorce law, at least one which would be imposed involuntarily by Congress on the states. However, it is probable that federal involvement will continue or be forthcoming in those areas where it is argued that federal resources can be utilized more efficiently and effectively than those available at the state or local level, such as tracking down parental kidnappers or establishing and enforcing child support orders. The spending power can be used to shape state approaches to a given situation, although this option involves expenditures of federal funds; the higher the funding level, the more likely a state is to comply with the federal directive. The nature of family law cases is such that an individualized approach to each particular case will undoubtedly continue. However, state domestic relations laws have become more uniform in recent years, and even without federal intervention this trend is likely to continue. Thus, it is possible that some of the national uniformity envisioned by proponents of adopting a constitutional amendment for this purpose will be realized, although states retain primary authority to legislate in this area.

Under the United States Constitution, Congress has little direct authority to legislate in the field of domestic relations. The primary authority and responsibility to legislate in the domestic relations arena lies with the individual states. The rationale behind this approach is the lack of overriding national considerations in the family law area. However, states' freedom to legislate has led to substantial variation between the individual states on many topics including incidents of marriage, divorce and child welfare. As such, Congress continues to utilize a number of indirect approaches to enact numerous federal laws which impact on family law questions. This report discusses the extent to which Congress is constitutionally authorized to legislate on family law questions, and includes examples of present laws utilizing the various approaches available in this area.

Continued revelations involving alleged disclosures of classified information to the news media or to others who are not entitled to receive it have renewed Congress's interest with regard to the possible need for legislation to provide for criminal punishment for the "leaks" of classified information. Opponents of any such legislation express concern regarding the possible consequences to freedom of the press and other First Amendment values. The current laws for protecting classified information have been criticized as a patchwork of sometimes abstruse and antiquated provisions that are not consistent and do not cover all the information the government legitimately needs to protect. Certain information is protected regardless of whether it belongs to the government or is subject to normal classification. Information related to "the national defense" is protected even though no harm to the national security is intended or is likely to be caused through its disclosure. However, nonmilitary information with the potential to cause serious damage to the national security is only protected from willful disclosure with the requisite intent or knowledge regarding the potential harm. For example, under 50 U.S.C. § 783, the communication of classified information by a government employee is expressly punishable only if the discloser knows or has reason to believe the recipient is an agent or representative of a foreign government, but not, for example, if the recipient is an agent of an international terrorist organization. To close some perceived gaps, the 106 th Congress passed a measure to criminalize all leaks of classified information; however, President Clinton vetoed the measure. The 108 th Congress considered passing an identical provision as part of the Intelligence Authorization Act for Fiscal Year 2001, but instead directed the Attorney General and heads of other departments to undertake a review of the current protections against the unauthorized disclosure of classified information, and to issue a report recommending legislative or administrative actions by May 1, 2002. In its response to Congress, the Department of Justice concluded that existing statutes and regulations are sufficient to prosecute disclosures of information that might harm the national security. This report describes the current state of the law with regard to the unauthorized disclosure of classified information, including criminal and civil penalties that can be imposed on violators, as well as some of the disciplinary actions and administrative procedures available to federal agencies with respect to their employees, as such measures have been addressed by federal courts. The report also describes the background of legislative efforts to amend the laws, including the measure passed in 2000 and President Clinton's stated reasons for vetoing it. Finally, the report considers possible constitutional issues—in particular, issues related to the First Amendment—that may arise if Congress considers new legislation to punish leaks or if the Attorney General seeks to apply current law to punish newspapers that publish leaked classified information. The classification by government agencies of documents deemed sensitive has evolved from a series of executive orders. Congress has, for the most part, let the executive branch make decisions regarding the type of information to be subject to protective measures. The current criminal statutory framework providing penalties for the unauthorized disclosure of classified government materials traces its roots to the Espionage Act of 1917, which made it a crime to disclose defense information during wartime. The National Security Act of 1947 directed the Director of the CIA to protect "intelligence sources and methods." The Atomic Energy Act of 1954 provided for secrecy of information related to nuclear energy and weapons. The Invention Secrecy Act of 1951 gave the government the authority to declare a patent application secret if disclosure of an invention might expose the country to harm. National defense information is protected by the Espionage Act, 18 U.S.C. § 793 et seq . The penalty for violation of 18 U.S.C. § 793 (gathering, transmitting, or losing defense information) is a fine or imprisonment for not more than 10 years, or both. Thus, under § 793, persons convicted of gathering defense information with the intent or reason to believe the information will be used against the United States or to the benefit of a foreign nation may be fined or sentenced to no more than 10 years imprisonment. Persons who have access to defense information that they have reason to know could be used to harm the national security, whether the access is authorized or unauthorized, and who disclose that information to any person not entitled to receive it, or willfully retain the information despite an order to surrender it to an officer of the United States, are subject to the same penalty. Although it is not necessary that the information be classified by a government agency, the courts give deference to the executive determination of what constitutes "defense information." Information that is made available by the government to the public is not covered under the prohibition, however, because public availability of such information negates the bad-faith intent requirement. On the other hand, classified documents may remain within the ambit of the statute even if information contained therein is made public by an unauthorized leak. Any person who is lawfully entrusted with defense information and who permits it to be disclosed or lost, or who does not report such a loss or disclosure, is also subject to a penalty of up to 10 years in prison. The act covers information transmitted orally as well as information in tangible form. 18 U.S.C. § 794 (aiding foreign governments) provides for imprisonment for any term of years or life, or under certain circumstances, the death penalty. The provision penalizes anyone who transmits defense information to a foreign government (or certain other foreign entities) with the intent or reason to believe it will be used against the United States. The death penalty is available only upon a finding that the offense resulted in the death of a covert agent or directly concerns nuclear weapons or other particularly sensitive types of information. The death penalty is also available under §794 for violators who gather or transmit information related to military plans and the like during time of war, with the intent that the information reach the enemy. Offenders are also subject to forfeiture of any ill-gotten gains and property used to facilitate the offense. Members of the military who commit espionage, defined similarly to the conduct prohibited in 18 U.S.C. § 794, may be tried by court-martial for violating Article 106a of the Uniform Code of Military Justice (UCMJ), and sentenced to death if certain aggravating factors are found by unanimous determination of the panel. Unlike offenses under § 794, Article 106a offenses need not have resulted in the death of a covert agent or involve military operations during war to incur the death penalty. One of the aggravating factors enabling the imposition of the death penalty under Article 106a is that "[t]he accused has been convicted of another offense involving espionage or treason for which either a sentence of death or imprisonment for life was authorized by statute." The unauthorized creation, publication, sale or transfer of photographs or sketches of vital defense installations or equipment as designated by the President is prohibited by 18 U.S.C. §§ 795 and 797. Violators are subject to fine or imprisonment for not more than one year, or both. The knowing and willful disclosure of certain classified information is punishable under 18 U.S.C. § 798 by fine and/or imprisonment for not more than 10 years. To incur a penalty, the disclosure must be prejudicial to the safety or interests of the United States or work to the benefit of any foreign government and to the detriment of the United States. The provision applies only to information related to cryptographic systems and information related to communications intelligence specially designated by a U.S. government agency for "limited or restricted dissemination or distribution." The provision protects information obtained by method of communications intelligence only if the communications were intercepted from a "foreign government," which, while broadly defined, may not include a transnational terrorist organization. 18 U.S.C. § 641 punishes the theft or conversion of government property or records for one's own use or the use of another. While this section does not explicitly prohibit disclosure of classified information, it has been used for that purpose. Violators may be fined, imprisoned for not more than 10 years, or both, unless the value of the property does not exceed the sum of $100, in which case the maximum prison term is one year. 18 U.S.C. § 952 punishes employees of the United States who, without authorization, willfully publish or furnish to another any official diplomatic code or material prepared in such a code, by imposing a fine, a prison sentence (up to 10 years), or both. The same punishment applies for materials "obtained while in the process of transmission between any foreign government and its diplomatic mission in the United States." 18 U.S.C. § 1030(a)(1) punishes the willful retention, communication, or transmission, etc., of classified information retrieved by means of knowingly accessing a computer without (or in excess of) authorization, with reason to believe that such information "could be used to the injury of the United States, or to the advantage of any foreign nation." The provision imposes a fine or imprisonment for not more than ten years, or both, in the case of a first offense or attempted violation. Repeat offenses or attempts can incur a prison sentence of up to twenty years. 18 U.S.C. § 1924 prohibits the unauthorized removal of classified material. The provision imposes a fine of up to $1,000 and a prison term up to one year for government officers or employees who knowingly take material classified pursuant to government regulations with the intent of retaining the materials at an unauthorized location. 42 U.S.C. § 2274 punishes the unauthorized communication by anyone of "Restricted Data," or an attempt or conspiracy to communicate such data, by imposing a fine of not more than $500,000, a maximum life sentence in prison, or both, if done with the intent of injuring the United States or to secure an advantage to any foreign nation. An attempt to disclose or participate in a conspiracy to disclose restricted data with the belief that such data will be used to injure the United States or to secure an advantage to a foreign nation, is punishable by imprisonment for no more than 10 years, a fine of no more than $100,000, or both. The disclosure of "Restricted Data" by an employee or contractor, past or present, of the federal government to someone not authorized to receive it is punishable by a fine of not more than $12,500. 50 U.S.C. § 421 provides for the protection of information concerning the identity of covert intelligence agents. Any person authorized to know the identity of such agents who intentionally discloses the identity of a covert agent is subject to imprisonment for not more than 10 years or a fine or both. A person who learns the identity of an agent through authorized access to classified information and discloses the agent's identity to someone not authorized to receive classified information is subject to a fine, a term of imprisonment not more than five years, or both. A person who learns of the identity of a covert agent through a "pattern of activities intended to identify and expose covert agents" and discloses the identity to any individual not authorized access to classified information, with reason to believe that such activities would impair U.S. foreign intelligence efforts, is subject to a fine or imprisonment for a term of not more than three years. To be convicted, a violator must have knowledge that the information identifies a covert agent whose identity the United States is taking affirmative measures to conceal. An agent is not punishable under this provision for revealing his or her own identity, and it is a defense to prosecution if the United States has already publicly disclosed the identity of the agent. 50 U.S.C. § 783 penalizes government officers or employees who, without proper authority, communicate classified information to a person whom the employee has reason to suspect is an agent or representative of a foreign government. It is also unlawful for the representative or agent of the foreign government to receive classified information. Violation of either of these provisions is punishable by a fine of up to $10,000 or imprisonment for not more than 10 years. Violators are thereafter prohibited from holding public office. Violators must forfeit all property derived directly or indirectly from the offense and any property that was used or intended to be used to facilitate the violation. Disclosure of a patent that has been placed under a secrecy order pursuant to the Invention Secrecy Act of 1951 can result in a fine of $10,000, imprisonment for up to two years, or both. Publication or disclosure of the invention must be willful and with knowledge of the secrecy order to be punishable. In addition to the criminal penalties outlined above, the executive branch employs numerous means of deterring unauthorized disclosures by government personnel using administrative measures based on terms of employment contracts. The agency may impose disciplinary action or revoke a person's security clearance. The revocation of a security clearance is usually not reviewable by the Merit System Protection Board and may mean the loss of government employment. Government employees may be subject to monetary penalties for disclosing classified information. Violators of the Espionage Act and the Atomic Energy Act provisions may be subject to loss of their retirement pay. Agencies also rely on contractual agreements with employees, who typically must sign non-disclosure agreements prior to obtaining access to classified information, sometimes agreeing to submit all materials that the employee desires to publish to a review by the agency. The Supreme Court enforced such a contract against a former employee of the Central Intelligence Agency (CIA), upholding the government's imposition of a constructive trust on the profits of a book the employee sought to publish without first submitting it to CIA for review. In 1986, the Espionage Act was amended to provide for the forfeiture of any property derived from or used in the commission of an offense. Violators of the Atomic Energy Act may be subjected to a civil penalty of up to $100,000 for each violation of Energy Department regulations regarding dissemination of unclassified information about nuclear facilities. The government can also use injunctions to prevent disclosures of information. The courts have generally upheld injunctions against former employees' publishing information they learned through access to classified information. The Supreme Court also upheld the State Department's revocation of passports for overseas travel by persons planning to expose U.S. covert intelligence agents, despite the fact that the purpose was to disrupt U.S. intelligence activities rather than to assist a foreign government. Similarly, the government can enjoin publication of inventions when it is determined that the release of such information is detrimental to the national security. If an inventor files a patent application for an invention that the Commissioner of Patents believes should not be made public, the Commissioner may place a secrecy order on the patent and establish conditions for granting a patent, or may withhold grant of a patent as long as the "national interest requires [it]." In addition to criminal penalties cited previously, in the case of an unauthorized disclosure or foreign filing of the patent information, the Patent Office will deem the invention to be "abandoned," which means a forfeiture by the applicant, his successors, or assigns of all claims against the United States based on the invention. The government has had less success trying to enjoin the media from disclosing classified information. Most famously, the government failed to enjoin publication of the Pentagon Papers by a newspaper, even though the information was clearly classified and had been stolen by someone with access to it. In that case, the Supreme Court set very high standards for imposing prior restraint on the press. Yet in another case, the government was able to enjoin a newspaper from printing information about the design of an atomic bomb, even though the information did not originate from classified material and the author's purpose was not subversive. The current laws for protecting classified information have been criticized as a patchwork of provisions that are not consistent and do not cover all the information the government legitimately needs to protect. Certain information is protected regardless of whether it belongs to the government or is subject to normal classification. Technical and scientific information, for example, can be restricted regardless of source. Information related to "the national defense" is protected even though no harm to the national security is intended or is likely to be caused through its disclosure. However, nonmilitary information with the potential to cause serious damage to the national security is only protected from willful disclosure with the specific intent to harm the national interest, or with the knowledge that such harm could occur. In 2000, and again in 2002, Congress sought to create 18 U.S.C. § 798A, subsection (a) of which would have read: Whoever, being an officer or employee of the United States, a former or retired officer or employee of the United States, any other person with authorized access to classified information, or any other person formerly with authorized access to classified information, knowingly and willfully discloses, or attempts to disclose, any classified information acquired as a result of such person's authorized access to classified information to a person (other than an officer or employee of the United States) who is not authorized access to such classified information, knowing that the person is not authorized access to such classified information, shall be fined under this title, imprisoned not more than 3 years, or both. The new provision would have penalized the disclosure of any material designated as classified for any reason related to national security, regardless of whether the violator intended that the information be delivered to and used by foreign agents (in contrast to 50 U.S.C. § 783). It would have been the first law to penalize disclosure of information to entities other than foreign governments or their equivalent solely because it is classified, without a more specific definition of the type of information covered. In short, the provision would have made it a crime to disclose or attempt to disclose classified information to any person who does not have authorized access to such information, with exceptions covering disclosures to Article III courts, or to the Senate or House committees or Members, and for authorized disclosures to persons acting on behalf of a foreign power (including an international organization). The provision would have amended the espionage laws in title 18 by expanding the scope of information they cover. The proposed language was intended to make it easier for the government to prosecute unauthorized disclosures of classified information, or "leaks" of information that might not amount to a violation of current statutes. The language was intended to ease the government's burden of proof in such cases by eliminating the need "to prove that damage to the national security has or will result from the unauthorized disclosure," substituting a requirement to show that the unauthorized disclosure was of information that "is or has been properly classified" under a statute or executive order. The 106 th Congress passed the measure, but President Clinton vetoed it, calling it "well-intentioned" as an effort to deal with a legitimate concerns about the damage caused by unauthorized disclosures, but "badly flawed" in that it was "overbroad" and posed a risk of "unnecessarily chill[ing] legitimate activities that are at the heart of a democracy." The President explained his view that [a] desire to avoid the risk that their good faith choice of words—their exercise of judgment—could become the subject of a criminal referral for prosecution might discourage Government officials from engaging even in appropriate public discussion, press briefings, or other legitimate official activities. Similarly, the legislation may unduly restrain the ability of former Government officials to teach, write, or engage in any activity aimed at building public understanding of complex issues. Incurring such risks is unnecessary and inappropriate in a society built on freedom of expression and the consent of the governed and is particularly inadvisable in a context in which the range of classified materials is so extensive. In such circumstances, this criminal provision would, in my view, create an undue chilling effect. The 108 th Congress considered passing an identical provision as part of the Intelligence Authorization Act for Fiscal Year 2001, but instead directed the Attorney General and heads of other departments to undertake a review of the current protections against the unauthorized disclosure of classified information, and to issue a report recommending legislative or administrative actions. An identical measure was introduced late in the 109 th Congress, but was not reported out of committee. The Attorney General, in his report to the 108 th Congress, concluded that [a]lthough there is no single statute that provides criminal penalties for all types of unauthorized disclosures of classified information, unauthorized disclosures of classified information fall within the scope of various current statutory criminal prohibitions. It must be acknowledged that there is no comprehensive statute that provides criminal penalties for the unauthorized disclosure of classified information irrespective of the type of information or recipient involved. Given the nature of unauthorized disclosures of classified information that have occurred, however, I conclude that current statutes provide a legal basis to prosecute those who engage in unauthorized disclosures, if they can be identified. It may be that carefully drafted legislation specifically tailored to unauthorized disclosures of classified information generally, rather than to espionage, could enhance our investigative efforts. The extent to which such a provision would yield any practical additional benefits to the government in terms of improving our ability to identify those who engage in unauthorized disclosures of classified information or deterring such activity is unclear, however. The publication of information pertaining to the national defense may serve the public interest by providing citizens with information necessary to shed light on the workings of government, but some observe a consensus that the public release of at least some defense information poses a significant enough threat to the security of the nation that the public interest is better served by keeping it secret. The Constitution protects the public right to access government information and to express opinions regarding the functioning of the government, among other things, but it also charges the government with "providing for the common defense." Policymakers are faced with the task of balancing these interests. The First Amendment to the U.S. Constitution provides: "Congress shall make no law ... abridging the freedom of speech, or of the press...." Despite this absolute language, the Supreme Court has held that "[t]he Government may ... regulate the content of constitutionally protected speech in order to promote a compelling interest if it chooses the least restrictive means to further the articulated interest." Where speech is restricted based on its content, the Supreme Court generally applies "strict scrutiny," which means that it will uphold a content-based restriction only if it is necessary "to promote a compelling interest," and is "the least restrictive means to further the articulated interest." Protection of the national security from external threat is without doubt a compelling government interest. It has long been accepted that the government has a compelling need to suppress certain types of speech, particularly during time of war or heightened risk of hostilities. Speech likely to incite immediate violence, for example, may be suppressed. Speech that would give military advantage to a foreign enemy is also susceptible to government regulation. Where First Amendment rights are implicated, it is the government's burden to show that its interest is sufficiently compelling to justify enforcement. Whether the government has a compelling need to punish disclosures of classified information turns on whether the disclosure has the potential of causing damage to the national defense or foreign relations of the United States. Actual damage need not be proved, but potential damage must be more than merely speculative and incidental. In addition to showing that the stated interest to be served by the statute is compelling, the government must also show that the law actually serves that end. If the accused can show that the statute serves an unrelated purpose—for example, to silence criticism of certain government policies or to manipulate public opinion—a judge might be prepared to invalidate the statute. If, for example, the government releases some positive results of a secret weapons program while suppressing negative results, a person prosecuted for releasing negative information could challenge the statute by arguing that his prosecution is related to the negative content of his speech rather than to valid concerns about the damage it might cause. If he can show that those who disclose sensitive information that tends to support the administration's position are not prosecuted, while those who disclose truthful information that is useful to its opponents are prosecuted, he might be able to persuade a court that the statute as enforced is an unconstitutional restriction of speech based on impermissible content-related interests. To survive a constitutional challenge, a law must be narrowly drawn to affect only the type of speech that the government has a compelling need to suppress. A statute that reaches speech that the government has no sufficiently compelling need to regulate may be subject to attack due to overbreadth. A law is overly broad if it prohibits more speech than is necessary to achieve its purpose. If a defendant can show that a statute regulating speech is "substantially overbroad," he may challenge its validity on its face. If the law is found to be substantially overbroad, a court will invalidate the law even if the defendant's conduct falls within the ambit of conduct that the government may legitimately prohibit. For this reason, a statute that relies solely on the Executive's classification of information to determine the need for its protection might be contested as overbroad. If a challenger were able to show that agencies classify information that it is unnecessary to keep secret, he could argue that the statute is invalid as overly broad because it punishes protected speech that poses no danger to the national security Although information properly classified in accordance with statute or executive order carries by definition, if disclosed to a person not authorized to receive it, the potential of causing at least identifiable harm to the national security of the United States, it does not necessarily follow that government classification by itself will be dispositive of the issue in the context of a criminal trial. Government classification will likely serve as strong evidence to support the contention. Typically, courts have been unwilling to review decisions of the executive related to national security, or have made a strong presumption that the material at issue is potentially damaging. In the context of a criminal trial, especially in a case with apparent First Amendment implications, courts may be more willing to engage in an evaluation of the propriety of a classification decision than they would in a case of citizens seeking access to information under the Freedom of Information Act (FOIA). The Supreme Court seems satisfied that national security is a vital interest sufficient to justify some intrusion into activities that would otherwise be protected by the First Amendment—at least with respect to federal employees. Although the Court has not held that government classification of material is sufficient to show that its release is damaging to the national security, it has seemed to accept without much discussion the government's assertion that the material in question is damaging. Lower courts have interpreted 18 U.S.C. § 798, which criminalizes the unauthorized release of specific kinds of classified information, to have no requirement that the government prove that the classification was proper or personally approved by the President. It is unlikely that a defendant's bare assertion that information is unlikely to damage U.S. national security will be persuasive without some convincing evidence to that effect, or proof that the information is not closely guarded by the government. Snepp v. United States affirmed the government's ability to enforce contractual non-disclosure agreements against employees and former employees who had had access to classified information. The Supreme Court allowed the government to impose a constructive trust on the earnings from Frank Snepp's book about the CIA because he had failed to submit it to the CIA for prepublication review, as he had agreed to do by signing an employment agreement. Although the CIA stipulated to the fact that the book contained no classified information, the Court accepted the finding that the book caused "irreparable harm and loss" to the American intelligence services. The Court suggested that the CIA did not need a signed agreement in order to protect its interests by subjecting its former employees to prepublication review and possible censorship. Haig v. Agee was a First Amendment challenge to the government's ability to revoke a citizen's passport because of his intent to disclose classified information. Philip Agee was a former CIA agent who engaged in a "campaign to fight the United States CIA," which included publishing names of CIA operatives around the world. In order to put a stop to this activity, the Department of State revoked his passport. Agee challenged that action as an impermissible burden on his freedom to travel and an effort to penalize his exercise of free speech to criticize the government. The Supreme Court disagreed, finding the passport regulations constitutional because they may be applied "only in cases involving likelihood of 'serious damage' to national security or foreign policy." United States v. Morison is significant in that it represents the first case in which a person was convicted for selling classified documents to the media. Morison argued that the espionage statutes did not apply to his conduct because he could not have had the requisite intent to commit espionage. The Fourth Circuit rejected his appeal, finding the intent to sell photographs that he clearly knew to be classified sufficient to satisfy the scienter requirement under 18 U.S.C. § 793. The definition of "relating to the national defense" was not overbroad because the jury had been instructed that the government had the burden of showing that the information was so related. In addition to restricting the disclosure of information by prosecuting the person responsible after the fact, the government may seek to prevent publication by prior restraint (i.e., seeking a temporary restraining order or an injunction from a court to enjoin publication). The Supreme Court, however, is unlikely to uphold such an order. It has written: [P]rior restraints are the most serious and least tolerable infringement on First Amendment rights.... A prior restraint,... by definition, has an immediate and irreversible sanction. If it can be said that a threat of criminal or civil sanctions after publication "chills" speech, prior restraint "freezes" it at least for the time. The damage can be particularly great when the prior restraint falls upon the communication of news and commentary on current events. The government's ability to protect sensitive information was explored in the context of prior restraints of the media in the Pentagon Papers case. In a per curiam opinion accompanied by nine concurring or dissenting opinions, the Court refused to grant the government's request for an injunction to prevent the New York Times and the Washington Post from printing a classified study of the U.S. involvement in Vietnam. A majority of the justices indicated in dicta , however, that the newspapers—as well as the former government employee who leaked the documents to the press—could be prosecuted under the Espionage Act. A statute is unconstitutionally vague if it does not permit the ordinary person to determine with reasonable certainty whether his conduct is criminally punishable. Therefore, a statute prohibiting the unauthorized disclosure of classified information must be sufficiently clear to allow a reasonable person to know what conduct is prohibited. Where First Amendment rights are implicated, the concern that a vague statute will have a chilling effect on speech not intended to be covered may make that law particularly vulnerable to judicial invalidation. The Espionage Act of 1917 has been challenged for vagueness without success. There have been very few prosecutions under that act for disclosing information related to the national defense. The following elements are necessary to prove an unauthorized disclosure offense under 18 U.S.C. § 793: 1. The information or material disclosed must be related to the national defense, that is, pertaining to any matters "directly and reasonably connected with the defense of our nation against its enemies" that "would be potentially damaging to the United States, or might be useful to an enemy of the United States" and are "closely held" in that the relevant government agency has sought to keep them from the public generally and that these items have not been made public and are not available to the general public. 2. The disclosure must be made with knowledge that such disclosure is not authorized. 3. There must be an "intent or reason to believe that the information . . . is to be used to the injury of the United States, or to the advantage of any foreign nation. There does not appear to be a requirement that the disclosure cause actual harm. An evil motive is not necessary to satisfy the scienter requirement; the willfulness prong is satisfied by the knowledge that the information may be used to the injury of the United States. It is irrelevant whether the information was passed to a friendly foreign nation. A patriotic motive will not likely change the outcome. The Supreme Court, in Gorin v. United States , upheld portions of the Espionage Act now codified as sections 793 and 794 of title 18, U.S. Code (communication of certain information to a foreign entity) against assertions of vagueness, but only because jury instructions properly established the elements of the crimes, including the scienter requirement and a definition of "national defense" that includes potential damage in case of unauthorized release of protected information and materials. Gorin was a "classic case" of espionage, and there was no challenge based on First Amendment rights. The Court agreed with the government that the term "national defense" was not vague; it was satisfied that it "is a generic concept of broad connotations, referring to the military and naval establishments and the related activities of national preparedness." Whether information was "related to the national defense" was a question for the jury to decide, based on its determination that the information "may relate or pertain to the usefulness, efficiency or availability of any of the above places, instrumentalities or things for the defense of the United States of America. The connection must not be a strained one nor an arbitrary one. The relationship must be reasonable and direct." As long as the jury was properly instructed that information not likely to cause damage was not "related to the national defense" for the purpose of the statute, the term was not unconstitutionally vague. No other challenge to a conviction under the Espionage Act has advanced to the Supreme Court. Under the present legal framework, the publication of national security information by non-government personnel may be prosecuted under various provisions, but only if the information meets the definition set forth by statute and the disclosure is made with the requisite knowledge or intent with regard to the nature of the damage it could cause. The First Amendment limits Congress's ability to prohibit the publication of information of value to the public, especially with regard to pre-publication injunctions against non-government employees. That the publication of some information has the potential to damage U.S. national security interests is rarely denied, but an agreement on how to protect such information without harming the public's right to know what its government is doing may remain elusive.

Recent cases involving alleged disclosures of classified information to the news media or others who are not entitled to receive it have renewed Congress's interest with regard to the possible need for legislation to provide for criminal punishment for the "leaks" of classified information. The Espionage Act of 1917 and other statutes and regulations provide a web of authorities for the protection of various types of sensitive information, but some have expressed concern that gaps in these laws may make prosecution of some disclosures impossible. The 106th Congress passed a measure to criminalize leaks, but President Clinton vetoed it. The 108th Congress reconsidered the same provision, but instead passed a requirement for the relevant agencies to review the need for such a proscription. The Department of Justice in turn reported that existing statutes and regulations are sufficient to prosecute disclosures of information that might harm the national security. This report provides background with respect to previous legislative efforts to criminalize the unauthorized disclosure of classified information; describes the current state of the laws that potentially apply, including criminal and civil penalties that can be imposed on violators; and some of the disciplinary actions and administrative procedures available to the agencies of federal government that have been addressed by federal courts. Finally, the report considers the possible First Amendment implications of applying the Espionage Act to prosecute newspapers for publishing classified national defense information.

Committee sizes and ratios are determined before Senators are assigned to committees. Although the size of each committee is set in Senate rules, changes to these rules often result from interparty negotiations before each Congress. Senate party leaders also negotiate the party ratio of each committee during the discussions of committee size. Senate rules call for the election of Senators to standing committees by the entire membership of the chamber. Senate Rule XXIV, paragraph 1 states: "In the appointment of the standing committees, or to fill vacancies thereon, the Senate, unless otherwise ordered, shall by resolution appoint the chairman of each such committee and the other members thereof." These elections are based on nominations made by the parties, but Senators do not officially take seats on committees until they are elected by the entire Senate. While Senate rules are fairly clear regarding how nominations are to be approved , they do not address how the nominations of Senators to committees are to be made . In practice, each party vests its conference with the authority to make nominations to standing committees. Senate Republicans primarily use a Committee on Committees for this purpose, although the Republican leader nominates Senators for assignment to some standing committees. Senate Democrats use a Steering and Outreach Committee to nominate Democrats for assignment to all standing committees. The processes these two panels use are distinct, but the nominations of each panel require the approval of the full party conference and, ultimately, the Senate. Senate approval of the committee nominations of its parties usually is pro forma because the Senate respects the work of each party. It has been customary for third-party and independent Senators to caucus with one of the major parties. At least for committee assignment purposes, such a Senator is considered a member of that conference and receives his or her committee assignments from that conference through its regular processes. As used in this report, the term "standing committees" refers to the permanent panels identified in Senate rules. The rules also list the jurisdiction of each committee. Within their jurisdictions, the standing committees consider bills and issues, recommend measures for consideration by the Senate, and conduct oversight of agencies, programs, and activities. Most standing committees recommend authorized levels of funds for government operations and for new and existing programs within their jurisdiction. The term "non-standing committee" is used here to describe joint committees, and select, special, and other Senate committees. Congress currently has four joint committees that are permanent and that conduct studies or perform housekeeping tasks rather than consider legislation. Members of both chambers serve on them. The assignment of Senators to conference committees (temporary joint committees formed to resolve differences in House- and Senate-passed versions of a measure) is not addressed by this report. On occasion, the Senate has created select, special, and other committees. Sometimes such panels are created for a short time to complete a specific task, as in the case of the Special Committee to Investigate Whitewater Development Corporation and Related Matters. The committee was created on May 17, 1995, and expired on June 17, 1996. Select, special, and other committees have sometimes existed for many years. Some, like the Special Committee on Aging, conduct studies and investigations. Others, such as the Select Committee on Intelligence, have legislative jurisdiction, meaning they consider measures and recommend them for action by the Senate. This report focuses primarily on how Senators are elected to standing committees. It first relates how standing committee sizes and ratios are set. It then identifies the classification of committees the Senate uses for assignment purposes, and the chamber limitations on committee service. It next describes the procedures that each party uses to recommend Senators for assignment to standing committees, and how the full chamber approves these recommendations. Finally, it summarizes the processes used to appoint Senators to non-standing committees. The report does not address how committee chairs and ranking minority members are selected, or how subcommittee members and leaders are chosen. Following general elections, one of the first orders of business for leaders of both parties in the Senate is the setting of standing committee ratios and sizes. Committee ratios and sizes usually are set simultaneously because of their interrelationship. These determinations usually are made before assigning Senators to standing committees because the party organizations that make committee assignments need to know the numbers of seats available to each party on each committee. The determination of ratios and sizes sometimes is made with an awareness of Senators' specific desires for seats on particular panels. The ratio of Republicans to Democrats on each standing committee usually is determined at early organization meetings held in the interval between the general election and the beginning of a Congress. Since the rules of the chamber do not contain provisions regarding committee ratios generally, the majority party possesses the potential to set them unilaterally. In practice, however, ratios generally are set after negotiation between leaders of the two parties. Committee ratios usually parallel the overall party ratio in the Senate, with each party occupying a percentage of seats on all committees consistent with the percentage of seats it has in the Senate. Senate Rule XXV sets out the number of Senators allowed on each committee. However, these committee sizes typically are amended at the beginning of a Congress through Senate approval of one or more resolutions. Under Senate rules, the majority and minority leaders may agree to adjust temporarily the size of one or more standing committees, by up to two members, to accord the majority party a majority of the membership of every standing committee (a "working majority"). In many cases, however, amendments to committee sizes are made to accommodate the interests and needs of Senators in serving on committees. These amendments, and therefore committee sizes, are usually the product of consultation between the party leaders. The sizes of standing committees normally differ. In the 109 th Congress, the Senate standing committees ranged from 13 to 28 members. Committees with broader jurisdictions generally are larger than those whose jurisdiction is more narrowly defined. Committees considered more prestigious or otherwise sought-after also tend to be larger. The Senate Select Committee on Ethics has an equal party ratio pursuant to the resolution which created the panel. The rules of the Senate divide its standing and other committees into categories for purposes of assigning all Senators to committees. In particular, Rule XXV, paragraphs 2 and 3 establish the categories of committees, popularly called the "A," "B," and "C" committees. The "A" and "B" categories, are as follows: " A " COMMITTEES Agriculture, Nutrition, and Forestry Appropriations Armed Services Banking, Housing, and Urban Affairs Commerce, Science, and Transportation Energy and Natural Resources Environment and Public Works Finance Foreign Relations Health, Education, Labor, and Pensions Homeland Security and Governmental Affairs Judiciary Select Committee on Intelligence " B " COMMITTEES Budget Rules and Administration Small Business and Entrepreneurship Veterans' Affairs Special Committee on Aging Joint Economic Committee The "C" category comprises three non-standing committees: the Select Committee on Ethics, the Committee on Indian Affairs, and the Joint Committee on Taxation. The Joint Committee on the Library and the Joint Committee on Printing are not listed in any category, but are treated as "C" committees for assignment purposes. Rule XXV, paragraph 4 places restrictions on Senators' committee membership based on these categories. The restrictions are intended to treat Senators equitably in the assignment process. Essentially, each Senator is limited to service on two of the "A" committees, and one of the "B" committees. Service on "C" committees is unrestricted. Exceptions to the restrictions are recommended by the pertinent party conference and then officially authorized through Senate approval of a resolution affecting one or more Senators. Sometimes these exceptions are authorized to accord the majority party a working majority on a committee, whereas at other times exceptions are made to accommodate the preferences and needs of individual Senators. The committee assignment process used by Senate Republicans involves three steps. First, the Committee on Committees and the Republican leader nominate Republican Senators for committee assignments. Second, these recommendations are submitted for approval to the Republican Conference, the organization of all Republican Senators. Third, the recommendations are incorporated into one or more Senate resolutions and approved by the full Senate. The chair and other members of the Committee on Committees are appointed by the chair of the Republican Conference, subject to confirmation by the Republican Conference. The size of the Committee on Committees fluctuates from Congress to Congress. In recent Congresses, it consisted of nine members, including the majority leader, who served on the committee ex-officio and did not chair the panel. The Committee on Committees is relatively small, in part because it relies on a seniority formula in assigning both returning and newly elected Republican Senators. The formula makes the assignment process somewhat automatic; the absence of significant debate and voting thus requires comparatively few members. Under Republican Conference rules, the Committee on Committees nominates Republicans for assignment to all category "A" committees, as well as to the Committee on Rules and Administration. According to Conference Rule V, nominations for assignment to other committees are made by the Republican leader (unless otherwise specified by law). In practice, the Republican leader also has nominated members to serve on the Committee on Rules and Administration. Following a general election, all Republican Senators are asked to submit their committee assignment preferences to the Committee on Committees. The committee prefers that these requests be listed in order of priority. It is considered useful for new Republican Senators to consult with party leaders and the chairs (or ranking members) of desired committees to assess the likelihood of receiving a desired assignment. Under the seniority system used by Senate Republicans, for example, a freshman is likely to have more success if his or her first choice is not a committee seat desired by an incumbent or a "more senior" freshman. Informing party and committee leaders of one's committee preferences also acts to alert them to one's substantive policy interests. In December or January following the general election, the Committee on Committees first meets to nominate Senators to committees. Senate Rule XXV, as described above, sets out the rules and restrictions that guide the committee in distributing standing committee seats. The Republican Conference has established additional rules and guidelines that govern the procedures of the Committee on Committees. One such rule generally prohibits any Republican from serving on more than one of the "Super A," or "big four" category "A," committees: Appropriations, Armed Services, Finance, and Foreign Relations. Conference rules also generally prohibit two Republican Senators from the same state from serving on the same panel. Republicans usually nominate Senators to "A" committees before filling vacancies on other committees. The seniority formula used by the Committee on Committees in making assignment nominations is as follows. First, in order of seniority in the chamber, each incumbent chooses two committee assignments; incumbents may decide to retain current committee seats or choose among existing vacancies. However, a Senator who has served on a committee and lost a seat due to a change in the party ratio has priority over any and all Senators to claim the first vacancy on the committee. While such instances have been rare, they have occurred when party control of the Senate has changed. Second, each newly elected Senator chooses seats in order of seniority, based on previous service in the Senate; previous service in the U.S. House of Representatives and length of service in the House; and previous service as a state governor. Ties in seniority of freshmen are broken by draw. In addition, every newly elected Senator receives one assignment before any newly elected Senator receives a second assignment. The Republican Leader has the authority to appoint half of all vacancies on each "A" committee. If there is an odd number of vacancies, the Leader can appoint half plus one of all vacancies. Effective in the 108 th Congress, all Republican Members are offered two "A" committee slots in order of seniority. Each Member can retain only one "B" committee assignment from the previous Congress. Following this process, the Republican Leader makes any remaining "A" committee assignments. Conference rules provide a guideline governing the time frame for Senators to choose among assignment options presented by the Committee on Committees. If a Senator is presented with selection options before noon on a given day, the Senator should notify the Committee on Committees of his or her decision by the close of business on that day. If a Senator is presented with selection options after noon on a particular day, then a decision should be made by noon on the next business day. This provision is designed to expedite the assignment process by preventing Senators from engaging in lengthy deliberation that could delay the assignment of Senators with less seniority. Rank on each committee generally is determined by length of continuous service on the committee. If a Senator leaves a committee and returns in a subsequent Congress, the Senator likely would lose his or her previous seniority. However, the chair (or ranking member) of a committee need not be the Member with the longest committee service. While nominations for assignment to "non-A" committees (except, officially, Rules and Administration) are at the discretion of the Republican leader, the leader generally follows the seniority formula used by the Committee on Committees. Moreover, the leader usually works in close cooperation with the chair and other members of the Committee on Committees. Through this system, the assignment process is relatively consensus-oriented and automatic, and formal votes on nominees usually are not necessary. In assigning freshmen, the Committee on Committees does not consider the multiple factors relied upon by the Senate Democrats' party organization (discussed below); instead, the most important factor appears to be Senators' requests. Personal efforts to compete for committee seats appear to be minimal (though not unknown) as compared with Senate Democrats. When the Committee on Committees and the Republican leader have finished their work, they submit their recommendations for assignment to the Republican Conference. For each committee, a slate of committee members in order of proposed seniority is presented for consideration. Voting by recorded written ballot, as specified by conference rules, ordinarily is not necessary. The conference usually adopts the recommendations by unanimous consent, presumably because they are based largely on seniority. Once accepted by the Republican Conference, the assignment recommendations are packaged into one or more Senate resolutions that are submitted to the full Senate for approval, usually by the Republican leader. Because the resolutions are privileged, they can be brought up at any time. These resolutions are amendable and any Senator may demand a separate vote on the appointment of the chair or on the other members of a standing committee. However, the resolutions usually are adopted without incident. Nominations rarely are challenged on the floor because it is in the parties where decisions are made; by custom, neither party has challenged the nominations of the other party. Indeed, the routine character of the Senate's approval of nominations highlights the importance of the nomination process. In filling vacancies that occur on standing committees after their initial organization, Senate Republicans follow the same procedure used for each new Congress. Committee vacancies may occur during the course of a Congress because party leaders decide to change a committee's size or party ratio, or because Members die, change parties, or resign from the Senate. A new Senator replacing a late or former Senator may be chosen to fill the vacated committee seats. However, if the new Senator is of the opposite party from the departed Senator, adjustments in sizes and ratios often are needed to make slots for the new Senator. Moreover, incumbents also might seek to compete for the newly open committee seats, especially if they occur on one of the more prestigious panels, such as the Appropriations Committee or the Finance Committee. When an incumbent is chosen to fill a committee vacancy, that Senator often gives up an existing assignment to comply with party or chamber assignment limitations (although a waiver might be granted). This may cause a chain reaction involving a series of shifts of committee assignments. There are three steps in the nomination and assignment process for Senate Democrats. The first is for the Democratic Steering and Outreach Committee to make nominations for committee assignments. The second consists of approval of the nominations by the Democratic Conference, which comprises all Democrats in the Senate. The final step is for the assignment rosters to be incorporated into one or more Senate resolutions and considered and approved by the full Senate. Senate Democrats do not have written rules governing this assignment process, as do Senate Republicans. The size of the Steering and Outreach Committee is set by the Democratic Conference. The Democratic leader serves on the committee and appoints its members, subject to ratification by the conference. Steering and Outreach Committee members (except party leaders) may not serve simultaneously on the Democratic Policy Committee. Instead of chairing the panel, in the past few Congresses the Democratic leader has named another Senator as chair. In appointing Senators to vacancies, the Democratic leader attempts to achieve regional balance on the committee under a system that divides the country into four regions. The Steering and Outreach Committee continues from Congress to Congress, appointing Democratic Senators to vacancies as they arise. In the 109 th Congress, the Steering and Outreach Committee had 18 members, including the Democratic leader, the Democratic whip, the chief deputy Democratic whip, and a deputy Democratic whip. While it is not composed exclusively of the most senior Democrats, the Steering and Outreach Committee includes many committee ranking members. Once elected to the Senate, it is customary for new Democratic Senators to communicate committee preferences to the Steering and Outreach Committee. While the Democratic leader and the Steering and Outreach Committee chair generally solicit committee preferences from new Senators, incumbents desiring to switch committees usually initiate contact. Democrats are encouraged to submit their requests for assignment as early as possible. A Senator who delays risks the potential of not securing primary or even secondary requests. While the Steering and Outreach Committee does not require Senators to rank order their assignment preferences, many have done so in the past to give the committee alternatives if it is unable to grant initial requests. It appears to be important for Senators-elect, in formulating their preferences, to consult with party leaders, Steering and Outreach Committee members, and the chairs (or ranking members) of preferred committees. This consultation acts both to notify senior Senators of a freshman's substantive interests and to inform the freshman Senator of the likelihood that he or she will be assigned to preferred committees. The Steering and Outreach Committee organizes, and begins the process of making committee assignments, in November or December following the general election. Unlike its Senate Republican counterpart, the committee nominates Senators for assignment to every standing committee. Given that most returning Senators choose to retain their assignments from the previous Congress, most of the committee's work involves matching freshman Democrats with vacancies created by retirement or electoral defeat, as well as by adjustments in committee sizes and ratios. In making nominations for committee assignments, the Steering and Outreach Committee is bound by the categories of committees and the limitations on committee assignments contained in Senate Rule XXV, discussed earlier. Within the confines of these restrictions, the Democratic Conference has formulated additional restrictions for its own members. One such restriction generally limits each Senator to service on no more than one of the "Super A," or "big four" "A," committees: Appropriations, Armed Services, Finance, and Foreign Relations. Senate Democrats also have an informal practice of prohibiting two Democratic Senators from the same state from serving on the same committee. In addition to these chamber and party restrictions, the Steering and Outreach Committee considers many factors. These include Senators' preferences, state demographics, length of time since the state was last represented on the committee, perceived willingness to support the party, policy views, and personal and occupational backgrounds. Personal intervention, by the requesting Senator or another Senator, is sometimes helpful. The Steering and Outreach Committee usually fills vacancies on "A" committees before slots on other panels. Because the Steering and Outreach Committee does not rely on a seniority formula in assigning Senators, its process is relatively less automatic than that of Senate Republicans. For Democrats, there are no rules guaranteeing priority in assignment to incumbents switching committees, or governing the seniority of freshmen in choosing assignments. However, a Senator who served on a committee but lost the seat due to a change in the party ratio generally receives priority in assignment to a vacancy on that committee. Nominations for assignment are made on a seat-by-seat basis, and Steering and Outreach members usually make nominations by consensus. However, if significant competition exists for a particular seat, then secret balloting usually is conducted and the majority-vote winner is granted the nomination. Senators who do not win election to their most preferred committee seat are protected by the "Johnson Rule," providing that all Democrats are appointed to one "A" committee before any Senator receives a second assignment. Rank on each committee generally is determined by length of continuous service on the committee. If a Senator leaves a committee and returns to it in a subsequent Congress, the Senator likely would lose his or her previous seniority. However, the ranking member (or chair) need not be the Member with the longest committee service. The committee rankings of Senators assigned to a committee at the same time generally are determined by their seniority in their party in the Senate. When an incumbent and a freshman are assigned to a committee at the same time, the incumbent ordinarily ranks higher than the freshman. Similarly, when elected, each freshman is given a seniority ranking among Senate Democrats, and his or her rank on committees is based on this overall chamber ranking. Once all veteran and freshman Democratic Senators have been recommended for assignment, the roster is forwarded to the Senate Democratic Conference. While separate votes are possible, the conference usually ratifies the entire slate of assignments by unanimous consent. After ratification, the assignment recommendations are packaged into one or more Senate resolutions and submitted on the Senate floor for adoption. The resolutions usually are submitted by the Democratic leader, and they can be brought up at any time because they are privileged. The resolutions also are amendable, and any Senator may demand a separate vote on the appointment of any member. However, the resolutions containing the committee rosters usually pass without debate, by voice vote. It is in the party where significant debate and decision-making already has occurred regarding committee assignments. In filling vacancies that occur on standing committees after their initial organization, Senate Democrats follow the same procedure used for each new Congress. Committee vacancies may occur during the course of a Congress because party leaders decide to change a committee's size or party ratio, or because Members die, change parties, or resign from the Senate. A new Senator replacing a late or former Senator may be chosen to fill the vacated committee seats. However, if the new Senator is of the opposite party from the departed Senator, adjustments in sizes and ratios often are needed to make slots for the new Senator. Moreover, incumbents also might seek to compete for the newly open committee seats, especially if they occur on one of the more prestigious panels, such as the Appropriations Committee or the Finance Committee. When an incumbent is chosen to fill a committee vacancy, that Senator often gives up an existing assignment to comply with party or chamber assignment limitations (although a waiver might be granted.) This may cause a chain reaction involving a series of shifts of committee assignments. Non-standing committees are divided between the so-called category "B" committees and category "C" committees. The Special Committee on Aging and the Joint Economic Committee, along with four standing committees, are included in the "B" category of committees. Under Senate rules, no Senator may serve on more than one "B" committee, whether standing or non-standing. The Select Committee on Ethics, the Committee on Indian Affairs, and the Joint Committees on Taxation, the Library, and Printing essentially are treated as "C" committees, although Joint Library and Joint Printing are not explicitly listed as such in Senate rules. The "C" committees are exempt from the assignment limitations in Senate rules, so a Senator may serve on any number of them without regard to his or her other assignments. Specific rules regarding Senate membership on and appointments to non-standing committees often are contained in the legislation creating these panels. Thus, the procedures vary from committee to committee. A review of the legislation establishing the non-standing committees, and the appointment practices that have evolved, reveal that party leaders are usually included in the process. The members of the Select Committee on Ethics and the Special Committee on Aging are elected by the Senate by resolution, essentially in the same manner as the standing committees. The Ethics Committee is the only Senate committee with an equal party ratio, consisting of three Senators from each party. Republican members of both committees are chosen by the Republican leader and confirmed by the Republican Conference before election by the full Senate. Democratic members of the Ethics Committee are selected initially by the Democratic leader. In contrast, Democrats on the Aging Committee are nominated by the Steering and Outreach Committee and confirmed by the Democratic Conference before election by the full Senate. Majority-party Senators are appointed to the Select Committee on Intelligence on the recommendation of the majority leader, and minority-party Senators on the recommendation of the minority leader. Senators are appointed to this committee from the Appropriations, Armed Services, Foreign Relations, and Judiciary Committees, as well as from the Senate "at large." The majority and minority leaders, as well as the chair and ranking member of the Armed Services Committee serve on the committee as ex-officio , non-voting members. The resolution creating the Intelligence Committee provided for a rotation of membership; no Senator could serve on the committee for more than eight years of continuous service. To the extent practicable, one-third of the Senators appointed to the committee at the outset of each Congress should be Senators who did not serve on it in the preceding Congress. S.Res. 445 , adopted October 9, 2004, ended the eight-year limitation on the Intelligence Committee. The majority and minority leaders recommend Senators for appointment to the Committee on Indian Affairs, but the members are officially appointed by the President of the Senate (the Vice President of the United States). Appointments to the Committee on Indian Affairs are announced to the Senate from the chair. Ten Senators, six from the majority party and four from the minority party, are appointed to the Joint Economic Committee by the President of the Senate. The Senate membership of the Joint Committee on Taxation consists of five Senators from the Committee on Finance, three from the majority and two from the minority, chosen by the Finance Committee. Appointments to both joint committees are announced to the Senate from the chair. The Senate participants on the Joint Committee on the Library and the Joint Committee on Printing are selected by the Committee on Rules and Administration from among the committee's members. The chair and four other members of the Rules Committee are to serve on each joint committee. However, in some Congresses, the House and Senate have agreed to a concurrent resolution allowing another member of the Senate Rules Committee to serve on the Joint Committee on the Library in place of the Rules Committee's chair. The membership of the Joint Committee on Printing typically includes not only the chair but also the ranking minority member of the Senate Rules Committee. Members of both joint committees are elected by the Senate by resolution.

Because of the importance of committee work, Senators consider desirable committee assignments a priority. The key to securing favorable committee slots is often said to be targeting committee seats that match the legislator's skills, expertise, and policy concerns. After general elections are over, one of the first orders of business for Senate leaders is setting the sizes and ratios of committees. Although the size of each standing committee is set in Senate rules, changes in these sizes often result from inter-party negotiations before each new Congress. Senate party leaders also negotiate the party ratios on standing committees. Determinations of sizes and ratios usually are made before the process of assigning Senators to committees. Once sizes and ratios of standing committees are determined, a panel for each party nominates colleagues for committee assignments. Senate Republicans primarily use a Committee on Committees for this purpose, although the Republican leader nominates Senators for assignment to some standing committees. Senate Democrats use a Steering and Outreach Committee to nominate Democrats for assignment to all standing committees. The processes these panels use are distinct. Republicans rely on a seniority formula to make nominations, while Democrats make nominations on a seat-by-seat basis, considering a variety of factors. The processes also have many common features. After the general election, each panel solicits preferences for committee assignment from party colleagues, then matches these preferences with vacancies on standing committees. Senate rules, along with party rules and practices, guide the work of the Committee on Committees and the Steering and Outreach Committee. Senate rules, for instance, divide the standing and other Senate committees into three groups, the so-called "A" "B" and "C" categories. Senators must serve on two "A" committees and may serve on one "B" committee, and any number of "C" committees. Exceptions to these restrictions are sometimes approved by the Senate. Both parties place further limitations, for example, by generally prohibiting two Senators from the same party and state from serving on the same committee. The nominations of each of these panels require the approval of the pertinent full party conference and ultimately the Senate. Approval at both stages usually is granted easily, because of the debate and decision-making earlier in the process. Specific rules regarding Senate membership on and appointments to non-standing committees vary from committee to committee, but party leaders usually are included in the process. For more information on Senate and party rules governing assignment limitations, see CRS Report 98-183, Senate Committees: Categories and Rules for Committee Assignments.

As a result of the implementation of the Making Work Pay (MWP) tax credit in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), some taxpayers may have unexpectedly found that their 2009 or 2010 income tax refunds were lower than anticipated or that they owed income tax instead of receiving a refund. Some taxpayers ineligible for the MWP credit had been receiving the credit but were not able to claim it when filing their 2009 and 2010 income tax returns. The IRS published an optional procedure for adjusting withholding for those making pension payments in 2009 and 2010. In addition, some pensioners may also have found that their 2011 take-home pay was different compared with the 2009 and 2010 amounts. The MWP tax credit expired on December 31, 2010. Under the MWP credit, eligible taxpayers could receive up to $400 for individuals or $800 for joint returns per year in 2009 and 2010. To qualify for the MWP credit, individuals must have had earned income and had a valid Social Security number. The MWP credit was phased out for individuals making more than $75,000 of modified adjusted gross income ($150,000 for a joint return). For the purposes of the MWP credit, ARRA used the definition of earned income in 26 U.S.C. 32(c)(2), which include wages, salaries, tips, and other compensation from work, but does not include pension income. Individuals who received income only from pensions were not be eligible for the MWP credit. In addition, noncitizens who did not have valid Social Security numbers were ineligible for the tax credit. (Noncitizens might have Individual Taxpayer Identification Numbers to comply with U.S. tax laws.) The MWP credit reduced the amount of income tax withheld from individuals' checks, resulting in higher take-home pay. On February 21, 2009, the IRS issued revised income tax withholding tables. All individuals subject to income tax withholding, including those individuals who were not eligible for the tax credit, were subject to the revised withholding tables. Taxpayers not eligible for the credit were not able to claim the credit on their 2009 tax return. If these taxpayers were advanced the credit, then they may have found that their taxes were underwithheld at the end of the tax year. In calculating their 2009 or 2010 income taxes, these taxpayers may have found their refunds to be lower than they expected or that they may have owed taxes. For example, an individual who received income entirely from a pension, normally received a $200 refund, and who received the entire $400 MWP credit could have found a tax liability of $200 for the 2009 tax year. However, because more than three-quarters of households receive income tax refunds, most affected households would likely have seen a reduction in their refunds rather than owing taxes. On May 14, 2009, the IRS issued Notice 1036-P, Additional Withholding for Pensions for 2009, which is an optional withholding schedule for those making pension plan payments. This optional withholding schedule was designed to offset the underwithholding that might have occurred. However, there may have been pension plans that did not adopt this withholding table. Pension plans were not required to use the revised withholding tables. Some continued to use the withholding table issued on February 21, 2009. For 2010, IRS Publication 15, (Circular E) Employer's Tax Guide, contained a method for calculating additional withholding amounts for pension payments. Some individuals who received pensions may have seen their withholding amounts (and hence their take-home pay) increase or decrease in 2010 compared with their amounts in 2009. The Treasury Inspector General for Tax Administration issued a report on November 4, 2009, determining that millions of taxpayers might have been negatively affected by the new withholding tables. The report estimated that 15.4 million taxpayers could be affected and identified the groups most likely to be: Dependents who receive wages —Dependents were ineligible for the MWP credit. Single taxpayers with more than one job and joint filers where one or both spouses have more than one job or both spouses work —Individuals who work multiple jobs in 2009 might have had the $400 MWP advanced to them at each job. Individuals who file a tax return with an Individual Taxpayer Identification Number —Individuals must have had valid Social Security Numbers to claim the MWP credit. Taxpayers who receive pension payments —Only taxpayers who had earned income were eligible for the MWP credit. Pension income is not classified as earned income. Social Security recipients who also receive wages —Section 2201 of the ARRA provided for Social Security recipients to receive a one-time payment of $250. The MWP credit was reduced by the amount of any payments under Sections 2201 or 2202 of the ARRA. Individuals who were advanced the $400 MWP credit and also received the Social Security economic recovery payment had to repay the excess received. The IRS's response included in the Inspector General's report indicated that the IRS had been engaging in outreach efforts to increase awareness of the MWP credit. The IRS has also indicated that it would alert taxpayers that they may request a waiver from the penalty for estimated taxes. The estimated tax penalty applies to individuals who fail to have a sufficient amount of income tax withheld throughout the year. Individuals who received income from pensions may have seen an increase in the amount of their federal income tax withholding and therefore lower after-tax income ("take home") in 2011. This was not the result of any tax increase enacted by Congress. This was a result of the expiration of the MWP tax credit on December 31, 2010. The MWP tax credit provided individuals a federal income tax credit of 6.2% of wages up to a maximum credit of $400 ($800 for married couples filing jointly) in tax years 2009 and 2010. The MWP tax credit was phased out for individuals with incomes more than $75,000 ($150,000 for married couples filing jointly). The MWP tax credit was implemented during the tax year (rather than at the end of the year only) by lowering federal income tax withholding on individuals' checks. Individuals who received income from pensions and who did not have wages were not eligible for the MWP tax credit. However, they may have seen their withholding taxes lowered in tax year 2009 or 2010 because the entity making their pension payments used the general federal withholding tables that reflected the MWP tax credit. When these individuals filed their tax returns for tax year 2009 or 2010, the additional amount they had received from the lower withholding during the tax year would have been offset by a lower income tax refund, or a larger federal income tax amount due with their tax return. With the expiration of the MWP tax credit, the federal income tax withholding had returned to the pre-MWP tax credit amounts. Assuming that their incomes remained the same in 2011 (as in 2010), these taxpayers saw higher federal withholding taxes from their pension payments. Although the MWP tax credit expired on December 31, 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ), signed by President Barack Obama on December 17, 2010, contained several tax provisions, including an extension of some tax provisions that were scheduled to expire on December 31, 2010. Among the provisions in P.L. 111-312 were (1) an extension through December 31, 2012, of certain tax provisions first enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001 ( P.L. 107-16 ), the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ), and the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ); (2) a one-year "payroll tax holiday" which for 2011 reduced the employee portion of the Social Security payroll tax from 6.2% to 4.2% of covered wages up to $106,800 in 2011; and (3) an extension of unemployment provisions. Among ARRA provisions extended include (1) the Earned Income Tax Credit for those with a third child; (2) the American Opportunity Tax Credit to support access to college education; and (3) the child tax credit for all families with incomes above even $3,000. P.L. 112-78 , signed by President Barack Obama on December 23, 2011, extended the 2% reduction in Social Security payroll taxes through February 29, 2012. The Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) extended the 2% reduction through the end of 2012. The MWP tax credit was equal to 6.2% of wages, up to a maximum credit of $400 for single filers and $800 for married filers. The credit was not available to single filers with modified adjusted gross income of $95,000 or more or to married filers with modified adjusted gross income of $190,000 or more. Adjusted gross income (AGI) includes income that would not be eligible for the MWP tax credit. Examples include rental income, interest income, and rent and royalty income. Salaries and wages composed 72.0% of AGI for 2008 tax returns and was likely a larger percentage of income for single filers with AGI of less than $20,000 and married filers with AGI less than $40,000. Figure 1 and Figure 2 show the dollar amounts available for single filers and married filers under the MWP tax credit and the Social Security payroll tax holiday. Figure 1 shows that for individuals who made less than $20,000, the dollar amount received under the MWP tax credit in 2010 was more than the dollar amount of the reduction in payroll taxes in 2011. For an individual who had wages of $20,000, the dollar amount of the MWP tax credit exactly equaled the dollar amount of the reduction in Social Security payroll taxes. The reduction in Social Security payroll taxes plateaus at $2,136 because $106,800 was the maximum amount of wages subject to the Social Security payroll tax in 2011. Figure 2 shows that for married filers who make less than $40,000, the dollar amount received under the MWP tax credit was more than the dollar amount of the reduction in payroll taxes in 2011. For a married couple with wages of $40,000, the dollar amount of the MWP tax credit exactly equaled the dollar amount of the reduction in Social Security payroll taxes. The Social Security payroll tax holiday provided a benefit to workers with modified adjusted gross income larger than $95,000 ($190,000 for married filers) who were not eligible for the MWP tax credit. The Congressional Research Services's (CRS's) analysis of the Current Population Survey (CPS) indicated that of the 56.7 million single filers in 2009, 2.4 million (4.2%) had wage income of $95,000 or more and some would not have received the MWP tax credit, but are likely to receive the 2% reduction in Social Security payroll taxes. Of the 49.9 million married couples in 2009, 3.4 million (6.7%) had wages of $190,000 or more and some would not have received the MWP tax credit, but are likely to receive the 2% reduction in Social Security payroll taxes. Workers who made less than $20,000 in wages may find that the reduction in Social Security payroll taxes in 2011 was less than the amount they received under the MWP tax credit in 2010. For example, an individual with annual wages of $14,500 (which would be equal to a full-time job of 40 hours per week for 50 weeks at the federally mandated minimum wage) would have received a MWP tax credit of $400 in 2010, whereas their reduction in Social Security payroll taxes would have been $290 in 2011. CRS's analysis of the CPS indicates that of the 56.7 million single households in 2009, 23.5 million (41.5%) had wages of less than $20,000. Of the 49.9 million married households in 2009, 12.1 million (24.2%) had wages less than $40,000. Workers in employment that was not covered by Social Security, and therefore did not pay Social Security payroll taxes, would not have received the Social Security payroll tax reduction. In 2009 (the year of most recent data), approximately 27.4% (6.4 million) of state and local government workers worked in employment that was not covered by Social Security. The percentage varied widely by state. For example, in 2009 the percentage of state and local government workers not covered by Social Security ranged from 3.1% (54,100 workers) in New York to 97.4% (810,300 workers) in Ohio. Appendix Table A-1 contains the number and percentage of state and local government employees not covered by Social Security in each state. H.R. 772 , the Extended Tax Relief for All Act of 2011, introduced by Representative Rosa DeLauro on February 17, 2011, would have extended the MWP tax credit through December 31, 2011, and would have reduced the amount of the credit by the amount of the Social Security Payroll Tax reduction. Thus, taxpayers would have received the larger of the MWP tax credit or the Payroll Tax reduction. In a press conference on December 8, 2010, Larry Summers, then-director of the National Economic Council, indicated that while some workers might have received a greater dollar amount under the MWP tax credit than from the payroll tax holiday, P.L. 111-312 contained a number of tax credits that would have expired. Three of the expiring credits mentioned at the press conference were (1) the Earned Income Tax Credit for those with a third child; (2) the American Opportunity Tax Credit to support access to college education; and (3) the child tax credit for all families with incomes above $3,000. Larry Summers responded to a question regarding a New York Times report that indicated that "those at the lower end of the economic spectrum will actually be the only ones with less money in their pocket as a result of the deal because of the Making Work Pay elimination" as follows: It's a very good question. You have to figure out what comparison you're going to do. It is true that for a $16,000 a year—so that's an all-year, minimum-wage worker—it is true that the Making Work Pay would have given that worker $400. And this proposal, the payroll tax holiday, will give $320, and there is that $80 difference. On the other hand, the proposal such as the House bill that contained the Making Work Pay would not have included any of the three refundable tax credits that I mentioned, which cumulatively, for that family, are on average worth several hundred dollars. Obviously it depends on how many kids the family has and what the situation is—but on average would work out to about $300 for such a family, one; two, would not have included the continuation of unemployment insurance benefits, which provide $300 a week in benefits; and three, takes no account of the extra growth increment that will come from this program. If you raised GDP by 1 percent, that's $2,000 for the average family. So as I've emphasized, this was a compromise. But if you look cumulatively at the elements that were in this compromise relative to no deal, or even relative to the bill that passed through the House, that $16,000-a-year family gets much more support from this bill than it would have in its absence. And we believe you have to look at the totality of the program, not just take one provision from it and compare it with one provision in some other bill.

The Making Work Pay (MWP) tax credit provided a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns in 2009 and 2010. The MWP tax credit expired on December 31, 2010. As a result of the expiration of the MWP tax credit, some taxpayers are finding that the amount of their income tax withholding had increased in 2011. In 2009 and 2010, as a result of the implementation of the MWP tax credit, some taxpayers may have found that their 2009 and 2010 income tax refunds were lower than they anticipated or that they owed taxes when they were expecting a refund. This is because some individuals who were ineligible for the MWP tax credit nonetheless received it. The MWP credit was implemented as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) and provided a temporary tax credit in 2009 and 2010. Individuals received the MWP credit through lower income tax withholding throughout the 2009 and 2010 tax years. Ineligible taxpayers were not able to claim the tax credit on their 2009 or 2010 income tax filings, resulting in higher tax liability. The change in withholding tables may affect some pensioners' take-home pay throughout the year, although their 2011 tax liability has not changed. Although the MWP tax credit was not extended, certain other ARRA tax provisions were extended and a 2% reduction in Social Security payroll taxes was implemented for 2011. H.R. 772 would have extended the MWP tax credit for 2011 and would have reduced the amount of the MWP by the amount of the reduction in payroll taxes. P.L. 112-78, signed by President Barack Obama on December 23, 2011, extended the 2% reduction in Social Security payroll taxes through February 29, 2012. The Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) extended the 2% reduction through the end of 2012. This CRS report describes how some taxpayers might have been affected by the implementation and expiration of the MWP tax credit and which taxpayer groups might have had their income tax underwithheld. The report also describes the circumstances in which some workers may have received more under the Making Work Pay tax credit compared with the 2% reduction in Social Security payroll tax.

Senate and House rules place restrictions on the kinds of agreements conferees can propose to their two houses. Implicit in the rules of both chambers is the requirement that conferees resolve the differences committed to them by reaching agreements within what is known as "the scope of the differences" between the House and Senate versions of the bill. The conferees may accept the House position, the Senate position, or a position that is a compromise between them. Any position that is not within this range of options exceeds the scope of the differences between the two houses. It constitutes "matter not committed to them by either House" and makes their conference report subject to a point of order on both the House and Senate floor. In practice, these restrictions are not as stringent as they may seem on their face. The House often waives its rules that restrict the authority of conferees, and the Senate has developed precedents that grant its conferees considerable latitude in reaching agreements with the House, especially when they are in conference with a bill from one house and a single amendment from the other house that proposes to replace the entire text of the bill. Rulings and practices in the Senate have left the chamber with a body of precedents that allow the inclusion of new matter as long as it is reasonably related to the matter sent to conference. Senators can also choose not to raise a scope point of order against a conference report, allowing it to be considered regardless of its content. Paragraph 8 of Senate Rule XLIV places an additional restriction on the content of conference reports. Under the rule, a Senator can raise a point of order against provisions of a conference report if they constitute "new directed spending provisions," which are defined as any item that consists of a specific provision containing a specific level of funding for any specific account, specific program, specific project, or specific activity, when no specific funding was provided for such specific account, specific program, specific project, or specific activity in the measure originally committed to the conferees by either House. It is worth emphasizing that Paragraph 8 of Rule XLIV applies only to the conference report and not to the joint explanatory statement (also known as the statement of managers ) that accompanies it. Joint explanatory statements are signed by the conferees but, like reports of standing committees, are not voted on by the House or the Senate and cannot be changed through any formal amendment process. It is the conference report that contains the formal legislative language that will become law if both chambers agree to the report and the President then signs the measure. In contrast to Rule XXVIII, which applies to the full text of every conference report, Paragraph 8 of Senate Rule XLIV applies only to provisions of conference reports that would provide for actual spending. In other words, it applies only to discretionary and mandatory spending provisions and not to authorizations of appropriations. Discretionary spending is provided in appropriations acts, and generally funds routine operations of the federal government. Mandatory spending, also referred to as direct spending, is provided in substantive law and generally funds entitlement programs, such as Social Security and Medicare. A hypothetical example can illustrate the difference between the Rule XXVIII "scope" point of order and the Rule XLIV, Paragraph 8, "new directed spending" point of order. The House might pass an appropriations bill providing funding for several specific projects. The Senate might pass this bill with an amendment in the nature of a substitute, and the two houses then could agree to a conference. The conferees might agree to include in the conference report funding for several similar projects that were not listed in the House bill or in the Senate substitute. Under Rule XXVIII, the provision including funding for additional projects would likely be considered to be reasonably related to the matter sent to conference and therefore not subject to a point of order. Under Rule XLIV, Paragraph 8, however, provisions of this kind would likely be interpreted to be "new directed spending provisions" and therefore subject to a point of order. The procedure for disposing of a Rule XXVIII or a Rule XLIV point of order allows the Senate to strike "new matter" or "new directed spending provisions" from the conference report but agree to the rest of the terms of the compromise. Because it is not in order for either chamber to alter the text of a conference report, the rule creates a process that converts the text of the conference compromise minus the "new matter" or "new directed spending provisions" into an amendment between the houses. If the Senate agrees to this amendment, it is then sent to the House for consideration in that chamber. Under the process, a Senator can make a point of order against one or more provisions of a conference report. If the point of order is not waived (see below), the presiding officer rules on whether the provision is in violation of the rule. If a point of order is raised against more than one provision, the presiding officer can make separate decisions regarding each provision. If the presiding officer sustains a point of order against a conference report on the grounds that it violates either the prohibition of "new matter" or "new directed spending provisions," the matter is stricken from the conference recommendation. After all points of order raised under this procedure are disposed of, the Senate will proceed to consider a motion to send to the House, in place of the original conference agreement, a proposal consisting of the text of the conference agreement minus the "new matter" or "new directed spending provision" that was stricken. Amendments to this motion are not in order. The motion to agree to the bicameral compromise with the "new matter" or "new directed spending provision" stricken is debatable "under the same debate limitation as the conference report." Under the regular rules of the Senate, debate on conference reports is not limited. It is limited only if the Senate agrees to limit debate by unanimous consent, if cloture has been successfully invoked on the conference report, or if the Senate is considering the report under expedited procedures established by law (such as the procedures for considering budget resolutions and budget reconciliation measures under the Budget Act). In short, the terms for consideration of the motion to send to the House the proposal without the offending provisions are the same as those that would have applied to the conference report itself. If the Senate agrees to the motion, the conference recommendation as altered by the deletion of the "new matter" or "new directed spending provision" would be returned to the House in the form of an amendment between the houses. The House would then have an opportunity to act on the amendment. The prohibition against amendments to a conference report does not apply to amendments between the houses. Accordingly, the House could, under its procedures, agree to the modified compromise version as it was received from the Senate or offer further amendment(s) thereto. The House could also request a further conference with the Senate or choose to take no action at all on the new compromise language. The procedure for disposing of points of order under either Rule XXVIII or Paragraph 8, Rule XLIV, is similar to that currently followed for disposing of points of order against conference reports under the "Byrd rule" (Section 313(d) of the Congressional Budget Act). The Byrd rule applies only to reconciliation measures, however. Senate rules also create a mechanism for waiving the restrictions on the content of conference reports. The points of order under Rule XXVIII and Paragraph 8 of Rule XLIV can be waived with the support of three-fifths of all Senators duly chosen and sworn (60 Senators if there are no vacancies). Senators can move to waive points of order against one or several provisions, or they can make one motion to waive all possible points of order under either rule. Under these procedures, a motion to waive all points of order is not amendable, but a motion to waive points of order against specific provisions is. As a result, it is possible for a Senator to ensure a vote on waiving all points of order under each rule, and, if successful, no separate motions to waive points of order against individual provisions would be necessary. Time for debate on the motion to waive is limited to one hour and is divided equally between the majority leader and the minority leader or their designees. If the motion to waive garners the necessary support, the Senate is effectively agreeing to keep the matter that is potentially in violation of the rule in the conference report. Motions to waive "scope" (Rule XXVIII) points of order are made and considered separately from motions to waive "new directed spending" (Rule XLIV, Paragraph 8) points of order. The rules further require a three-fifths vote to sustain an appeal of the ruling of the chair and limit debate on an appeal to one hour, equally divided between the party leaders or their designees. The purpose of these requirements is to ensure that either method by which the Senate could choose to apply these rules—through a motion to waive or through an appeal of the ruling of the chair—requires a three-fifths vote of the Senate (usually 60 Senators). A simple majority (51 Senators if there are no vacancies and all Senators are voting) cannot achieve the same outcome. The effect of overturning a ruling of the chair on appeal is quite different from the effect of agreeing to a motion to waive a rule. The decision on an appeal stands as the judgment of the Senate and becomes a precedent for the Senate to follow in future proceedings. A decision to waive the rule, in contrast, does not change the interpretation of the rule in future practice.

Two Senate rules affect the authority of conferees to include in their report matter that was not passed by the House or Senate before the conference committee was appointed. Colloquially, such provisions are sometimes said to have been "airdropped" into the conference report. First, Rule XXVIII precludes conference agreements from including policy provisions that were not sufficiently related to either the House or the Senate version of the legislation sent to conference. Such provisions are considered to be "out of scope" under long-standing Senate rules and precedents. Second, Paragraph 8 of Rule XLIV establishes a point of order that can be raised against "new directed spending provisions," or provisions in a conference report that provide specific items of appropriations or direct spending that were not committed to the conference committee in either the House or Senate versions of the legislation. Both of these restrictions can be enforced on the Senate floor if any Senator chooses to raise a point of order against one or more provisions in a conference report. The process for disposing of either a Rule XXVIII or a Rule XLIV point of order allows the Senate to strike "out of scope matter" or "new directed spending provisions" from the conference report but agree to the rest of the terms of the compromise. It is not in order, however, for either chamber to alter the text of a conference report, and therefore the process converts the text of the conference compromise minus the "new matter" or "new directed spending provisions" into an amendment. If the Senate agrees to this amendment, it is then sent to the House for consideration in that chamber. The points of order under Rule XXVIII and Paragraph 8 of Rule XLIV can be waived with the support of three-fifths of all Senators duly chosen and sworn (60 Senators if there is no more than one vacancy). A figure at the end of the report outlines the procedural steps for disposing of these points of order when they are raised against conference reports.

Since the 9/11 terrorist attacks, Congress has not only focused considerable attention on how intelligence is collected, analyzed, and disseminated in order to protect the homeland against terrorism, but also what should such intelligence encompass. A discussion of what constitutes "homeland security intelligence" and how it nests within the broader intelligence discipline may be useful background as Congress continues to examine a broad range of homeland security issues. Prior to 9/11, it was possible to make a distinction between "domestic intelligence"—primarily law enforcement information collected within the United States—and "foreign intelligence"—primarily military, political, and economic intelligence collected outside the country. Today, this distinction is blurred. Threats to the homeland posed by terrorist groups are national security threats, and intelligence collected outside the United States is often very relevant to the threat environment inside the United States and vice versa. The National Commission on Terrorist Attacks Upon the United States (hereafter the 9/11 Commission) stated that one of the challenges in preventing terrorist attacks is bridging the "foreign-domestic divide." The 9/11 Commission used this term for the divide that it found not only within the Intelligence Community (IC), but also between the agencies of the IC dedicated to the traditional foreign intelligence mission, and those agencies responsible for the homeland security intelligence (HSINT) and law enforcement missions. Some might categorize security intelligence and law enforcement (criminal) intelligence as "non-traditional" intelligence. Yet, the scope and composition of this non-traditional or homeland security intelligence remains somewhat nebulous. At the broadest level, there is a plethora of definitions for intelligence. Most explain the various types of clandestine intelligence, the methods of intelligence collection (the "-Ints"), intelligence consumers, the purposes for which intelligence is collected, and the intelligence cycle. Traditional intelligence collection done clandestinely and overtly, largely at the federal level, to inform national-level policymakers is often differentiated from criminal intelligence gathered by a broader set of federal, state, and local actors generally for law enforcement purposes. Some argue that given that the end result in a criminal case is successful prosecution, that criminal intelligence gathering is largely reactive—a crime takes place, and "intelligence" or evidence is collected to support a prosecution. However, intelligence gathering can also be used to advance the causes of national security, as state and local law enforcement agencies can be viewed as the nation's counterterrorism "eyes and ears." Arguably, not all criminal intelligence gathering is reactive, as some law enforcement organizations and intelligence fusion centers use proactive intelligence gathering techniques, such as the recruitment of human assets, to prevent terrorist attacks. The terms domestic intelligence and homeland security intelligence are often used colloquially and interchangeably by some observers. Depending on how one defines "homeland security," this may be understandable. If, however, one bounds the activities associated with intelligence geographically, a systemic malady which was at least a proximate cause of the intelligence failure resulting in the terrorist attacks of September 11, 2001, the two terms are inherently distinct. That is, domestic intelligence could be defined as that which is collected, analyzed, and disseminated within the United States; yet, homeland security intelligence may be much more broadly defined without regard to the geographic origin of the intelligence collected. The rationale for the integration of what is traditionally defined as foreign intelligence with that which is thought of as domestic intelligence is concisely stated by former Director of National Intelligence (DNI) Ambassador John Negroponte: "What happens abroad can kill us at home." One of the broadest definitions of intelligence is that "intelligence is knowledge, organization, and activity." Arguably, one of the most meaningful purposes of intelligence is "to establish where the danger lies." Some would argue based on this definition that "intelligence is intelligence"—that is, differentiating traditional from non-traditional intelligence is a theoretical matter which may have little relation to the end result—protecting national security. This argument might continue that threats to U.S. national security by and large originate overseas and, since its formal and statutory inception in 1947, the U.S. Intelligence Community has always been the first line of defense in identifying and understanding these threats. Although compelling, this argument could lead some observers to conclude that the state, local, and private sector intelligence players are simply "bolt on" modules to the existing federal community. Such a status quo plus model could be interpreted by some to mean that state, local, and private sector entities are new and passive consumers of federally gathered and analyzed intelligence products, yet not necessarily full intelligence cycle partners. This may not necessarily be the case, as state, local, and private sector organizations have taken on a more activist and proactive role in protecting their populations and infrastructure, a role that includes collecting their own intelligence while working with federal law enforcement and IC partners stationed in Washington, DC, and within their respective districts. The "intelligence is intelligence" position might beg the question of what is the most appropriate strategy for homeland security intelligence—a "top-down" federally driven model where the traditional "Ints" are dominant, a "bottom-up" state, local, and private sector model where the thousands of state and local law enforcement intelligence collectors are dominant, or some unique partnership that strikes a balance between these two extreme models? To some extent, HSINT may be perceived by some as a federally led "top-down" model through which the federal government's intelligence entities provide raw intelligence and/or finished terrorism threat assessments to state, local, and tribal law enforcement entities which may make independent determinations of whether the intelligence is actionable. Another alternative is a "bottom up" model through which criminal intelligence, of the type collected long before the events of September 11, 2001, provides an assessment of the local environments in which a national security and/or a criminal threat might become a reality. A third model, among others, might envision a less hierarchical or a more decentralized structure in which roles and responsibilities of federal, state, and local players are more clearly delineated, information shared more widely, and coordination between law enforcement and traditional intelligence actors closer. These models will be highlighted below. Some perceptions of HSINT among leaders in the IC and observers of the intelligence process are illustrative. Leaders within the Intelligence and Homeland Security communities often speak openly about the responsibilities, priorities, accomplishments, and challenges their agencies face. The nation's first DNI, Ambassador John Negroponte, stated that the Intelligence Community has tasked itself with "bolstering intelligence support for homeland security as enterprise objective number one." He spoke of this priority within the context of the DNI's mandate resulting from the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) to "integrate the foreign, military and domestic dimensions of the United States intelligence into a unified enterprise" and "connecting the dots across the foreign-domestic divide." At the aggregate level, even if it is assumed that there is one unified intelligence discipline, according to Ambassador Negroponte, there are three different dimensions of intelligence—foreign, military, and domestic. Under this school of thought, HSINT could become another dimension of intelligence that is distinct in some manners, yet overlaps with the aforementioned dimensions. At a relatively simplistic level, the relationships among the dimensions of intelligence could be depicted according to Figure 1 below. Although each of the dimensions of intelligence (referred to above) could be further subdivided, the domestic intelligence dimension, under a broad understanding of the term, would include the role state, local, tribal, and private sector entities play in collecting, analyzing, and disseminating information and intelligence within their respective areas of jurisdiction or industries. DNI Negroponte has defined the domestic agenda as "institution building and information sharing without damaging the fabric and values of our political culture." With respect to institution building, the approach remains federal-centric. Ambassador Negroponte referred specifically to the refinement of the FBI's National Security Branch, the further development of the National Counterterrorism Center (NCTC), as well as the development of the DHS Office of Intelligence and Analysis. State governments, local law enforcement, the private sector, and tribal entities were mentioned at a procedural level—that is, in the sense of "facilitating these multidirectional flow of information." Former Secretary of Homeland Security Michael Chertoff provided his insights into and thoughts about defining the scope of HSINT. Using the metaphor of intelligence as the "radar of the 21 st century" to provide early warning of terrorist attacks, he stated, Intelligence, as you know, is not only about spies and satellites. Intelligence is about the thousands and thousands of routine, everyday observations and activities. Surveillance, interactions—each of which may be taken in isolation as not a particularly meaningful piece of information, but when fused together, gives us a sense of the patterns and the flow that really is at the core of what intelligence analysis is all about ... . We (DHS) actually generate a lot of intelligence ... we have many interactions every day, every hour at the border, on airplanes, and with the Coast Guard. Some observers have characterized domestic intelligence in the following manner: Domestic intelligence entails the range of activities focused on protecting the United States from threats mostly of foreign origin. Focused narrowly, it includes the FBI's counterterrorism work with local law enforcement. On a much broader scale, however, it also involves a broader set of intelligence activities overseen by the Director of National Intelligence, the secretary of defense, the attorney general, and the secretary of homeland security. The goal is to integrate federal, state and local governments, and, when appropriate, the private sector on a secure collaborative network to stop our enemies before they act. Those enemies include individuals and groups attempting to transport weapons of mass destruction, international terrorists, organized criminals, narcotics traffickers, and countries that are working alone or in combination against U.S. interests. Another observer has defined "domestic national security intelligence" as intelligence concerning the threat of major, politically motivated violence, or equal grievous harm to national security or the economy, inflicted within the nation's territorial limits by international terrorists, homegrown terrorists, or spies of saboteurs employed or financed by foreign nations. According to Dr. Sherman Kent, security intelligence is defined as the intelligence behind the police function. Its job is to protect the nation and its members from malefactors who are working to our national and individual hurt. In one of its most dramatic forms it is the intelligence which continuously is trying to put the finger on clandestine agents sent here by foreign powers. In another, it is the activity which protects our frontiers against other undesirable gatecrashers: illegal entrants, smugglers, dope runners, and so on... By and large, security intelligence is the knowledge and the activity which our defensive police forces must have before they take specific action against the individual ill-wisher or ill-doer. Some of the similarities between these perceptions include (1) a fundamental belief that intelligence is the first line of defense for the nation, (2) threats to U.S. national security are largely, although not solely, of foreign origin, and (3) there is a national intelligence role for non-traditional players (largely state, local, tribal law enforcement, as well as the private sector), a role in which they make contributions to preventing terrorist attacks or other inimical acts directed against U.S. citizens within the United States. Others, however, may account for the difference in these perceptions as being associated with the explicit roles and responsibilities that these non-traditional entities play. Are these entities solely recipients of federally collected raw and finished intelligence products? At a policy and, importantly, local level, are non-traditional players viewed by federal personnel as equal partners, and/or "force multipliers?" At the federal level, what policies and mechanisms are in place to provide those non-traditional entities with feedback on the intelligence they collect and provide to the federal government? Although the breadth of these questions is beyond the scope of this report, it may be illustrative to view HSINT through the eyes of national strategy. According to the DNI's National Intelligence Strategy of the United States of America: Transformation Through Integration and Innovation , one of the basic objectives is to "build an integrated intelligence capability to address threats to the homeland, consistent with U.S. laws and the protection of privacy and civil liberties." The strategy stipulates that the nature of the transnational threats to the United States "force us to rethink the way we conduct intelligence collection at home and its relationship with traditional intelligence methods abroad." Moreover, the strategy states that U.S. intelligence elements must focus their capabilities to ensure that (1) Intelligence elements in the Departments of Justice and Homeland Security are properly resourced and closely integrated within the larger Intelligence Community, (2) all Intelligence Community components assist in facilitating the integration of collection and analysis against terrorists, weapons of mass destruction, and other threats to the homeland, and (3) state, local, and tribal entities and the private sector are connected to our homeland security and intelligence efforts. Any national strategy, one could argue, by definition focuses on and provides direction to only those agencies that the federal government controls. A broader reach and/or direction to entities beyond this purview might run the risk of presupposing that the affected community(ies) agree with the national strategy and/or have the resources to implement such direction. Therefore, it may be appropriate that the National Intelligence Strategy , while recognizing a homeland security intelligence role for state, local, and tribal entities, as well as the private sector, does so only in a general manner that does not stipulate the activities these communities will implement as part of the broader community of entities working to protect U.S. national security. It could also be argued, that while the National Intelligence Strategy calls for state, local, and tribal entities to be "connected to our homeland security and intelligence efforts," it nevertheless envisions homeland security intelligence as being driven, in large part, by the federal entities most associated with the domestic intelligence mission—that is, the activities undertaken by the intelligence elements of the Departments of Justice and Homeland Security. How the term "connected" is defined becomes of critical importance, as it implies communication and the sharing of information among federal, state, and local intelligence officials. The National Strategy for Homeland Security published in October 2007, is more explicit about the role of state, local, tribal, and even private sector elements. It stresses that homeland security is a shared responsibility. Consistent with this theme, the strategy highlights the importance of collaboration in the realm of homeland security intelligence. It characterizes the process of identifying, locating, and uncovering terrorist activity—the core objective of homeland security intelligence—as multifaceted. The strategy specifies the ways government at all levels and the private sector need to contribute to the homeland security effort. It also notes the importance of an "integrated Information Sharing Environment that supports the vertical and horizontal distribution of terrorism-related information.... " The sharing of homeland security intelligence has been a particular priority for the Congress, which directed the establishment of the Information Sharing Environment in the IRTP A . Later, in the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) , Congress directed DHS to undertake additional initiatives, including the following: Establish department-wide procedures for review and analysis of information provided by state, local, tribal, and private sector elements; integrate that information into DHS intelligence products, and disseminate to federal partners within the IC. Evaluate how DHS components are utilizing homeland security information and participating in the Information Sharing Environment. Establish a DHS State, Local, and Regional Fusion Center Initiative to establish partnerships with state, local, and regional fusion centers. Coordinate and oversee the creation of an Interagency Threat Assessment and Coordination Group (ITACG) that will bring state, local, and tribal law enforcement and intelligence analysts to work in the National Counterterrorism Center. The DHS intelligence strategy has four main elements: (1) vision, (2) mission, (3) definitions, and (4) goals and objectives. While the strategy does not specifically define HSINT, it provides a vision for the DHS intelligence enterprise as being "an integrated ... enterprise that provides a decisive information advantage to the guardians of our homeland security." According to the strategy, the mission of the DHS intelligence enterprise is to provide valuable, actionable intelligence and intelligence-related information for and among the National leadership, all components of DHS, our federal partners, state, local, territorial, tribal, and private sector customers. We ensure that information is gathered from all relevant DHS field operations and is fused with information from other members of the Intelligence Community to produce accurate, timely, and actionable intelligence products and services. We independently collate, analyze, coordinate, disseminate, and manage threat information affecting the homeland. Implicit in this strategy is the DHS adoption of the definition of homeland security information outlined in the Homeland Security Act of 2002. Homeland security intelligence is not a term that is as yet defined or codified in law. The term and activities associated with it include—and go beyond—the definitions of the two traditional types of intelligence commonly defined in law and executive orders: foreign intelligence and counterintelligence. And, more recently, definitions of these two types of intelligence have been supplemented by the terms "national intelligence" and "intelligence related to national security." As with most intelligence-related terms, individuals attach their own interpretations and perceptions to HSINT. While there may be some commonly held perceptions about how HSINT is defined, it is also possible that individuals use the terms freely, but without a true common understanding of the scope and breadth of activities that may be consistent with homeland security intelligence. The primary statutory definition that applies is that which appears in the Homeland Security Act of 2002 , which defines homeland security information as any information possessed by a federal, state, or local agency that (a) related to the threat of terrorist activity, (b) relates to the ability to prevent, interdict or disrupt terrorist activity, (c) would improve the identification or investigation of a suspected terrorist or terrorist organization; or (d) would improve the response to a terrorist act. The DHS Office of Intelligence and Analysis has adopted this definition of homeland security information. It is worthwhile to note that although DHS remains an organization designed to protect against "all hazards," the focus of homeland security information, at least as defined in law, is counterterrorism. As illustrated below, HSINT can be more broadly interpreted to involve intelligence designed to protect against the inimical activities of narcotics traffickers, organized criminals, and others having international support networks and seeking to engage in activities that could undermine U.S. national security. Another type of intelligence defined in statute is traditional or foreign intelligence, which means [i]nformation relating to the capabilities, intentions, and activities of foreign governments or elements thereof, foreign organizations, or foreign persons, or international terrorism activities. The methods of traditional foreign intelligence collection fall into the following five areas: imagery intelligence (IMINT), signals intelligence (SIGINT), human intelligence (HUMINT), measurement and signatures intelligence (MASINT), and open source intelligence (OSINT). While the meanings of these disciplines are relatively well known and commonly understood among intelligence professionals, HSINT is more nebulous. Because HSINT is not necessarily source-specific, some would question whether it should be referred to as a collection "discipline." Although it is true that numerous unique entities are within DHS and at the state and local government levels, as well as within the private sector, that are aggressively collecting homeland security information, it is also true that many of the traditional aforementioned "INTs" collect homeland security intelligence insofar as they provide information on terrorism threats that may originate globally, yet are potentially manifested within U.S. borders. Within DHS Intelligence itself, the OSINT and HUMINT collection methods are likely to be most prevalent. The other type of intelligence codified in law is counterintelligence, which is defined as Information gathered and activities conducted to protect against espionage, other intelligence activities, sabotage, or assassinations conducted for by or on behalf of foreign governments or elements thereof, foreign organizations, or foreign persons, or international terrorist activities. With respect to counterintelligence, DHS Intelligence has as one of its objectives to "consistent with legal authorities, establish measures to protect the Department against hostile intelligence and operational activities conducted by or on behalf of foreign powers or international terrorist activities." To some extent, however, at least for semantics if not necessarily for jurisdictional purposes, the differences between foreign intelligence and counterintelligence were attenuated with the passage of the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ). The IRTPA sought to remedy numerous problems uncovered by the 9/11 Commission, one of which was the aforementioned gap between foreign and domestic intelligence. The IRTPA amended the National Security Act of 1947 (50 U.S.C. §401a) to read, The terms 'national intelligence' and 'intelligence related to national security' refer to all intelligence, regardless of source from which derived and including information gathered within or outside the United States that (a) pertains, as determined consistent with any guidance issued by the President, to more than one United States Government agency; and (b) that involves - (I) threats to the United States, its people, property, or interests; (ii) the development, proliferation, or use of weapons of mass destruction; or (iii) any other matter bearing on U.S. national or homeland security. As such, HSINT could be interpreted as synonymous with intelligence related to national security, or some subset thereof. A framework for outlining the scope of HSINT, or at least the criteria by which it might be framed could prove helpful. While there are numerous approaches to framing homeland security intelligence, three possible approaches are discussed below. There are at least three different constructs that could be used to frame HSINT: (1) geographic (2) structural, and (3) holistic. Table 1 summarizes some of the limits and boundaries of these three possible approaches to framing HSINT. Beyond geographic bounds, another set of differentiating factors between these approaches is the extent to which, if at all, one believes homeland security intelligence is the sole purview of the federal government, or a more inclusive and cooperative federal, state, local, tribal, and private sector model. Homeland security intelligence can be viewed, some might argue rather simplistically, in geographic and federal/state/local government terms. That is, if the intelligence collection activity takes place within the United States—whether it be by a federal agency or a state, local, tribal, or private sector actor, it would be considered HSINT. Under this approach, while HSINT's activities are constrained by borders, the yield from homeland security's collection and analysis could be combined with foreign intelligence to develop a more complete picture of homeland security threats. Others might counter that the problem with this type of approach is that, as the events of September 11, 2001, demonstrated clearly, national borders increasingly have little meaning in determining threats to U.S. national and homeland security. As has been well documented by numerous studies, the planning for the events of 9/11 took place largely overseas, but the acts were executed within U.S. borders. An intelligence approach that considered only activities associated with homegrown threats, without a more integrated, global perspective on the threat, would miss one of the central lessons learned from 9/11—the importance of integrating intelligence related to threats to national security regardless of the geographic location of the source. Homeland security intelligence could be viewed as primarily a federal activity. Geography is not as important under this approach, as the federal entities that engage in homeland security intelligence may, directly or indirectly, collect information outside the United States. For example, the FBI, through its Legal Attaché (LEGAT) program, has 75 LEGAT offices and sub-offices providing coverage for over 200 countries, islands, and territories. Through these offices, it collects principally criminal information through open liaison with international law enforcement counterparts. More specifically, under this approach, HSINT is a federal activity that is engaged in by certain statutory members of the Intelligence Community. Thus, of the 16 agencies that are statutory members of the IC, under this approach perhaps only four would engage in domestic intelligence activities—the intelligence elements of the FBI; DHS I&A and the U.S. Coast Guard; the intelligence elements of the Treasury Department; and the intelligence elements of the Energy Department. Others might argue this approach is too parochial, as it discounts the important homeland security intelligence roles played by other statutory members of the IC and non-federal actors, such as state and local intelligence fusion centers and the private sector. Under this approach, HSINT is not bounded by geographic constraints, level of government, or perceived mutual mistrust between public and private sectors. That is, the approach recognizes no borders and is neither "top down" nor "bottom up." It involves and values equally information collected by the U.S. private sector owners of national critical infrastructure, intelligence related to national security collected by federal, state, local, and tribal law enforcement officers, as well as the traditional "-Ints" collected by statutory members of the IC. It involves strategic and tactical intelligence designed to prevent attacks on the U.S. homeland, as well as highly tactical and event-driven information coordination that must take place in response to a terrorist attack or national disaster. Although information sharing between levels of government is widely held to be an undisputable public "good," achieving effective levels of information exchange is a challenging goal. As former Vice Chair of the 9/11 Commission, Lee H. Hamilton, stated: "You can change the law, you can change the technology, but you still need to change the culture; you need to motivate institutions and individuals to share information." Administration officials have recognized these challenges. Ambassador Thomas E. McNamara, the Program Manager for the Information Sharing Environment (ISE), testified that "the breadth and complexity of the information sharing challenge should not be underestimated. Information silos, cultural issues, and other barriers that inhibit sharing still exist today." Under the holistic approach, the HSINT community might include the 16 statutory members of the IC (as each collects national intelligence, or intelligence related to national security which could have a profound impact on homeland security); the National Counterterrorism Center, National Counterintelligence Center, National Counter Proliferation Center, and the Open Source Intelligence Center; the 14 existing private sector Information Sharing and Analysis Centers (ISACS), scores of state and local law enforcement entities charged with gathering criminal intelligence, numerous state and regional "intelligence fusion" centers, and federal entities with law enforcement responsibilities which may collect intelligence related to national security. This holistic approach implies an interdependency between the diverse players of the statutory IC and the broader HSINT Community. As Ambassador Henry A. Crumpton, a former CIA case officer and former Special Coordinator for Counterterrorism at the State Department states, although there are differences between intelligence and law enforcement, the primary customer for domestic foreign intelligence on near-term threats is law enforcement. And law enforcement can provide valuable leads for intelligence officers. The intelligence collector and the law enforcement consumer, therefore, must strive for more than information sharing; they must seek interdependence. Calls for interdependence between foreign intelligence and security or criminal intelligence today mirror those made nearly thirty years ago by Dr. Kent, who wrote The real picture of the diversity in kinds of intelligence... lies in this truth: a very great many of the arbitrarily defined branches of intelligence are interdependent. Each may have its well-defined primary target which it makes its primary concern, but both the pursuit of this target and the byproducts of pursuing it bring most of the independent branches into some sort of relationship with the others. Intelligence as an activity is at its best when this fact is realized and acted upon in good faith. The challenge, then as now, is to implement such a vision where all players in the de facto HSINT Community would be treated as partners with value to add. What has changed substantially since Dr. Kent's seminal work is the addition of state, local, and private sector actors as both producers and consumers of intelligence. It is here—in the interaction with these relatively new players—that the DHS Intelligence Enterprise has a great role to play. The clear elucidation of HSINT role and responsibilities and implementation, particularly between the FBI and DHS Intelligence, remains an evolving process. A broader understanding of the members and functions of the HSINT Community and the DHS members of the community may be helpful in assessment of these matters. The Intelligence Community (IC) is defined in law, yet the homeland security intelligence community (HSIC) remains a somewhat nebulous entity. As defined by the DHS Intelligence Enterprise Strategic Plan , the HSIC "includes the organizations of the stakeholder community that have intelligence elements." The Homeland Security Stakeholder Community is defined broadly as all levels of government, the Intelligence, Defense, and Law Enforcement Communities, private sector critical infrastructure operators, and those responsible for securing the borders, protecting transportation, and maritime systems, and guarding the security of the homeland. Notwithstanding the fact that a HSIC is not statutorily defined, and may not necessarily be a useful construct from a managerial perspective, such a community, as traditionally defined, exists. The members and collective responsibilities of this community depend, to some extent, on how one bounds the function of HSINT. As mentioned above, the broader the definition of HSINT, the wider the range of players in the community. If one adopts the holistic model of HSINT, the HSIC would include a broad range of agencies, many of which are hybrid agencies undertaking homeland security, law enforcement, defense, and/or traditional foreign intelligence functions. These entities include, among others, the intelligence elements of the Department of Defense (DOD) U.S. Northern Command (USNORTHCOM), and Counterintelligence Field Activity; the Department of Justice's Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Drug Enforcement Administration; the Department of Treasury's Office of Terrorism and Financial Intelligence, and the Department of Energy's (DOE) Office of Intelligence and Counterintelligence. Numerous state and local law enforcement entities, and the state and regional intelligence fusion centers, would fall under a broad interpretation of homeland security intelligence. Finally, the private sector, particularly those sectors outlined as being part of U.S. critical infrastructure (as defined under HSPD-7) would also fall into a broadly defined concept of a homeland intelligence community. An interesting comparison can be drawn between the HSIC and the statutory IC, as defined in the National Security Act of 1947, as amended, and in subsequent Executive Orders. One general definition of the IC is a "federation of Executive Branch agencies and organizations that conduct intelligence activities necessary for the conduct of foreign relations and protection of national security." A federation differs from a community insofar as the constituent elements of a federation, by definition, give up some degree of authority to a more central body. A community, by contrast, implies a group of persons or entities merely having common interests, but not necessarily bound together by any formal power sharing arrangements or agreements. While the IC has arguably moved more in the direction of a federation with the establishment of a Director of National Intelligence (DNI), one could argue the HSIC, broadly defined, remains very much a community spread across federal, state, local government sectors, as well as the private sector. The diffuse nature of a broadly defined HSIC may be dictated by the very nature of the function itself. That is, if state, local, tribal and private sector members are valued and contributing members of the HSIC, an attempt at centralization may undermine the community's effectiveness and efficiency. Planned decentralization, with a clear understanding of the roles played by each level of organization, and the parameters of how information is shared bi-directionally, is one model of organization for the HSIC.

Since the 9/11 terrorist attacks, Congress has focused considerable attention on how intelligence is collected, analyzed, and disseminated in order to protect the homeland against terrorist threats. Prior to 9/11, it was possible to make a distinction between "domestic intelligence"—primarily law enforcement information collected within the United States—and "foreign intelligence"—primarily military, political, and economic intelligence collected outside the country. Today, threats to the homeland posed by terrorist groups are now national security threats. Intelligence collected outside the United States is often very relevant to the threat environment inside the United States and vice versa. Although the activities involved in homeland security intelligence (HSINT) itself are not new, the relative importance of state, local, and private sector stakeholders; the awareness of how law enforcement information might protect national security; and the importance attached to homeland security intelligence have all increased substantially since the events of 9/11. There are numerous intelligence collection disciplines through which the U.S. Intelligence Community (IC) collects intelligence to support informed national security decision-making at the national level and the allocation of tactical military and law enforcement resources at the local level. The collection disciplines are generally referred to as those which fall within national technical means or non-technical means. Technical means include signals intelligence (SIGINT), measurement and signatures intelligence (MASINT), and imagery intelligence (IMINT). Non-technical means include human intelligence (HUMINT) and open source intelligence (OSINT). Each of these collection disciplines is source-specific—that is, a technical platform or human source, generally managed by an agency or mission manager, collects intelligence that is used for national intelligence purposes. HSINT, however, is generally not source specific, as it includes both national technical and non-technical means of collection. For example, HSINT includes human intelligence collected by federal border security personnel or state and local law enforcement officials, as well as SIGINT collected by the National Security Agency. Reasonable individuals can differ, therefore, with respect to the question of whether HSINT is another collection discipline, or whether homeland security is simply another purpose for which the current set of collection disciplines is being harnessed. Homeland security information, as statutorily defined, pertains directly to (1) terrorist intentions and capabilities to attack people and infrastructure within the United States, and (2) U.S. abilities to deter, prevent, and respond to potential terrorist attacks. This report provides a potential conceptual model of how to frame HSINT, including geographic, structural/statutory, and holistic approaches. Given that state, local, tribal, and private sector officials play such an important role in HSINT, the holistic model, one not constrained by geography or levels of government, strikes many as the most compelling. The report argues that there is, in effect, a Homeland Security Intelligence Community (HSIC). Although the HSIC's members are diffused across the nation, they share a common counterterrorism interest. The proliferation of intelligence and information fusion centers across the country indicate that state and local leaders believe there is value to centralizing intelligence gathering and analysis in a manner that assists them in preventing and responding to local manifestations of terrorist threats to their people, infrastructure, and other assets. At the policy and operational levels, the communication and integration of federal HSINT efforts with these state and local fusion centers will likely remain an important priority and future challenge. This report will not be updated.

The President and some leading Members of Congress have indicated that income tax reform is a major policy objective. The House Budget Resolution ( H.Con.Res. 25 ) supports a revenue-neutral reform that would broaden the individual income tax base and lower statutory income tax rates, while the Senate Budget Resolution ( S.Con.Res. 8 ) proposes revenue raising through base-broadening. The President has proposed substantive tax policy changes in his budget outlines. Further, both tax-writing committees have held hearings and have working groups on tax reform. Most tax provisions that might be considered for base-broadening are contained in a list of tax expenditures. Itemized deductions are a group of tax expenditures likely to be considered as important candidates for reform. The major itemized deductions are for mortgage interest, state and local taxes, charitable contributions, and medical costs. The Ways and Means Committee has recently held hearings on provisions affecting state and local governments, charitable contributions, and housing tax provisions (including the home mortgage interest deduction). Itemized deductions account for about one-fifth of all tax expenditures, and may be easy targets of reform, based on their visibility and some policy grounds. In particular, itemized deductions are already listed on the 1040 income tax form and are easily measured. Eliminating some of them might contribute to tax simplification (unlike revisions such as including employee fringe benefits in income). At the same time, itemized deductions have broad support, and are claimed by roughly one-third of tax filers. Arguments can be made to justify some of these deductions and some of them are among the longest-standing provisions of the federal income tax code (see Appendix A for a brief history of itemized deductions). Reducing incentives and subsidies that alter taxpayers' choices is one potential objective of tax reform. In addition, as suggested by the differing budget resolutions, some proponents of reform see broadening the tax base as a means of raising revenue without raising tax rates, while others see it as a way to pay for reduced tax rates. For a given revenue target, tax reform can involve a trade-off between a broader base and lower rates. In addition, as outlined in this report, base-broadening could have unintended side effects, such as effects on savings incentives or the labor supply. A variety of proposals for limiting itemized deductions, either as an overall proposition or through specific revisions to certain deductions, have been advanced by policy makers, economists, and tax experts. This report discusses the proposals that have been advanced, their potential revenue gain, their consequences for taxpayer behavior and economic efficiency, their distributional implications, and administrative and transition issues that may arise. Although this report provides some background material, it assumes some familiarity with itemized tax deductions, and the debate surrounding their reform. For an introduction to tax deductions, see CRS Report R42872, Tax Deductions for Individuals: A Summary , by [author name scrubbed]. For general tax data analysis on itemized tax deductions, see CRS Report R43012, Itemized Tax Deductions for Individuals: Data Analysis , by [author name scrubbed]. Individual income tax filers have the option to claim either a standard deduction or the sum of their itemized deductions on the federal income tax Form 1040. The standard deduction is a fixed amount, based on filing status, available to all taxpayers. Alternatively, tax filers may claim itemized deductions . Taxpayers that itemize must list each item separately on their tax return. Whichever deduction a tax filer claims—standard or itemized—the deduction amount is subtracted from adjusted gross income (AGI) in the process of determining taxable income. AGI is the basic measure of income under the federal income tax and is the income measurement before itemized or standard deductions and personal exemptions are taken into account. Generally, only individuals with aggregate itemized deductions greater than the standard deduction find it worthwhile to itemize. The tax benefit of choosing to itemize is the amount that their itemized deductions exceed the standard deduction, multiplied by their top marginal income tax rate. About one-third of taxpayers, largely in the middle and upper income parts of the income distribution, itemize deductions. At incomes of more than $200,000, 95% or more of taxpayers itemized, although two-thirds of itemizers had incomes below $100,000. Therefore while the benefits of itemizing are more concentrated in higher incomes, many middle-class taxpayers itemize deductions. Itemized deductions are often grouped together in broader discussions of tax policy, in part because they are grouped together on the tax Form 1040. But, itemized deductions exist for a variety of reasons, can affect different types of economic behavior, and are designed in ways such that they target (or exclude) different types of tax filers. One way to distinguish between different types of itemized deductions is whether they are classified as tax expenditures. Tax expenditures are defined under the Congressional Budget and Impoundment Control Act of 1974 ( P.L. 93-344 ) as "revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability." The Joint Committee on Taxation (JCT) also provides annual revenue loss estimates for tax expenditures. In contrast, some itemized deductions are not classified as tax expenditures because they generally are appropriate to use to measure income (such as employee job expenses). These provisions might be contained in the form of an itemized deduction for reasons of simplifying tax compliance and administration, so that taxpayers do not keep track of and deduct small amounts, or so most taxpayers will not have to encounter provisions that apply to limited numbers of taxpayers on other, simpler, tax forms. Detailed tables showing the number of claimants and the size of deductions for each type of itemized deduction are shown in Appendix A . Four basic itemized deductions, summing to $1.1 trillion of deductions in 2010, constitute those classified as tax expenditures: State and local deductions for income, sales, and property taxes totaled $442 billion in 2010. Tax deductions for state income taxes were the largest at $246 billion, followed by real estate property taxes at $172 billion. Optional sales tax deductions (which are part of the temporary provisions termed "extenders" and, absent legislation, will expire after 2013) were $16 billion. Tax deductions for state and local personal property taxes (on motor vehicles) were $7 billion. Mortgage interest deductions totaled $401 billion in 2010. Less than $2 billion of that amount was for home equity loan points, and less than $7 billion for qualified mortgage insurance premiums. The latter is also an "extender." Charitable contribution deductions totaled $172 billion in 2010. Of these deductible contributions, $135 billion was in cash, $44 billion in property, and $31 billion carried over from prior years (due to limits on deductions as a percentage of income). Medical and dental expense deductions above the 7.5% floor totaled $85 billion in 2010. These deductions have diverse purposes. Notably, for example, the deduction of extraordinary medical expenses is not an incentive to encourage spending but a provision to reflect ability to pay taxes. State and local income taxes are not under the control of the taxpayer in the short run (and cannot be avoided other than relocating), but the deduction may encourage state and local governments to enact these taxes. Benefits for homeownership and charitable contributions, however, arise from explicit choices of the taxpayer and are incentives to make the choice to own a home or donate to charity. Itemized deductions not classified as tax expenditures were $264 billion, although only $117 billion were allowed because many of these deductions are subject, as a group, to a floor and only amounts in excess of 2% of income are deducted. Examples of these itemized deductions (some limited and some not) are investment interest expenses, unreimbursed employee expenses, tax preparation expenses, other costs of earning income, such as investment expenses, and gambling losses. These deductions would likely need to be deducted elsewhere on the tax Form 1040 if itemized deductions were repealed. Numerous restrictions are on itemized deductions in the form of floors or ceilings, which may be in dollar amounts or percentage-of-income amounts. A floor means that only deductions in excess of a certain amount are allowed. A ceiling means that only deductions up to a certain amount are allowed. There is also a so called "limitation" on the amount of itemized deductions that certain higher-income tax filers are subject to. Pease applies to tax filers with an AGI over $250,000 ($275,000 for head of household filers and $300,000 for married joint filers). Pease is, however, not a true limit on deductions, but rather an increased tax rate. Two itemized deductions are subject to caps or ceilings. Mortgage interest deductions are allowed for interest on the first $1 million of a mortgage. In addition, while interest on home equity loans can be deducted, only interest associated with up to $100,000 of loans is deductible. Whereas the mortgage interest deduction is subject to a dollar ceiling, charitable contributions are subject to percentage-of-income ceilings, although those ceilings are so high that few taxpayers encounter them. Cash contributions are limited to 50% of income and to 30% of income for contributions to certain types of nonprofits, mainly foundations. These limits are lower for charitable contributions of appreciated property: 30% and 20%. In effect, the limits prevent individuals from wiping out too much of their tax liability via charitable deductions. Any unused deductions can also be carried over and deducted in future years. There is a special provision related to charitable contributions, although not explicitly an itemized deduction, which allows individuals aged 70½ or older to contribute IRA withdrawals directly to charity without including them in income and then deducting them (if the individual itemizes); this amount is capped at $100,000. Two itemized deductions considered tax expenditures are subject to a floor: extraordinary medical and dental expenses and casualty and theft losses. Currently, only medical deductions in excess of 10% of AGI are allowable (7.5% until 2016 for returns where at least one taxpayer is aged 65 or older). Casualty and theft losses are limited to the excess over $100 and that excess can only be deducted if over 10% of income. Of the itemized deductions not classified as tax expenditures, employee expenses, tax preparation expenses, and certain other miscellaneous deductions are limited, as a group, to amounts in excess of 2% of income. Some might ask why policy makers would consider new policies to limit itemized deductions when one "already exists" in the form of Pease. Pease, however, is designed in such a way that it is unlikely to have an effect on the value of itemized deductions. Pease is not a true limit on itemized deductions because it is triggered by an AGI threshold— not the amount of deductions claimed. For affected tax filers, the total of certain itemized deductions is reduced by 3% of the amount of AGI exceeding the threshold. The total reduction, however, cannot be greater than 80% of the value of the deductions (and the tax filer always has the option of taking the standard deduction). Pease's limitations are triggered by an AGI threshold and are implemented like an additional tax rate rather than a true limit on deductions. For a tax filer affected by Pease, a $1.00 increase in AGI will increase taxable income by $1.03 because itemized deductions have been decreased by $0.03 (an increase of itemized deductions of $1 will decrease taxable income by $1). Consequently, the effective marginal tax rate will be 3% higher than the statutory marginal tax rate. For example, a tax filer in the 33% tax bracket faces an effective marginal tax rate of 33.99%—an increase of about 1 percentage point. These effects are not directly linked to deduction claims. Pease's total reduction (or increase in taxable income) cannot be greater than 80% of the deductions. If this limit were reached then the value of itemized deductions would be affected. Higher-income itemizers are unlikely to hit this 80% limit because some common deductions increase at a rate greater than Pease's 3% surtax. For example, if a tax filer claimed an itemized deduction for state income taxes set at a 5% rate, then the amount claimed for the deduction would increase at a faster rate than the amount of increased taxable income under Pease. A range of options could reform or restrict itemized deductions. The options for revisions generally fall into two basic types: overall limits on the size or value of itemized deductions in general through caps, floors, or limits on tax benefit and specific revisions to particular itemized deductions. These restrictions could be justified in several different ways, including to increase federal revenue; to allow a reduction in statutory tax rates, while holding revenue constant; to reduce economic distortions, where individuals pursue economic behaviors that they would not otherwise do, absent the influences of tax policy (also referred to as inefficiencies ); to increase the progressivity of the federal income tax (an issue of vertical equity ); to reduce discrepancies in the taxation of individuals with similar abilities to pay taxes (also referred to as horizontal equity ); or to simplify the tax code. This section provides a brief overview of these issues. The subsequent analysis explains the various options and provides more detailed analysis of them considering the issues of revenue, efficiency, distribution, and simplicity. With regard to raising revenue, some might argue that there is less potential revenue to be raised by restricting itemized deductions than from restricting larger tax expenditures. The tax exclusion of employer contributions for health care, exclusion of contributions and earnings to retirement plans, and the reduced tax rates on dividends and long-term capital gains are larger sources of annual revenue loss than the largest itemized deduction (the deduction for home mortgage interest). These options may be limited for a variety of reasons, including difficulties in imputing income (as in the case of the present value of defined-benefit pension plans), difficulties in limiting the effects on middle-class taxpayers (as in the case of employer-provided health benefits), desires to protect savings incentives, or aversions to potential behavioral effects that reduce revenue (as in the case of capital gains). The maximum revenue gain from an elimination of itemized deductions is projected at $190 billion in 2015, which is 12% of individual income taxes and 44% of the projected deficit under the Congressional Budget Office's (CBO's) standard baseline. Proposals to limit itemized deductions would raise less revenue, in some cases only a small share of the revenue from full elimination. The increasing attention to across-the-board proposals for itemized deductions and, in some cases, other tax expenditures, suggests that the primary focus of base-broadening for some could be the goal of lowering tax rates (or preventing them from rising due to revenue needs) rather than reducing subsidies for undesirable or inefficient activities. Some are interested in keeping statutory tax rates low because they presume that lower rates limit the distorting effects of taxes on wage and capital income, thereby also limiting the effect of taxes on labor supply and savings rates (which are components of long-term growth). This objective may not be obtainable, as there are many circumstances where restrictions on itemized deductions have similar effects to increases in tax rates; thus base broadening to permit lower rates should not be expected have a supply-side effect. As explained below, it is not the effect of pushing taxpayers into a higher rate bracket, but affecting the tax collected from a marginal dollar of income, which affects taxpayers in the top bracket as well as those in other brackets. This effect is often on the periphery of tax reform discussions, but it is an important issue because designing an efficient proposal to reform itemized deductions that does not lead to significant increases in effective marginal rates may conflict with distributional objectives. A recent article by Martin Sullivan, Chief Economist at Tax Analysts, argued the narrower point that base-broadening can increase marginal tax rates because, in some cases, because base-broadening expands taxable income enough for some itemizers to push them into higher tax brackets. Of course, this effect would not apply to the highest tax bracket because these tax filers are already being taxed at the top marginal tax rate. While this effect could certainly be a concern for some, there is a much more important and direct relationship between base-broadening, through restricting itemized deductions, and effective marginal tax rates. Whereas the statutory income tax rates are set in law, the effective tax rates at the margin are the share of an additional dollar of income that is paid in taxes. If part of an additional dollar of earnings is spent in a way that generates a tax deduction, it reduces the effective marginal tax rate (EMTR) for that tax filer. If that deduction is eliminated, then the EMTR rises. It is the EMTR—not the statutory tax rate—that could discourage the supply of labor or savings. Despite this potential concern, from a theoretical perspective, prior studies indicate that there is not a consensus among economists whether these marginal effects are statistically or economically significant. The most straightforward example of this effect is the itemized deduction for state and local income taxes. According to IRS statistics in 2010, the average deduction on itemized returns for state and local income taxes was 5.5% of income for those with an AGI of $200,000 or greater. Because most state income tax rates are progressive, income taxes paid as a share of income would be even higher at the margin. Using an example of 6%, if the federal statutory income tax rate is 35%, and the state income tax is deductible, the total EMTR is 35% plus 6% minus the value of the tax deduction (0.35 times 6%), or 38.9%. If the state and local income tax deduction is eliminated or capped, the EMTR rises to 41% (35% plus 6%). On average then, disallowing the state income tax deduction is the equivalent of raising the EMTR by 2.1 percentage points for those tax filers that would otherwise claim the deduction. Put another way, retaining the state and local deduction and simply raising the federal statutory rate to 37.2% for this bracket would achieve the same effect. As will be discussed in more detail when specific options are considered, how much of an increase in EMTR occurs depends on the nature of the proposed change, as some approaches are more likely to affect these marginal rates than others, across the various income groups. Similarly some itemized deductions are more likely to have a larger effect on marginal tax rates relative to revenue gain than others. Itemized deductions were enacted into the federal tax code to serve a particular purpose. Whether they were enacted to reflect the costs of generating income (such as the deduction for unreimbursed employee expenses) or promote certain goals of social policy (such as the deduction for charitable contributions), the net effects of these provisions were deemed desirable enough by a past Congress to be enacted and by many past Congresses to retain. Yet traditional tax reform presumes that provisions that are to be eliminated or constrained are undesirable in some fashion and one of the arguments is that they distort the allocation of resources. This concern suggests specific attention to the itemized deductions one by one. In many cases, while there may be arguments that itemized deductions distort spending in favor of housing, charity, or state and local services financed by deductible taxes, there may also be some justifications for favoring this type of spending. Some might see raising revenue through restrictions on itemized deductions as one approach to further concentrate the share of income tax paid by those with higher incomes because itemizing is concentrated in the higher incomes. Others might oppose restrictions on itemized deductions based on distributional or equity reasons. Higher-income tax filers already provide most of the revenue collected through the individual federal income tax, and thus some might oppose further efforts to increase the progressivity of the federal income tax code. Itemized deduction provisions might also be restricted based on the grounds of horizontal equity. Currently, there are tax provisions that favor individuals who have a preference for home ownership, or for charity, or for living in areas that provide a high level of state and local service. On the other hand, itemized deductions may increase horizontal equity in some instances, for example, between homeowners who can finance more of their home out of assets and those who need larger mortgages. Allowing a deduction for extraordinary medical expenses may also treat those with the same ability to pay more equitably, because a family with these expenses has a lower ability to pay than a family without them. One objective of tax reform may be to simplify the tax code. Eliminating itemized deductions, for example, would simplify tax filings and compliance because taxpayers would take a standard deduction. In some instances, retaining the deductions and placing restrictions on them could further complicate tax planning and tax filing. Many of the proposals recently advanced would address itemized deductions (or other tax expenditures) in the aggregate. Some of these options include dollar or percentage of income limits on deductions, limits on the value of tax deductions, or elimination of a percentage of, or all of, deductions. Caps generally are meant to reduce the extent that tax provisions can distort economic behavior, limit revenue losses, or reduce the availability of the deduction to higher-income tax filers. Dollar caps currently apply to itemized deductions for home mortgage interest. Some have proposed using caps in the form of an across-the-board limit on itemized deductions based on a flat, dollar-value (hereinafter referred to as the "flat-cap" option). Proposals on the exact value of a flat-cap have varied from $17,000 to $50,000 per joint tax filing unit. An additional flat-cap on itemized deductions would add complexity to the process of filing taxes. Compared with some other reform options, though, the flat-cap is simpler because it is not dependent on calculations of income or other tax benefits (e.g., exemptions). Tax filers who anticipate itemizing their deductions can tally their deduction-eligible activities (e.g., charitable contributions or home mortgage interest) as they go. A flat-cap proposal could also be structured in a way to exclude deductions for unusual expenses that reduce a tax filer's ability to pay taxes, such as extraordinary medical expenses and casualty and theft losses. If a tax filer potentially has deductions that exceed a flat-dollar value cap, then they could have to choose which deductions they will actually claim. Table 1 shows the average deductions in each income class to provide a general idea of what types of taxpayers might be affected. For example, a $17,000 cap would affect most itemizers (approximately 71%), while a $50,000 cap would largely affect itemizers with incomes above $250,000 (totaling approximately 6% of all itemizers). Taxpayers with deductions above the cap would lose the marginal incentives associated with these deductions and their behavior might be affected. After enactment of a flat-cap, deductible activities that are more easily adjustable in the short run (e.g., charitable contributions) could be reduced, which could push other deductions under the limit. Prospective homebuyers might reduce the size of their home purchase or opt for rental housing. Taxpayers with sufficient assets might pay down some or all of their mortgages. Other adjustments, such as mortgages for middle income homeowners or state and local income taxes, may be more difficult to make or make quickly. Another option to cap itemized deduction amounts would be to restrict total claim amounts to a certain percentage of the tax filer's AGI (hereinafter referred to as an "AGI cap"). This option would add complexity to the tax-filing process by requiring an itemizer to additionally calculate their total itemized deduction claims as a share of their AGI. Compared with the flat dollar-value cap, an AGI cap would be less likely to cause the relative tradeoff effects between claiming certain deductions. Some itemized deductions tend to grow proportionately with income under an AGI cap (such as state and local income taxes) or at slower rate than income. Table 2 shows the amounts claimed for certain itemized deductions as a share of the total income of itemizers. The total itemized deductions claimed as a share of the total income claimed were less for the higher-income tax filers than those tax filers in the lower or middle sections of the income distribution. Thus, a broad cap on itemized deductions based on AGI cannot be targeted in a way that primarily affects higher-income earners without affecting lower- or middle-income earners. The data in Table 2 show that some itemized deductions comprise a larger share of income of higher-income earners. If a policy goal is to minimize the negative effects of a cap on middle-income tax filers, an AGI cap could be applied only to certain deductions, such as the deduction for state and local taxes or charitable gifts in order to reduce the effect of the cap on itemizers in the middle of the income distribution. Another way to restrict itemized deductions is by limiting the value of certain provisions rather than the claims. In contrast to limits on deduction claims (which would be calculated before applying the progressive statutory income tax rates), a limit on the value (tax benefit to the tax filer) of certain tax provisions would be calculated after applying their tax rates. That is, one approach limits the deductions taken, while the other limits the effect of those deductions on tax liability. Two types of restrictions have been suggested: limiting the marginal tax rate at which deductions are valued or limiting the total value of itemized deductions to a percentage of income. Restrictions on the tax value of deductions tend to affect tax filers facing higher marginal income tax rates (than those facing lower marginal tax rates) because the tax value of itemized deductions increases as marginal rates increase. In his FY2015 budget recommendation, President Obama proposed limiting the tax rate that applies to itemized deductions, certain above-the-line deductions, and certain income exclusions to 28% for tax filers in the top three brackets (33%, 35%, and 39.6%). Taxpayers affected would generally be those with incomes of $250,000 or more. Earlier budget outlines had proposed these restrictions for itemized deductions only. Researchers Martin Feldstein, Dan Feenberg, and Maya Maguineas (2011) proposed another option (hereinafter referred to as "FFM") to limit the total value that certain tax expenditures, including itemized deductions, can reduce one's tax burden as a share of AGI. The initial FFM proposal called for limiting the value of certain tax expenditures to 2% of a tax filer's AGI. Specifically, FFM would apply only to the sum of (1) total itemized deductions, (2) the exclusion for health insurance costs, and (3) a number of tax credits (e.g., the child tax credit). The researchers chose these tax provisions because they are among some of the largest tax expenditures in the federal income tax code. According to Martin Feldstein, the goal of this proposal is to both enhance progressivity in the tax system and reduce tax expenditures (i.e., the loss of revenue), among other things, without changes to the statutory tax rates. If applied to the itemized deductions alone, this provision would limit deductions more for higher-income taxpayers than the limit on deductions as a percentage of income. Limiting the value of itemized deductions to 2% of income would be the equivalent of limiting deductions for taxpayers in the 15% bracket to 13.3% (because 0.15 times 13.3% equals 2%), whereas for taxpayers in the top bracket, it would be equivalent to a 5% limit (2% dividend by 0.396). The original FFM proposal has since been amended by the Committee for a Responsible Federal Budget (CRFB) to include additional policy options to focus on higher-income tax filers. The rationale for this targeted approach is that more than 40% of tax expenditures accrue to those with annual incomes above $200,000. These options include a $10,000 flat-cap; phasing in FFM for tax filers earning between $250,000 and $500,000; or including additional tax expenditures under the original FFM proposal. As noted earlier some itemized deductions can only be claimed if they meet or exceed minimum threshold amounts (usually a certain percentage of AGI) in order to simplify tax administration and compliance or confine deductions to extraordinary expenditures. An option that could raise revenue while preserving the marginal incentives in many cases is an overall floor, with deductions allowed only in excess of that amount. The floor could be a dollar floor or a percentage of income floors. As implied by data in Table 1 and Table 2 dollar floors are more restrictive for lower-income itemizers, whereas percentage of income floors would proportionally reduce deductions more at the higher-income levels. For example, a 5% floor would eliminate, for the average taxpayer in the $1 million or more income class, 37% of deductions, whereas it would eliminate 24% of deductions in the $100,000 to $200,000 class. Although a floor is an across-the-board option, it has more frequently been proposed for specific provisions whose marginal effects are more likely to be considered desirable, such as charitable contributions. One option for reforming itemized deductions is to convert them into credits. Proponents of converting deductions to credits argue that credits are fairer than deductions because a taxpayer that faces a lower marginal tax rate benefits less from a deduction than a taxpayer facing a higher marginal tax rate, even if they have identical expenses (e.g., the same mortgage interest expenses). On the other hand, opponents of converting deductions to credits argue that the reduced value of the tax preference (particularly for higher-income individuals) might reduce the incentives for certain individuals to engage in what some believe are desirable activities. Credits could be structured as non-refundable or refundable. In the case of a refundable credit, the dollar-for-dollar reduction in tax liability is the same regardless of a taxpayer's marginal tax rate—even if the taxpayer has no tax liability. If credits are allowed for all taxpayers, those taking the standard deduction would also qualify and this extension of benefits would limit any revenue gains as well as complicate tax filing. Credits could be restricted to those who do not take the standard deduction, however. Some argue that the choice between structuring tax provisions as deductions or credits should depend on the purpose of the deduction. If the purpose is to correct for ability to pay taxes, then a deduction may be appropriate. If the purpose is to encourage certain types of behavior (e.g., charitable contributions), it is less clear whether credits or deductions would be the preferred method. If tax filers have a greater response to tax subsidies at higher incomes, it could be more efficient to use deductions to present lower after-tax prices for these taxpayers. Eliminating all itemized deductions could reduce tax compliance costs for tax filers, potentially reduce some economic inefficiencies, and eliminate the unequal value of itemized deductions between tax filers facing higher marginal tax rates compared with tax filers facing lower tax rates. Although cases can be made for restricting, reforming, or even eliminating certain itemized deductions, the variety of justifications for itemized deductions makes it difficult to make a compelling argument for eliminating all itemized deductions. The 2010 Chairmen's Mark of the President's National Commission on Fiscal Responsibility and Reform (hereinafter referred to as "Simpson-Bowles") calls for an elimination of all itemized deductions, and a conversion of selected tax expenditures to credits. Simpson-Bowles would still allow taxpayers to claim a standard deduction and any personal exemptions for dependents. Deductions for mortgage interest and charitable contributions would be replaced with 12% non-refundable tax credits available for all tax filers. Only charitable contributions in excess of 2% of income would be eligible for the credit. The Domenici-Rivlin (D-R) Debt Reduction Task Force also calls for an elimination of itemized deductions, while converting selected tax expenditures into refundable tax credits. Specifically, the D-R proposal would allow all taxpayers to claim a 20% credit for home mortgage interest expenses on a principal residence up to $25,000. The mortgage interest credit would then be phased down from 20% to 15% over five years. The D-R proposal would also allow a 15% refundable credit for charitable contributions. The D-R proposal also calls for changes in tax administration in areas that are currently in the form of an itemized deduction, such that mortgage brokers and charities apply to the IRS for a matching grant to supplement payments from taxpayers. For example, for every $85 a taxpayer gives, the charity would receive another $15 or mortgage lenders will apply for a tax credit, which would be passed through to homeowners as a 15% reduction in their home mortgage interest payments. The purpose of structuring the D-R tax credit in this manner, according to its authors, is to reduce the need for certain individuals to file a tax return, thereby possibly reducing tax administration costs. Even if policy makers find the original intent of itemized deductions no longer desirable, elimination of all itemized deductions that are not considered tax expenditures would change the base of income that is subject to tax. Individuals with catastrophic medical expenses would find their taxes rising perhaps beyond their ability to pay. Provision might need to be made to deduct these items elsewhere. Rather than eliminate itemized deductions, a percentage could be disallowed. For example, if 20% of deductions are disallowed, the value of an additional dollar of deductions would be reduced by 20%. Rather than an across-the-board limit on itemized deductions, each individual provision could be considered. Specific tax expenditures might be eliminated, or limited. The following subsections discuss some options that have been discussed in past tax reform debates for the three major categories of itemized deductions: mortgage interest, state and local taxes (including real estate property taxes), and charitable contributions. These categories represent three of the four general categories of itemized deductions that are considered tax expenditures. The floor for the fourth category, the deduction for extraordinary medical expenses, was increased recently. Thus, this remaining provision has not generally been the target of additional, specific reforms. The itemized deduction for home mortgage interest expenses is currently limited to interest on the first $1 million of mortgage debt, combined on a primary and secondary residence, and first $100,000 of home equity debt. Three types of specific limits on these components of the home mortgage interest deduction could be considered. First, the current $1 million cap on mortgages eligible for interest deductions could be reduced, with $500,000 the number most commonly cited. A declining limit might also be used to eliminate the provision over time. Secondly, the mortgage interest deduction could be limited to primary residences and not extended to second, or vacation homes, as in current law. Finally, interest on home equity loans could be disallowed; or the ceiling on those whose interest is deductible (currently $100,000) may be reduced. Growth in deductions of home equity loans has been perceived to be related to the Tax Reform Act of 1986 ( P.L. 99-514 ), which ended the deduction for consumer interest other than mortgages. In part due to this tax policy, home equity lines of credit have become a substitute, to some extent, for consumer interest. The deduction for qualified mortgage insurance premiums, which might be considered in the nature of interest, is part of the "tax extenders," temporary provisions that tend to get extended every year or two. This provision, along with other extender provisions, could be allowed to lapse. Credits for interest paid on home mortgages would allow all homeowners with mortgages to benefit, even those who do not itemize, but because the credit extends benefits to a wider class of (mostly lower-income) taxpayers, it would likely raise less revenue and add to complexity for those additional taxpayers. It is possible, depending on the rate chosen, that a credit could result in a net revenue loss, if the value of the tax credits from new homeowners exceeds the revenue gain from higher-income tax filers whose deductions were taken at higher rates. As noted earlier, the D-R proposal includes a matching grant for mortgage lenders to be passed along to individuals, as a substitute for the mortgage deduction. The federal itemized deduction for state and local taxes includes state and local income, real estate, and personal property taxes. An option to choose a deduction for state and local sales taxes in lieu of the deduction for state and local income taxes is part of the extenders, which is temporarily in effect through 2013. Each of the state and local tax deductions might be separately considered. For example, sales taxes were eliminated as a deduction in 1986, and have been introduced as an alternative deduction option only recently and also temporarily. That option could be allowed to lapse permanently. Another deduction that might be eliminated is the deduction for personal property taxes, which are generally taxes on motor vehicles. They are not imposed in many states, such as those states where taxes might be collected on motor vehicles based on weight (and thus, not deductible). Deductions for personal property taxes are claimed by a much smaller number of tax filers than the deduction for state and local income taxes (see Table A-1 in Appendix A ). The deductions for state and local income, sales, and property taxes cover many tax filers and might be considered for more limited reforms. A cap on deductions based on a percent of adjusted gross income ("AGI cap") has been more frequently proposed than a flat-dollar cap because income taxes tend to grow constantly with income, and a dollar cap may be considered to be too harsh (especially if the flat-cap is not indexed for inflation over time). According to Table 2 , claims for the deduction for state and local income or sales taxes can be limited by an AGI cap in such a way that it primarily targets certain tax filers. For example, a 3% cap would largely focus the restriction on those with $500,000 or more of income. For many proposals relating to charitable contributions, a key policy concern for some is to retain the giving incentives. Thus, revision of the deduction for charitable contributions is more likely to involve floors than ceilings. A floor would only allow deductions of contributions in excess of a dollar amount or percentage of income. This approach would raise revenue while preserving more of the marginal incentive to give. It would also eliminate deductions for small amounts and the associated record-keeping. As with mortgage interest, proposals have been made to convert the charitable contributions deduction into a credit. If allowed for non-itemizers as well, it would increase complexity and limit the revenue-raising capacity of the change. The D-R plan proposed to provide grants to charities as a substitute for credits to simplify tax administration. Reforms for the deduction for charitable contributions could be directed specifically at gifts of property, both property that has lost value (such as clothes, household items, and automobiles) and property that has appreciated (such as art, stocks, and real estate). Overall, according to IRS statistics, gifts of property account for 26% of contributions in 2010. Gifts of household items and clothes accounted for 7%, or about a quarter of the total gifts of property. Gifts of appreciated property tend to be more concentrated among higher-income tax payers, while gifts of household items and clothes are probably more common among middle-class taxpayers. For property without an easily established value (such as household items, clothes, art, and perhaps to some degree real estate) there is an incentive for tax filers to overstate the value so that they can claim a larger deduction. For the gifts of clothes and household items, a separate floor, a dollar ceiling, disallowing the deduction, or allowing the deduction of only a fraction of the market value are possible options to restrict the provision. The Joint Committee on Taxation (JCT), for example, proposed a $500 limit on these deductions. Allowing deduction of a fraction of the value might be sufficient to encourage donations rather than discarding these items. Gifts of appreciated property, which account for three-quarters of the total of gifts of property, present more complex challenges. These donations have two benefits: first, the market value is deductible, and second, the difference between initial cost (basis) and market value if the asset were sold and donated as cash is not taxed as a capital gain. For assets not regularly traded (i.e., difficult to price), there is an incentive to exaggerate the value to claim a larger deduction. About 40% of these gifts of appreciated property are in stocks, about 15% are in real estate and property easements, and 3% in arts and collectibles. More even treatment between cash and property gifts could be obtained by imposing the capital gains tax on the appreciation of charitable gifts. A stricter treatment would disallow deduction except for the basis (generally, cost of the property). Effectively, this would disallow deductions for appreciation in the value. This change would encourage the taxpayer to sell the asset and then donate the cash proceeds, which would increase the value of the charitable deduction to the taxpayer. This treatment would also deal with the problems of over-valuation by providing incentives for the individual to find a market price for the item. Two expired tax extender provisions are also associated with charitable contributions that might be considered for reauthorization for the 2014 tax year if the itemized deduction for charitable contributions is revised. One extender allows individuals who are 70½-years-old to donate distributions from individual retirement accounts (IRAs) directly to charity without including them in their calculations of gross income. This income exclusion treatment benefits non-itemizers, and also reduces AGI and the likelihood of being taxed on Social Security benefits. If this provision were reauthorized, it might allow some individuals to circumvent floors or ceilings. A second extender deals with treatment of conservation property. Because charitable contributions are often viewed as desirable, there are many proposals to expand the benefit, such as extending the deduction to non-itemizers (as an above-the-line deduction), allowing deductions for a particular calendar year to be made up until taxes are due on April 15 of the following year, allowing lottery winners to contribute their winnings to charity without being taxed, and expanding the allowances for direct contributions from IRAs. This section of the report presents revenue estimates for proposals to restrict itemized deductions, where available. To provide a better idea of how these changes might contribute to any base-broadening goals for tax reform, revenue gains from each proposal are converted into equivalent across-the board rate reductions that would retain revenue neutrality, as well as the potential percentage point reduction in the highest and lowest rates. Consider first the effects of eliminating some or all of the itemized deductions. Table 3 shows the Tax Policy Center's (TPC's) revenue estimates for eliminating itemized deductions in 2015 based on estimated benefits. For example, eliminating all itemized deductions is estimated to increase revenue by $190.1 billion in 2015. If this revenue increase were used to offset revenue losses associated with a reduction in statutory tax rates, then the elimination of all itemized deductions could lead to a 10.6% across-the-board reduction in statutory tax rates (if distributed evenly across all of the marginal tax brackets). In other words, the top, statutory marginal tax bracket could be lowered by 4.2 percentage points from 39.6% to 35.4% and the lowest, statutory marginal tax bracket could be lowered by 1.1 percentage points from 10% to 8.9%. Table 4 shows the JCT estimates for the revenue loss in 2015 for each itemized deduction classified as a tax expenditure, including the deduction for medical expenses. JCT also separates real estate taxes from others itemized deductions, leaving a tax expenditure estimate for the remaining state taxes; as noted below, about 98% of that provision is for income taxes, and the remainder of the tax expenditure estimate is for personal property taxes (sales tax deductions would have expired at that point, under current law). Table 5 provides revenue estimates for 2015, largely drawn from the TPC, for a variety of across-the-board limits to itemized deductions, including dollar ceilings, limiting the value to 2% of adjusted gross income (FFM), and limiting the value at which the deductions can be taken to 15% and 28% (i.e., similar to the President's budget proposal for FY2014). Because some view charitable deductions as provisions that should be protected, some options exclude restricting them. Table 6 provides estimated revenue effects in 2015 for a number of specific options that were discussed earlier for the three major itemized deductions: mortgage interest, charitable contributions, and state and local taxes. As the estimates indicate, some minor proposals would yield modest amounts of revenue. On the other hand, some options could result in significant increases in revenue, such as ceilings on the mortgage interest deduction and the floors on the charitable deduction. As noted earlier, the increasing attention towards analysis of across-the-board proposals for itemized deductions and, in some cases, other tax expenditures, suggests that the primary focus of base-broadening for some could be the goal of lowering tax rates (or preventing them from rising due to revenue needs) rather than reducing subsidies for undesirable or inefficient activities. However, restricting tax provisions causes effective marginal rates to rise and could defeat the purpose of base-broadening to lower tax rates. This section discusses this issue for several types of revisions. The effective marginal rate is affected by tax-free uses of income, many of which are embodied in itemized deductions and affect the marginal rate on all types of income (e.g., wage, investment, self-employment). In the illustrations in this section, the calculations do not take into account the reductions in effective marginal rates for all tax expenditures that might have marginal effects or the lower tax rates on capital gains. Therefore, they should be seen as an illustration of what would occur for a taxpayer whose only tax benefits are itemized deductions. Not all itemized deductions have a marginal effect at every point along the income distribution. Some insight can be gained by looking at the pattern of deductions across income classes. If a deduction rises as income rises, it is likely that the deduction is not only marginal (affecting the last dollar of income) across all incomes, but is also higher at the margin than on average. As shown in Table 7 and in the earlier Table 2 , of the four major itemized deductions, the share of returns and AGI for two deductions tends to rise with income at almost every class over an AGI of $200,000: state income taxes and charitable gifts. If deductions rise as a share of income, the implication is that the deduction out of each marginal dollar is growing, and thus the elimination of deductions would increase effective taxation at the margin even in a revenue neutral tradeoff for lower statutory rates. If this share is falling, the deduction at the margin is smaller than the average deduction and could be zero. The mortgage interest deduction tends to decline with income at very high income levels (e.g., $10 million), which is not surprising as higher-income tax filers generally do not need to borrow as much (as a share of their income) to purchase their homes. In addition, homes may be a smaller part of these tax filers' budgets, which is also reflected in the declining value of property tax deduction claims as a share of AGI. In general, itemized deductions are a smaller percentage of itemizers' AGI as income rises. Outside of itemized deductions other provisions may involve tax-exempt income because of exclusions from income. For example, employer-provided benefits such as health insurance and pensions (or similar benefits for the self-employed) reduce the effective marginal tax rate on earnings from wages or self-employment. However, some of these benefits, for example, tax exclusions for health insurance, are unlikely to increase with income on average, especially when income grows to very high levels. Pension benefits are more likely to be marginal because pensions are related to income. Other benefits, such as tax-exempt state and local bonds, are more likely to rise with income and be marginal in some cases because these bonds are more attractive to taxpayers with higher tax rates. Table 7 also shows another potential issue with base-broadening through restricting itemized deductions: the "costs" of base-broadening might be concentrated among middle-income itemizers whereas the tax benefits of statutory rate reductions could spread across all tax filers. In all cases, a large share of these itemized deductions is on tax returns that have an AGI less than $200,000. Thus, if the policy goal is to protect middle-income itemizers from increased tax burdens through high ceilings, potential revenue gains are limited. For high-income taxpayers, who retain an average, but not a marginal, benefit from itemized deductions, the statutory rate reductions to keep their burden fixed would be too small to offset the rise in effective marginal tax rates from the loss of deductions at the margin. If ceilings are lowered to increase revenue and permit higher top statutory rate reductions, the burden on middle class taxpayers would increase. To avoid that effect, intermediate rates would have to be reduced, leaving less revenue for reducing the top rate (or rates). As is the case with restricting individual itemized deductions provisions, some of the across-the-board options for base-broadening through restrictions on itemized deductions have consequences for effective marginal tax rates (EMTRs). As previously mentioned, the EMTR is affected by tax-free uses of income, many of which are embodied in itemized deductions and which affect the marginal rate on all types of income. The calculations in the analysis and examples in the following section of this report do not take into account the reductions in EMTRs for all tax expenditures that might have marginal effects or the lower tax rates on capital gains. Nor do these calculations account for Medicare taxes, including those taxes on capital income enacted by the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 , as amended). Therefore, this analysis is only an illustration of what could occur for a taxpayer whose only benefits are itemized deductions and whose only tax is the income tax. Table 8 provides illustrative effects of certain proposals to restrict itemized tax deductions on EMTRs for the top rate and a very high income taxpayer. These effects do not refer to any particular income level, but one high enough that the tax rate is at 39.6% (which applies to taxable income of joint returns with $450,000 or more income) and one where the assumptions regarding charitable contributions and taxes are appropriate (well in excess of $1 million). Eliminating itemized deductions could raise EMTRs for tax filers across a broad range of income. As the discussion above suggests, elimination of entire categories of deductions could be problematic for some because tax filers of a wide-range of income tend to claim certain itemized deductions. Even those deductions where returns with an AGI less than $200,000 have lower claim amounts as a share of income (state and local income or sales taxes, followed by charitable contributions) have more than half of the benefit fall in lower incomes. These deductions are still likely to be marginal and increase marginal tax rates for lower-income tax filers. For example, for a tax filer in the 25% bracket who might have marginal deductions of those in the $100,000 to $200,000 class (based on Table 2 where deductions are 20.5% of income) would have an increase in effect rate of 5.1 percentage points (0.205 times 0.25). Eliminating taxes, mortgage interest, and charity, which account for almost 15% of income, would increase rates by 3.7 percentage points with most of the increase due to provisions associated with housing (mortgage interest and real property taxes). For taxpayers in the top bracket and at very high income levels (as shown in Table 8 ), the deductions that are marginal are probably around 11%, half from taxes and half from charity, leading to a 4.4 percentage point increase. A flat-cap approach could direct more of the revenue increase to higher-income tax filers (although heterogeneity across returns means it would not be possible to confine the effects solely to higher incomes). If the policy goal is to concentrate the effects in the highest income classes, then the dollar cap would have to be set high. According to the data in Table 1 , a flat-cap would have to be around $50,000 to largely confine the effects to taxpayers with $250,000 or more in income (most itemized returns with high incomes are joint returns). According to Table 8 , returns in the $100,000 to $200,000 income range have average deductions of 20.5% of AGI and returns in the $200,000 to $250,000 AGI range have 18.5%, so that a dollar cap equal to around 20% of the $250,000 AGI level would be needed. Still, a flat-cap could lead to the marginal effects discussed, above. Taxpayers with incomes over $200,000 would have reduced deductions of around 8% at a minimum (based on shares for charity and state income taxes in Table 7 ). These reduced deductions would raise effective marginal tax rates on average by about 3 percentage points. For very high income tax filers, it would eliminate on average about 11% of deductions and raise rates by over 4 percentage points (0.11 times 39.6%). For the top statutory rate the effect would be to raise the effective rate of 35.2% to 39.6%. Because of the significant trade-off between the number of tax filers subject to a flat-cap and revenue-raising potential, this option might have limited ability to broaden the base and could increase EMTRs for some tax filers. In any case where current deductions are greater than the cap, any current reduction in EMTR due to the deductions, in their current form, would be eliminated. If the flat-cap is set at relatively low levels, these increases in effective tax rates at the margin could appear across a wide range of incomes. If a flat-cap is designed to largely avoid increasing EMTRs on returns with an AGI less than $250,000, the cap would probably raise relatively little revenue (see Table 5 ) because it would retain a large non-marginal benefit for itemized deductions from a smaller pool of higher-income tax filers. A percentage of income cap on all itemized deduction claims could be used to limit the marginal tax rate effect to a smaller number of tax filers. For example, with an average deduction that is 9% of income at the margin, a percentage of income limit that is that high would, on average, not affect marginal rates for that individual. A possible difficulty with this approach is that the constraint would be more binding on those with an AGI less than $250,000 where total itemized deduction claims are a higher share of income (see Table 2 ). It would, therefore shift a larger share of the burden of the tax increase to those below $250,000 as compared to a dollar limit. One possibility is to allow both a dollar ceiling and a percentage of income ceiling, and the tax filer can take the higher of the ceilings. If the policy goal is to target higher-income tax filers, an alternative could involve placing percentage of income ceiling on those itemized deductions whose claims as a share of income rises at the higher-end of the income distribution. These provisions primarily include deductions for state and local income taxes and charitable gifts. For example, a 6% limit on these combined provisions would raise some revenue from tax filers with an AGI over $1 million while permitting most of the deductions to be taken by others (see Table 2 ). This proposal would still limit the increase in effective tax rates for those affected to about 1½ percentage points on average (the difference between 10% and 5% multiplied by 39.6%). For the top rate, with 11% of deductions, the rate rises by the difference between 6% and 11%, multiplied by 39.6%, for 2 percentage points. Like other broad proposals to restrict itemized deductions, limiting the value of certain tax expenditures (including some itemized deductions) could increase EMTRs. For example, if deductions effective at the margin are 11% of income for a tax filer facing a top marginal statutory tax rate of 39.6%, then limiting the value of itemized deductions reduces the EMTR by 4 percentage points, or to 35.6%, on average. Limiting itemized deductions to 2% of income produces a rate of 37.6% because the provision reduces taxes by 2% of income at the margin. Thus the EMTR rises by 2 percentage points compared to tax policy without the limit. President Obama's proposal to limit the tax rate at which itemized deductions could be valued to 28% would only affect tax filers in the top two tax brackets. Based on the analysis presented here, it could increase the top EMTR by 1.3 percentage point for those tax filers facing the top income tax rate of 39.6% (deductions of 11% at the margin times the difference between 39.6% and 28%, 0.11 times 0.116). However, this approach might be limited in its ability to raise revenue, as indicated in Table 5 . This option would likely raise some revenue from itemized deductions that are not marginal. The policy option of substituting a credit for a deduction has a similar effect to the proposal to limit the rate at which deductions could be valued. In the case of a 28% credit, the effects would be the same as President Obama's proposal, although the credit would be available to non-itemizers unless it could be taken only if the standard deduction is not. For a 15% credit, more tax filers who currently itemize would encounter marginal effects. In the case of the top rate illustration, the increase in EMTR would be the difference between the rates (39.6% minus 15%) multiplied by the share of deductions (11%). As indicated above, each of the potential approaches examined in this report could result in increases in EMTRs and some options have a limited ability to target the effects of restrictions on itemized tax deductions solely to higher-income tax filers. In these cases, policy goals aimed at raising revenue from higher-income tax filers may be harder to achieve. On the other hand, approaches that are more targeted and less likely to induce marginal tax rates have more limited potential to raise revenue. To take one example, if all itemized deductions are eliminated, the top, statutory income tax rate would rise by around 4.4 percentage points. If an across-the-board percentage reduction in tax rates were adopted, the statutory rate could fall by 4.2 percentage points. If the across-the-board reduction in statutory tax rates is revenue neutral within income classes, the top rate reduction might be 5 percentage points at the top (as discussed in the subsequent section on distributional issues). In either case the effects are largely offsetting. For the high tax rate individuals, the tradeoff would be less favorable if dollar caps were used, because that change would raise less revenue but still have the same marginal effects. Some of the economic analysis of the effects of restricting itemized deductions as a means to broaden the tax base to offset the revenue loss from cuts in statutory tax rates could be overlooking the effects of possible proposals on EMTRs. As discussed above, analysis of EMTRs could provide better estimates of effects on labor supply and savings, and hence economic growth, contrary to the practice of some studies. Given the recent interest in using dynamic scoring in preparing cost estimates, as expressed in the Senate budget resolution ( S.Con.Res. 8 ), the understanding of EMTRs as contrasted with statutory marginal tax rates is important if such a proposal becomes law (and if marginal tax rates affect certain types of behavior). For example, in the tradeoff between ending itemized deductions at the top for a 5 percentage point rate reduction, and a net reduction of effective marginal tax rate of 0.6 percentage points, an estimate that used the statutory rate reduction would produce behavioral effects that are more than 8 times as large as they should be (5/0.6) Even if a proposal could lead to higher effective marginal tax rates for some tax filers, however, this issue could be of limited importance since most evidence suggests these marginal effects on labor supply and saving behavior are relatively small. Nevertheless, the analysis suggests that tax reform undertaken for the purpose of lowering statutory rates, rather than addressing the particular economic effects of the tax subsidized activities, may not accomplish its purpose. This section of the report turns to the more traditional arguments for base broadening, namely the specific merits of particular tax provisions. Presumably, a provision would be eliminated or revised for efficiency reasons if the behavior is undesirable, or if the subsidy to a desirable behavior is too large. This discussion does not address the itemized deductions not classified as tax expenditures or the medical expense deduction, because the primary purpose of many of these provisions is to enhance vertical equity in the federal income tax code, as discussed above. In each of the other cases, both the merits of providing an incentive and the effectiveness of doing so are addressed. This section provides summaries. More detailed information and supporting references can be found in other CRS reports. Homeownership is sometimes presumed to be a desirable social policy goal. Economists, however, generally justify subsidies on the grounds of economic efficiency, such as the case where there is too little owner-occupied housing because individuals do not do not take into account social benefits to home ownership in making their choices. Even in the presence of a large base of literature discussing the benefits and costs of homeownership, the literature has not come to a definitive conclusion on the merits of subsidizing homeownership. There are several positive, social benefits to homeownership, some of which result in spillover benefits (positive externalities) to other individuals in the community. Some view homeownership as benefiting communities because homeowners are thought to be more stable, maintain property better, and may be more involved citizens regarding community decisions. Homeownership can also provide a "nest egg" for retirement and is an important asset, especially of moderate income families. Economists, however, could justify subsidies on the grounds of economic efficiency if there was a market failure for homeownership. For example, there could be an undersupply of housing because private participants in the market may not be able to adequately capture the social value of the spillover benefits of homeownership. At the same time, homeownership can also have negative effects. Homeowners may join in adopting exclusionary policies (such as large lot sizes) that restrict the supply of housing, or they may discriminate against certain groups. Homeowners could also oppose the growth of certain types of businesses in their communities, thereby limiting local sources of job creation. The concentration of assets in a home could lead to diminished diversity and increased exposure to risk in an individual's personal financial portfolio. Finally, households that cannot easily sell their home (for whatever reason) contribute to labor immobility which can cause burdens for society, such as more claims for unemployment benefits. Overall, the magnitude of these effects has been difficult to estimate. But, they do lead to some questions about the desirability of providing such large benefits for homeownership. With regard to the home mortgage interest and real estate property tax deductions, there are two potential effects that could be of concern to policy makers. First, they could increase the rates of homeownership and increase the average size of homes. According to empirical research on the issue, it is the tenure choice (i.e., renting versus owning), rather than the size of homes, that is more likely to lead to positive externalities in a community. Evidence, however, suggests that tenure choice is not affected very much by the tax benefits. Historically, the rate of homeownership has not changed although changes in inflation and tax rates have significantly affected the relative cost of owning versus renting. Also, homeownership rates are high in many countries without these benefits. Those on the margin between choosing to rent or own are likely to be younger or have lower incomes, and thus are less likely to itemize their deductions. Finally, the major barrier to owning a home is saving enough to provide a down payment, an issue that is not affected by the tax subsidy. The mortgage interest deduction and property tax deduction (as well as the exclusion of imputed net rent) may, instead, provide additional incentives for individuals who already intend to choose owning over renting to spend more on housing than they would absent the tax deduction. Some proposals for restricting the deductions related to homeownership would target them more towards moderate-income individuals. These policies could include caps, limits on the value of deductions, or eliminating the benefit for secondary residences (e.g., vacation homes). Table 6 provides revenue estimates for some of these options. The current home equity loan deduction is not targeted towards a particular behavior because home equity funds can be used to finance spending unrelated to the home. Instead of these tax incentives, a more desirable alternative for some could be loan programs that make it possible for younger families to acquire homes. The mortgage interest deduction and deduction of real property taxes are not the only provisions that reduce the cost of acquiring and maintaining a home. Economists argue that owner-occupied housing is also subsidized by the exclusion of net imputed rental income. Imagine two homeowners renting their houses to each other: they would include the rent received in income but deduct the homeownership costs, including depreciation, insurance, and maintenance as well as mortgage interest and property taxes. Thus, rather than claiming just deductions for mortgage interest and property taxes they would also increase their respective incomes by the net rental income. In other words, even if the deductions for home mortgage interest and real property taxes were eliminated, there would still be some tax benefits in place for homeowners. Moreover, eliminating deductions for home mortgage interest could put lower-income tax filers at a comparative disadvantage, as other individuals could have sufficient assets (such as higher-income tax filers) to offset the loss of tax benefits from the deduction by paying off their mortgages. Those that can pay off their mortgages effectively retain tax exemption because earnings on these assets have fallen; their net income may be no different, since they pay less interest, but also receive less capital income. Tax benefits for charity probably enjoy more support among economists because charitable contributions are subject to market failures due to "free-rider" problems. The free-rider issues in the charitable sector of the economy refer to the extent that contributions are often undersupplied because individual tax filers can benefit from the contributions of others (even if they do not contribute, themselves), thus giving some individuals an incentive not to contribute while still receiving the benefits of charitable activities. For example, transfers to enhance public health can provide a social benefit to donors and also to non-donors if there is a social value to non-recipients, such reduced risk of contracting illness. Two issues, however, could make the deduction questionable. The first issue is that an individual contributor could give less to charity than the revenue loss associated with their tax deduction claim. If this were the case, then government could provide more funds for charitable purposes through grants rather than a tax deduction. This effect occurs when the elasticity of charitable contributions (percentage change in charity contributions from a 1% change in tax rates) is less than one, which most current research shows. In other words, the low elasticity found in this research indicates that changes in charitable contributions are not very responsive to changes in tax rates. The second issue is that the contributors may receive direct benefits, implicit benefits, or their contributions may go to charities that much of the population does not benefit from. For example, contributors could receive fringe benefits, such as front-row seats at the orchestra or box seats at sporting events, or may give to individual universities and art museums. In contrast, less than 8% of charitable contributions, by some estimates, goes directly to aid those in poverty. Adding a floor to the deduction for charitable contributions is often discussed as one option for reform. A floor that permitted only large contributions relative to income, could increase the tax-induced charitable contributions per dollar of revenue loss. For example, Table 6 provides revenue estimates for three different floor options (2% of income, $500, and $1,000) for the deduction for charitable contributions. A floor could also increase tax compliance since small donations would no longer be eligible. According to the latest data available, about 14% of contributions would no longer have a marginal incentive with a 2% floor, although the revenue gain would be 37% of the total tax expenditure. The relatively larger gain in revenue compared with the reduction in incentive is because most of the value of the contributions are made by tax filers who would retain a marginal incentive to give even after disallowing contributions up to 2% of income. These individuals are more likely to be higher-income individuals. As discussed subsequently in the section on administrative and transitional issues, some options related to the deduction for charitable contributions (including the floor and also limits on gifts of property) are also aimed at increasing tax compliance. Deductions for state and local taxes reduce the costs to state and local governments of imposing taxes, and they could be viewed by some as a federal subsidy to the states. This implicit subsidy to the states could encourage more taxes or government services at the state and local level, or provide incentives for some states and localities to favor federally deductible taxes in their choice of revenue sources. This assessment could lead some to question whether the federal taxpayers should subsidize activities in specific states or localities, whether via tax subsidies or via direct grants. Some government services provided by state and local governments do potentially benefit all federal taxpayers to some degree (e.g., roads) while others do not (e.g., residential waste management). Given the mobility of the population, there are some general benefits to educational services (which is also a recipient of some of the tax benefits of general obligation tax-exempt bonds). Similarly, taxpayers in one state or locality could benefit from the awareness that the poor are being cared for in another state or locality. Still, the overall spending of state and local governments tends to largely benefit their own residents. Moreover, federal tax deductions for state and local taxes are not targeted, particularly with regard to ability to pay federal income taxes. In addition, those states that have higher-income tax rates tend to also have a preference for higher levels of public goods so that taxpayers are receiving higher levels of public goods (that are exempt from income tax). Also, the fact that several states do not have income taxes creates an inequality in the benefits of federal tax deductions that vary depending on the mix of revenue sources. Even if there is consensus among policy makers that the rationale of a federal tax subsidy for state and local governments is justified, alternatives to the current policy could still fulfill this rationale while also meeting other policy goals associated with federal tax reform. Depending on the primary policy goal, the deduction for state and local taxes could be capped at a flat-dollar or share of income, replaced with a credit, or certain types of state and local taxes could be disallowed. Table 6 provides revenue estimates for some of these options. Economists generally approach distributional issues of tax policy through terms of vertical equity (how the tax change is distributed across income classes) and horizontal equity (the extent to which itemized deductions and changes in them might decrease or increase fairness across taxpayers similarly situated). The following section of the report analyzes various options to restrict itemized deductions from these two standards of economic equity. Vertical equity is important to analyze because it affects how rates can be reduced if pursuing a policy that is neutral from a distributional as well as a revenue perspective. If base-broadening is primarily to raise revenue, it indicates which income groups are paying additional taxes. Some have proposed to have more revenue raised from higher income classes. Although itemized deductions tend to benefit higher-income groups because they have more income, are more likely to itemize, and have higher tax rates, the relative concentration of tax benefits from itemized deduction differs across different provisions. According to the estimates in Table 9 , the share of tax benefits in 2012 from certain itemized deductions classified as tax expenditures for tax filers with incomes above $200,000 (the highest income range in Table 9 ) is 58% for charitable contributions and 56% for state and local taxes other than real estate. In contrast, those same tax filers receive 33% of the share of total tax benefits tax filers derived from the mortgage interest deduction and 25% share of the total tax benefits derived from the deduction for real estate taxes. Part of the reason some of the tax benefits of certain itemized deductions are concentrated in higher-income levels is because much of the income at that level is concentrated among a smaller number of tax filers. The distribution of tax benefits relative to incomes can also be illustrated visually using concentration curves, as shown in Figure 1 . The horizontal, x-axis of the concentration curve measures the cumulative percentage of income from poorest to richest. For example, the first 15% of cumulative adjusted gross income is the income reported by the poorest 50% of taxpayers in the sample. The vertical, y-axis measures the cumulative percentage of tax benefits of a tax expenditure. If the concentration is above the 45-degree diagonal line in the figures, then the tax benefits are larger as a share of income for lower-income taxpayers. If the concentration is below the diagonal line, then the tax benefits tend to accrue to high-income taxpayers (i.e., distributed more regressively). Note that the tax benefits for home mortgage interest, property taxes, charitable contributions and state and local sales or income taxes are each distributed regressively. The deduction for medical expenses is the only provision that exhibits some form of progressivity. Table 10 shows estimates from the Tax Policy Center (TPC) that provide a measure of progressivity by examining the tax benefits of certain itemized deductions as a share of a tax filer's after-tax income. If tax benefits are larger as a percentage of income for higher income individuals, then the provision is making after-tax income more unequal. TPC's data do not separate out real estate taxes, so the progressivity of state and local tax deductions reflects both the less progressive real estate taxes along with the more progressive income taxes and personal property taxes. In general, the effects of certain itemized deductions on after-tax income are relatively small for tax units with an income less than $50,000. The benefits of the mortgage interest deduction rise through the middle and upper classes, but eventually fall until they become negligible. On the other hand, the tax benefits as a share of income for the deductions for charitable gifts and state and local taxes rise with income. The percentage increase in after-tax income as a result of certain itemized deductions can help to inform the general number of percentage points that statutory tax rates could be cut to obtain a revenue-neutral, base-broadening restriction on itemized deductions. At the $500,000 and over income level, approximately where the top, marginal statutory tax rate begins, rates could be cut: approximately 1.75 percentage points if the itemized deduction for charitable gifts were eliminated, almost 3 percentage points if the deduction for state and local tax deductions were eliminated, and about 1.2 percentage points if the deduction for mortgage interest were eliminated. Overall, the top statutory rate could be reduced by about 5 percentage points in a revenue-neutral manner if all three of these itemized deduction provisions were eliminated. Table 11 shows the effects of various across-the-board options to restrict itemized deductions for the three highest income classes (i.e., over $200,000). For tax units in these higher-income classes, a flat-cap of $50,000 could eliminate most of the increase in after-tax income as a result of itemizing. By comparison, limiting the value to 2% of income would eliminate part of the tax benefits of itemized deductions to tax units at the highest income levels. In terms of statutory rate reductions, the $50,000 flat-cap option could permit reductions of slightly over 4 percentage points, and the limit in value to 2% of income could allow a rate reduction of 3 percentage points. Whereas vertical equity considers the treatment of individuals with different income and presumably tax filers with different abilities to pay, horizontal equity considers taxpayers who have similar abilities to pay but different circumstances. Many features of the tax code recognize that factors other than income (e.g., family size, health, and age) affect ability to pay income taxes. Certain itemized deductions are viewed by some as introducing horizontal inequities. For example taxpayers who own their homes have a lower effective tax burden than renters — even if both taxpayers have the same AGI. As another example, taxpayers with a preference for charitable donations have lower tax burdens than those with other preferences. On the other hand, some itemized deductions could increase equity across taxpayers with similar abilities to pay. For example, a family with extraordinary medical expenses has a lesser ability to pay taxes than a family without those costs. A homeowner who has financed more of their home with assets will be effectively exempt from the income those assets are earning. By this logic, allowing a mortgage interest deduction may lead to more equitable treatment between those with a larger share of their home financed by a mortgage versus those with a lower share of their home financed by a mortgage. One could argue, however, the mortgage deduction also discriminates between homeowners and renters. In the context of eliminating the deduction for state and local taxes, a taxpayer who lives in a high tax state may pay more in federal taxes if state taxes are not deductible. Whether that treatment is equitable across taxpayers depends on whether the benefits from federal spending by the state are commensurate with taxes. Reforms vary in the degree to which they will simplify tax administration by the government and compliance among tax filers. An outright repeal of itemized deductions, or a repeal of particular deductions, would tend to simplify both tax filing and compliance by reducing record-keeping and auditing for those deductions and reducing the general determination of whether a tax filer should choose to itemize their deductions or claim the standard deduction. Some particular reforms might also simplify tax compliance and administration. For example, applying a floor to charitable deductions could eliminate the need for record-keeping for small donations that might also be less likely to be documented. Limits on contributions of property, such as household goods and clothing, could also reduce administrative costs because these items are hard to value and monitor. Limiting the deduction for appreciated assets to basis could improve the valuation of assets by encouraging taxpayers to sell assets and donate the proceeds. On the other hand, some approaches could add complications to tax compliance, by requiring additional computations. The proposal to limit the value of deductions, such as the President's proposal or FFM, could be particularly complicated for some tax filers as it could require computing tax liabilities under multiple additional scenarios, and perhaps re-computing the alternative minimum tax (AMT), depending on what or if modifications are made to that provision. Current rules, for example, may require three tax calculations for high-income taxpayers, the basic, an adjustment for dividends and capital gains, and for the AMT. The FFM proposal would require a separate computation to compare tax liability income, with and without deductions, to determine the limit on tax benefits, and these might also have to be coordinated with capital gains and dividends calculations, as well as the AMT. In addition, calculations compared with the standard deduction would have to be made, because it is less obvious which is better. One question that could be asked is whether producing a tax code in which tax liability may need to be calculated as many as eight different ways a desirable step in tax reform? Although these tax computation problems could be minor with the use of tax preparation software, they still could complicate choices for individuals who prepare their own returns without software. Moreover, any type of aggregate ceiling or floor would complicate year-to-year decisions about charitable contributions, which are the most easily adjusted in the short run. Other complications may arise relating to charitable contributions. For example, in the case of revisions to the treatment of donated property, individuals wishing to donate property may now need to sell that property. These additional transactions may add complexity for them, although it may relieve the charities of that burden. Floors and ceilings could lead to shifting charitable contributions across tax years to minimize effects. In addition to administrative issues, there are also transitional issues. These issues are probably the most serious in the case of mortgage interest deductions, in which taxpayers entered into mortgages under the assumption of tax deductibility. Especially in the case of middle-income taxpayers, the presence and size of a mortgage is quite variable and may not be offset for many taxpayers with a rate reduction if mortgages are entirely eliminated. That is, since both itemizers and non-itemizers will face the same rates, tax burdens for current itemizers will rise even if the tax reform is distributionally neutral. Two solutions to these issues are to grandfather existing mortgages and only disallow the deduction of interest on new mortgages or to slowly lower the cap on mortgages over time. A second transitional issue, relating to owner occupied housing, is the potential short-run effect on an already troubled housing market. The solution might be slowly phasing down the caps. On February 26, 2014, House Ways and Means Committee Chairman Camp (MI) released a discussion draft for comprehensive tax reform legislation. Relative to current law, several substantial changes to individual itemized deductions have been proposed. Some of the major changes to itemized deductions include the following: Home mortgage interest deduction : the cap on deductions for interest on the first $1 million in home mortgage value would be reduced to $500,000 in increments over three years. Also, deductions for interest on home equity loans would be repealed. Charitable contributions deduction : would generally be subject to a 2% of AGI floor. Gifts of property would generally be valued at their cost rather than fair market value. State and local tax deductions : would be repealed (e.g., property taxes, income taxes), except for state and local taxes accrued in a trade or business. Casualty loss deduction : would be repealed for personal casualty losses (i.e., losses not connected with a trade or business or entered into profit). Medical expenses deduction : would be repealed. Miscellaneous itemized deductions : several miscellaneous itemized deductions would be repealed, including deductions for tax preparation expenses. The 2% floor for miscellaneous deductions would also be repealed. Pease : would be repealed. The House Ways and Means proposal intends to reduce the rate of tax filers who itemize from roughly one-third now to 5%, post-reform, through a combination of (1) increasing the standard deduction (from $12,400, married filing jointly in 2014 to $22,000, post-reform), and (2) eliminating or reforming the largest itemized deductions. If successful, then reductions in the rate of itemizers would increase the effective marginal tax rates (EMTRs) of tax filers, absent other changes, for the reasons explained in the " Effects of Base-Broadening on Marginal Tax Rates, Labor Supply, and Saving " and the " Effects of Base-Broadening on Effective Marginal Tax Rates " sections of this report. If these effects were taken into account in the macroeconomic analysis of the Ways and Means draft, then it is likely that the estimated, stimulative effect of tax reform would have been less than current estimates (and possibly negative) under dynamic scoring. As explained in the section on reforming " Charitable Deductions ," the Ways and Means draft would increase the economic efficiency of the tax code with the 2% of AGI floor. Also, as discussed in that section, valuing property gifts at basis (generally their cost of acquisition) would eliminate the ability to avoid capital gains and receive a tax deduction. The Executive Summary for the legislation claims that the entire legislation would increase charitable giving by $2.2 billion per year by improving the health of the economy. This claim is suspect, however, because (1) the draft would reduce the number of tax filers itemizing, and reduce incentives to giving for middle- and upper-middle-income tax filers (whose aggregate deduction amounts are shown in Table A-2 ); and (2) the macroeconomic effect of tax reform is uncertain due to possible effects of increasing EMTRs on growth. The lower $500,000 cap on amount of mortgage debt available for the home mortgage interest deduction contributes to progressivity of the draft tax reform plan. Repeal of the deduction for interest paid on home equity indebtedness would increase economic efficiency by reducing the incentive for consumers to open equity lines of credit. The repeal of the long-standing deductions for medical expenses and casualty loss would make the tax code less equitable, as these provisions are designed to better measure income and reflect a tax filer's inability to pay taxes due to catastrophic events. Appendix A. History of and Detailed Data on Itemized Deductions A Concise History of Itemized Deductions Itemized deductions have existed in some form since the creation of the first, permanent, U.S. income tax code in 1913. Tax filers have been able to itemize their deductions since the Revenue Act of 1913 (P.L. 63-16), which created the first permanent federal income tax. Deductions for interest paid or unexpected casualty losses were early provisions in the federal income tax code because many businesses were sole proprietorships (i.e., pass-through entities) in which the owner was personally liable for the costs of doing business. Tax deductions expanded during the post-World War II period between 1947 and the end of the 1970s. Itemized deductions were created for state and local taxes, certain forms of interest, charitable contributions, extraordinary health expenses, and miscellaneous expenses. As a share of personal income, these deductions grew from approximately 3.7% in 1947 to 10% in 1969, and then leveled off slightly to 9% in 1979. Some say that the growth of these itemized deductions was dampened, in part, due to increases in the standard deduction amount. The standard deduction, which was formerly based on a share of income instead of a set amount adjusted for inflation, grew from a postwar low of 2.4% of income in 1969 to 6.5% of income by 1979. This growth in the standard deduction reduced incentives for tax filers to itemize, because the value of the standard deduction exceeded the sum of their itemized deductions. The Tax Reform Act of 1986 (TRA86) represented one of the most comprehensive tax code changes since the creation of the modern tax code in 1913. Among its main objectives, TRA86 sought to "broaden the base" of the individual income tax system, or expand the tax base without raising statutory tax rates, in a way that would provide an equitable distribution of tax reductions among individuals. With regard to the individual income tax code, TRA86 included reductions in marginal tax rates, reductions in the number of tax brackets, increase in the standard deduction, and the elimination or reformation of a variety of itemized deductions. Within this policy framework, TRA86 eliminated some tax deductions and reformed other deductions that were left in the tax code. Deductions for state and local sales taxes were eliminated and numerous other deductions (e.g., employee business expenses, travel, and entertainment, and unreimbursed medical expenses) were limited either through higher thresholds or partial disallowance. For example, TRA86 applied restrictions on the dollar amount of the home mortgage that was eligible for interest deduction ($1 million for married filing jointly/$500,000 for married filing separately), and limited the deduction only to a primary or secondary residence. Following TRA86, itemized deductions claims decreased in value by about one-quarter, dropping from 11.4% of personal income in 1985 to 9.2% by 1988. However, this decline in itemized deductions was partially offset in the tax base by a rise in the amount of tax filers claiming the standard deduction, whose value increased with the enactment of the TRA86. Since TRA86, Congress has authorized new itemized deductions. These individual provisions have been regularly reauthorized as part of a package of temporary "tax extenders" and are still in-effect under current law. For example, an option to deduct state and local sales taxes in lieu of state income taxes was enacted in 2004. In addition, qualified home mortgage insurance premiums became eligible for itemized deduction in 2007. Detailed Data on the Types of Itemized Deductions This section of the report presents data tables of how many tax filers claimed specific itemized deductions on their tax returns, and what amount they claimed for each itemized deduction. These data come from the Internal Revenue Service's (IRS's) Statistics of Income for 2010. In the aggregate, more than 46.6 million tax filers itemized their tax deductions (rather than claim the standard deduction) for a total of more than $1.2 trillion in claim amounts. Table A-1 and Table A-2 disaggregate the number of tax returns and the claim amounts, respectively, for itemized deductions that are classified as tax expenditures. Table A-3 and Table A-4 disaggregate the number of tax returns and the claim amounts, respectively, for itemized deductions that are not classified as tax expenditures.

The President and leading Members of Congress have indicated that income tax reform is a major policy objective. Some itemized deductions are visible candidates for "broadening the base" of the individual income tax and cutting back on tax expenditures and primarily consist of deductions for mortgage interest, state and local taxes, and charitable contributions. The benefits of itemized deductions are concentrated among higher-income individuals, and that is particularly the case for state and local income tax deductions and charitable deductions. Proposals for addressing these provisions fall into two general classes. One approach could include repealing or restricting all itemized deductions. A different approach would consider each type of deduction and tailor a reform to the particular objectives and merits of the deductions, such as a lower ceiling on home mortgage interest deduction and a floor for charitable contributions. This report analyzes various proposals to restrict itemized deductions—both across-the-board and individually tailored—using standard economic criteria of economic efficiency, distribution, simplicity, and estimated revenue effects. In particular, this report estimates each proposal's potential to contribute to revenue-neutral reductions in income tax rates and the consequences for economic behavior. For an introduction to tax deductions, see CRS Report R42872, Tax Deductions for Individuals: A Summary, by [author name scrubbed]. For general tax data analysis on itemized tax deductions, see CRS Report R43012, Itemized Tax Deductions for Individuals: Data Analysis, by [author name scrubbed]. Regardless of the class of reform undertaken, for a given revenue target, tax reform involves a trade-off between a broader base and lower income tax rates. One objective of lower rates is presumably to reduce the distortionary effects on labor supply and saving. The analysis in this report, however, shows that this trade-off, with respect to effects on labor supply or saving, may be more apparent than real. Economic theory indicates that the tax rate that should determine the supply responses is not the statutory marginal tax rate but the effective marginal tax rate (EMTR). If part of the earnings of the last dollar is spent on tax exempt uses, then EMTRs are lower, and eliminating these deductions raises them. It is possible for a revenue-neutral tax reform to have no effect on EMTRs, or even raise them, which, for some, may defeat the purpose of tax reform. Analysis in this report suggests that eliminating itemized deductions would increase the top EMTR by approximately 4½ percentage points but permit a statutory rate reduction in a distributionally and revenue-neutral change by about 5 percentage points. Thus, the net effect of this change is a reduction of ½ a percentage point (a tenth the size of the statutory reduction). Proposals with ceilings could easily raise EMTRs. A traditional concern of tax expenditures is generally that they distort economic behavior. However, for each type of deduction there are also some justifications, although the magnitude may be in question. The provision that may have the most support from an economic efficiency standpoint is the deduction for charitable contributions. Some types of tax reform may simplify the tax code, but others can make it more complex. In addition, transitional rules may be needed for the mortgage interest deduction to limit the impact on taxpayers with large mortgages and to soften the potential impact on the housing market.

Dependence on foreign sources of crude oil, concerns over global climate change, and the desire to promote domestic rural economies have raised interest in renewable biofuels as an alternative to petroleum in the U.S. transportation sector. In response to this interest, U.S. policymakers have enacted a variety of policies, at both the state and federal levels, to directly support U.S. biofuels production and use (although some of these policies have expired). Policy measures have included blending and production tax credits to lower the cost of biofuels to end users, an import tariff to protect domestic ethanol from cheaper foreign-produced ethanol, research grants to stimulate the development of new biofuels technologies, loans and loan guarantees to facilitate the development of biofuels production and distribution infrastructure, and, perhaps most important, minimum usage requirements to guarantee a market for biofuels irrespective of their cost. As a result of expanding policy support, biofuels (primarily corn-based ethanol and biodiesel) production has grown significantly (up over 600%) since the early 2000s. However, despite the rapid growth, U.S. biofuels consumption remains small as a component of U.S. motor fuels, comprising about 5.7% of total transportation fuel consumption (on a gasoline-equivalent basis) in 2012. Initially, the most significant federal programs for supporting biofuels were tax credits for the production or blending of ethanol and biodiesel into the nation's fuel supply. However, under the Renewable Fuel Standard (RFS)—first established in 2005, then greatly expanded in 2007 (as described below)—Congress mandated biofuels use. In the long term, the expanded RFS usage mandate is likely to prove more significant than tax incentives in promoting the use of these fuels. This report focuses specifically on the RFS. It describes the general nature of the biofuels RFS and its implementation, and outlines some of the emerging issues related to the sustainability of the continued growth in U.S. biofuels production needed to fulfill the expanding RFS mandate, as well as the emergence of potential unintended consequences of this rapid expansion. This report does not address the broader public policy issue of how best to support U.S. energy policy. Congress first established a Renewable Fuel Standard (RFS)—a mandatory minimum volume of biofuels to be used in the national transportation fuel supply—in 2005 with the enactment of the Energy Policy Act of 2005 (EPAct, P.L. 109-58 ). The initial RFS (referred to as RFS1) mandated that a minimum of 4 billion gallons of renewable fuel be used in the nation's gasoline supply in 2006, and that this minimum usage volume rise to 7.5 billion gallons by 2012 ( Table 1 ). Two years later, the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ) superseded and greatly expanded the biofuels mandate to 36 billion gallons by 2022. In addition to gasoline, the expanded RFS (referred to as RFS2) applies to most transportation fuel used in the United States—including diesel fuel intended for use in highway motor vehicles, non-road, locomotive, and marine diesel (MVNRLM). RFS2 directly supports U.S. biofuels production by providing a mandatory market for qualifying biofuels—fuel blenders must incorporate minimum volumes of biofuels in their annual transportation fuel sales irrespective of market prices. By guaranteeing a market for biofuels, RFS2 substantially reduces the risk associated with biofuels production, thus providing an indirect subsidy for capital investment in the construction of biofuels plants. As such, the expanding RFS is expected to continue to stimulate growth of the biofuels industry, particularly for the advanced and cellulosic biofuels categories that are potentially in short supply relative to their growing RFS mandates. EISA was passed on December 19, 2007, and EPA issued its final rule to implement and administer the RFS2 on February 3, 2010. The new rule builds upon the earlier rule for RFS1. However, there are four major distinctions between RFS1 and RFS2: First and foremost, RFS2 increases the mandated usage volumes and extends the time frame over which the volumes ramp up through at least 2022 ( Table 1 ). Second, RFS2 subdivides the total renewable fuel requirement into four separate but nested categories—total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic biofuels—each with its own volume requirement or standard (described below). Third, biofuels qualifying under each nested RFS2 category must achieve certain minimum thresholds of lifecycle greenhouse gas (GHG) emission performance, with exceptions applicable to facilities existing or under construction when EISA was enacted ( Table 2 ). Fourth, under RFS2 all renewable fuel must be made from feedstocks that meet a revised definition of renewable biomass, including certain land use restrictions. The RFS is administered by the Environmental Protection Agency (EPA). EPA issued its final rule for administering RFS1 in April 2007. This rule established detailed compliance standards for fuel suppliers, a tracking system based on renewable identification numbers (RINs) with credit verification and trading, provisions for treatment of small refineries, and general waiver provisions. EPA rules for administering RFS2 (issued in February 2010) built upon the earlier RFS1 regulations and include specific deadlines for announcing annual standards, as well as greater specificity on potential waiver requests and RIN oversight. RFS2 includes four biofuel categories, each with a specific volume mandate and lifecycle GHG emission reduction threshold (as compared to the lifecycle GHG emissions of the 2005 baseline average gasoline or diesel fuel that it replaces). Each is also subject to biomass feedstock criteria. Total renewable fuels . The scheduled mandate grows from nearly 13 billion gallons (bgals) in 2010 to 36 bgals in 2022. Biofuels from new facilities must reduce lifecycle GHG emissions by at least 20% relative to conventional fuels to qualify as a renewable fuel. Most biofuels, including corn-starch ethanol from new facilities, qualify for this mandate. However, the volume of corn-starch ethanol included in the RFS is capped at 13.8 bgals in 2013, but grows to 15 bgals by 2015 and is fixed thereafter. Advanced biofuels . The mandate grows from nearly 1 bgals in 2010 to 21 bgals in 2022. Advanced biofuels must reduce lifecycle GHG emissions by at least 50% to qualify. A subcomponent of the total renewable fuels mandate, this category includes biofuels produced from non-corn feedstocks—corn-starch ethanol is expressly excluded from this category. Potential feedstock sources include grains such as sorghum and wheat. Imported Brazilian sugarcane ethanol, as well as biomass-based biodiesel and biofuels from cellulosic materials (including non-starch parts of the corn plant such as the stalk and cob), also qualify. The total advanced biofuel mandate for 2013 is 2.75 bgals (ethanol equivalent). Cellulosic and agricultural waste-based biofuel . The mandate grows from 100 million gallons in 2010 to 16 bgals in 2022 (subsequently, RFS mandates were lowered for 2010, 2011, 2012, and 2013—see discussion under " Waivers to Annual Biofuel Standards "). Cellulosic biofuels must reduce lifecycle GHG emissions by at least 60% to qualify. Cellulosic biofuels are renewable fuels derived from cellulose, hemicellulose, or lignin. This includes cellulosic biomass ethanol as well as any biomass-to-liquid fuel such as cellulosic gasoline or diesel. Biomass-based biodiesel (BBD) . The mandate grows from 0.5 bgals in 2009 to 1 bgals in 2012. Any diesel fuel made from biomass feedstocks (including algae) qualifies, including biodiesel (mono-alkyl esters) and non-ester renewable diesel (e.g., cellulosic diesel). The lifecycle GHG emissions reduction threshold is 50%. EPA established the 2013 mandate at 1.28 bgals (actual volume). EPA is proposing the same 1.28 bgals (actual volume) for 2014. BBD produced from cellulosic feedstocks could potentially be used to simultaneously meet the cellulosic and BBD standards. RFS2 is essentially a biofuels mandate with limits on corn-starch ethanol inclusion and carve-outs for higher-performing biofuels ( Figure 1 )—as measured by reductions in lifecycle GHG emissions. The cap on the volume of ethanol derived from corn starch that can be counted under the RFS is intended to encourage the use of non-corn-based biofuels. As a result, corn-starch ethanol blended in excess of its annual cap is not credited toward the annual total RFS. Because of the nested nature of the biofuel categories, any renewable fuel that meets the requirement for cellulosic biofuels or biomass-based diesel (BBD) is also valid for meeting the advanced biofuels requirement. Thus, if any combination of cellulosic biofuels or BBD were to exceed their individual mandates, the surplus volume would count against the advanced biofuels mandate, thereby reducing the potential need for imported sugar-cane ethanol or other fuels to meet the unspecified portion of the advanced biofuels mandate (which grows to 21 bgals by 2022). Similarly, any renewable fuel that meets the requirement for advanced biofuels is also valid for meeting the overall total renewable fuel requirement (which grows to 36 bgals by 2022). As a result, any combination of cellulosic biofuels, BBD, or imported sugar-cane ethanol that exceeds the advanced biofuel mandate would reduce the potential need for corn-starch ethanol to meet the overall mandate. In addition to volume mandates, EISA specified that the lifecycle GHG emissions of a qualifying renewable fuel must be less than the lifecycle GHG emissions of the 2005 baseline average gasoline or diesel fuel that it replaces. EISA established lifecycle GHG emission thresholds for each of the RFS2 biofuels categories ( Table 2 ). With respect to the GHG emissions assessments, EISA specifically directed EPA to evaluate the aggregate quantity of GHG emissions (including direct emissions and significant indirect emissions, such as significant emissions from land use changes) related to the full lifecycle, including all stages of fuel and feedstock production, distribution, and use by the ultimate consumer. Under EISA, EPA is required to evaluate the lifecycle emissions of all biofuel pathways registered in the RFS2. A key point of contention was the inclusion in the statute of a requirement that EPA incorporate so-called "indirect land use changes" (ILUC) in the GHG emissions assessment. ILUC refers to the idea that diversion of an acre of traditional field cropland in the United States to grow a biofuels feedstock crop might result (due to market price effects) in that same acre reappearing at another location and potentially on virgin soils, such as the Amazon rainforest. Such a transfer—when included in the lifecycle GHG calculation of a particular biofuel—could result in an estimated net increase in GHG emissions. EPA's initial assessment of biofuel lifecycle GHG emissions in its proposed RFS2 was met with criticism from many stakeholders. Several environmental and academic groups argued that, as a result of ILUC costs, corn ethanol should not be permissible under the RFS2. Biofuels proponents argued that ILUC was too vague a concept to be measurable in a meaningful way, and that it alone should not determine the fate of the U.S. biofuels industry. As a result, EPA reconsidered all of the evidence (including ILUC) and made relevant adjustments to its analytical tools. The resultant changes were announced as part of its final RFS2 rule of February 3, 2010. In addition, EPA has pointed out that other pathways are likely to be similar enough to existing qualifying pathways ( Table 3 ) that they can be extended the same GHG reduction compliance determinations. However, EPA stated that, although the announced determinations for the qualifying fuel pathways ( Table 3 ) are final for the time being, its lifecycle methodology remains subject to new developments in the state of scientific knowledge, and that future reassessments may alter the current status of these fuel pathways. EPA says that it will be able to make determinations on several other potential biomass crops and their fuel pathways in the future. For example, in a February 2013 rule that qualified several new fuel pathways for cellulosic biofuel production, EPA stated that it hoped to provide opportunities to increase the volume of advanced, low-GHG renewable fuels. For other biofuel pathways not yet modeled, EPA encourages parties to use a petition process to request EPA to examine additional pathways. Fuel from the capacity of facilities that either existed or commenced construction prior to December 19, 2007 (the date of enactment of EISA), is exempt from the 20% lifecycle GHG threshold requirement. The exemption is extended to ethanol facilities that commenced construction on or before December 31, 2009, provided that those facilities use natural gas, biofuels, or a combination thereof as processing fuel. However, any new expansion of production capacity at existing facilities must be designed to achieve the 20% GHG reduction threshold if the facility wants to generate RINs for that volume. EISA changed the definition of renewable fuel to require that it be made from feedstocks that qualify under an amended definition of "renewable biomass." As such, EISA limits not only the types of feedstocks that can be used to make renewable fuel, but also the land that these renewable fuel feedstocks may come from. Specifically excluded under the EISA definition are virgin agricultural land cleared or cultivated after December 19, 2007, as well as tree crops, tree residues, and other biomass materials obtained from federal lands. These restrictions are applicable to both domestic and foreign feedstock and biofuels producers. Existing agricultural land includes three land categories—cropland, pastureland, and Conservation Reserve Program (CRP) land. Rangeland is excluded. Fallow land is defined as idled cropland and is therefore included within the definition of agricultural land. EPA determined that fuels produced from five categories of feedstocks (primarily targeted for cellulosic biofuels) were expected to have less or no indirect land use change and thereby qualify as renewable biomass: crop residues such as corn stover, wheat straw, rice straw, citrus residue; forest material including eligible forest thinnings and solid residue remaining from forest product production; secondary annual crops planted on existing cropland, such as winter cover crops; separated food and yard waste, including biogenic waste from food processing; and perennial grasses, including switchgrass and miscanthus. The EPA is responsible for revising and implementing regulations to ensure that the national transportation fuel supply sold in the United States during a given year contains the mandated volume of renewable fuel in accordance with the four nested volume mandates of the RFS2. To accomplish this task, EPA first calculates annual percentage standards for the four biofuel categories of RFS2. The percentage standards apply to refiners, blenders, and importers of gasoline and diesel fuels and are used to determine each individual company's renewable volume obligation (RVO). To facilitate meeting the requirements, while taking into consideration regional differences in biofuels production and availability, EPA established a system of tradable RINs. Percentage standards, RVOs, and RINs are described in this section. In order to ensure that the requisite volumes of biofuels are used each year, EPA first estimates the total volume of gasoline and diesel fuel that is expected to be used in the United States during the upcoming year. EPA relies on projections from the Department of Energy's Energy Information Agency (EIA) for this estimate. The percentage obligation (or standard) is computed as the total amount of renewable fuels mandated to be used in a given year expressed as a percentage of expected total U.S. transportation fuel use ( Table 4 ). This ratio is adjusted to account for the small refinery exemptions. A separate ratio is calculated for each of the four biofuel categories. Under EISA, EPA is required to set the biofuel standards on a final basis by November 30 for the following year, based in part on information provided by the EIA. In order to accommodate this deadline, EPA announced that it intended to issue a notice of proposed rulemaking (NPRM) by summer of the preceding year, and on a final basis by November 30 of the preceding year. These announcements are to include the cellulosic biofuel waiver credit price (see section on " Cellulosic Biofuel Waiver Credits ") and the status of the aggregate compliance approach to land-use restrictions under the definition of renewable biomass for both the United States and Canada. The RFS mandates (by biofuel category) are ultimately enforced on gasoline and diesel fuel refiners, blenders, and/or importers (not on biofuels producers or importers). Companies that supply gasoline or diesel transportation fuel for the retail market are obligated to include a quantity of biofuels equal to a percentage of their total annual fuel sales—referred to as a renewable volume obligation (RVO). The RVO is obtained by applying the EPA-announced standards for each of the four biofuel categories to the firm's annual fuel sales to compute the mandated biofuels volume. At the end of the year, each supplier must have enough RINs to show that it has met its share of each of the four mandated standards. Failure to acquire sufficient RINs to meet a party's RVO (see section " Renewable Identification Numbers (RINs) " for details) is subject to civil penalties of up to $32,500 per day, plus the amount of any economic benefit or savings resulting from the violation. Since the RFS program is intended to require a specific volume of renewable fuel to be consumed in the U.S. domestic transportation fuel market, RINs associated with exports of renewable fuel are not valid for RFS compliance purposes. To ensure that renewable fuels exported from the U.S. cannot be used by an obligated party for RFS compliance purposes, the RINs associated with any exported renewable fuel must be removed from circulation. To achieve this under the RIN-based program, exporters of renewable fuel are assigned an RVO that is equal to the annual volume of renewable fuel that they export. EISA requires that EPA evaluate and make an appropriate market determination for setting the RFS standards each year. As part of this process, EPA announced that it will issue a notice of proposed rulemaking by summer and a final rule by November 30 of each year to set the renewable fuel standard for each ensuing year. Pursuant to this task, the EPA Administrator has the authority to waive the RFS requirements, in whole or in part, if, in her determination, there is inadequate domestic supply to meet the mandate, or if "implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States." In addition to waivers associated with the annual RFS review process, EPA may respond to waiver requests resulting from unusual circumstances. For example, in 2008 the governor of Texas requested a waiver of the RFS because of high grain prices; however, that waiver request was denied because EPA determined that the RFS requirements alone did not "severely harm the economy ... of a State, a region, or the United States," a standard required by the statute. A similar waiver was requested in 2012 by the governors of Arkansas and North Carolina and several other states. In both cases, the petition was ultimately denied. Under certain conditions, the EPA administrator may waive (in whole or in part) the specific carve-outs for cellulosic biofuel and biomass-based diesel fuel. Because these categories are nested, EPA may pass the waiver along to the higher, aggregate totals for advanced and total renewable biofuels. However, through 2013 EPA has elected to limit the waiver to the cellulosic category. For example, in each of the years 2010 through 2013 EPA has waived the original RFS mandates for cellulosic biofuels, but left both the advanced and total renewable mandates unchanged as follows: In February 2010, EPA lowered the 2010 RFS for cellulosic biofuels to 6.5 million gallons (mgals), on an ethanol-equivalent basis, down from its original 100 mgals scheduled by EISA. In November 2010, EPA lowered the 2011 RFS for cellulosic biofuels to 6 mgals (ethanol equivalent), down from its original 250 mgals. In December 2011, EPA lowered the 2012 RFS for cellulosic biofuels to 8.65 mgals (ethanol equivalent), down from its original 500 mgals. In August 2013, EPA lowered the 2013 RFS for cellulosic biofuels to 6 mgals (ethanol equivalent), down from its original 1 billion gallons. EPA cited a lack of current and expected production capacity, driven largely by a lack of investment in commercial-scale refineries—for example, only a limited number of cellulosic biofuel RINs were registered in 2012 (20,069 gallons), while no commercial production was reported in 2010 and 2011. The downward revisions for 2010 through 2013 suggest that the actual cellulosic biofuels standard for future years, although explicitly scheduled in statute, is uncertain. In contrast to these previous waivers, which were limited to the cellulosic biofuels mandate, on November 15, 2013, EPA released its proposed 2014 RFS mandates and included a waiver of cellulosic, advanced, and total renewable biofuels. EPA is proposing to use both its cellulosic waiver authority and its general authority to lower the total 2014 RFS below the 2013 levels. EPA has determined that the current "blend wall" limitation of 10% ethanol in gasoline would lead to inadequate supply of RINs to comply with the mandate. Therefore, EPA is proposing lowering the advanced biofuel mandate by 1.55 billion gallons, and the overall RFS by 2.94 billion gallons, from the amounts scheduled for 2014 in the statute. Under the proposal, the corn-ethanol cap would be roughly 1.4 billion gallons below the level scheduled in the statute for 2014, and roughly 800 million below the 2013 cap. Some ethanol proponents argue that EPA has exceeded its legislative waiver authority and that this action will likely result in litigation. If EPA reduces the required volume of cellulosic biofuel according to the waiver provisions in EISA, EPA must offer a number of credits to obligated parties no greater than the reduced cellulosic biofuel standard. These waiver credits are not allowed to be traded or banked for future use, and are only allowed to be used to meet the cellulosic biofuel standard for the year that they are offered. The formula for determining the value of the credits is set in statute. Since the cellulosic standard was lowered for each year from 2010 through 2013, cellulosic waiver credits were made available to obligated parties at announced prices per gallon—$1.56 in 2010; $1.13 in 2011; $0.78 in 2012; and $0.42 in 2013. The value of the credits is equal to the amount by which $3.00 per gallon—adjusted for inflation—exceeds the average wholesale price of a gallon of gasoline in the United States in the preceding year. In 2012 the American Petroleum Institute (API) challenged the obligation under the RFS to use cellulosic biofuels that do not exist in sufficient amounts in commercial markets or pay a fee. After three successive years (2010-2012) where, first, EPA lowered the cellulosic biofuels mandate, cellulosic biofuels production failed to achieve the lowered mandates. API petitioned the U.S. Court of Appeals, D.C., charging that EPA exceeded its authority by setting unachievable standards in an effort to promote cellulosic biofuel development. On January 25, 2013, the appeals court agreed with API's charge, ruling that the EPA's cellulosic biofuels mandate for 2012 was vacated and that EPA must replace it with a revised mandate. On February 27, 2013, EPA announced that the 2012 cellulosic biofuel standard was vacated (dropped to zero). Then, in November, 2013, EPA proposed retroactively lowering the 2011 RFS to zero. A RIN is a unique 38-character number that is issued (in accordance with EPA guidelines) by the biofuel producer or importer at the point of biofuel production or the port of importation. Each qualifying gallon of renewable fuel has its own unique RIN. RINs are generally assigned by batches of renewable fuel production as follows: RIN = KYYYYCCCCFFFFFBBBBBRRDSSSSSSSSEEEEEEEE Where K = code distinguishing RINs still assigned to a gallon from RINs already detached YYYY = the calendar year of production or import CCCC = the company ID FFFFF = the company plant or facility ID BBBBB = the batch number RR = the biofuel equivalence value (described below) D = the renewable fuel category SSSSSSSS = the start number for this batch of biofuel EEEEEEEE = the end number for this batch of biofuel Under the RFS2 RIN formulation, Code D has been redefined to identify which of the four RFS categories—total, advanced, cellulosic, or biodiesel—the biofuel satisfies ( Table 5 ). Together, SSSSSSSS and EEEEEEEE identify the RIN block that demarcates the number of gallons of renewable fuel the batch represents in the context of compliance with the RFS—that is, RIN gallons. The RIN-gallon total equals the product of the liquid volume of renewable fuel times its equivalence value. For example, since biodiesel has an equivalence value of 1.5 when being used as an advanced biofuel, 1,000 gallons of biodiesel would equal 1,500 RIN gallons of advanced biofuels. If the RIN block start for that batch was 1 (i.e., SSSSSSSS = 00000001), then the end value (EEEEEEEE) would be 00001500, and the RR code would be RR = 15. Any party that owns RINs at any point during the year (including domestic and foreign producers, refiners, exporters, and importers of renewable fuels) must register with the EPA and follow RIN record-keeping and reporting guidelines. RINs can only be generated if it can be established that the feedstock from which the fuel was made meets EISA's definitions of renewable biomass, including land restrictions. The feedstock affirmation and record-keeping requirements apply to RINs generated by both domestic renewable fuel producers and RIN-generating foreign renewable fuel producers or importers. After a RIN is created by a biofuel producer or importer, it must be reported to the EPA. When biofuels change ownership (e.g., are sold by a producer to a blender), the RINs are also transferred. When a renewable fuel is blended or supplied for retail sale or at the port of embarkation for export, the RIN is separated from the fuel and maybe used for compliance or trade. The Code K status of the RIN is changed at separation. A permanent exemption is available to any parties who produce or import less than 10,000 gallons of renewable fuel in a year—they are not required to generate RINs for that volume, and are not required to register with the EPA if they do not take ownership of RINs generated by other parties. Under EISA, this exemption is temporarily extended (for up to three years beginning with the calendar year in which the refinery produces its first gallon of renewable fuel) to renewable fuel producers who produce less than 125,000 gallons per year from new production facilities. This exemption is intended to allow pilot and demonstration plants to focus on developing the technology and obtaining financing during their early stages rather than complying with RFS2 regulations. RINs generated during the current year may be used to satisfy either the current year's or the following year's RVO. A RIN is not viable for any year's RVO beyond the immediately successive year; thus giving it essentially up to a two-year lifespan. For any individual company, up to 20% of the current year's RVO may be met by RINs from the previous calendar year. In addition to compliance demonstration, RINs can be used for credit trading. When a fuel supplier has blended or sold a quantity of biofuel, the RINs are separated from the biofuels. If a supplier has already met its mandated share and has supplied surplus biofuels for a particular biofuel category, it can sell the extra RINs to another entity or it can hold onto the RINs for future use (either to satisfy the succeeding year's requirement or for sale in the succeeding year). An obligated party who faces a RIN deficit can purchase excess RINs. Since biofuels supply and demand can vary over time and across regions, a market has developed for RINs. The marketability of RINs allows fuel suppliers who have not bought enough biofuels to fulfill their RFS requirement for each of the four RFS categories by purchasing the biofuels-specific RINs instead. As a result, RINs have value as a replacement for the actual purchase and supply of biofuels. Because four separate biofuel mandates must be met, the RIN value may vary across the individual biofuel categories. Since the RFS biofuels categories are nested, the price of biodiesel RINs is generally equal to or greater than the price of RINs for advanced biofuels which, in turn is generally equal to or greater than the RIN value for total renewable biofuels. Thus, RIN values may vary across RFS categories as well as geographically with variations in specific biofuels supply and demand conditions. Differences in RIN values also reflect the degree to which the mandate associated with a specific RIN biofuel category is binding on the market equilibrium. For example, if the supply of a specific biofuel—including both domestically produced as well as imported—available to the market exceeds the RFS mandate (see left-hand side of Figure 2 where Q * > Q RFS ), then the RIN's "core" value (i.e., its price minus transaction costs and speculative component) would be zero at the mandated level (Q RFS ). In contrast, if the mandated biofuel usage level exceeds what is offered by the market (see right-hand side of Figure 2 where Q RFS > Q * ), the biofuels mandate is binding because it forces obligated parties ("blenders" for this discussion) to use more biofuels than they would without the mandate. The price of the biofuel purchased by the blender has to rise to P producer to solicit the extra production from the biofuels producers, while the biofuels price must fall to P blender to encourage greater blender purchases. The RIN's core value would be equal to the gap between these two prices, P producer minus P blender . However, the blender must pay the full price of P producer , which includes both P blender plus the RIN's core value, to acquire the mandated Q RFS . A RIN also may have speculative value, even when in surplus, if an investor were to anticipate a shortage in the near future (i.e., within the period for which a RIN is valid) and seek to acquire RINs cheaply in advance of the shortage. Prior to 2013, the overall biofuels mandates had not been binding and renewable fuel RIN values were small (usually less than $0.05/gallon). However, based on EIA data for U.S. gasoline consumption, it is expected that the RFS as scheduled in the statute will become binding sometime during 2013 or 2014 (see discussion later in this report). As a result, RIN prices escalated sharply in 2013 to prices well in excess of $1.00/gallon, before dropping dramatically in the second half of the year. Economists suggest that market conditions—supply, demand, and asymmetries in market power—will determine how any added cost of biofuels acquisition (i.e., the RIN value) would be distributed along the supply chain—that is, partially absorbed by biofuel producers and blenders or passed on to motor fuel consumers in the form of higher fuel prices. Because RINs have value, they are not immune to fraudulent activity. In late 2011 and early 2012, EPA issued notices of violations (NOVs) to three companies (Clean Green Fuels, LLC, Absolute Fuels, LLC, and Green Diesel, LLC) that the agency alleges fraudulently generated a combined 140 million biodiesel RINs in 2010 and 2011. Subsequently, individuals representing two of these companies have also faced criminal prosecution. As part of its final rule determination, EPA included an analysis of the market and environmental impact of the increased use of renewable fuels under the RFS2 standards. The analytical results include the following. Reduced dependence on foreign sources of crude oil . By 2022, the mandated 36 bgals of renewable fuel will displace about 13.6 bgals of petroleum-based gasoline and diesel fuel, representing about 7% of expected annual U.S. transportation fuel consumption. Reduced price of domestic transportation fuels . By 2022, the increased use of renewable fuels is expected to decrease gasoline costs by $0.024 per gallon and diesel costs by $0.121 per gallon, producing a combined annual savings of nearly $12 billion. Reduced GHG emissions . When fully implemented in 2022, the expanded use of biofuels under the RFS is expected to reduce annual GHG emissions by 138 million metric tons—equivalent to taking about 27 million vehicles off the road. Increased U.S. farm income . By 2022, the expanded market for agricultural products such as corn and soybeans resulting from biofuels production is expected to increase annual net farm income by $13 billion. Decreased corn and soybean exports . The expanded use of corn starch and soybean oil for biofuels is expected to reduce corn exports by 8% and soybean exports by 14% by 2022. Increased cost of food in the United States . The increased demand for U.S. agricultural products is expected to raise the overall commodity price structure, leading to an annual increase in the cost of food per capita of about $10 by 2022, or over $3 billion. Increased emissions of certain air contaminants, but decreased emissions of others. Contaminants expected to increase include hydrocarbons, nitrogen oxides (NOx), acetaldehyde, and ethanol; those expected to decrease include carbon monoxide (CO) and benzene. The effects are expected to vary widely across regions, but in the net, increases in population-weighted annual average ambient PM and ozone concentrations are anticipated to lead to up to 245 cases of adult premature mortality. Supporters of an RFS claim it serves several public policy interests in that it: reduces the risk of investing in renewable biofuels by guaranteeing biofuels demand for a projected period (such risk would otherwise keep significant investment capital on the sidelines); enhances U.S. energy security via the production of liquid fuel from a renewable domestic source resulting in decreased reliance on imported fossil fuels (the United States currently imports over half of its petroleum, two-thirds of which is consumed by the transportation sector); provides an additional source of demand—renewable biofuels—for U.S. agricultural output that has significant agricultural and rural economic benefits via increased farm and rural incomes and substantial rural employment opportunities; underwrites the environmental benefits of renewable biofuels over fossil fuels (most biofuels are non-toxic, biodegradable, and produced from renewable feedstocks); and responds to climate change concerns because agricultural-based biofuels emit substantially lower volumes of direct greenhouse gases (GHGs) than fossil fuels when produced, harvested, and processed under certain circumstances. Critics of an RFS, particularly of the EISA expansion of the original RFS, have taken issue with many specific aspects of biofuels production and use, including the following: By picking the "winner," policymakers may exclude or retard the development of other, potentially preferable alternative energy sources. Critics contend that biofuels are given an advantage via billions of dollars of annual subsidies that distort investment markets by redirecting venture capital and other investment dollars away from competing alternative energy sources. Instead, these critics have argued for a more "technology-neutral" policy such as a carbon tax, a cap-and-trade system of carbon credits, or a floor price on imported petroleum. Continued large direct and indirect federal incentives for corn-starch ethanol production are no longer necessary since the sector is no longer in its "economic infancy" and would have been profitable in most months since 2006 without federal subsidies. The expanded mandate could have substantial unintended consequences in other areas of policy importance, including energy/petroleum security, pollutant and greenhouse gas emissions, agricultural commodity and food markets, land use patterns, soil and water quality, conservation, the ability of the gasoline-marketing infrastructure and auto fleet to accommodate higher ethanol concentrations in gasoline, the likelihood of modifications in engine design, and other considerations. Taxpayers are being asked to finance continued biofuels subsidies in support of existing and future biofuels infrastructure that have the potential to affect future federal budgetary choices. Historically, the major direct federal costs associated with the implementation of the RFS have been the federal tax credits available to the various biofuels that are blended to meet the RFS mandate. Most of these tax credits expired at the end of 2011, while the cellulosic biofuels production tax credit is scheduled to expire at the end of 2013. Prior to their expiration, the combination of biofuels tax credits with other federal and state government subsidies in support of ethanol production were estimated to be in the range of $5.4 billion to $6.6 billion per year—averaging nearly $1 per gallon of biofuel produced in the United States. In 2011 (the last year in which the full suite of biofuels tax credits was in effect), federal subsidies were estimated at over $7.8 billion, including nearly $7.5 billion in tax credits. With the expiration of the ethanol tax credit, estimates of federal support have fallen sharply. In 2012, following the expiration of the corn ethanol tax credit, a preliminary estimate of federal biofuel subsidies (including Title IX farm bill energy programs) was approximately $1.3 billion, of which slightly more than $1 billion was attributable to the biodiesel tax credit of $1.00 per gallon. Both the cellulosic biofuels production tax credit of $1.01 per gallon and the biodiesel and renewable diesel fuel mixtures tax credit of $1.00 per gallon were extended through 2013 by the American Taxpayers Relief Act of 2012 (ATRA: P.L. 112-240 ). ATRA also retroactively applied the extension to biodiesel and renewable diesel fuel mixtures produced in 2012. There is currently no proposed legislation in the 113 th Congress to renew or extend either of these biofuel tax credits. However, several bills propose to alter RFS mandates and EPA's waiver of E15 blending ratios. Most U.S. biofuel production is ethanol produced from corn starch. As a result, as the U.S. ethanol industry has grown over the years, so too has its usage share of the annual corn crop. In 2000, national ethanol production was using about 6% of U.S. corn supplies; by 2012 it was expected to use about 31%. The principal co-product from ethanol production—Distiller's Dried Grains or DDG—is useful as a relatively high-protein animal feed. About 30% (by weight) of corn used for biofuels is left over from the production process in the form of DDGs. The supply of DDGs has become more abundant in direct correlation with the expansion of the ethanol industry, and the U.S. livestock sector has learned how to incorporate this new feedstuff into animal and poultry rations, thus increasing both DDG value and average returns to ethanol production. Corn use for ethanol peaked at 5,019 million bushels in 2010, then declined sharply to 4,648 million bushels during the severe drought of 2012. USDA currently estimates 2013 corn use for ethanol at 4,900 million bushels. Under the expanded RFS, the 2015 corn ethanol cap of 15 billion gallons, coupled with the existing U.S. ethanol production capacity of nearly 15 billion gallons, suggests that ethanol will likely use a declining share—perhaps in the 25% to 30% range—of the volume of U.S. corn production (adjusted for DDGs) in the future, depending on yield and area developments, and petroleum market conditions. The shift towards greater corn use for biofuels that occurred from 2006 to 2010 meant higher prices for other corn users, including both the livestock and export sectors ( Figure 3 ). The biofuels-driven expansion in feedstocks production (especially corn for grain and stover) has heightened competition for available cropland between biofuels feedstocks and other field crops, and has resulted in more intense agricultural activity on U.S. cropland to meet growing demand for food, feed, and fuel resources. This has consequences for several important agricultural markets, including grains—because corn competes with other grains for land; livestock—because animal feed costs increase with the price of corn; agricultural inputs—because corn is more input-intensive (in terms of fertilizers and pesticides) than other major field crops; and land—because the value of cropland, as well as total harvested acreage, increases with commodity prices and returns per acre. As recently as 2004, over 60% of U.S. corn production was used as feed. The feed share of corn declined to 40% in 2011, but is expected to rebound slightly to 47% with the outlook for a record corn crop in 2013. The ability of the U.S. corn industry to continue to expand production and satisfy the steady growth in demand depends, first and foremost, on continued productivity gains. U.S. corn yields have shown strong, steady growth since the late 1940s, with some acceleration occurring since the mid-1990s as bio-engineered advances in seed technology have heightened drought and pest resistance in corn plants ( Figure 4 ). Weather-related problems, including the severe drought of 2012, pulled corn yields well below trend; however, yields are estimated to return to trend in 2013. A return to normal growing conditions is expected to replenish corn supplies, lower prices, and return the supply and demand situation to a more traditional balance. From 1998 through early 2006, the U.S. farm price of corn averaged $2.09 per bushel. However, average corn prices jumped to $3.83 per bushel during the 2006-2010 period, when the rapid expansion of the U.S. ethanol industry exceeded the growth in U.S. corn production. Unfavorable weather reduced corn yields slightly below trend in both 2010 and 2011, but the severe drought of 2012 ( Figure 4 ) dropped yields 23% below trend. The combination of these successive below-trend yield outcomes, in the face of continued strong demand for corn, pushed prices temporarily to a $6.29-per-bushel average during 2011 through early 2013 ( Figure 5 ). The outlook for a return to trend yields and a record harvest of 14 billion bushels of corn in 2013 has since pressured prices back towards the $4.00 per bushel level. USDA projects corn prices to remain in the $4.00 to $5.00 per bushel range through 2020. It is likely that upward-trending farm prices ( Figure 5 ) will encourage continued research investments to move corn yields steadily higher in the future. U.S. cropland planted to corn has increased in recent years from the 1983 low of 60.3 million acres to an estimated high of 97.2 million acres in 2012—the highest since 1936. Prospects for further expansion in crop area are far less certain, as corn is an energy-intensive crop that prefers deep, fertile soils and timely precipitation. Within the prime corn-growing regions of the Corn Belt, per-acre returns for corn easily dwarf other field crops that vie for the same acreage. Recent seed developments have allowed corn production to expand dramatically into the central and northern Plains states. However, the risk of investing up front in high operating costs to be offset at harvest by strong returns increases as production moves into less traditional regions, such as the northern Plains, the Delta, and the Southeast. The most likely source of new corn acreage will come from shifts in crop rotation from soybeans to corn. However, crop intensification also has its limits. Corn (of the grass family) is traditionally planted in an annual rotation with soybeans (a broad-leaf legume) that offers important agronomic benefits including pest and disease control, as well as enhanced soil fertility. When farmers shift away from this rotation, corn yields tend to suffer. Planting successive corn crops—referred to as corn-on-corn cultivation—rather than in rotation with soybeans, wheat, or fallow generally produces a yield drag on successive corn crops that can lower yields anywhere from 5% to 15%, depending on soil, climate, and cultivation practices. As a result, the corn-to-soybean price ratio would have to tilt fairly strongly in favor of corn for corn-on-corn production to be profitable. Given the limitations on corn area expansion and rotational intensification, it is likely that the sustainable long-run corn planted area is probably in the range of 90 million to 95 million acres. If this is the case, then it would mean that future growth in U.S. corn production will be increasingly dependent on yield growth. EISA defines "advanced biofuels" very broadly as biofuels other than corn-starch ethanol that achieve a 50% reduction in greenhouse gas emissions relative to gasoline. As such, advanced biofuels would include imported Brazilian sugar-cane ethanol, as well as home-grown biodiesel. However, the principal focus of advanced biofuels is on biofuels based on cellulosic biomass. Under the RFS2, advanced biofuels use is mandated to reach a minimum of 21 billion gallons by 2022, of which at least 16 billion gallons must be some type of cellulosic biofuel. However, many obstacles must first be overcome before commercially competitive cellulosic biofuels production occurs. In the near term, it is likely that corn stover will be a primary biomass of choice for cellulosic biofuels production. This is because many ethanol plants already exist in corn production zones and an extension of those plants to include cellulosic biofuels production from stover would offer some scale economies. However, stover-to-biofuel conversion has its own set of potential environmental trade-offs, paramount of which is the dilemma of sacrificing soil fertility gains by harvesting the stover rather than returning it to the soil under no- or minimum-tillage practices. Other potential near-term supplies include other agricultural and municipal wastes. There are substantial uncertainties regarding both the costs of producing cellulosic feedstocks and the costs of producing biofuels from those feedstocks. Dedicated perennial crops are often slow to establish, and it can take several years before a marketable crop is produced. Crops heavy in cellulose tend to be bulky and represent significant problems in terms of harvesting, transporting, and storing. New harvesting machinery would need to be developed to guarantee an economic supply of cellulosic feedstocks. Seasonality issues involving the operation of a biofuels plant year-round based on a four- or five-month harvest period of biomass suggest that storage is likely to matter a great deal. In addition, most marginal lands (i.e., the low-cost biomass production zones) are located far from major urban markets, making it difficult to reconcile plant location with the cost of fuel distribution. Following the EPA's substantial revisions to the first four years of cellulosic biofuels mandates (2010-2013), there has been considerable uncertainty surrounding current cellulosic biofuel conversion technologies and the cost of the conversion process (including physical, chemical, enzymatic, and microbial treatment and conversion of the biomass feedstocks into motor fuel). These uncertainties, plus the financial crisis of 2008 and the ensuing recession and credit crunch, severely curtailed new investment in the biofuels sector. However, it appears that 2013 may experience the first substantial commercial production levels of cellulosic biofuels. EPA finalized a cellulosic biofuels RFS of 6 million gallons under the expectation that two plants would begin commercial production during 2013, with possibly one more plant expected to follow by the fourth quarter of 2013. However, while production from at least one of the plants has started, through October 2013 fewer than 0.6 million cellulosic RINs were registered in EPA's system – significantly more than in previous years, but still well below the 2013 mandate level. However, cellulosic fuel supply may be poised to grow rapidly, at least in relative terms. Industry reports suggest that new cellulosic biofuels plants are either in the planning stages or under construction in as many as 20 states and Canadian provinces. Because the advanced biofuels mandate in the RFS is a fixed mandate, irrespective of prices, the above uncertainties about the production of cellulosic ethanol could have significant implications for fuel supply and fuel prices. If cellulosic ethanol production is unable to advance rapidly enough to meet the RFS mandate for non-corn-starch ethanol, then other unexpected biofuels sources may be forced to step in and fill the void: production of domestic sorghum-starch ethanol may expand across the prairie states and in other regions less suitable for corn production; costly domestic sugar-beet ethanol or biodiesel production may be undertaken to fill the mandate; or imports of Brazilian sugar-cane ethanol could expand. Biofuels are not primary energy sources. Energy is first stored in biological material (through photosynthesis), and then must be converted into a more useful, portable fuel. This conversion requires energy. The amount and types of energy used to produce biofuels (e.g., coal versus natural gas), and the feedstocks for biofuels production (e.g., corn versus cellulosic biomass), are critical in determining a biofuel's net energy balance and the environmental benefits of a biofuel. To analyze the net energy consumption of ethanol, the entire fuel cycle must be considered. The fuel cycle consists of all inputs and processes involved in the development, delivery, and final use of the fuel. For corn-based ethanol, these inputs include the energy needed to produce fertilizers, operate farm equipment, transport corn, convert corn to ethanol, and distribute the final product. There are a wide range of estimates of the net energy output/input ratio for corn-starch ethanol production, although many of these are now dated. The most recent study by USDA estimated an energy output/input ratio of 2.3 based on a 2005 survey of corn growers and 2008 data for ethanol plants (and assuming the then-most-advanced technology for corn and ethanol production). A 2.3 ratio implies that the energy contained in a gallon of corn ethanol was 130% higher than the amount of energy needed to produce and distribute it. Ethanol industry sources argue that technological innovation will continue to improve corn ethanol's energy balance. However, other analyses have resulted in a significantly lower output/input ratio. If feedstocks other than corn are used to produce biofuels, it is expected that lower nitrogen fertilizer use would greatly improve the energy balance. Further, if biomass were used to provide process energy at the biofuels refinery (rather than coal or natural gas), the energy savings would be even greater. Some estimates are that cellulosic ethanol could have an energy balance of 8.0 or more. Similarly high energy balances have been calculated for sugar-cane ethanol and certain types of biodiesel. Ethanol displaces gasoline, and the benefits to energy security from ethanol, while relatively small, are still potentially important. However, biofuels' potential to play a larger role in energy security is questionable. Roughly 40% of the U.S. corn crop was used for ethanol in 2012, and the resultant ethanol accounted for about 7% of gasoline consumption on an energy-equivalent basis. There is considerable uncertainty regarding how quickly or how much U.S. corn production can expand. If the entire 2012 U.S. corn crop of 10.8 billion bushels were used as ethanol feedstock, the resultant 30 billion gallons of ethanol (20.6 billion gasoline-equivalent gallons, or GEG) would represent about 16% of estimated national gasoline use of approximately 132 billion gallons. An expanded RFS would certainly displace petroleum consumption, but the overall effect on life-cycle fossil fuel consumption is questionable, especially if there is a large reliance on corn-based ethanol. Under the EISA RFS mandate, by 2022 biofuels will still represent about 20% of gasoline energy transportation fuel demand and 2.4% of diesel transportation fuel demand. The specific definition of "advanced biofuels" also affects the overall energy security picture for biofuels. For example, an expanded RFS provides an incentive to increase imports of sugar-cane ethanol, especially from Brazil. The expanded RFS may also provide an incentive for imports of biodiesel and other renewable diesel substitutes from tropical countries, although EPA has determined that biodiesel from palm oil does not meet the necessary greenhouse gas reductions. The supplies would represent a "diversification" of fuel sources, not the "domestication" that some claim is true energy security. The effects of the expanded RFS on energy prices are uncertain. If wholesale biofuels prices are higher than gasoline prices (after all economic incentives are taken into account), then mandating higher and higher levels of biofuels would likely lead to higher gasoline pump prices. However, if petroleum prices—and thus gasoline prices—are high, the use of some biofuels might help to mitigate high gasoline prices. Current production costs are thought to be so high for some biofuels, especially cellulosic biofuels and biodiesel from algae, that significant technological advances—or significant increases in petroleum prices—would be necessary to make them competitive with gasoline. Without cost reductions, mandating large amounts of these fuels would likely raise fuel prices. If a price were placed on greenhouse gas emissions—perhaps through the enactment of a carbon tax—then the economics could shift in favor of these fuels despite their high production costs, as they have lower fuel-cycle and life-cycle greenhouse gas emissions (see below). In addition to the above concerns about feedstock supply for ethanol production, there also are issues involving ethanol distribution and infrastructure. Expanding ethanol production likely will strain the existing supply infrastructure. Further, expansion of ethanol use beyond the current 10% blend will require investment in entirely new infrastructure that would be necessary to handle an increasing percentage of ethanol in gasoline, or retrofitting and recertification of existing equipment. On the other hand, if drop-in fuels (i.e., petroleum-like biofuels such as bio-butanol or biomass-based diesel substitutes) are produced in large quantities, some of these infrastructure issues may be mitigated, since these fuels can be used in existing infrastructure. Unlike petroleum products, ethanol and ethanol-blended gasoline cannot be shipped in existing U.S. pipeline infrastructure. Ethanol-blended gasoline tends to separate in pipelines due to the presence of water in the lines. Further, ethanol is corrosive and may damage existing pipelines and storage tanks. Also, corn ethanol must be moved from rural areas in the Midwest to more populated areas, which are often located along the coasts. This shipment is in the opposite direction of existing pipeline transportation, which moves gasoline from refiners along the coasts to other coastal cities and into the interior of the country. While some studies have concluded that shipping ethanol or ethanol-blended gasoline via pipeline could be feasible, no major U.S. pipeline has made the investments to allow such shipments on a large scale. The current distribution system for ethanol is dependent on rail cars, tanker trucks, and barges. These deliver ethanol to fuel terminals where it is blended with gasoline before shipment via tanker truck to gasoline retailers. However, these transport modes lead to prices higher than for pipeline transport, and the supply of current shipping options (especially rail cars) is limited. Because of these distribution issues, some pipeline operators are seeking ways to make their systems compatible with ethanol or ethanol-blended gasoline. These modifications could include coating the interior of pipelines with epoxy or some other, corrosion-resistant material. Another potential strategy could be to replace all susceptible pipeline components with newer, hardier components. However, even if such modifications are technically possible, they likely will be expensive, and could further increase ethanol transportation costs. As non-corn biofuels play a larger role, some of the supply infrastructure concerns may be alleviated. Cellulosic biofuels potentially can be produced from a variety of feedstocks that are more widely distributed throughout the country, unlike current dependency on a single crop (corn) from one region of the country. For example, municipal solid waste is ubiquitous across the United States, and could serve as a ready feedstock for biofuels production if the technology were developed to convert it economically to fuel. Further, increased imports of biofuels from other countries could allow for greater use of biofuels, especially along the coasts. It is now estimated that almost all gasoline sold in the United States contains some ethanol (mostly blended at the 10% level). A key benefit of gasoline-ethanol blends up to 10% ethanol is that they are compatible with existing vehicles and infrastructure (fuel tanks, retail pumps, etc.). All automakers that produce cars and light trucks for the U.S. market warrant their vehicles to run on gasoline with up to 10% ethanol (E10). As a result, this 10% blend has represented an upper bound (sometimes referred to as the "blend wall") to the amount of ethanol that can be introduced into the gasoline pool. If most or all gasoline in the country contained 10% ethanol, this would allow only for roughly 13 billion gallons, far less than the RFS mandates for 2013 onward—13.8 billion gallons in 2013; 14.4 billion in 2014; and 15 billion in 2015. For ethanol consumption to exceed the so-called "blend wall" and meet the RFS mandates, increased consumption at higher blending ratios is likely needed. For example, raising the blending limit from 10% to a higher ratio such as 15% or 20% would immediately expand the "blend wall" to somewhere in the range of 20 billion to 27 billion gallons. The U.S. ethanol industry is a strong proponent of raising the blending ratio. In response to industry concerns regarding the impending blend wall, the EPA, after substantial vehicle testing, issued a partial waiver for gasoline that contains up to a 15% ethanol blend (E15) for use in model year 2001 or newer light-duty motor vehicles (i.e., passenger cars, light-duty trucks, and sport utility vehicles), but announced that no waiver would be granted for E15 use in model year 2000 and older light-duty motor vehicles, as well as in any motorcycles, heavy duty vehicles, or non-road engines. According to the Renewable Fuel Association (RFA), the approval of E15 use in model year 2001 and newer passenger vehicles covered 62% of passenger vehicles on U.S. roads at the end of 2010. However, the EPA waiver for E15 is not sufficient, in and of itself, to ensure higher blending ratios. Fuel producers must also register new fuel blends and submit health effects testing to EPA. Further, numerous other changes have to occur before large numbers of gasoline stations will begin selling E15, including many approvals by states and potentially significant infrastructure changes (pumps, storage tanks, etc.). As a result, the vehicle limitation to newer models, coupled with infrastructure issues, is likely to limit rapid expansion of blending rates. EPA acknowledged this infrastructure limitation when it stated, EPA recognizes that ethanol will likely continue to predominate the renewable fuel pool in the near future, and that for 2014 the ability of the market to consume ethanol in higher blends such as E85 is highly constrained as a result of infrastructure- and market-related factors. EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by statute for 2014. Moreover, a group of engine and equipment manufacturers challenged the partial waiver in court, arguing that EPA failed to estimate the likelihood of misfueling (using E15 in equipment denied a waiver), and the economic and environmental consequences of that misfueling. In response to these concerns, EPA requires E15 suppliers to submit to the agency misfueling mitigation plans (MMP). Concerns over a preliminary MMP that required a four-gallon minimum purchase from some pumps supplying both E15 and E10 led to a new MMP that EPA approved in February 2013 that eliminates the four-gallon requirement as long as a fuel station has at least one dedicated E10 (or lower) pump to fuel older passenger cars and light trucks as well as non-road vehicles/engines. The blend wall problem is made more acute by substantial revisions in EIA's projections of U.S. transportation fuel consumption rates since the RFS was first passed into law in 2007 ( Figure 6 ). At that time, EIA estimated that U.S. transportation consumers were using about 145 billion gallons of gasoline (including ethanol) per year, but that consumption would grow strongly to 176 billion gallons of gasoline by 2022—as a result, RFS mandated biofuels would represent about 19% of annual gasoline consumption. By 2013, EIA had substantially lowered its fuel consumption outlook—partly due to sustained high petroleum prices, the prolonged effects of the 2008 financial crises on consumer incomes, and significantly higher fuel economy standards on new vehicles. Instead of growth, EIA projects gasoline consumption to fall to about 120 billion gallons by 2022, thus causing the RFS mandate's share of the gasoline transportation fuel market (if left unchanged) to grow to nearly 20% of annual consumption (in gasoline-equivalent gallons). Two additional options to resolving this bottleneck exist but appear to be long-run alternatives. First, increased use of ethanol in flex-fuel vehicles (FFVs) at ethanol-to-gasoline blend ratios as high as 85% (referred to as E85) is a possibility. However, increased E85 use involves substantial infrastructure development, particularly in the number of designated storage tanks and E85 retail pumps, as well as a rapid expansion of the FFV fleet to absorb larger volumes of ethanol. Infrastructure expansion will require significant investments, especially at the retail level. Installation of a new E85 pump and underground tank can cost as much as $100,000 to $200,000. However, if existing equipment can be used with little modification, the cost could be less than $10,000. A second alternative is to expand use of processing technologies at the biofuel plant to produce biofuels in a "drop-in" form (e.g., butanol) that can be used by existing petroleum-based distribution and storage infrastructure and the current fleet of U.S. vehicles. However, more infrastructure-friendly biofuels generally require more processing than ethanol and are therefore more expensive to produce. As was stated above, if a large portion of any increased RFS is met using ethanol, then the United States likely does not have the vehicles to consume the fuel. The 10% blend wall on ethanol in gasoline for conventional vehicles still poses a significant barrier to expanding ethanol consumption beyond 14 billion gallons per year. To allow more ethanol use, vehicles will need to be certified and warranted for higher-level ethanol blends, or the number of ethanol FFVs will need to increase. Turnover of the U.S. automobile fleet has slowed during the recession, making it more difficult to integrate FFVs into the fleet. In the face of a looming blend wall, the status of available RIN stocks of renewable and advanced biofuels for use by obligated parties towards mandate compliance remains an important issue. Current RIN stocks in mid-2013 are estimated at approximately 2.5 billion gallons, of which 2 billion gallons are D6 RINs which can only be used for compliance with the renewable portion of the RFS mandate. However, RIN stocks were expected to tighten substantially in 2014 as a large portion of existing RINs is used for current mandate compliance as well as a scheduled increase in the RFS mandates for all categories in 2014. As a result, the price of renewable fuel RINs increased dramatically in the first half of 2013. Spot prices for ethanol RINs averaged between $0.07 and $0.08 per gallon in the first weeks of January. However, in the first week of March 2013, ethanol RINs averaged roughly $0.76 per gallon—a nine-fold increase. By July 2013, RIN prices have pushed past $1.00 per gallon. In the second half of the year RIN prices dropped steadily with the expectation that EPA might use its waiver authority to lower the 2014 mandates below the 2013 levels, as the agency ultimately proposed in November 2013. There is continuing interest in expanding the U.S. biofuels industry as a strategy for promoting energy security and achieving environmental goals. However, it is possible that increased biofuel production may place desired policy objectives in conflict with one another. There are limits to the amount of biofuels that can be produced from current feedstocks, particularly corn, and questions about the net energy and environmental benefits they might provide. Further, rapid expansion of biofuels production based on traditional field crops such as corn may have many unintended and undesirable consequences for agricultural commodity costs, fossil energy use, and environmental degradation. Owing to these concerns, alternative strategies for energy conservation and alternative energy production (including biofuels from nontraditional feedstock sources) are widely seen as warranting consideration.

Federal policy has played a key role in the emergence of the U.S. biofuels industry. Policy measures have included minimum renewable fuel usage requirements, blending and production tax credits, an import tariff, loans and loan guarantees, and research grants. One of the more prominent forms of federal policy support is the Renewable Fuel Standard (RFS)—whereby a minimum volume of biofuels is to be used in the national transportation fuel supply each year. This report describes the general nature of the RFS mandate and its implementation, and outlines some emerging issues related to the continued growth of U.S. biofuels production needed to fulfill the expanding RFS mandate, the potential inability of the domestic market to absorb ethanol above a 10% share of domestic gasoline fuels (a problem known as the "blend wall"), and the emergence of potential unintended consequences of this rapid expansion. Congress first established the RFS with the enactment of the Energy Policy Act of 2005 (EPAct, P.L. 109-58). This initial RFS (referred to as RFS1) mandated that a minimum of 4 billion gallons be used in 2006, rising to 7.5 billion gallons by 2012. Two years later, the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140) greatly expanded the biofuel mandate volumes and extended the ramp-up through 2022. The expanded RFS (referred to as RFS2) required the annual use of 9 billion gallons of biofuels in 2008, rising to 36 billion gallons in 2022, with at least 16 billion gallons from cellulosic biofuels, and a cap of 15 billion gallons for corn-starch ethanol. In addition to the expanded volumes and extended date, RFS2 has three important distinctions from RFS1. First, the total renewable fuel requirement is divided into four separate, but nested categories—total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic biofuels—each with its own volume requirement. Second, biofuels qualifying under each category must achieve certain minimum thresholds of lifecycle greenhouse gas (GHG) emission reductions, with certain exceptions applicable to existing facilities. Third, all renewable fuel must be made from feedstocks that meet an amended definition of renewable biomass, including certain land use restrictions. The Environmental Protection Agency (EPA) is responsible for establishing and implementing regulations to ensure that the nation's transportation fuel supply contains the mandated biofuels volumes. EPA's initial regulations for administering RFS1 (issued in April 2007) established detailed compliance standards for fuel suppliers, a tracking system based on renewable identification numbers (RINs) with credit verification and trading, special treatment of small refineries, and general waiver provisions. EPA rules for administering RFS2 (issued in February 2010) built upon the earlier RFS1 regulations and include specific deadlines for announcing annual standards, as well as greater specificity on potential waiver requests and RIN oversight. Over the long term, the RFS is likely to play a dominant role in the development of the U.S. biofuels sector. However, emerging resource constraints related to the rapid expansion of U.S. corn ethanol production have provoked questions about its long-run sustainability and the possibility of unintended consequences in other markets as well as on the environment. Questions also exist about the ability of the U.S. biofuels industry to meet the expanding mandate for biofuels from non-corn sources such as cellulosic biomass materials, whose production capacity has been slow to develop, or biomass-based biodiesel, which remains expensive to produce owing to the relatively high prices of its feedstocks. Finally, considerable uncertainty remains regarding the development of the infrastructure capacity (e.g., trucks, pipelines, retail pumps, etc.) needed to deliver the expanding biofuels mandate to consumers.

Congress has established regulatory exclusivities to encourage different activities within the pharmaceutical and biotechnology industries. Regulatory exclusivities consist of a period of time during which the Food and Drug Administration (FDA) protects an approved drug from competition in the marketplace. In combination, the Federal Food, Drug, and Cosmetic Act, P.L. 75-717 (as amended), and Public Health Service Act, P. L. 78-410 (as amended), require the FDA to enforce 16 different regulatory exclusivities: Twelve-Year Biologics Exclusivity, Ten-Year Transitional Exclusivity, Seven-Year Orphan Drug Exclusivity, Five-Year New Chemical Entity Exclusivity, Five-Year Enantiomer Exclusivity, Five-Year Qualifying Infectious (QI) Disease Product Exclusivity, Five-Year QI Act Antibiotic Exclusivity, Four-Year Biologics Exclusivity, Three-Year QI Act Antibiotic Exclusivity, Three-Year Clinical Investigation Exclusivity for an Original NDA, Three-Year Clinical Investigation Exclusivity for a Supplemental NDA, Two-Year Transitional Exclusivity, One-Year Interchangeable Biologics Exclusivity, Six-Month Pediatric Exclusivity, 180-Day Generic Exclusivity, and 180-Day Competitive Generic Therapy Exclusivity. This report introduces the various regulatory exclusivities and then describes pertinent legislation in the 115 th Congress addressing them. The U.S. government regulates the marketing of pharmaceuticals in the interest of public health. The developer of a new drug—known as its "sponsor"—must demonstrate that the product is safe and effective before it can be distributed to the public. This showing requires a sponsor to conduct both preclinical and clinical investigations of drugs that have not been previously tested. In deciding whether to issue marketing approval or not, the FDA evaluates the test data that the sponsor submits in a so-called New Drug Application (NDA). The FDA maintains the test data incorporated into an NDA in confidence. In addition, because the required test data is usually quite costly to generate, sponsors of new pharmaceuticals ordinarily do not disclose them to the public. Otherwise the sponsor's competitors could file their own NDAs using that test data, and thereby avoid the expenses of developing the information themselves. Until 1984, federal law contained no separate provisions addressing lower-cost generic versions of brand-name drugs that the FDA had previously approved for marketing. The result was that a would-be generic drug manufacturer had to file its own NDA in order to market its drug. Some generic manufacturers could rely on published scientific literature demonstrating the safety and efficacy of the drug. Because these sorts of studies were not available for all drugs, however, not all generic firms could file these so-called "paper NDAs." Further, at times the FDA would request additional studies to address safety and efficacy questions that arose from experience with the drug following its initial approval. The result was that some generic manufacturers were forced to prove independently that their pharmaceuticals were safe and effective, even though their products were chemically identical to those of previously approved drugs. Some commentators believed that the approval of a generic drug was a needlessly costly, redundant, and time-consuming process under this system. These observers noted that although patents on important drugs had expired, manufacturers were not moving to introduce generic equivalents for these products due to the level of resource expenditure required to obtain FDA marketing approval. As the introduction of generic drugs often causes prices to decrease, the interest of consumers was arguably not being served through these observed costs and delays. In response to these concerns, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the Hatch-Waxman Act. This legislation created a new type of application for marketing approval of a generic drug. This application, termed an "Abbreviated New Drug Application" (ANDA), may be filed at the FDA. An ANDA may be filed if the active ingredient of the generic drug is the bioequivalent of the approved drug. An ANDA allows a generic drug manufacturer to rely upon the safety and efficacy data of the original manufacturer. The availability of the ANDA mechanism often allows a generic manufacturer to avoid the costs and delays associated with filing a full-fledged NDA. ANDAs also allow a generic manufacturer, in many cases, to place its FDA-approved bioequivalent drug on the market as soon as any relevant patents expire. The Hatch-Waxman Act also modified the FDA's earlier "paper NDA" practice by establishing a "section 505(b)(2)" application. A section 505(b)(2) application is, in a sense, a hybrid application that falls somewhere between an ANDA and a full NDA. More technically, a section 505(b)(2) application is one for which one or more of the investigations relied upon by the applicant for approval "were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.... " A section 505(b)(2) application differs from an ANDA in that it includes full reports of investigations of the safety and efficacy of the proposed product. However, a section 505(b)(2) NDA is distinct from an NDA in that the section 505(b)(2) application relies upon data that the applicant did not develop itself. The Hatch-Waxman Act placed certain limits upon the ability of generic competitors to sell their own versions of brand-name drugs. These limitations—termed regulatory exclusivities—consist of a period of time during which a competitor's ability to obtain FDA permission to sell a generic version of a previously approved brand-name drug is restricted. The federal food and drug laws establish several different sorts of regulatory exclusivities relating to new chemical entities, new clinical studies, orphan drugs, pediatric studies, generic drugs, antibiotics, qualified infectious disease products, enantiomers, and biologics. This report will describe each of these regulatory exclusivities below. Regulatory exclusivities are not subject to a standard terminology. Some commentators employ terms such as "statutory exclusivity," "data protection," and "marketing exclusivity" synonymously with the term "regulatory exclusivity." This report will instead follow the approach of a second group of writers who ascribe distinct meanings to these terms. Under this latter approach, "regulatory exclusivity" is an umbrella term that refers to any FDA-administered proprietary right. Regulatory exclusivities may in turn be divided into two categories: (1) those that provide data exclusivity, alternatively known as data protection, and (2) those that provide marketing exclusivity. The distinction between data and marketing exclusivity lies in the scope of protection that each proprietary right affords. Data exclusivity protects the safety and efficacy information—often termed the "data package"—submitted by the brand-name firm from use by generic firms. As a result, a generic firm may not rely upon that data in support of its own application for FDA marketing approval for a period of years. Data exclusivity does not prevent a generic firm from submitting its own data package. In contrast, a marketing exclusivity prevents a competing firm from obtaining FDA approval whether or not it has generated its own safety and efficacy data. For many firms the distinction between a data exclusivity and marketing exclusivity may be more apparent than real. The expense of generating clinical data and other information needed to obtain marketing approval from the FDA is prohibitive for many firms. The difference between data and marketing exclusivity is of greater importance to firms that can afford to generate their own data packages for submission to the FDA. The Hatch-Waxman Act established a five-year data exclusivity that is available to drugs that qualify as a new chemical entity (NCE). The purpose of this "NCE exclusivity" is to encourage the development of innovative drug products that include an entirely new active ingredient (commonly termed the "active moiety"), in contrast to "me-too" drugs that incorporate chemical variants of previously known compounds. NCE exclusivity prevents a subsequent generic applicant from relying upon the data submitted by the innovative drug company during a five-year period. As a result, generic firms are precluded from relying upon this data for five years from the date of the marketing approval of the NDA for that active moiety. A drug is judged to be an NCE if the FDA has not previously approved that drug's active ingredient. During that five-year period of NCE exclusivity, the FDA may not accept a generic drug company's application to market a drug product containing the same active moiety protected under the NCE exclusivity. This prohibition holds even if these applications are directed toward a different use, dosage form, or ester or salt of the active ingredient. As noted, NCE exclusivity acts as data exclusivity. It therefore does not preclude the FDA from accepting an application submitted by an entity that has performed all the required preclinical and clinical studies itself. The Hatch-Waxman Act allows the five-year term of NCE exclusivity to be decreased to four years under one circumstance. If the NDA holder owns or licenses patents that the generic applicant believes are invalid or not infringed, then the generic applicant is allowed to file its application one year early—upon the expiration of four, rather than five years from the date the NDA was approved. The practical effect of this arrangement is to restrict a potential generic manufacturer from bringing a product to market for the NCE exclusivity—either four or five years—plus the length of the FDA review of the generic application. If, for example, the FDA requires two years to approve a particular generic application, the real-world impact of the NCE exclusivity has been seven years of protection. In this respect NCE exclusivity operates differently from other forms of FDA-administered exclusivities. Other exclusivities generally prevent the FDA from approving applications, rather than accepting them in the first instance. In order to encourage improvements upon drugs that are already in use, the Hatch-Waxman Act also provided for a three-year clinical investigation exclusivity period. Clinical investigation exclusivity may be awarded with respect to an NDA that contains reports of new clinical studies conducted by the sponsor that are essential to FDA approval of that application. The FDA has granted clinical investigation exclusivity for such changes as new dosage forms, new indications, or a switch from prescription to over-the-counter status for the drug. The Hatch-Waxman Act imposes four requirements that an investigation must fulfill in order to qualify for clinical investigation exclusivity. First, the study must be new, in that it could not have been previously used for another FDA drug approval proceeding. Second, the study must be a clinical study on humans, as compared to a preclinical or other sort of study. Third, the study must have been "conducted or sponsored" by the applicant. Finally, the study must be "essential to the approval" of the application. The FDA has defined the term "essential to approval" as meaning "that there are no other data available that could support approval of the application." A study that provides useful background information, but is not essential to approving the change in the drug, does not provide sufficient basis for an FDA award of clinical investigation exclusivity. As with NCE exclusivity, clinical investigation exclusivity acts as data exclusivity. It therefore does not preclude the FDA from approving a full NDA. If the sponsor of a subsequent NDA has performed all the required preclinical and clinical studies itself, the FDA may approve the NDA without regard to the new clinical trial exclusivity. In contrast to NCE exclusivity, clinical investigation exclusivity does not prevent the FDA from accepting a generic application with respect to the drug. If the clinical investigation exclusivity continues to bar the issuance of marketing approval at the close of FDA review, the FDA will issue a tentative approval for the generic product that will become effective once the clinical investigation exclusivity has run its course. In addition, clinical investigation exclusivity only applies to the "conditions of approval"—that is to say, the use of the product that was supported by the clinical investigation. If, for example, the new studies support a new indication or dosage form of the previously approved ingredient, then the three-year exclusivity applies only to that particular use or dosage form. The FDA is not barred from approving generic drugs for other indications or dosage forms. A drug product may be subject both to NCE exclusivity and clinical investigation exclusivity during the life of that product. Commonly, a new drug will initially enjoy a five-year NCE exclusivity. Later in the life of that product, the sponsor of the drug may perform additional clinical trials to qualify the drug for additional three-year data exclusivities that apply only to those new, specific uses. In 1982, Congress enacted the Orphan Drug Act in order to encourage firms to develop pharmaceuticals to treat rare diseases and conditions. Such drugs are called "orphan drugs" because firms may lack the financial incentives to sponsor products to treat small patient populations. The Orphan Drug Act provides several incentives, including FDA protocol assistance, tax breaks, and a clinical trial grants program. The most commercially significant of all of these benefits is a seven-year term of marketing exclusivity. This period commences from the date the FDA issues marketing approval on the drug. The original version of the Orphan Drug Act extended marketing exclusivity only to drugs that were not patented. However, Congress amended the statute in 1985 to provide for regulatory exclusivity for both patented and unpatented products. Because it acts as a marketing exclusivity, orphan drug exclusivity blocks competitors from obtaining FDA approval whether or not they have generated their own data. However, orphan drug regulatory exclusivity applies only to the indication for which the drug is approved. As a result, the FDA could approve a second application of the same drug for a different use. The FDA cannot approve the same drug made by another manufacturer for the same use, however, unless the original sponsor approves or the original sponsor is unable to provide sufficient quantities of the drug to the market. As originally enacted, the Orphan Drug Act defined an orphan drug as one for which there was no "reasonable expectation that the cost of developing ... will be recovered from sales in the United States of such drug." In 1984, Congress changed the definition to its present form. Currently, in order to qualify for orphan drug status, the drug must treat a rare disease or condition (1) affecting less than 200,000 people in the United States, or (2) affecting more than 200,000 people in the United States, but for which there is no reasonable expectation that the sales of the drug would recover the costs. The effect of this change was to allow drug sponsors to avoid making a showing of unprofitability if the target population consisted of fewer than 200,000 persons. The Biologics Price Competition and Innovation Act of 2009 (BPCIA), which was enacted as Title VII of the Patient Protection and Affordable Care Act, P.L. 111-148 , introduced new regulatory exclusivities for a category of biologically derived preparations known as "biologics." Biologics consist of such products as vaccines, antitoxins, blood components, and therapeutic serums. For the most part, the FDA regulates biologics under Section 351 of the Public Health Service Act, as compared to the Federal Food, Drug, and Cosmetic Act which applies to small-molecule, traditional pharmaceuticals. The BPCIA established two periods of regulatory exclusivity applicable to brand-name biologics, one with a duration of 4 years and the other with a duration of 12 years. The BPCIA specifically provides (7) EXCLUSIVITY FOR REFERENCE PRODUCT.— (A) EFFECTIVE DATE OF BIOSIMILAR APPLICATION APPROVAL.—Approval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed under subsection (a). '(B) FILING PERIOD.—An application under this subsection may not be submitted to the Secretary until the date that is 4 years after the date on which the reference product was first licensed under subsection (a). Some discussion has occurred about whether the 12-year regulatory exclusivity period identified in the statute operates as a data or marketing exclusivity. In the FDA's public hearing notice, the agency referred to a "12-year period of marketing exclusivity." Several Members of Congress drafted letters to the FDA explaining that the 12-year period instead acted as a data exclusivity. One letter explained The Act does not provide market exclusivity for innovator products. It provides data exclusivity, which prohibits FDA from allowing another manufacturer of a highly similar biologic to rely on the Agency's prior finding of safety, purity and potency for the innovator product for a limited period of time. It does not prohibit or prevent another manufacturer from developing its own data to justify FDA approval of a full biologics license application rather than an abbreviated application that relies on the prior approval of a reference product. Similarly, other Members of Congress explained that the 12-year regulatory exclusivity acts as data exclusivity that "only protects the FDA from allowing another manufacturer to rely on the data of an innovator to support another product. Importantly, it does not prohibit or prevent another manufacturer from developing its own data to justify FDA approval of a similar of competitive product." A third letter from some Members of Congress stated their belief that "the statute is clear that the FDA can begin reviewing biogeneric applications during the 12 year exclusivity period." The FDA subsequently issued a draft guidance document that appeared to align the agency's view with that of the congressional correspondents. Brand-name firms may qualify for a six-month pediatric exclusivity upon the completion of studies on the effects of a drug upon children. This six-month period begins on the date that the existing patent or data exclusivity protection on the innovator drug would otherwise expire. Pediatric exclusivity extends to any drug product with the same active ingredient. The purpose of the pediatric regulatory exclusivity is to improve the availability of appropriate pediatric labeling on drug products. Congress first established pediatric regulatory exclusivities with the Food and Drug Administration Modernization Act of 1997 (FDAMA). Although the FDAMA included a sunset provision, Congress subsequently reauthorized these provisions. In the 112 th Congress, the Food and Drug Administration Safety and Innovation Act, P.L. 112-144 , made the pediatric exclusivity permanent. In establishing pediatric exclusivity, Congress responded to concerns that many FDA-approved drugs had not yet been clinically tested upon children. Investigations upon a pediatric population tends to raise a number of complexities, including issues of informed consent, the changes that occur in children as they grow, and the inability of children to describe accurately the effect of a medication. As a result, most drugs are tested solely upon adults. By establishing a pediatric regulatory exclusivity, Congress hoped to encourage additional pediatric testing, which in turn could allow medications to be labeled for use by children. Pursuant to its statutory authority, the FDA issues written requests to NDA applicants and holders of approved NDAs to perform pediatric studies with respect to the drug. An FDA written request contains such information as the indications and the number of patients to be studied, the labeling that may result from such studies, the format of the report to be submitted to the FDA, and the timeframe for completing the studies. Response to this written request is wholly voluntary. If the innovative drug company submits a report to the satisfaction of the FDA, however, then it will be awarded the six-month regulatory exclusivity. Notably, the food and drug laws do not condition pediatric exclusivity upon the success of the study. The six-month regulatory exclusivity period may be obtained whether or not the study successfully demonstrates safety and effectiveness in children. Thus, the pediatric exclusivity is intended to create incentives for drug sponsors to conduct research and submit their results to the FDA. The effect of a pediatric exclusivity is to extend the approved manufacturer's existing regulatory exclusivity or patent protection for an additional 6 months. If the pediatric exclusivity applied to an orphan drug, for example, the result would be 7 years and 6 months of marketing exclusivity; if applied to an NCE exclusivity, the drug's sponsor would obtain 5 years and 6 months of data protection. If applied to a patent, that pediatric exclusivity does not actually extend the term of a patent; rather, it is a regulatory exclusivity administered by the FDA. Congressional concern over the spread of antibiotic-resistant "superbugs" led to the enactment of the Generating Antibiotic Incentives Now (GAIN) Act, enacted as Title VIII of the FDA Safety and Innovation Act, P.L. 112-144 . That statute allows the FDA to designate a drug as a "qualified infectious disease product" (QIDP) if it consists of an antibacterial or antifungal drug intended to treat serious or life-threatening infections. The GAIN Act stipulates that QIDPs include drugs that address drug-resistant tuberculosis, gram negative bacteria, and Staphylococcus aureus. Along with other measures intended to provide pharmaceutical and biotechnology companies with incentives to develop innovative antibiotics, the GAIN Act adds five years to the term of the new chemical entity, clinical investigation, and orphan exclusivities for any QIDP. The statute stipulates that the five-year QIDP extension is cumulative with the pediatric exclusivity. As a result, a QIDP that qualified as a new chemical entity, and was also awarded a pediatric exclusivity, would be entitled to a data exclusivity period of 10 years and 6 months. Enantiomers are molecules that possess the same molecular formula but are mirror images of each other—like left and right hands. Frequently, only one of a pair of enantiomers is pharmacologically active, while the other is inactive or nearly so. Sometimes only one member of a pair of enantiomers will demonstrate toxicity. The term "racemate" refers to a compound that has equal amounts of the two sorts of enantiomers. The FDA traditionally held the view that the single enantiomer of a previously approved racemate contained a previously approved active moiety and was not a new chemical entity. This situation changed with the enactment of the FDA Amendments Act (FDAAA) of 2007. This legislation incorporated provisions that allowed the FDA to grant new chemical entity (NCE) exclusivity to enantiomers of previously approved racemates if the NDA applicant so elects. Under the FDAAA, enantiomer exclusivity only applies where the applicant seeks approval for an indication in a different therapeutic class from that of the previously approved racemate. In addition, approval of the non-racemic drug must be based upon different studies than the racemic one for exclusivity to be awarded. Finally, in the event of applicant election for enantiomer exclusivity, the labeling of the non-racemic drug "shall include a statement that the non-racemic drug is not approved, and has not been shown to be safe and effective, for any condition of use of the racemic drug." The FDAAA limits the availability of enantiomer exclusivity to applications submitted to the FDA after September 27, 2007, and before October 1, 2017. An antibiotic is "any drug … composed wholly or partly of any kind of penicillin, streptomycin, chlortetracycline, chloramphenicol, bacitracin, or any other drug intended for human use containing any quantity of any chemical substance which is produced by a micro-organism and which has the capacity to inhibit or destroy micro-organisms in dilute solution (including a chemically synthesized equivalent of any such substance) or any derivative thereof." Prior to 1997, the FDA reviewed most applications for antibiotic drug marketing approval under section 507 of the Federal Food, Drug, and Cosmetic Act (FFDCA). The FDA Modernization Act of 1997 repealed section 507 and instead required agency to review antibiotic drugs under section 505 of the FFDCA. Stated differently, antibiotics were no longer covered by a distinct statute, and instead were brought into the mainstream of pharmaceutical regulation. The FDA Modernization Act considered the ramifications for intellectual property rights in so-called "old antibiotics"—that is to say, antibiotics that were subject to applications for marketing approval prior to the statute's enactment. Under that legislation, marketing applications for drugs containing an antibiotic that the FDA received on or before November 20, 1997, were exempted from certain patent listing, patent certification, and regulatory exclusivity provisions of the Hatch-Waxman Act. These provisions essentially maintained the status quo with respect to the expectations of antibiotics manufacturers who had sought marketing approval prior to the enactment of the FDA Modernization Act. Congress revisited the issue in 2008 with the QI Program Supplemental Funding Act of 2008. This legislation introduced changes to the Medicare and Medicaid programs, but also altered the rules pertaining to patents and regulatory exclusivities for antibiotics. The QI Act clarified that antibiotic drugs approved before November 21, 1997, may obtain a three-year exclusivity for a new condition of use for an "old antibiotic." The statute also stipulated that marketing approval applications for antibiotic drugs submitted before November 21, 1997, but not yet approved by the FDA, may elect to become eligible for three-year clinical investigation exclusivity, five-year NCE exclusivity, or a patent term extension under section 156 of the Patent Act. Should this election be made, the other features of the Hatch-Waxman Act, such as its patent dispute resolution system, apply to that "old antibiotic." Most of the regulatory exclusivities operate in favor of brand-name firms. However, federal law also establishes regulatory exclusivities designed to encourage generic and follow-on firms to market their products. The Hatch-Waxman Act allows generic firms to obtain a 180-day period of "generic exclusivity" if they are the first to file an ANDA challenging a brand-name firm's patents. Generally speaking, this regulatory exclusivity precludes the FDA from approving another ANDA for the same product for the 180-day period. In addition, the Biologics Price Competition and Innovation Act of 2009 (BPCIA) establishes a regulatory exclusivity that operates in favor of manufacturers of follow-on biologics. Under the BPCIA, the first follow-on product deemed to be "biosimilar" to or "interchangeable" with the brand-name product is entitled to a period of exclusivity before the FDA will make a determination for a competing product. Follow-on exclusivity ends at the earlier of one year after first commercial marketing, 18 months after a final court decision in a patent infringement action against the applicant or dismissal of such an action, 42 months after approval if the applicant has been sued and the litigation is still ongoing, or 18 months after approval if the applicant has not been sued. Under the Hatch-Waxman Act as originally enacted, the first generic drug company that challenges patents relating to a brand-name drug may obtain a 180-day period of regulatory exclusivity. The FDA could not award a generic exclusivity when patents on the brand-name drug have already expired, however. Some observers believed that this circumstance discouraged generic drug companies from offering products to compete with drugs that were off-patent. To address this concern, the FDA Reauthorization Act of 2017, P.L. 115-52 , established a 180-day "competitive generic therapy" exclusivity period in circumstances of "inadequate generic competition." The FDA Reauthorization Act defines "inadequate generic competition" to exist where no generic competition exists for a particular drug, or where a single generic drug has been approved but the brand-name drug is no longer marketed. In addition, the "competitive generic therapy" must not be subject to relevant patents or regulatory exclusivities. The "competitive generic therapy" exclusivity blocks competing generic applications from initial FDA approval for 180 days. It is forfeited if its holder does not market its generic drug within 75 days from the date of FDA approval. The Hatch-Waxman Act established two "transitional" exclusivities for applications for marketing approval, other than ANDAs, that the FDA approved between January 1, 1982, and September 24, 1984. These periods of exclusivity expired some years ago and are of historical interest today. Legislation introduced in the 115 th Congress would modify the current system of regulatory exclusivities. None of this legislation has been enacted as of the publication of this report. The Improving Access to Affordable Prescription Drugs Act, introduced as both H.R. 1776 and S. 771 , would modify the NCE exclusivity period. Under current law, the FDA may not accept an ANDA proposing to market a generic version of a brand-name drug subject to NCE exclusivity for five years from the date the brand-name drug was approved for marketing. This period may be reduced to four years if the ANDA applicant challenges patents pertaining to the brand-name drug. H.R. 1776 and S. 771 would instead allow the FDA to accept a generic drug application for the brand-name product three years after the brand-name product was approved. This earlier date would apply whether or not the ANDA applicant challenges any relevant patents. However, under this proposed legislation, the agency may not approve the ANDA until five years have passed since the brand-name product's approval date. As noted earlier in this report, in select instances the practical effect of NCE exclusivity is to restrict a potential generic manufacturer from bringing a product to market for the period of NCE exclusivity—currently either four or five years—plus the length of the FDA review of the generic application. By reducing the period during which generic firms must wait before filing ANDAs, H.R. 1776 and S. 771 would potentially allow the FDA to approve generic drugs pertaining to NCEs more quickly. This legislation would also reduce the regulatory exclusivity period for biologics from 12 to 7 years. This proposal is consistent with those previously made by the Obama Administration and in legislation introduced in the 114 th Congress. This report previously described the four requirements that the Hatch-Waxman Act imposes upon an investigation for it to qualify for clinical investigation exclusivity. In particular, the study must be new; consist of a clinical study on humans; been "conducted or sponsored" by the applicant; and be "essential to the approval" of the application. H.R. 1776 and S. 771 would also limit the award of the three-year clinical investigation exclusivity to drugs that show "a significant clinical benefit over existing therapies manufactured by the applicant in the 5-year period preceding the submission of the application." This proposed additional requirement appears to address concerns that brand-name firms have obtained multiple awards on three-year clinical investigation exclusivity with respect to variations upon the same drug in order to thwart generic competition. H.R. 1776 and S. 771 would also call for the termination of a regulatory exclusivity if its proprietor engages in one of certain specified activities, including adulteration, misbranding, illegally marketing a drug, making false statements to the FDA, or entering into an anticompetitive settlement of patent infringement litigation. The Abuse-Deterrent Opioids Plan for Tomorrow Act of 2017, H.R. 2025 , would limit the scope of the three-year clinical investigation exclusivity with respect to section 505(b)(2) applications that relate to abuse-deterrent opioids. Firms have begun to market opioid formulations that deter abuse through physical or chemical barriers; antagonists that reduce the euphoria associated with abuse; additional substances that produce an unpleasant effect, such as nasal irritation, if the dosage is manipulated; and other techniques. Often these products involve the use of newer abuse deterrent technologies applied to a previously marketed opioid. In such circumstances, firms have used the section 505(b)(2) pathway to obtain FDA marketing approval. Under this approach, they rely upon the safety and efficacy studies associated with the old opioid, and then conduct additional clinical trials with respect to the newer abuse-deterrent formulation. If approved, the product includes labeling describing its specific abuse-deterrent properties. Observers have criticized the impact of the three-year clinical investigation exclusivity in these circumstances. An example illustrates concerns that this exclusivity may be too generously awarded with respect to abuse-deterrence labeling. Suppose that Company A files a 505(b)(2) application with respect to the combination of an old opioid in a nasal abuse deterrence formulation. Company A relies upon the safety and efficacy data generated years ago by sponsor of the old opioid and also conducts its own clinical trials with respect to its in-house nasal abuse deterrence technology. If the FDA approves the 505(b)(2) application, then it will award a three-year clinical investigation exclusivity with respect to the "condition of approval"—namely, the nasal abuse deterrence labeling. Company B later also files a 505(b)(2) application with respect to the combination of the same old opioid and its distinct nasal abuse deterrence technology. In doing so, Company B relies upon the old opioid's safety and efficacy data, along with its own clinical trials with respect to its abuse-deterrent formulation. Because the FDA has already approved Company A's application with nasal abuse deterrence labeling, then the clinical investigation exclusivity owed to Company A would bar Company B's application from FDA approval for three years. The clinical investigation exclusivity would apply even though the two abuse deterrence technologies may differ, and even though Company B did not in any way reference or otherwise rely upon Company A's application. To address this issue, H.R. 2025 would add the following language to the Federal Food, Drug, and Cosmetic Act: A drug for which [a section 505(b)(2)] application ... is submitted shall not be considered ineligible for approval under this subsection on the basis that its labeling includes information describing the abuse-deterrent properties of the drug ... that otherwise would be blocked by [three-year clinical investigation] exclusivity ... if— (I) the investigation or investigations relied upon by the applicant for approval of the labeling information were conducted by or for the applicant or the applicant has obtained a right of reference or use from the person by or for whom the investigation or investigations were conducted; and (II) the drug has meaningful technological differences compared to the drug otherwise protected by exclusivity.... This amendment would affect any 505(b)(2) application filed on or after January 1, 2017. The Orphan Products Extension Now Accelerating Cures and Treatments Act (OPEN ACT) of 2017, S. 1509 , would build upon the incentive structure of the Orphan Drug Act. The bill endeavors to encourage drug companies to repurpose existing medications in order to address rare diseases. That statute would require the FDA to extend by six months each existing exclusivity period for an approved drug or biological product when the product is additionally approved to prevent, diagnose, or treat a new indication that is a rare disease or condition. The six-month extension would be cumulative with other sorts of regulatory exclusivity, such as pediatric or qualified infectious disease product exclusivity, that might apply to the product. S. 1509 would also modify the Orphan Drug Act in one respect. The current statute explains that when a drug is subject to an orphan drug exclusivity, the FDA cannot approve the same drug made by another manufacturer for the same use, unless the original sponsor approves or the original sponsor is unable to provide sufficient quantities of the drug to the market. S. 1509 would clarify that the orphan drug exclusivity also does not bar the FDA from approving a new, clinically superior drug with the same active ingredient that will be marketed for treatment of the same disease or condition. Congress placed one limitation on the three-year exclusivity, as well as patents, that relate to the use of a drug in pediatric populations. As provided by 21 U.S.C. §355a(o)(1) A drug for which an [ANDA] application has been submitted or approved ... shall not be considered ineligible for approval ... or misbranded ... on the basis that the labeling of the drug omits a pediatric indication or any other aspect of labeling pertaining to pediatric use when the omitted indication or other aspect is protected by patent or by three-year exclusivity. Stated differently, the statute permits generic drugs to omit pediatric labeling and therefore bypass relevant patents and the three-year clinical investigation exclusivity. The statute further requires the labels of generic drugs to indicate that they are not approved for pediatric use and provide a statement of any contraindications, warnings, or precautions that the FDA deems necessary. Under current law, this possibility of a "labelling carve out" for pediatric indications applies only to ANDA applications. The OPEN ACT, S. 1509 , would extend the scope of this exemption to include section 505(b)(2) applications. Congress has increasingly turned to regulatory exclusivities in order to encourage the development and distribution of new drugs. In comparison with the broadly oriented patent system, which pertains to virtually every innovative industry in the United States, regulatory exclusivities allow Congress to direct attention to more focused issues. This shift holds a number of implications for innovation and public health policy. In particular, the growing number of regulatory exclusivities has caused the FDA to move beyond its traditional focus upon food and drug safety, and instead become an agency that must administer numerous intellectual property rights. They have also created a more complex landscape of proprietary rights in the area of pharmaceuticals and biologics. The ultimate assessment of regulatory exclusivities depends upon whether they have encouraged the discovery and public availability of new medicines. Orphan and pediatric drug exclusivity have been widely lauded as successful programs, although some observers have expressed concern over their operation. More recently established exclusivities, such as those pertaining to enantiomers and qualified infectious disease products, have arguably not attracted the same level of interest from industry. Continued congressional monitoring may help ensure that regulatory exclusivities provide appropriate incentives for innovation in the crucial area of public health.

Regulatory exclusivities provide incentives for pharmaceutical innovation in the United States. Overseen by the Food and Drug Administration (FDA), regulatory exclusivities are alternatively known as marketing exclusivities, data exclusivities, or data protection. Each of the distinct regulatory exclusivities establishes a period of time during which the FDA affords an approved drug protection from competing applications for marketing approval. Between them, the Federal Food, Drug, and Cosmetic Act, P.L. 75-717 (as amended), and the Public Health Service Act, P. L. 78-410 (as amended), require the FDA to enforce 16 different regulatory exclusivities. They include exclusivity terms of 12 years for biologics, 7 years for orphan drugs, 5 years for drugs that qualify as a new chemical entity (NCE), 3 years for certain clinical investigations, and 180 days for generic drug companies that challenge relevant patents under certain conditions. Other, more specialized regulatory exclusivities pertain to antibiotics, enantiomers, and qualifying infectious disease products. Legislation introduced in the 115th Congress would modify the current system of regulatory exclusivities. One bill, the FDA Reauthorization Act of 2017, was signed into law on August 18, 2017, as P.L. 115-52. That legislation establishes a wholly new 180-day "competitive generic therapy" exclusivity period in order to address circumstances of "inadequate generic competition." Other legislation has been introduced but not enacted. The Improving Access to Affordable Prescription Drugs Act, introduced as both H.R. 1776 and S. 771, would modify the NCE exclusivity period to allow FDA to accept a generic drug application for the brand-name product after three years rather than five. However, the agency may not approve the generic application until five years have passed since the brand-name product's approval date. This legislation would also limit the award of the three-year clinical investigation exclusivity to drugs that show significant clinical benefit over existing therapies manufactured by the applicant in the five-year period prior to the application. H.R. 1776 and S. 771 would also reduce the regulatory exclusivity period for biologics from 12 to 7 years. The two bills would also call for the termination of a regulatory exclusivity if its proprietor engages in one of certain specified activities, including adulteration, misbranding, illegally marketing a drug, or making false statements to the FDA. In addition, the Abuse-Deterrent Opioids Plan for Tomorrow Act of 2017, H.R. 2025, would limit the scope of regulatory exclusivities with respect to so-called "505(b)(2) applications" that relate to abuse-resistant opioids. Finally, the Orphan Products Extension Now Accelerating Cures and Treatments Act (OPEN ACT) of 2017, S. 1509, would require the FDA to extend by six months the exclusivity period for an approved drug or biological product when the product is additionally approved to prevent, diagnose, or treat a new indication that is a rare disease or condition. S. 1509 and another bill, S. 934, the FDA Reauthorization Act, would also clarify that the orphan drug exclusivity does not bar the FDA from approving a new, clinically superior drug with the same active ingredient that will be marketed for treatment of the same disease or condition. As well, the OPEN ACT would extend a "labelling carve out" to section 505(b)(2) applications with respect to pediatric uses.

This report presents information on two federal entitlement programs administered by the Social Security Administration (SSA) that provide income support to individuals with severe, long-term disabilities: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is a social insurance program that provides monthly cash benefits to nonelderly disabled workers who paid Social Security taxes for a sufficient number of years in jobs covered by Social Security and to their eligible dependents. In contrast, SSI is a public assistance program that provides monthly cash benefits to aged, blind, or disabled individuals (including children) who often have little or no work experience in covered employment and whose assets and other income are below certain limits. Enacted in 1956 under Title II of the Social Security Act, SSDI is part of the Old-Age, Survivors, and Disability Insurance (OASDI) program, commonly known as Social Security. OASDI is a form of social insurance designed to protect against the loss of income due to retirement, disability, or death. Like Old-Age and Survivors Insurance (OASI), SSDI replaces a portion of a worker's lost earnings based on the individual's career-average earnings in jobs covered under Social Security. Specifically, SSDI provides monthly benefits to insured workers under the full retirement age who meet the statutory test of disability and to their eligible dependents. The SSDI and OASI programs are funded primarily through a payroll tax levied on current workers who are in jobs covered by Social Security. In August 2016, 10.7 million individuals received SSDI benefits, including 8.9 million disabled workers, 137,000 spouses of disabled workers, and 1.7 million children of disabled workers. SSI, which went into effect in 1974, is a need-based program that provides cash payments assuring a minimum income for aged, blind, or disabled individuals who have limited income and assets. This program is often referred to as a program of "last resort" because individuals who apply for benefits are also required to apply for all other benefits for which they may be eligible (e.g., Social Security retirement or disability benefits, pensions, earnings). Although the SSI program is administered by SSA, it is funded through general revenues—not by payroll taxes. The federal benefit provided through this program, unlike through the SSDI program, is a flat amount (reduced by other countable income), and it is not related to prior earnings. In addition to the federal SSI payment, many states provide supplements to certain groups or categories of SSI recipients. In August 2016, 8.3 million individuals received federally administered SSI payments, including 1.2 million children under the age of 18, 4.9 million adults aged 18-64, and 2.2 million seniors aged 65 or older. SSDI benefits are based on a worker's career-average earnings in covered employment, indexed to reflect changes in national wage levels. The benefits are adjusted annually for inflation, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Benefits are also provided to eligible spouses and children of disabled workers, subject to certain maximum family benefit rules. Benefits may be offset if the disabled worker also receives workers' compensation or other public disability benefits. In August 2016, the average monthly SSDI payment was $1,166 for disabled workers, $322 for spouses of disabled workers, and $352 for children of disabled workers. In addition to cash benefits, disabled workers and certain disabled dependents generally qualify for health coverage under Medicare after 24 months of entitlement to cash benefits. The basic federal SSI benefit is the same for all beneficiaries. In 2016, the maximum SSI payment (also called the federal benefit rate), regardless of age, is $733 per month for an individual living independently and $1,100 per month for a couple living independently if both members are SSI eligible. Federal SSI benefits are increased each year to keep pace with inflation (as measured by the CPI-W). The monthly SSI benefit may be reduced if an individual has other income or receives in-kind (non-cash) support or maintenance. Some states supplement this payment to provide a higher benefit level than specified in federal law. SSI recipients living alone or in a household where all members receive SSI benefits are also automatically eligible for the Supplemental Nutrition Assistance Program (SNAP; formerly the Food Stamp Program) and are generally eligible for Medicaid. Individuals may qualify for SSDI, SSI, or both (in addition to other benefits). However, the amount of the SSI payment may be adjusted based on receipt of other income, such as SSDI benefits. (The SSDI benefit is not reduced if the recipient also receives SSI benefits because SSDI is not means-tested.) In August 2016, the average monthly federally administered SSI payment was $540 for all recipients, $645 for children under the age of 18, $561 for adults aged 18-64, and $435 for seniors aged 65 or older. Under both SSDI and SSI, disability is defined as the inability to engage in substantial gainful activity (SGA) by reason of a medically determinable physical or mental impairment that is expected to last for at least 12 months or to result in death. The SGA earnings limit in 2016 is $1,130 per month for non-blind individuals and $1,820 per month for statutorily blind individuals. (For SSI, SGA rules do not apply to statutorily blind individuals and apply only at the time of application to disabled individuals.) In general, individuals must be unable to do any kind of substantial work that exists in the national economy, taking into account their age, education, and work experience. The definition of disability for minor children under the SSI program is slightly different from the definition for adults. Children under the age of 18 are required to demonstrate that their impairment results in marked and severe functional limitations . Child SSI claimants are also subject to slightly different criteria under SSA's medical listings. To qualify for SSDI, workers must be (1) under the full retirement age (FRA), (2) insured in the event of disability, and (3) statutorily disabled. The FRA is the age at which unreduced Social Security retirement benefits are first payable, which is currently 66. To achieve insured status, individuals must have worked in covered employment for about a quarter of their adult lives before they became disabled and for five years of the 10 years immediately before the onset of disability. However, younger workers may qualify with less work experience based on their age. In 2016, SSDI provided disability insurance coverage to more than 152 million nonelderly workers. Once an individual's application for SSDI benefits has been approved, he or she will receive benefits after a five-month waiting period from the time the disability began and will receive Medicare coverage 24 months after SSDI eligibility begins (generally 29 months after the onset of disability). Disability benefits will continue as long as the individual continues to meet SSA's disability standard, or until he or she reaches FRA, when SSDI benefits are automatically converted to Social Security retired-worker benefits. To receive SSI aged benefits , an individual must be at least 65 years old. To receive SSI disability benefits , an individual must meet the same definition of disability that applies under the SSDI program. To qualify for SSI benefits because of blindness , an individual must have visual acuity of 20/200 or less with the use of a correcting lens in the person's better eye, or tunnel vision of 20 degrees or less. In addition to age, disability, or blindness, an individual must meet income and resource tests to qualify for SSI benefits. The countable resource limit for SSI eligibility is $2,000 for individuals and $3,000 for couples. These amounts are not indexed for inflation and have remained at their current levels since 1989. Some resources are not counted in determining SSI eligibility. Excluded resources include an individual's home and adjacent land; one car, regardless of value, if it is used for transportation by the individual or a member of his or her household; property essential for self-support; household goods and personal effects; burial funds of $1,500 or less; and life insurance policies with a cumulative face value of $1,500 or less. Two types of income are considered for purposes of determining SSI eligibility and payment amounts: unearned and earned. Most income not derived from current work (including Social Security benefits, other government and private pensions, veterans' benefits, workers' compensation, and in-kind support and maintenance) is considered unearned income . In-kind support and maintenance includes food, clothing, or shelter that is given to an individual. Earned income includes wages, net earnings from self-employment, and earnings from services performed. If an individual meets all other SSI eligibility requirements, his or her total monthly SSI payment equals the maximum federal benefit rate ( plus the amount of an applicable federally administered state supplementation payment) minus countable income. Not all income is counted for SSI purposes, and different exclusions apply to earned and unearned income. Monthly unearned income exclusions include a general income exclusion of $20 per month that applies to non-need-based income. Food stamps, housing and energy assistance, state and local need-based assistance, in-kind support and maintenance from non-profit organizations, student grants and scholarships used for educational expenses, and income used to fulfill a plan for achieving self-support (PASS) are also excluded from unearned income. Once the $20 exclusion (and any other applicable exclusion) is applied to unearned income, there is a dollar-for-dollar reduction in SSI benefits (i.e., each dollar of countable unearned income reduces the SSI benefit by one dollar). Monthly earned income exclusions include any unused portion of the $20 general income exclusion, the first $65 of earnings, one-half of earnings over $65, impairment-related expenses for blind and disabled workers, and income used to fulfill a PASS. Because of the one-half exclusion for earnings, once the $65 exclusion (and any other applicable exclusion) is applied to earned income, SSI benefits are reduced by $1 for every $2 of earned income. In some cases, the income and resources of non-recipients are counted in determining SSI eligibility and payment amounts. This process is called deeming and is applied in cases where an SSI-eligible child lives with an ineligible parent, an eligible individual lives with an ineligible spouse, or an eligible non-citizen has a sponsor. In addition to the categorical and financial requirements for SSI, a person must also (1) reside in one of the 50 states, the District of Columbia, or the Northern Mariana Islands and (2) be a U.S. citizen or a noncitizen who meets a qualified alien category and certain other conditions. (SSI is not available in Puerto Rico, Guam, the Virgin Islands, or American Samoa.) Recipients who are outside the country for more than a month are ineligible for benefits. Except for situations involving certain medical facilities, residents of public institutions (such as a jail or prison) are generally ineligible for SSI. Additional requirements related to filing for other benefits and fugitive felon status also apply. The application process for SSDI and SSI disability benefits is similar. Although SSDI and SSI are federal programs, both federal and state offices are used to determine eligibility for benefits. The process begins when an individual files an initial application in person at a SSA field office, by telephone, by mail, or online (SSDI claims only). To make an initial determination, SSA employs a five-step sequential evaluation process to verify that a claimant meets the medical and other eligibility criteria for SSDI or SSI benefits (see Figure 1 ). The five steps are listed below: Step 1. Work T est . Is the individual working and earning over SGA? If yes, the application is denied. If no, the application moves to Step 2. Step 2. Severity T est . Is the applicant's condition severe enough to limit basic work activities for at least one year or to result in death? If yes, the application moves to Step 3. If not, the application is denied. Step 3. Medical Listings T est . Does the condition meet SSA's medical listings, or is the condition equal in severity to one found in the medical listings? If yes, the application is accepted and benefits are awarded. If not, the application moves to Step 4. Step 4. Previous Work T est . Can the applicant do the work he or she had done in the past? If yes, the application is denied. If not, the application moves to Step 5. Step 5. Any Work T est . Does the applicant's condition prevent him or her from performing any other work that exists in the national economy? If yes, the application is accepted and benefits are awarded. If not, the application is denied. Field offices are responsible for validating the non-medical eligibility requirements such as age, employment, marital status, income, resources, and insured status (Step 1). Field office staff will also interview claimants to obtain relevant medical and work-history information, as well as to make certain that required forms are completed. Applications that meet the non-medical eligibility criteria are then forwarded to a state Disability Determination Service (DDS) for a medical determination (Steps 2-5). DDSs, which are fully funded by the federal government, are state agencies tasked with developing medical evidence and issuing the disability determination. The medical determination for both types of disability benefits is made based on evidence gathered in an individual's case file. State disability examiners—with the help of medical and psychological consultants—typically use medical evidence collected from the claimant's treating sources (i.e., a physician, psychologist, or other acceptable medical source) to determine the severity of the claimant's impairment(s). Ordinarily, there is no personal interview with the applicant on the part of the state personnel who decide the claim. Claimants who do not meet the criteria in the medical listings (Step 3) proceed to a more individualized assessment that examines their residual functional capacity to perform work. Residual functional capacity (RFC) is a function-by-function assessment based upon all of the relevant evidence of an individual's ability to do work-related activities. At Step 4, the state DDS evaluates a claimant's RFC to complete past relevant work. If the claimant cannot perform past relevant work, his or her application is forwarded to the final step of the determination process. At Step 5, the state DDS uses a claimant's RFC along with vocational factors, such as age, education, and work experience to determine whether he or she can perform any work that exists in the national economy. Claimants who are unable to perform such work are found to be disabled. After a determination has been made, the state DDS returns the case to the field office for appropriate action. The disability determination process for child SSI claimants is similar to the one used for SSDI and adult SSI claimants, in that child claimants must have a severe impairment that prevents them from engaging in basic life activities. However, unlike adult disability claimants, child SSI claimants not approved at Step 3a are not subsequently evaluated based on their RFC to perform work. Instead, child SSI claimants proceed to an individualized assessment that examines whether their severe impairment (or combination of impairments) results in limitations that functionally equal the medical listings (see Figure 2 ). During this process (child's Step 3b), the state DDS will assess the extent to which a child's condition affects his or her functioning during day-to-day activities at home, in childcare, at school, and in the community. The state DDS evaluates a child SSI claimant's functioning across six domains: (1) acquiring and using information; (2) attending and completing tasks; (3) interacting and relating with others; (4) moving about and manipulating objects; (5) caring for yourself; and (6) health and physical well-being. A child SSI claimant's condition functionally equals the criteria in the listings if the impairment (or combination of impairments) results in marked limitations in at least two of the domains or an extreme limitation in one domain. A marked limitation in a domain occurs when a claimant's impairment interferes seriously with his or her ability to independently initiate, sustain, or complete activities. An extreme limitation in a domain occurs when a claimant's impairment interferes very seriously with his or her ability to independently initiate, sustain, or complete activities. If a claimant's application for benefits is denied at any point during the disability determination process, the claimant has the right to appeal the decision. During the appeals process, claimants may present additional evidence or arguments to support their case, as well as appoint a representative to act on their behalf (either an attorney or non-attorney). The appeals process includes three levels of administrative review through SSA before a case can be appealed to the U.S. court system, in the following order: Step 1. Reconsideration. In most states, claimants who are dissatisfied with the initial determination may request to have their case reconsidered by a different examiner from the state DDS office. The disability examiner will reexamine the evidence from the original decision, along with any new evidence submitted with the appeal. After a review of the evidence, the claimant is notified in writing of the decision. If the claimant disagrees with the reconsideration decision, he or she may proceed to Step 2. Step 2. Administrative Hearing. Claimants who are dissatisfied with the reconsidered judgment (or who disagree with the initial determination and reside in a state where the reconsideration step has been eliminated) may request a hearing before an administrative law judge (ALJ). During a hearing, an ALJ will investigate the merits of an appeal by informally questioning the claimant, as well as any scheduled witnesses such as medical or vocational experts. A claimant and his or her representative may also present additional evidence, examine evidence used in making the determination under review, introduce witnesses, question witnesses, and present oral or written arguments in support of a favorable decision. Because SSA is not represented as the hearing, the proceeding is considered non-adversarial. After the hearing, the claimant is notified in writing of the ALJ's decision. If the claimant disagrees with the hearing decision, the case can be appealed to Step 3. Step 3. Appeals Council. Claimants dissatisfied with either the ALJ's decision or the dismissal of a hearing request may request a review before the Appeals Council (AC). The AC may dismiss or deny the request for review, or the AC may grant the request and either issue a decision or remand the case to an ALJ. The claimant is notified in writing of the AC's decision or reason for denial of the review. If the claimant disagrees with the AC's decision or denial, he or she may proceed to Step 4. Step 4. U.S. District Court. If a claimant is dissatisfied with the AC's decision or if the AC decides not to review the case, the claimant may file a lawsuit in U.S. district court. A district court may issue a decision or remand the case to the AC. The AC may, in turn, either assume jurisdiction and issue a decision or remand the case to an ALJ for further proceedings and a new decision. At each stage of the appeals process, claimants or their representatives must request an appeal, in writing, within 60 days of receiving notice of the prior decision. On rare occasions, disability cases are appealed beyond U.S. district court to the U.S. court of appeals and, ultimately, the U.S. Supreme Court. SSA conducts periodic program integrity reviews to ensure SSDI beneficiaries and SSI disability recipients continue to meet each program's respective eligibility criteria. After SSA finds that a claimant is disabled, the agency must evaluate his or her impairment(s) from time to time to determine if the individual is still medically eligible for payments. This evaluation is known as a continuing disability review (CDR). The frequency of a medical CDR depends on the beneficiary's prospective medical improvement: Medical Improvement Expected (MIE). If a beneficiary's impairment is expected to improve, SSA will generally schedule a review at intervals from six to 18 months following the most recent decision that the individual is disabled or that disability is continuing. Medical Improvement Possible (MIP). If medical improvement is possible but cannot be accurately predicted based on current experience and the facts of the case, SSA will schedule a review at least once every three years. Medical Improvement Not Expected (MINE). If medical improvement is unlikely due to the severity of an individual's condition, SSA will schedule a review once every five to seven years. Under current law, SSA must find substantial evidence of medical improvement during a CDR to deem a SSDI beneficiary or SSI disability recipient no longer disabled and therefore ineligible for benefits. The legal requirement for determining if disability continues during a CDR is called the medical improvement review standard (MIRS). Under a MIRS determination for adults, the agency will generally consider an adult beneficiary no longer disabled if the review finds considerable evidence that (1) there has been substantial medical improvement in the beneficiary's impairment(s) related to his or her ability to work since the last favorable medical decision and (2) the beneficiary has the ability to engage in SGA. For a child SSI recipient, SSA will typically consider the child no longer disabled if the review demonstrates that there has been substantial medical improvement in the recipient's impairment(s) since his or her most recent favorable medical decision to the point where the recipient's condition no longer meets (or medically or functionally equals) the severity in the listings. When a SSDI beneficiary or SSI disability recipient is found no longer disabled, he or she may appeal the decision using the process described previously. SSA also reevaluates the eligibility of all child SSI recipients who attain age 18 under the adult standard for initial disability claims. These reevaluations are known as age- 18 disability redeterminations . Because such redeterminations are effectively a new disability determination under the adult criteria, the MIRS does not apply. In addition to medical CDRs, SSA conducts periodic non-medical reviews to ensure that SSDI beneficiaries and SSI disability recipients continue to meet each program's respective financial and other eligibility requirements. Under the SSDI program, SSA performs work CDRs to determine if a beneficiary's work activity represents SGA and if eligibility for benefits should continue. SSA typically will initiate a work CDR only if the agency becomes aware of a beneficiary's return to work. If a work CDR finds evidence that a recipient is engaging in SGA and is not participating in an approved SSA work incentive program, the agency may determine that the recipient's disability has ceased. Under the SSI program, SSA conducts periodic redeterminations of a recipient's non-medical eligibility factors—such as income, resources, and living arrangements—to verify that a recipient is still eligible for SSI and is receiving the correct payment amount. There are two types of redeterminations: scheduled and unscheduled. Unscheduled redeterminations are conducted based on a report of change in a recipient's circumstances that may affect program eligibility or the payment amount. Scheduled redeterminations are performed at periodic intervals, depending on the likelihood of payment error: annually if a change in a recipient's circumstances is likely to occur; or once every six years if a change in a recipient's circumstances is unlikely to occur. The SSDI program is funded primarily through the Social Security payroll tax, a portion of which is credited to a Disability Insurance trust fund. By contrast, the SSI program is funded through annual appropriations from general revenues. The Social Security payroll tax rate on covered wages and self-employment income is 12.40%, which is split equally between employees and employers, up to the taxable maximum of $118,500 in 2016 (self-employed individuals bear the full tax). Of the 12.4%, 10.03% is paid to the OASI trust fund and 2.37% is paid to the DI trust fund under current law. Funding for each trust fund is prescribed in the Social Security Act, and the two funds may not borrow from one another under current law. In addition to the payroll tax contributions, the DI and OASI trust funds receive some revenues from the taxation of Social Security benefit payments. These combined revenues are invested in special issue (non-marketable), interest-bearing U.S. government securities. (The interest earned is also deposited in the trust funds.) The resources in the DI trust fund are used to pay for SSDI benefits and the cost of administering the program. In FY2016, the DI trust fund is estimated to have paid out more than $149.2 billion in benefits. The SSI program is financed through the general fund of the U.S. Treasury. Appropriations for SSI benefits and program administration are considered mandatory spending. In FY2016, the SSI program is estimated to have paid out $59.6 billion in federal benefits.

The Social Security Administration (SSA) is responsible for administering two federal entitlement programs that provide income support to individuals with severe, long-term disabilities: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is a social insurance program that provides monthly cash benefits to nonelderly disabled workers who paid Social Security taxes for a sufficient number of years in jobs covered by Social Security and to their eligible dependents. In contrast, SSI is a public assistance program that provides monthly cash benefits to aged, blind, or disabled individuals (including children) who often have little or no work experience in covered employment and whose assets and other income are below certain limits. To qualify for disability benefits under either program, claimants must meet the definition of disability prescribed in the Social Security Act. For both SSDI and SSI disability benefits, disability is defined as the inability to engage in substantial gainful activity (SGA) by reason of a medically determinable physical or mental impairment that is expected to last for at least one year or to result in death. In general, the individual must be unable to do any kind of substantial work that exists in the national economy, taking into account age, education, and work experience. Special rules apply to statutorily blind individuals and to children under the age of 18 applying for or receiving SSI. Both programs are administered by SSA and therefore have similar application and disability determination processes. Although SSDI and SSI are federal programs, both federal and state offices are used to determine eligibility for disability benefits. SSA determines whether someone is disabled according to a five-step sequential evaluation process where SSA is required to look at all of the pertinent facts of a particular case. Current work activity, severity of impairment, and vocational factors are assessed in that order. If SSA finds that a claimant is disabled, the agency must periodically reevaluate his or her impairment(s) to ensure that the individual continues to meet the program's respective eligibility criteria. If a claimant's application for benefits is denied at any point during the disability determination process, the claimant has the right to appeal the decision. During the appeals process, claimants may present additional evidence or arguments to support their case, as well as appoint a representative to act on their behalf. In most states, the appeals process is composed of four stages: (1) reconsideration by a different disability examiner; (2) a hearing before an administrative law judge (ALJ); (3) a review before the Appeals Council; and (4) filing suit against SSA in U.S. district court. The SSDI program is funded primarily through Social Security payroll tax revenues, portions of which are credited to the Disability Insurance (DI) trust fund. In contrast, the SSI program is financed by annual appropriations from general revenues.

Late in the 113 th Congress, former House Ways and Means Committee Chairman Dave Camp introduced a comprehensive tax reform bill, the Tax Reform Act of 2014 ( H.R. 1 ). While no action was taken on H.R. 1 in the 113 th Congress, tax reform remained a key issue of interest early in the 114 th Congress. In January 2015, the Senate Finance Committee established five bipartisan working groups to evaluate tax reform options. The working groups' reports were released in July 2015. Both the Senate Finance Committee and the House Ways and Means Committee have continued to hold hearings on tax reform in the 114 th Congress. There are various policy options for achieving comprehensive tax reform. One option is to enact a base-broadening reform, maintaining the current system with reduced tax rates, in the spirit of the Tax Reform Act of 2014. A second option is to substantially revise or eliminate the current tax system, instead relying on an alternative tax base for revenues (e.g., taxing consumption rather than income). Tax reform legislation introduced early in the 114 th Congress has tended to take the latter approach, proposing a retail sales tax at the federal level or a flat tax. Either option can be designed to be revenue-neutral or change the revenue outlook, depending on the exact provisions of the reform. As an alternative to comprehensive tax reform, Congress may choose to consider reforms to certain parts of the code. For example, Congress may choose to consider international tax reform options, or evaluate business-only options. Toward the end of 2015, as part of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), certain temporary provisions for individuals and businesses were made permanent. The 114 th Congress may consider other targeted tax changes to the taxation of individuals or businesses, absent comprehensive tax reform. Tax systems are often evaluated using the criteria of efficiency, equity, and simplicity. One goal of tax reform is to enhance economic efficiency, removing provisions in the code that adversely affect decisionmaking and economic output. Changes in tax policy also have equity implications, with respect to "fairness" of the tax code. The current tax code is widely seen as being overly complex. Thus, tax reform provides the opportunity to simplify the U.S. tax system. Balancing these three objectives often involves trade-offs. Balancing the trade-offs in these objectives is one of the challenges policymakers face in implementing tax reform. Fundamental or comprehensive tax reform may be achieved either by modifying the existing income tax system or by changing the source of tax revenue (e.g., replacing the current tax system). In modifying the existing tax system, base-broadening could raise additional tax revenues. The additional revenues could either be used to reduce tax rates or for deficit reduction. Similarly, revenues from a new tax (e.g., a consumption tax) could be used to offset reductions in current taxes, or to reduce the deficit. Much of the recent debate has centered around a revenue-neutral tax reform, with lower rates on individual and corporate income. Either base-broadening or an alternative revenue source could be used to pay for lower rates in a revenue-neutral tax reform. How revenue-neutrality is evaluated might also be an issue to be considered, with some suggesting that dynamic scoring be used to evaluate tax reform proposals. Some Members of Congress have expressed concern about the large number and high cost of tax expenditures. Examples of tax expenditures include the deduction for mortgage interest on owner-occupied residences and the deduction for property taxes on owner-occupied residences. Many tax expenditures are seen as targets to be reduced or eliminated. In evaluating tax expenditures, one issue Congress may want to consider is whether the benefits of a particular tax expenditure exceed the costs of that tax expenditure. Identifying and quantifying the costs and benefits associated with particular tax expenditure provisions, however, can be challenging. The current tax reform debate generally deals with the issue of broadening the individual and corporate income tax bases, often by scaling back or eliminating tax expenditures. The additional revenues could be used to lower marginal tax rates, reduce the deficit, or achieve some combination of these two options. Both the Tax Reform Act of 2014 and the Fiscal Commission's 2010 tax reform proposal pay for reduced tax rates at least in part by repealing or reforming many major tax expenditures. The tax expenditures associated with the individual and the corporate tax differ in their size and value, and thus in their scope for potential revenue generation. The potential revenue gain from individual tax expenditures is large as they currently result in roughly $1 trillion of lost revenue annually. While these large amounts suggest a significant scope for base-broadening, most of these tax expenditures arise from a limited number of provisions, many of which are popular and broadly used, are difficult to eliminate in a technical sense, and/or are considered desirable provisions. In 2012, the Joint Committee on Taxation (JCT) found that a revenue-neutral reform that (1) repealed the AMT; (2) repealed all itemized deductions; (3) taxed capital gains and dividends at ordinary rates; and (4) retained the earned income tax credit (EITC), child tax credit, and tax benefits for retirement savings and healthcare could reduce rates by 4%. Thus, the top individual income tax bracket would be reduced from 39.6% to 38.02%. Corporate tax expenditures are relatively small in value, partially reflecting the smaller corporate tax base. Analysis suggests that eliminating all corporate tax expenditures would allow the statutory corporate tax rate to be reduced from 35% to roughly 28% to 29%. These base-broadening provisions are also concentrated in a few provisions, which may be difficult to change, such as accelerated depreciation. There are, however, some significant potential base-broadening provisions outside of tax expenditures. For example, additional revenues could result from taxing large pass-through entities that currently pay taxes at the individual level as corporations or by restricting interest deductions. Enacting additional base-broadening reforms could be used to reduce the corporate tax rate below what could be achieved through revenue-neutral policy that only eliminated tax expenditures. There has been a particular focus, as well, on the tax treatment of foreign source income of multinationals. Under the current system, U.S.-based companies with foreign-source income may be subject to U.S. taxes on that income. However, deferral allows tax payments to be deferred until the income earned abroad is repatriated (returned) to the United States. Some proposals would eliminate the U.S. taxation of income earned abroad by U.S.-based multinationals, which could, depending on the details of the proposal, narrow the tax base. Another option is to increase the taxation of foreign-source income of U.S.-based multinationals, through limiting deferral, for example. Increasing the amount of foreign-source income subject to tax would broaden the tax base. International issues have also been an impetus for lowering the corporate tax rate. As an additional challenge, corporate tax reform, business tax reform, or individual tax reform in isolation would be difficult to achieve, as the corporate and individual tax systems are highly interconnected. Many of the corporate preferences also benefit unincorporated business, or "pass-throughs." For pass-through entities, business income is subject to the individual income tax. The Tax Reform Act of 2014 proposed reducing statutory tax rates in both the individual and corporate income tax systems. Under this proposal, there would have been two individual income tax brackets, set at 10% and 25%, with a 10% surtax for certain higher-income taxpayers, for a top individual rate of 35%. Corporate tax rates would have been reduced to 25%, with this reduction phased in over time. The cost of these rate reductions would have been partially offset through base-broadening, and partially through other revenue-raising policies, so as to be revenue-neutral over the 10-year budget window. Additional details on the Tax Reform Act of 2014 are provided in a section later in the report. Alternative revenue options may be sought for a number of reasons. If the revenues generated through base-broadening do not fully finance desired rate reductions, alternative revenue sources may be sought to fill the gap. Revenue from an add-on tax could allow for the retention of more tax expenditures and smaller reductions in other tax expenditures, or larger tax rate reductions. Further, Congress may choose to seek alternative revenue sources to reduce the budget deficit and national debt. An alternative revenue source or tax base (e.g., consumption) might also be supported as an option for potentially improving economic efficiency. There are several options for imposing a broad-based consumption tax. These include a value-added tax (VAT), a retail sales tax, and a flat tax. A value-added tax is a tax on the value that a firm adds to a product at each stage of production. The value the firm adds is the difference between a firm's sales and a firm's purchases of inputs from other firms. The VAT is collected by each firm at every stage of production. A retail sales tax is a consumption tax levied only at a single stage of production, the retail stage. The retailer collects a specific percentage markup in the retail price of a good or service, which is then remitted to the government. Both the VAT and the retail sales tax have the potential of a robust revenue yield. Another option for implementing a broad-based consumption tax would be to levy a so-called "flat tax" (often referred to as a Hall-Rabushka flat tax after the two economists who popularized this proposal). Flat tax proposals generally have two components: a wage tax and a cash-flow tax on businesses. With this form, a flat tax is essentially a modified VAT, with wages and pensions subtracted from the VAT base and taxed at the individual level. Under a standard VAT, a firm would not subtract its wage and pension contributions when calculating its tax base. Under the flat tax, some wage income may not be included in the tax base because of personal exemptions. Other potentially new revenue sources include environmental taxes or taxes on the financial sector. Environmental taxes have been proposed as an option to simultaneously reduce pollution and raise revenue. The most frequently discussed energy tax is a carbon tax that would be levied on the volume of carbon emitted. Another alternative energy tax option would be higher gasoline taxes. Options for imposing new taxes on the financial sector include a securities transaction tax or taxes on certain types of financial institutions, such as systemically important financial institutions (SIFIs). The Tax Reform Act of 2014 proposed an excise tax be imposed on the consolidated assets of SIFIs in excess of $500 billion. In evaluating any change in tax policy, the prevailing economic framework is to analyze the tax policy for equity, efficiency, and simplicity. Tradeoffs may exist between these three objectives. For example, if greater income equality is desired, this may conflict with the goal of economic efficiency. Economic theory maintains that it is not possible to make interpersonal comparisons of utility. Hence, whether a change in the distribution of income, with gainers and losers, is an improvement in the national welfare is a value judgment. The effects on different groups, however, can be measured and debated. When considering the fairness of the distribution of tax burdens, the concepts of horizontal and vertical equity are often considered. Horizontal equity holds that taxpayers with similar incomes should face similar tax burdens. Tax preferences that allow certain taxpayers to claim deductions, credits, or exemptions to reduce tax burdens often result in situations where taxpayers with similar incomes face different tax burdens. Evaluating horizontal equity involves exploring whether taxpayers in similar circumstances pay approximately the same amount of taxes. For example, will the tax burden on two cohabiting single taxpayers be the same as the burden on a similarly situated married couple? Vertical equity examines the distribution of tax burdens across different income groups. Under an ability-to-pay standard, vertical equity would suggest that taxpayers in higher income groups pay more. How much more is a policy question. Should the after-tax distribution of income be the same as the pre-tax distribution (suggesting taxation should be proportional)? Or should taxpayers with a greater ability to pay have a proportionally higher tax burden (suggesting taxation should be progressive)? In looking at the income of taxpayers, is annual or lifetime income the appropriate ability-to-pay metric? There are also questions as to whether tax reform should seek to be "distributionally neutral," keeping the share of the tax burden borne by different income groups roughly the same. Evaluating the fairness of tax policy, from an economic perspective, may also involve asking several other questions. For example, what will be the effect on taxpayers in different age groups? Will there be distributional effects by region of the country? Another consideration might be how minority groups could be affected. Tax policy should promote economic efficiency; that is, tax policy should be as neutral as possible by minimizing economic distortions. Low marginal tax rates tend to lessen distortions. Taxes that are applied to a broad base, with few exclusions or exemptions, also tend t o be more economically efficient. Many efficiency questions concern household decisions, specifically those related to savings and labor choices. In the long run, savings used for investment promote economic growth. Increased labor supply can also positively contribute to GDP. Thus, in evaluating economic efficiency, the following types of questions might be asked. What will be the effect of a tax change on households' decisions to save versus consume? Will household decisions about the composition of goods and services consumed be affected? Will households' choices of leisure versus work be affected? Other efficiency questions concern firms' decisions. What will be the effect on firms' decisions concerning the method of financing (debt or equity), choice among inputs, type of business organization (corporation, partnership, or sole proprietorship), and composition of output? The greater the simplicity of the tax system, the lower will be the administrative and compliance costs. Tax compliance tends to increase with simplicity such that simplifying the tax system could help reduce the tax gap. Thus, tax policy should eliminate any unnecessary complexity and promote transparency. Numerous questions concerning simplicity arise; among them are the following: How will a tax change affect federal administrative costs? Will the administrative costs of state and local governments change? How will compliance costs of households be affected? Will business compliance costs change? Tax reform options continue to be actively debated in the 114 th Congress. While there has been sustained congressional interest in tax reform, it is not clear what form reform might take. Comprehensive tax reform, similar to what was proposed in the Tax Reform Act of 2014, remains an option. It is also possible that tax reform efforts proceed but target a specific sector of the economy, through a business-only tax reform or a reform of international tax law. In the first session of the 114 th Congress, the Committee on Ways and Means considered legislation to make permanent a number of temporary tax provisions. Permanent extensions of a number of temporary tax provisions were enacted as part of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) in December 2015. The Ways and Means Committee has continued to hold tax reform hearings in the 114 th Congress. Early in the 114 th Congress, Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden announced the creation of "tax reform working groups," with the goal of providing tax reform recommendations. The working groups were to provide recommendations for tax reform in five areas: (1) individual income tax; (2) business income tax; (3) savings and investment; (4) international tax; and (5) community development and infrastructure. In March 2015, the committee announced it would be seeking input from stakeholders on how to make the tax code "simpler, fairer, and more efficient." Stakeholder submissions were posted on the Finance Committee's website in April 2015. The working groups' reports were released in July 2015. The committee has also held a number of hearings on tax reform in the 114 th Congress. As of the date of this report, legislation that would provide a comprehensive reform of the individual and corporate income tax systems has not been introduced. Comprehensive tax reform legislation was introduced in December 2014 as the Tax Reform Act of 2014 ( H.R. 1 ), and is discussed below in the section " Tax Reform in the 113th Congress ." Proposals that broaden the tax base and reduce statutory tax rates are widely believed to promote economic growth. The degree to which a specific set of policies is likely to affect growth, however, depends on changes in the effective marginal tax rates. It is possible for base-broadening to increase effective marginal tax rates, potentially offsetting any growth benefits that would be expected from statutory rate reductions. The Joint Committee on Taxation (JCT) prepared a macroeconomic analysis of the Tax Reform Act of 2014, which was released along with the discussion draft. The JCT's analysis found that the Tax Reform Act of 2014 would have been expected to reduce effective marginal tax rates on labor, creating an incentive to work, and increased the after-tax income of individuals, increasing demand for goods and services. Both of these effects would be expected to stimulate the economy. On the corporate side, even though statutory tax rates would have been reduced, base-broadening provisions, including repeal of accelerated depreciation, would have led to higher effective tax rates on some capital investments. Overall, the JCT estimated that the increased cost of capital for domestic firms would lead to reduced investment in domestic capital stock. On net, the JCT estimates suggest that the provisions proposed in the Tax Reform Act of 2014 would increase economic output. Several proposals to replace the income tax system have been introduced in the 114 th Congress. The Fair Tax Act of 2015 ( H.R. 25 / S. 155 ), the Flat Tax Act ( H.R. 1040 ), and the Simplified, Manageable, and Responsible Tax (SMART) Act ( H.R. 1824 / S. 929 ) have all been introduced in previous Congresses. The Fair Tax Act of 2015 would replace the current income tax system with a national retail sales tax. Both the Flat Tax Act and the SMART Act would impose a flat tax system that is structurally similar to the Hall-Rabushka flat tax proposal, taxing wages and business taxable income. Another proposal would replace the corporate income tax with a cash flow tax on business income. The American Business Competitiveness Act ( H.R. 4377 ) proposes a top rate of 25% on net business income, whether that income was earned by a corporation or a business in a non-corporate form. Most business tax credits and deductions would be repealed. The current system of depreciation would also be repealed (with provisions allowing for depreciation deductions accrued before enactment to be claimed as scheduled), and businesses would expense capital purchases. Interest would no longer be deductible as a business expense, and interest income for individuals would be taxed at the same rate as capital gains and dividends. Net operating losses could be carried back five years, and carried forward indefinitely. All businesses would be required to use the cash method of accounting. The alternative minimum tax (AMT) would be repealed for business income. The proposal would also convert to a territorial system for taxing overseas income. A cash flow tax, similar to what is proposed in H.R. 4377 , is essentially the business component of a flat tax. Relative to the current system, it is often asserted that a flat tax (or consumption tax) would increase economic efficiency. This type of tax is imposed on a broad definition of wage income (or consumption), and there are limited deductions, exemptions, and credits to reduce tax liability. Lower tax rates on a broader tax base tend to promote economic efficiency. If the flat tax (consumption tax) is not applied to capital income or corporate income, the flat tax may contribute to additional capital accumulation and investment. A cash flow tax might also encourage additional investment, as allowing business expensing exempts the normal (or marginal) return on capital from tax. A flat tax (or consumption tax) system, however, is likely to be less progressive than the current tax system, particularly at the top of the income distribution. Thus, efficiency gains achieved by moving to a flat tax (or consumption tax) system would come at the cost of reduced equity, as higher-income groups would tend to see tax burdens decline while lower-income groups would tend to see increased tax burdens. Another potential benefit of a flat tax system is simplicity. A flat tax system would impose one tax rate, and eliminate most of the tax deductions and tax credits currently in the tax code. A cash flow system that eliminates most credits and deductions and provides that most business expenses are expensed rather than depreciated over time, coupled with cash accounting, might also contribute to tax simplicity. However, much of the complexity in the current tax system is related to the definition of income, rather than the income tax rates. If the tax were applied only to wage income, this would create an incentive for non-wage compensation (e.g., benefits), as is the case in the current tax system with the exclusion for employer-provided healthcare. Further, if the flat tax system were to run parallel to the current income tax system, as proposed in H.R. 1040 , the flat tax could create additional complexity for taxpayers trying to decide whether to elect flat tax treatment. There would also be horizontal inequities, as taxpayers with identical incomes and tax circumstances would have different tax liabilities under the flat tax and income tax systems. While reduced tax rates, particularly reduced corporate tax rates, could yield economic benefits, there are revenue considerations to be taken into account. The Joint Committee on Taxation has not publicly released revenue estimates for any of the tax reform proposals discussed in this section. If a tax reform proposal contributed to increased deficits, meaning the reform was ultimately financed with government debt, increased interest rates could crowd out economic benefits associated with the reform. Legislation introduced in the 114 th Congress would eliminate the current tax code, leaving it to Congress to design a new tax code. The Tax Code Termination Act ( H.R. 27 ) would terminate the Internal Revenue Code, and declares that any new tax system should be a simple and fair system that (1) applies a low rate to all Americans; (2) provides tax relief for working Americans; (3) protects the rights of taxpayers and reduces tax collection abuses; (4) eliminates the bias against savings and investment; (5) promotes economic growth and job creation; and (6) does not penalize marriage or families. The House and Senate have not yet agreed to a budget resolution for FY2017. After going to a conference in April 2015, the House and Senate agreed on a budget resolution ( S.Con.Res. 11 ) for FY2016. As is required of a budget resolution, S.Con.Res. 11 includes enforceable aggregate levels of revenue for FY2016. Additionally, the budget resolution demonstrates some support for congressional action on tax reform. Specifically, the resolution includes: A deficit-neutral reserve fund in the Senate for legislation related to tax reform. Congress frequently includes "reserve funds" in the budget resolution. Such provisions provide the chairs of the House or Senate Budget Committees the authority to adjust the budgetary allocations, aggregates, and levels included in the budget resolution in the future if certain conditions are met. Typically these conditions consist of legislation dealing with a particular policy being reported by the appropriate committee or an amendment dealing with that policy being offered on the floor. Generally, the goal of such a reserve fund or adjustment is to allow certain policies to be considered on the floor without triggering a point of order for violating levels in the budget resolution. Two policy statements expressing support in the House for tax reform. The first policy statement communicates support for fundamental tax reform that will foster economic growth and job creation, and the second states that tax reform should be enacted that (1) simplifies the tax code; (2) substantially lowers tax rates for individuals and consolidates the current seven individual income tax brackets into a fewer number; (3) repeals the Alternative Minimum Tax; (4) reduces the corporate tax rate; and (5) transitions the tax code to a more competitive system of international taxation. The budget resolution also includes reconciliation instructions to several committees, including the committees with jurisdiction over tax reform, the Senate Finance Committee and the House Ways and Means Committee. These instructions trigger the reconciliation process by directing individual committees to develop and report legislation that would change laws within their jurisdiction to achieve a specified budgetary goal. During the final stages of the reconciliation process, the reported legislation is considered under expedited procedures in both the House and Senate. In responding to their reconciliation instructions, the Senate Finance Committee or the House Ways and Means Committee may choose to include in their reconciliation legislation changes to tax policy constituting tax reform. Many of the tax policy changes contained in the President's FY2017 budget proposal have been included in the Administration's previous budget proposals. Specifically, 115 of the proposals are substantially the same as those in the FY2016 budget, 15 are modifications or combinations from FY2016 proposals, 12 reflect policy changes, and six are new. In total, there are nearly 150 revenue proposals contained in the President's FY2017 budget. The tax proposals in the President's FY2017 budget are divided into two general categories. The first category contains proposals to reform the business tax system. The revenue-raising proposals in the President's budget include reforms to the international tax system, the elimination of a number of fossil fuel tax preferences, reform of the tax treatment of financial and insurance products, and the closure of a variety of items that the Administration views as "loopholes." In the international reforms, the largest two proposed revenue raisers are the imposition of a 19% minimum tax on foreign earnings, which the Administration estimates would raise $350.4 billion between 2017 and 2026, and a 14% one-time tax on previously untaxed foreign income, which it is estimated would raise $299.4 billion. The elimination of tax incentives for fossil fuels would raise $38.2 billion, while the reform of the tax treatment of financial products would raise $34.7 billion, and the closure of various loopholes would raise $153.1 billion. Presumably some of this revenue would be used for various incentives in the budget proposals that are directed toward research, manufacturing, clean energy, small business, and infrastructure. The proposals for manufacturing, research, and clean energy are collectively estimated (by the Administration) to cost $89 billion over 10 years. The largest single item in this category of incentives is a proposal to modify and permanently extend the renewable electricity production tax credit and investment tax credit at a cost of $24.1 billion over 10 years. The simplification and tax relief for small businesses proposals are estimated to cost $47.5 billion between 2017 and 2026. The proposed incentives for increased investment in infrastructure would be the least expensive of the President's proposed business incentives at an estimated cost of $9.3 billion over 10 years. The second group of tax proposals in the President's FY2017 budget includes tax proposals affecting middle-class households, health and retirement benefits, higher-income taxpayers, and financial institutions. A variety of other changes to increase compliance and strengthen administration were also included. The most costly proposals in this second group were a new second-earner tax credit for working couples, at $87.0 billion between 2017 and 2026, followed by proposed expansion of the EITC, at $61.4 billion between 2017 and 2026; consolidation, expansion, and simplification of education tax incentives, at $48.7 billion between 2017 and 2026; and reform of the child care tax incentives, at $39.8 billion between 2017 and 2026. The proposals in this second group of provisions that are estimated to generate the most additional revenue between 2017 and 2026 include capping the value of certain tax expenditures at the 28% tax rate ($645.5 billion); imposing a $10.25 per barrel fee on crude oil ($319.1 billion); coordinating the application of the net investment and Self Employment Contributions Act (SECA) taxes for owners of partnerships and limited liability companies (LLCs) who materially participate in the business ($271.7 billion); increasing the capital gains rate from 20% to 24.2% ($235.2 billion); setting estate and gift tax parameters at 2009 levels ($201.8 billion); imposing a fee on certain financial institutions ($111.4 billion); increasing tobacco taxes ($115.1 billion); and imposing a "Buffett Rule" or "Fair Share Tax" ($37.5 billion). The President's FY2016 budget, as previous budgets have, proposed a number of tax changes that largely followed those of years past. The President's FY2016 budget used an adjusted baseline, which assumed that the American Opportunity Tax Credit (AOTC), Earned Income Tax Credit (ETIC), and Child Tax Credit (CTC) expansions that were extended through 2017 as part of the American Taxpayer Relief Act (ATRA; P.L. 112-240 ) would be made permanent. These provisions were made permanent as part of the Consolidated Omnibus Appropriations Act, 2016 ( P.L. 114-113 ). As with the President's FY2017 budget, the tax proposals in the President's FY2016 budget were divided into two groups. The first group of proposals was to be considered as part of a long-run revenue-neutral business tax reform. The revenue raised from the base-broadening proposals in this section would pay for a reduction in the corporate tax rate to 28%, with an effective rate of 25% for manufacturing. The President's FY2016 budget also provided a one-time $268 billion allowance for transportation infrastructure spending, which would be paid for using unspecified revenues generated through the transition to a reformed business tax system. The business tax reform proposals in the President's FY2016 budget included incentives for research, manufacturing, clean energy, and small business. The proposed modification and extension of the research and experimentation tax credit would have cost $127.7 billion between 2016 and 2026 according to the Administration's estimates. The President's FY2016 budget also proposed extending the increased expensing allowance for small businesses. Both the research credit and small business expensing provisions were modified and made permanent in P.L. 114-113 . Revenue-raising provisions in the President's business tax reform included changes in the tax treatment of derivatives and insurance products, repeal of certain tax incentives for fossil fuels, and repeal of last-in, first-out inventory accounting methods, among several other changes. Also included as revenue-raising provisions were proposed changes to the U.S. international tax system. These changes included such things as a 19% minimum tax on foreign earnings; limitations on corporate inversions; interest deductions restrictions; Subpart F reforms; limits on income shifting using intangible property transfers; and restrictions on hybrid arrangements to create stateless income. The Administration estimated the reforms to the U.S. international tax system would generate $238.3 billion between 2016 and 2025. Overall, the long-run revenue-neutral business tax reform section of the President's FY2016 budget would generate a reserve of $141.5 billion for revenue-neutral tax reform. The second group of revenue proposals included additional provisions related to manufacturing and clean energy, certain incentives for infrastructure, a proposal to expand the Earned Income Tax Credit (EITC), and other individual-level tax incentives. The most costly proposal in this section was a new second-earner tax credit for working couples, at $89.0 billion between 2016 and 2025, followed by proposed expansion of the EITC, at $59.9 billion between 2016 and 2025. On net, the revenue proposals that are not related to baseline adjustments or reserved for revenue-neutral business tax reform would have raised $1.5 trillion between 2016 and 2025. The provisions that would have generated the most additional revenue between 2016 and 2025 included capping the value of certain tax expenditures at 28% ($603.2 billion); imposing a 14% one-time tax on untaxed overseas earnings ($268.1 billion); increasing the maximum capital gains rate to 24.2% ($207.9 billion); setting estate and gift tax parameters at 2009 levels ($189.3 billion); imposing a fee on certain financial institutions ($111.8 billion); increasing tobacco taxes ($95.1 billion); conforming Self Employment Contributions Act (SECA) taxes for professional services businesses ($74.6 billion); and imposing a "Buffett Rule" or "Fair Share Tax" ($35.2 billion). Several major tax reform proposals were put forward by Members in the 113 th Congress. While comprehensive tax reform was not enacted, proposals introduced in the 113 th Congress may continue to inform the debate. The House Committee on Ways and Means worked toward comprehensive tax reform in the 113 th Congress. On February 26, 2014, Chairman Camp released the draft Tax Reform Act of 2014. This proposal would have broadened the tax base and restructured statutory tax rates in both the individual and corporate income tax systems, changed the tax treatment of foreign-source income for U.S. multinational corporations, and made dozens of other changes to the federal tax system (additional details can be found in the shaded text box below). This reform built on earlier discussion drafts that had been released by Chairman Camp. Chairman Camp's first tax reform discussion draft on international tax reform was released during the 112 th Congress. A number of the international tax reform proposals in the Tax Reform Act of 2014 appeared in this earlier discussion draft. Similar to the earlier draft, the Tax Reform Act of 2014 would have allowed a 95% dividends received deduction for foreign business income. As a transition rule, the earlier draft had proposed a 5.25% tax on undistributed foreign earnings. The Tax Reform Act of 2014 also proposed taxing accumulated deferred foreign earnings, with a higher rate of 8.75% for cash, with other earnings held abroad taxed at 3.5%. In an effort to prevent tax base erosion, the Tax Reform Act of 2014 would have taxed foreign income generated by U.S. companies through the use of intangibles. Other proposals in the Tax Reform Act of 2014 were similar to proposals contained in Camp's previous discussion drafts. Similar to proposals made in Camp's January 24, 2013, financial products discussion draft, the Tax Reform Act of 2014 would have required that derivatives be marked-to-market at year-end, such that taxpayers would recognize income or losses. With respect to small businesses, the Tax Reform Act of 2014 did not include the broader reform option that had appeared in the March 12, 2013, small business discussion draft. Instead, the Tax Reform Act of 2014 proposed a number of changes to existing pass-through and partnership tax rules. Among the many proposals are provisions that would have taxed carried interest as ordinary income, changed rules related to partnership audits and adjustments, and restricted the use of publicly traded partnerships. Former Committee on Finance Chairman Max Baucus also released several discussion drafts related to tax reform. The former chairman released discussion drafts related to international tax reform, tax administration, cost recovery and accounting, and energy tax policy. The discussion drafts were released in addition to a series of tax reform options papers put forward by the committee earlier in 2013. Under Senator Baucus's international tax reform proposal, passive and highly mobile forms of foreign-earned income would be taxed at the full U.S. rate, as would income earned from goods ultimately consumed in the United States. Two alternatives were put forth for taxing income earned from products and services sold abroad. "Option Y" would subject all foreign-earned income to a minimum tax, which the draft sets at 80% of the U.S. statutory rate. "Option Z" would tax 60% of foreign active business income at the U.S. rate. Similar to Chairman Camp's international tax proposals, undistributed foreign earnings would be subject to a one-time tax. The Baucus discussion draft sets this rate at 20%. Reforms to cost recovery and accounting rules have also been put forward by former Chairman Baucus as a discussion draft. Proposed reforms would eliminate the modified accelerated cost recovery system (MACRS), enacting instead a system that uses asset pools and longer lives that more closely approximate economic depreciation. Certain intangibles, including research and experimentation as well as advertising expenditures, would be capitalized and amortized. Last-in, first-out (LIFO) inventory accounting rules would be repealed. Small-business expensing allowances would be increased such that more businesses would be allowed to use cash accounting. A number of similar proposals appear in the Tax Reform Act of 2014, discussed above. Former Chairman Baucus has also released a discussion draft related to tax administration and energy tax reform. This tax administration draft contained several proposals designed to reduce the tax gap, enacting additional data reporting requirements and anti-fraud provisions. The energy tax reform discussion draft proposes clean energy production and investment tax credits designed to replace existing incentives for renewables and other clean electricity resources (e.g., nuclear, carbon capture, and sequestration). These credits would be available for the long term, but are designed to begin phasing out once the annual average greenhouse gas emissions rate falls below a specified threshold. The proposal also contains a new tax credit for clean transportation fuels. The Tax Reform Act of 2014 ( H.R. 1 ) was introduced late in the 113 th Congress. This legislation was preceded by several tax reform discussion drafts, discussed above. Key provisions of this comprehensive legislation are provided in the text box below. Additional legislative proposals in the 113 th Congress would have reformed the current income tax system. Specifically, the Family Fairness and Opportunity Tax Reform Act ( S. 1616 ) proposed substantive changes to the current income tax. Specifically, S. 1616 would have consolidated the tax brackets, repealed the alternative minimum tax (AMT), provided an additional child tax credit and personal credit, eliminated the standard deduction and most itemized deductions (retaining, with modifications, the deduction for mortgage interest and charitable contributions), in addition to making other changes to the tax code. Other legislation, such as the Flat Tax Rate Act ( H.R. 5882 ), would have imposed a single income tax rate of 15%. Several proposals were introduced in the 113 th Congress that would have replaced the income tax system with some alternative form of taxation at the federal level. The Fair Tax Act of 2013 ( H.R. 25 / S. 122 ) would have repealed the individual income tax, the corporate income tax, all payroll taxes, the self-employment tax, and the estate and gift taxes. These taxes would have effectively been replaced with a national retail sales tax. Thus, under H.R. 25 / S. 122 , the current federal tax system, based on taxing income, would have been replaced with a system that taxes consumption. The Fair Tax Act was reintroduced in the 114 th Congress, and is discussed above. The Flat Tax Act ( H.R. 1040 ) proposed to allow taxpayers to elect to be subject to a flat tax, as an alternative to the current tax system. Individuals and businesses electing a flat tax would pay a flat rate of 19% for the first two years, and a rate of 17% thereafter. The Simplified, Manageable, And Responsible Tax (SMART) Act ( S. 173 ) also proposed a flat tax of 17% on individuals' wages and business taxable income. The flat tax systems proposed in H.R. 1040 and S. 173 were structurally similar to the Hall-Rabushka flat tax proposal. Both of these proposals were reintroduced in the 114 th Congress, and are discussed above. The American Growth & Tax Reform Act of 2013 ( H.R. 2393 ) would have required the Secretary of the Treasury to submit to Congress a legislative proposal for a progressive consumption tax. H.R. 2393 would have been designed to eliminate the public debt outstanding. Specifically, the Treasury would have been directed to provide rates and details on a progressive consumption tax to eliminate the public debt under scenarios in which (1) the consumption tax in addition to other taxes; (2) the consumption tax would replace the individual income tax; and (3) the consumption tax would replace the corporate income tax. The Progressive Consumption Tax Act of 2014 ( S. 3005 ) proposed a 10% consumption tax on most goods and services (structured as a value-added tax (VAT)). While the legislation would not fully replace the income tax system, it would have reduced individual and corporate income tax rates to a maximum rate of 28% and 17%, respectively. The legislation also would have broadened the income tax base, eliminating a number of individual tax expenditures. Further, the legislation would have provided an allowance of $50,000 for single filers ($100,000 for married filing jointly), that would have effectively exempted most taxpayers from the individual income tax. Refundable tax credits for families would effectively be replaced with rebates to offset consumption tax liability for lower-income families. Legislation introduced in the 113 th Congress would have eliminated the existing tax code, leaving it to Congress to design a new tax code. The Tax Code Termination Act ( H.R. 352 ) would have terminated the Internal Revenue Code, and declares that any new tax system should be a simple and fair system that met a set of criteria, as noted above. The End Wasteful Tax Loopholes Act ( S. 8 ) proposes to express the sense of the Senate that Congress should enact legislation to (1) eliminate wasteful tax loopholes; (2) eliminate corporate tax loopholes and wasteful tax breaks for special interests; (3) enhance tax fairness by reforming or eliminating tax breaks that provide excessive benefits to millionaires and billionaires; (4) crack down on tax cheaters and close the tax gap; (5) use the revenue saved by curtailing tax loopholes to reduce the deficit and reform the federal tax code; (6) address provisions in the tax code that make it more profitable for companies to create jobs overseas than in the United States; and (7) reform the tax code in a manner that promotes job creation, competitiveness, and economic growth. General instructions for tax reform were not included in the Bipartisan Budget Act of 2013. Section 114 of the act, did, however, provide several deficit-neutral tax reform-related reserve funds for Senate budget enforcement. The earlier Senate- and House-passed budget resolutions recommend substantial changes in current tax law. The House budget resolution ( H.Con.Res. 25 ) called for revenue-neutral comprehensive tax reform, while the Senate budget resolution ( S.Con.Res. 8 ) instructed the Senate Finance Committee to draft revenue legislation that would reduce the deficit by $975 billion over the 2013 to 2023 budget window. The House budget resolution ( H.Con.Res. 25 ) was passed on March 21, 2013. The accompanying H.Rept. 113-17 stated that H.Con.Res. 25 sought to grow the economy through tax reform. Specifically, tax reform as outlined in H.Con.Res. 25 , would have achieved the following objectives: (1) simplify the tax code to make it fairer to American families and businesses; (2) reduce the amount of time and resources necessary to comply with tax laws; (3) substantially lower tax rates for individuals, with a goal of achieving a top individual rate of 25%; (4) consolidate the current seven individual-income-tax brackets into two brackets with a first bracket of 10%; (5) repeal the Alternative Minimum Tax; (6) reduce the corporate tax rate to 25%; and (7) transition the tax code to a more competitive system of international taxation. H.Con.Res. 25 stated that revenue-neutral tax reform that meets the objectives listed above should have been reported by the Committee on Ways and Means to the House by December 31, 2013. This would have allowed Congress time to enact comprehensive tax reform during FY2014. The tax reform efforts that were being undertaken at the time by the Committee on Ways and Means are discussed in greater detail elsewhere in this report (see " Committee on Ways and Means " above). The Senate budget resolution ( S.Con.Res. 8 ) was passed on March 23, 2013. This budget resolution stated that by October 1, 2013, the Senate Committee on Finance was to report revenue legislation that would have raised $975 billion between fiscal years 2013 and 2023. The committee report accompanying S.Con.Res. 8 stated that these additional revenues would result from tax increases on "the wealthiest Americans and biggest corporations." The committee report also noted that S.Con.Res. 8 , as reported, supported the goal of comprehensive tax reform that "simplifies the tax code, increases fairness, generates economic growth, and improves the competitive position of U.S. businesses, if it is done in a way that is consistent with the revenue and progressivity goals" of the budget. The President's FY2015 budget proposed a number of changes to current tax policy. Many of these changes were part of previous Obama Administration budget proposals. The President's budget used an adjusted baseline, which assumed that the American Opportunity Tax Credit (AOTC), Earned Income Tax Credit (ETIC), and Child Tax Credit (CTC) expansions that were extended through 2017 as part of the American Taxpayer Relief Act (ATRA; P.L. 112-240 ) are made permanent. The tax proposals in the President's FY2015 budget were divided into two groups. The first group of proposals was to be considered as part of a revenue-neutral business tax reform. The revenues raised from proposals in this section would have paid for a reduction in the corporate tax rate. The President's FY2015 budget also provided a one-time $150 billion allowance for transportation infrastructure spending, which would have been paid for using unspecified revenues generated through the transition to a reformed business tax system. The business tax reform proposals in the President's FY2015 budget included incentives for research, manufacturing, clean energy, and small business. The proposed modification and extension of the research and experimentation tax credit would have cost $108.1 billion between 2015 and 2024. The President's FY2015 budget also proposed extending the increased expensing allowance for small businesses. Revenue-raising provisions in the President's business tax reform included proposed changes to the U.S. international tax system, changes in the tax treatment of derivatives and insurance products, repeal of certain tax incentives for fossil fuels, and repeal of last-in, first-out inventory accounting methods, among several other changes. Changes to the U.S. international tax system in this section would have generated $276.3 billion between 2015 and 2024. Overall, this section of the President's FY2015 budget would have generated $248.3 billion for revenue-neutral tax reform. The second group of revenue proposals included additional provisions related to manufacturing and clean energy, certain incentives for infrastructure, a proposal to expand the EITC, and other individual-level tax incentives. The most costly proposal in this section was the proposed EITC expansion, at $59.7 billion between 2015 and 2024. On net, the revenue proposals that were related to baseline adjustments or reserved for revenue-neutral business tax reform would have raised $1,048.1 billion between 2015 and 2024. The provisions that would have generated the most additional revenue between 2015 and 2024 included the 28% cap on the value of certain tax expenditures ($598.1 billion); setting estate and gift tax parameters at 2009 levels ($118.3 billion); increased tobacco taxes ($78.2 billion); expansion and indexing of the federal unemployment tax act (FUTA) wage base ($59.0 billion); a financial crisis responsibility fee ($56.0 billion); and imposing a "Buffett Rule" or "Fair Share Tax" ($53.0 billion). Similar revenue-raising proposals appeared in previous Obama Administration budgets. Notably excluded from the President's FY2015 Budget was a proposal which first appeared in the FY2014 Budget to re-index the tax code using chained-CPI. Tax reform continues to be of interest in the 114 th Congress. One open question is whether Congress will choose to pursue comprehensive tax reform that simultaneously addresses the individual and corporate income tax systems, including multinational corporations. An alternative may be to look at international or business-only reforms. The extent to which such reforms are feasible and would achieve the policy objectives of tax reform remains an open question. Another open question is whether the federal tax system should continue to rely on taxing income as the primary source of revenue. Several tax reform proposals introduced in the 114 th Congress would tend to shift the tax system away from taxing income, taxing consumption instead.

Many agree that the U.S. tax system is in need of reform. Congress continues to explore ways to make the U.S. tax system simpler, fairer, and more efficient. Identifying and enacting policies that will result in a simpler, fairer, and more efficient tax system remains a challenge. On December 10, 2014, the chairman of the House Committee on Ways and Means introduced a comprehensive tax reform proposal, the Tax Reform Act of 2014 (H.R. 1). The bill proposed substantial changes to both the individual and corporate income tax systems, reducing statutory tax rates for many taxpayers, while repealing dozens of credits, deductions, and other tax preferences. While no further action was taken on H.R. 1 in the 113th Congress, the proposal continues to inform the ongoing tax reform debate. There are various policy options for achieving comprehensive tax reform. One option is a base-broadening, rate-reducing tax reform, in the spirit of the Tax Reform Act of 2014. An alternative approach would be to substantially revise or eliminate the current tax system, instead relying on an alternative tax base for revenues. Tax reform legislation introduced early in the 114th Congress has tended to take the latter approach, proposing a retail sales tax at the federal level or a flat tax. Similar proposals were introduced in the 112th and 113th Congresses, and did not advance. A cash flow tax for businesses has also been introduced in the 114th Congress. Both Congress and the Administration have indicated interest in tax reform through their respective budget processes. The budget resolution for FY2016 (S.Con.Res. 11) communicates congressional support for action on tax reform. The President's FY2017 budget proposes a number of tax policy changes, similar to the President's FY2016 budget, including substantial changes in the international tax system. The prevailing framework for evaluating tax policy considers equity (or fairness), efficiency, and simplicity. Equity examines the distribution of the tax burden across different groups. This information can then be used to assess the "fairness" of the tax system. A tax system that is economically efficient generally provides neutral treatment, minimizing economic distortions and maximizing output. A tax system that is simple reduces administrative and compliance costs while also promoting transparency. Oftentimes, there are trade-offs to be considered when evaluating tax policy options. For example, shifting toward a consumption tax might enhance economic efficiency. However, taxing consumption rather than income tends to put an increased tax burden on lower-income taxpayers relative to higher-income taxpayers, reducing the progressivity of the tax system. Policymakers may want to consider the trade-off between equity and efficiency when evaluating tax policy options.

On February 15, 2007, the President signed into law the Revised Continuing Appropriations Resolution, 2007 ( H.J.Res. 20 , P.L. 110-5 ). P.L. 110-5 , among other things, funded several agencies including the Department of Veterans Affairs (VA). The Revised Continuing Appropriations Resolution provides $32.7 billion for the Veterans Health Administration (VHA) for FY2007, a $14.7 million increase over the President's request and $3.3 billion above the FY2006 enacted amount (see Table 1 ). This amount includes $25.5 billion for medical services, $3.2 billion for medical administration, $3.6 billion for medical facilities, and $413.7 million for medical and prosthetic research. These amounts are the same as the President's request except for the medical and prosthetic research account, which is $14.7 million above the President's request (see Table 5 ). The Revised Continuing Appropriations Resolution does not include any provisions that would give VA the authority to implement fee increases as requested by the Administration's budget proposal for VHA for FY2007. During Senate floor consideration of the FY2007 Department of Defense Appropriations Act ( H.R. 5631 ), controversy erupted over the adequacy of funding for the Defense and Veterans' Brain Injury Center, a facility that coordinates treatment and research for traumatic brain injuries affecting active-duty military, their dependents, and veterans. Concerned about the incidence of traumatic and other brain injuries in Iraq and Afghanistan resulting from Improvised Explosive Device (IED) attacks, Congress increased DOD's funding request for this program in FY2006, and commissioned an extensive report that was due on October 6, 2006. In FY2007, the final funding level for this program will be set in the conference version of the Military Construction, Military Quality of Life, Veterans Affairs and Related Agencies bill ( H.R. 5385 ). Notwithstanding the controversy about the funding level for this particular program, military personnel are entitled to full medical coverage under the TRICARE program. The Defense and Veterans' Brain Injury Center, funded within the Blast Injury Prevention, Mitigation and Treatment program, received $10.7 million of the $19.6 million appropriated from the program in FY2006 (see Table 2 ). Last year, Congress increased DOD's request for the blast injury program from $7 million to $19.6 million, including monies for both treatment and research and development (R&D), all funded under the Defense Health program. In FY2007, the Administration again requested $7 million for the Blast Injury Prevention, Mitigation and Treatment program, including $4.9 million for the Defense and Veterans' Brain Injury Center (see Table 2 ). On September 6, 2007, the Senate unanimously adopted an amendment to the FY2007 DOD Appropriations bill ( H.R. 5631 ) offered by Senators Allen and Durbin (SA4883) that made $19 million available from monies for Defense Health for the Defense and Veterans' Brain Injury Center. The House did not change DOD's request for $7 million for the Blast Injury Prevention, Mitigation and Treatment program, and funded the program in a different bill, Military Construction, Military Quality of Life and Veterans Affairs Appropriations bill ( H.R. 5385 ). During conference, the funding provision for the Defense and Veterans' Brain Injury Center was dropped from H.R. 5631 , and the final enacted Department of Defense Appropriations Act, 2007 ( H.R. 5631 , P.L. 109-289 ) did not include any funding for the Defense and Veterans' Brain Injury Center. The Revised Continuing Appropriations Resolution, 2007 ( H.J.Res. 20 , P.L. 110-5 ) has not explicitly delineated the amount of funding that will go to the Defense and Veterans' Brain Injury Center, although it is expected that it will be funded at the FY2007 requested level. The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility rules, including disability compensation and pensions, education, training and rehabilitation services, hospital and medical care, home lone guarantees, and death benefits that cover burial expenses. VA carries out its programs nationwide through three administrations and the board of veterans appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical research programs. The Veterans Benefits Administration (VBA) is responsible, among other things, for providing compensations, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries, providing grants to states for establishing, expanding or improving state veterans cemeteries, and providing headstones and markers for the graves of eligible persons, among other things. VA's budget includes both mandatory and discretionary spending accounts. Mandatory funding supports disability compensation, pension benefits, vocational rehabilitation, and life insurance, among other benefits and services. Discretionary funding supports a broad array of benefits and services, including medical care. In FY2006, discretionary budget authority accounted for about 48% of the total VA budget authority, with most of this discretionary funding going toward supporting VA health care. VHA operates the nation's largest integrated direct health care delivery system. VA's health care system is organized into 21 geographically defined Veterans Integrated Service Networks (VISNs). While policies and guidelines are developed at VA headquarters to be applied throughout the VA health care system, management authority for basic decision making and budgetary responsibilities are delegated to the VISNs. Congressionally appropriated medical care funds are allocated to the VISNs based on the Veterans Equitable Resource Allocation (VERA) system, which generally bases funding on patient workload. Prior to the implementation of the VERA system, resources were allocated to facilities primarily on the basis of their historical expenditures. Unlike other federally funded health insurance programs, such as Medicare and Medicaid, which finance medical care provided through the private sector, VHA provides care directly to veterans. In FY2005, VHA operated 156 hospitals, 135 nursing homes, 43 residential rehabilitation treatment centers, and 711 community-based outpatient clinics (CBOCs). VHA also pays for care provided to veterans by independent providers and practitioners on a fee basis under certain circumstances. Inpatient and outpatient care is provided in the private sector to eligible dependents of veterans under the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA). In addition, VHA provides grants for construction of state-owned nursing homes and domiciliary facilities, and collaborates with DOD in sharing health care resources and services. During FY2005, VHA provided medical care to about 4.9 million unique veteran patients, a caseload that is estimated to increase by about 108,000, or 2.2% in FY2006 (see Table 3 ). According to VHA estimates, the number of unique veteran patients is estimated to increase by approximately 45,000 in FY2007. As shown in Table 3 , there would be a 3.6% increase in the total number of unique patients (both veterans and non-veterans), from 5.3 million in FY2005 to 5.5 million in FY2007. The total number of outpatient visits reached 52.3 million during FY2005 and is projected to increase to 55.5 million in FY2006 and 58.5 million in FY2007. In FY2005, VHA spent approximately 61.7% of its medical care obligations on outpatient care. Since 1946, VHA has been associated with training physicians and other health care professionals and has become an essential component of health care higher education in the United States. Veterans' health care facilities are affiliated with 107 of the nation's 126 medical schools, and participate in graduate medical education (GME) through integrated residency programs administered through medical schools and academic health centers. VHA is also affiliated with over 1,200 other schools offering students allied and associated education degrees and certificates in 40 health profession disciplines. In FY2005, about 31,000 physician residents and fellows—17,000 medical students, 24,000 nursing students, and 18,000 allied health residents and fellows—received some or all of their training in VA medical centers. The rest of this report tracks VHA's FY2007 appropriations and provides a brief summary of funding levels for VHA for FY2006, including a discussion on supplemental appropriations for FY2005 and FY2006. It also discusses the Administration's budget proposal for FY2007, and the final enacted amounts for FY2007. The report begins with a brief overview of eligibility for VA health care, VHA's enrollment process, and its enrollment priority groups. To understand VA's medical care appropriations and the Administration's major policy proposals discussed later in this report, it is important to understand eligibility for VA health care, VA's enrollment process, and its enrollment priority groups. Unlike Medicare or Medicaid, VA health care is not a entitlement program. Contrary to numerous claims made concerning "promises" to military personnel and veterans with regard to "free health care for life," not every veteran is automatically entitled to medical care from VA. Prior to eligibility reform in 1996, all veterans were technically eligible for some care, however, the actual provision of care was based on available resources. The Veterans' Health Care Eligibility Reform Act of 1996, P.L. 104-262 , established two eligibility categories and required VHA to manage the provision of hospital care and medical services through an enrollment system based on a system of priorities. P.L. 104-262 authorized VA to provide all needed hospital care and medical services to veterans with service-connected disabilities, former prisoners of war, veterans exposed to toxic substances and environmental hazards such as Agent Orange, veterans whose attributable income and net worth are not greater than an established "means test", and veterans of World War I. These veterans are generally known as "higher priority" or "core" veterans. The other category of veterans are those with no service-connected disabilities and with attributable incomes above an established "means test." P.L. 104-262 also authorized VA to establish a patient enrollment system to manage access to VA health care. As stated in the report language accompanying P.L. 104-262 , "the Act would direct the Secretary, in providing for the care of 'core' veterans, to establish and operate a system of annual patient enrollment and require that veterans be enrolled in a manner giving relative degrees of preference in accordance with specified priorities. At the same time, it would vest discretion in the Secretary to determine the manner in which such enrollment system would operate." Furthermore, P.L. 104-262 was clear in its intent that the provision of health care to veterans was dependent upon the available resources. The Committee report accompanying P.L. 104-262 states that the provision of hospital care and medical services would be provided to "the extent and in the amount provided in advance in appropriations Acts for these purposes. Such language is intended to clarify that these services would continue to depend upon discretionary appropriations." As stated previously, P.L. 104-262 required the establishment of a national enrollment system to manage the delivery of inpatient and outpatient medical care. The new eligibility standard was created by Congress to "ensure that medical judgment rather than legal criteria will determine when care will be provided and the level at which care will be furnished." For most veterans, entry into the veterans' health care system begins by completing the application for enrollment. Some veterans are exempt from the enrollment requirement if they meet special eligibility requirements. A veteran may apply for enrollment by completing the Application for Health Benefits (VA Form 10-10EZ) at any time during the year and submitting the form online or in person at any VA medical center or clinic, or mailing or faxing the completed form to the medical center or clinic of the veteran's choosing. Once a veteran is enrolled in the VA health care system the veteran remains in the system and does not have to re-apply for enrollment annually. However, those veterans who have been enrolled in Priority Group 5 based on income must submit a new VA Form 10-10EZ annually with updated financial information demonstrating inability to defray the expenses of necessary care. Eligibility for VA health care is primarily based on "veteran's status" resulting from military service. Veteran's status is established by active-duty status in the military, naval, or air service and a honorable discharge or release from active military service. Generally, persons enlisting in one of the armed forces after September 7, 1980, and officers commissioned after October 16, 1981, must have completed two years of active duty or the full period of their initial service obligation to be eligible for VA health care benefits. Veterans discharged at any time because of service-connected disabilities are not held to this requirement. Furthermore, reservists who were called to active duty and who completed the term for which they were called, and who were granted an other than dishonorable discharge, or were National Guard members who were called to active duty by federal executive order, and who completed the term for which they were called, and who were granted an other than dishonorable discharge are also exempt from the 24 continuous months of active duty requirement. When not activated to full-time federal service, members of the reserve components and National Guard have limited eligibility for VA health care services. Members of the reserve components may be granted service-connection for any injury they incurred or aggravated in the line of duty while attending inactive duty training assemblies, annual training, active duty for training, or while going directly to or returning directly from such duty. Additionally, reserve component servicemembers may be granted service-connection for a heart attack or stoke if such an event occurs during these same periods. The granting of service-connection makes them eligible to receive care from VA for those conditions. National Guard members are not granted service-connection for any injury, heart attack, or stroke that occurs while performing duty ordered by a governor for state emergencies or activities. After veteran's status has been established ,VA next places applicants into one of two categories. The first group is composed of veterans with service-connected disabilities or with incomes below a established means test. These veterans are regarded by VA as "high priority" veterans, and they are enrolled in Priority Groups 1-6 (see Appendix A ). Veterans enrolled in Priority Groups 1-6 include: veterans in need of care for a service-connected disability; veterans who have a compensable service-connected condition; veterans whose discharge or release from active military, naval or air service was for a compensable disability that was incurred or aggravated in the line of duty; veterans who are former prisoners of war (POWs); veterans awarded the purple heart; veterans who have been determined by VA to be catastrophically disabled; veterans of World War I; veterans who were exposed to hazardous agents (such as Agent Orange in Vietnam) while on active duty; and veterans who have an annual income and net worth below a VA-established means test threshold. VA also looks at applicants' income and net worth to determine their specific priority category and whether they have to pay copayments for nonservice-connected care. In addition, veterans are asked to provide VA with information on any health insurance coverage they have, including coverage through employment or through a spouse. VA may bill these payers for treatment of conditions that are not a result of injuries or illnesses incurred or aggravated during military service. Appendix B provides information on what categories of veterans pay for which services. The second group is composed of veterans who do not fall into one of the first six priority groups. These veterans are primarily those with nonservice-connected medical conditions and with incomes and net worth above the VA established means test threshold. These veterans are enrolled in Priority Group 7 or 8. Appendix C provides information on income thresholds for VA health care benefits. VHA is funded through multiple appropriations accounts that are supplemented by other sources of revenue. Although the appropriations account structure has been subject to change from year to year, traditionally the appropriation accounts used to support VHA include medical care, medical and prosthetic research, and medical administration. In addition, Congress also appropriates funds for construction of medical facilities through a larger appropriations account for construction for all VA facilities. In FY2004, "to provide better oversight and [to] receive a more accurate accounting of funds," Congress changed VHA's appropriations structure. The Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 2004 ( P.L. 108-199 , H.Rept. 108-401 ) funded VHA through four accounts: (1) medical services; (2) medical administration; (3) medical facilities; and (4) medical and prosthetic research. Provided below are brief descriptions of these accounts. The medical services account covers expenses for furnishing inpatient and outpatient care and treatment of veterans and certain dependents, including care and treatment in non-VA facilities; outpatient care on a fee basis; medical supplies and equipment; salaries and expenses of employees hired under Title 38, United States Code; and aid to state veterans homes. The medical administration account provides funds for the expenses in the administration of hospitals, nursing homes, and domiciliaries; billing and coding activities; quality of care oversight; legal services; and procurement. The medical facilities account covers, among other things, expenses for the maintenance and operation of VHA facilities; administrative expenses related to planning, design, project management, real property acquisition and deposition, construction, and renovation of any VHA facility; leases of facilities; and laundry and food services. This account provides funding for VA researchers to investigate a broad array of veteran-centric health topics such as treatment of mental health conditions, rehabilitation of veterans with limb loss, traumatic brain injury and spinal cord injury, organ transplantation, and the organization of the health care delivery system. VA researchers receive funding not only through this account but also from DOD, the National Institutes of Health (NIH), and from private sources. In addition to direct appropriations through the above accounts, the Committees on Appropriations include medical care cost recovery collections when considering the amount of resources needed to provide funding for VHA. The Consolidated Omnibus Budget Reconciliation Act of 1985 ( P.L. 99-272 ), enacted into law in 1986, gave VHA the authority to bill some veterans and most health care insurers for nonservice-connected care provided to veterans enrolled in the VA health care system, to help defray the cost of delivering medical services to veterans. The Balanced Budget Act of 1997 ( P.L. 105-33 ) gave VHA the authority to retain these funds in the Medical Care Collections Fund (MCCF). Instead of returning the funds to the Treasury, VA can use them for medical services for veterans without fiscal year limitations. To increase VA's third-party collections, P.L. 105-33 also gave VA the authority to change its basis of billing insurers from "reasonable costs" to "reasonable charges." This change in billing was intended to enhance VA collections to the extent that reasonable charges result in higher payments than reasonable costs. In FY2004, the Administration's budget requested consolidating several medical collections accounts into MCCF. The conferees of the Consolidated Appropriations Act of 2004 ( H.Rept. 108-401 ) recommended that collections that would otherwise be deposited in the Health Services Improvement Fund (former name), Veterans Extended Care Revolving Fund (former name), Special Therapeutic and Rehabilitation Activities Fund (former name), Medical Facilities Revolving Fund (former name), and the Parking Revolving Fund (former name) should be deposited in MCCF. The Consolidated Appropriations Act of 2005, ( P.L. 108-447 , H.Rept. 108-792 ) provided VA with permanent authority to deposit funds from these five accounts into MCCF. The funds deposited in MCCF would be available for medical services for veterans. These collected funds do not have to be spent in any particular fiscal year and are available until expended. As shown in Table 4 , MCCF collections increased by 56% from $1.2 billion in FY2002 to almost $1.9 billion in FY2005. During this same period, first-party collections increased by 59% from $485 million in FY2002 to $772 million in FY2005. In FY2005, first-party collections represented approximately 41% of total MCCF collections. During the past year, Congress considered several appropriation measures to provide funding for VHA. Aside from the regular FY2006 appropriations bill that provides funding for VHA, Congress passed several measures that included funding to bridge the shortfall for VHA for FY2005 and provided additional funding for FY2006. Given below is a brief description tracking Congressional action on FY2006 appropriations for VHA. Table 5 provides details of funding levels for the various accounts that comprise funding for VHA. On May 23, 2005, the House Committee on Appropriations reported H.R. 2528 ( H.Rept. 109-95 ), making appropriations for Military Quality of Life and Veterans Affairs and Related Agencies for FY2006 (MilQual appropriations bill). The House passed H.R. 2528 on May 26, 2005. The MilQual appropriations bill appropriated $28.8 billion for VHA. Under the House-passed version of H.R. 2528 , the total amount of funds available for VHA was $31.0 billion, including $2.2 billion in collections (see Table 5 ). On June 23, 2005, at a hearing of the House Veterans Affairs Committee the Administration announced that the increased medical care cost for FY2005 was about $1 billion more than the FY2005 enacted amount. Moreover, at a subsequent hearing before the House Committee on Appropriations, Subcommittee on Military Quality of Life and Veteran Affairs, on June 28, 2005, the Secretary testified that for FY2006 veterans' health care programs would need $1.1 to $1.6 billion more than the FY2006 President's request. On June 30, 2005, and July 14, 2005, respectively, the President submitted to Congress a supplemental request to address the FY2005 shortfall and a budget amendment to address the additional funding needs of FY2006. These two requests totaled $2.9 billion. On July 26, 2005, the conferees of the Department of the Interior, Environment and Related Agencies, Appropriations bill, 2006 ( H.R. 2361 , H.Rept. 109-188 ) provided $1.5 billion in supplemental appropriations for VA medical services for FY2005. The bill included language that would allow VA to carry over any unused funds into FY2006. The House passed H.R. 2361 on July 28, 2005, and the Senate passed the measure a day later. The FY2006 Department of the Interior, Environment, and Related Agencies appropriations bill was signed into law on August 2, 2005 ( P.L. 109-54 ). On July 21, 2005, the Senate Committee on Appropriations reported out of committee H.R. 2528 ( S.Rept. 109-105 ) making appropriations for Military Construction and Veterans Affairs and Related Agencies for FY2006 (MilCon appropriations bill). This bill appropriated approximately $33.5 billion for VHA, including $2.2 billion in collections (see Table 5 ). On November 18, 2005, the House voted to adopt the conference report ( H.Rept. 109-305 ) making appropriations for Military Quality of Life, Military Construction, Veterans Affairs, and Related Agencies for FY2006 (MilCon-Qual-VA Appropriations Act). The Senate adopted H.Rept. 109-305 by unanimous consent that same day. The MilCon-Qual-VA Appropriations Act was signed into law by the President on November 30, 2005 ( P.L. 109-114 ). The MilCon-Qual-VA Appropriations Act appropriated $ 29.1 billion for VHA ( not shown in Table 5 ). This amount included $22.5 billion for medical services, $2.9 billion for medical administration, $3.3 billion for medical facilities and $412 million for medical and prosthetic research. When Congress passed P.L. 109-114 , it designated $1.2 billion as an emergency requirement, and included bill language that required the President to declare the entire amount as an emergency. On January 28, 2006, the President designated $1.2 billion in funding for veterans' health care as an "emergency." On October 28, 2005, President Bush submitted a reallocation request to Congress to transfer previously appropriated funds to several agencies, including the VA, to address various needs arising from the consequences of Hurricane Katrina. Congress responded to the President's proposed reallocation by attaching the reallocation request to the conference version of the FY2006 Defense Appropriations bill ( H.R. 2863 ). The conference agreement includes $225.2 million for VA medical services, including $198.2 million to purchase medical equipment and supplies lost during the Gulf Coast hurricanes, and $27.0 million for Avian Flu pandemic preparation (shown in Table 5 ). H.R. 2863 also included $24.9 million for general operating expenses; $200,000 to clean up and repair national cemeteries (these amounts are not shown in Table 6 ); $368 million for construction major projects; and $1.8 million for the construction minor projects accounts (these amounts are shown in Table 6 ). The Department of Defense Appropriations Act, 2006, was signed into law on December 30, 2005 ( P.L. 109-148 ). On February 16, 2006, the Administration submitted two separate FY2006 supplemental appropriations requests. One of these supplemental requests would provide $19.8 billion for recovery and reconstruction activities in hurricane-affected Gulf Coast areas. In this request the Administration requested $600 million for VA's construction major projects account to be used for rebuilding the VA Medical Center in New Orleans, which was damaged by Hurricane Katrina. Proposed funding for this project was previously included in the October 28, 2005 reallocation request, but Congress provided only $75.0 million of the $368 million, for the purpose of advance planning and design of the VA Medical Center in New Orleans. The conference committee did not include the full amount of funding because it felt that there was insufficient information to determine the actual cost of the project. In the FY2006 conference report, H.Rept. 109-359 , VA was directed to report to the Committees on Appropriations of both houses of Congress by February 28, 2006, on the long-term plans for the replacement hospital construction. The report submitted by VA estimated that the cost of construction of a new VA Medical Center in New Orleans would be $636 million. On March 17, 2006, the House passed the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 ( H.R. 4939 , H.Rept. 109-388 ). The House-passed bill provides $550 million for rebuilding the VA Medical Center in New Orleans, $50.0 million less than the Administration's request. In addition, the Secretary of Veterans Affairs is authorized to transfer up to $275 million of this amount to the medical services account, to be used only for unanticipated costs related to the global war on terror. Availability of the $550 million appropriation is made contingent on the enactment of authority for it by June 30, 2006. On May 4, 2006, the Senate passed its version of H.R. 4939 ( S.Rept. 109-230 ). The Senate-passed bill provides $623 million for the construction major projects account, $73.0 million above the House-passed amount. This includes $561 million for the construction of a new VA Medical Center in New Orleans. Together with the previous appropriation of $75.0 million in P.L. 109-148 , the total amount of funding for reestablishing the VA Medical Center in New Orleans would be $636 million. During the Senate Appropriations Committee markup of H.R. 4939 , the Committee designated $62.0 million of the total amount provided for the construction major projects account to be used for the disposal and cleanup of land associated with the VA medical facility in Gulfport, Mississippi. During floor consideration of H.R. 4939 , the Senate adopted an amendment offered by Senator Akaka to provide $430 million for the VHA medical services account for FY2006. Of this amount: $168 million was designated to address veterans' mental health care needs, including Post-Traumatic Stress Disorder (PTSD); and $80.0 million was designated for the provision of readjustment counseling services to veterans. The amendment also included language that requires the President to declare the entire amount of $430 million as an emergency requirement. On June 13 and 15, 2006, the House and Senate, respectively, adopted the conference report to accompany the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 ( H.R. 4939 , H.Rept. 109-494 ). The bill was signed into law ( P.L. 109-234 ) on June 15. P.L. 109-234 provides $586 million for construction major projects account. Of this amount, $550 million would be for the construction of a new VA medical center in New Orleans, Louisiana, and $36.0 million would be for the removal of debris and cleanup of the former VA medical center in Gulf Port, Mississippi. P.L. 109-234 did not include a provision to provide $430 million for the VHA medical services account for FY2006. Furthermore, it should be noted that the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, included a provision to rescind $198.2 million appropriated under P.L. 109-148 to the medical services account, and to reappropriate this same amount under P.L. 109-234 (see Table 5 ). On February 6, 2006, the President submitted his FY2007 budget proposal to Congress. The Administration requested $32.7 billion for VHA, an 11.3% increase over the FY2006 enacted amount of $29.3 billion, and a 10% increase over FY2005 enacted amount of $29.7 billion (see Table 5 ). The FY2007 request included $25.5 billion for medical services, a 12% increase over the FY2006 enacted amount; $3.2 billion for medical administration, an 11.2% increase over FY2006; $3.6 billion for medical facilities, an 8.2% increase over FY2006; and $399 million for medical and prosthetic research, a 3.2% decrease from the FY2006 enacted amount. The President's FY2007 budget request also includes a set of legislative proposals that the Administration asserts "will continue to concentrate VA's health care resources to meet the needs of high priority core veterans—those with service-connected conditions, those with lower incomes, and veterans with special health care needs." These legislative proposals are discussed in detail under the key budget issues section of this report. On March 31, 2006, the House Budget Committee reported H.Con.Res. 376 ( H.Rept. 109-402 ), providing $36.9 billion for VA's discretionary programs, which consist mainly of VA medical care. This amount includes an amendment offered by Representative Bradley increasing the discretionary budget authority by $795 million over the President's recommended level. According to the committee report language, the recommended amount does not assume the President's proposal to implement enrollment fees and increase drug copayments for Priority Group 7 and 8 veterans. H.Con.Res. 376 also calls for budget authority of $37.8 billion for VA's mandatory programs. In total, the committee-reported budget resolution calls for $74.6 billion for VA programs for FY2007. H.Con.Res. 376 was adopted by the House on May 18. On March 9, 2006, the Senate Budget Committee marked up S.Con.Res. 83 , and the Senate passed it on March 16. On the Senate floor, $823 million was added to the committee-recommended amount to provide an additional $795 million to VA Medical Services, in lieu of enactment of the proposed pharmacy copayment increase and the new enrollment fee, and $28 million to increase VA's medical and prosthetic research funding. In total S.Con.Res. 83 calls for $74.8 billion for VA programs for FY2007. This includes approximately $37.0 billion for VA's discretionary programs, and approximately $37.8 billion for mandatory programs. On May 10, 2006, the House Committee on Appropriations approved by voice vote its version of the Military Construction, Military Quality of Life, and Veterans Affairs Appropriations bill (MilCon-Qual-appropriations bill) for FY2007 ( H.R. 5385 , H.Rept. 109-464 ). The bill was reported out of committee on May 15, 2006. The House passed H.R. 5385 on May 19, 2006. H.R. 5385 provided $32.7 billion for VHA, a $3.4 billion (11.4%) increase over the FY2006 enacted amount of $29.3 billion, and about the same as the President's request. This amount included $25.4 billion for medical services, $100 million less than the President's request and $2.6 billion (11.6%) over the FY2006 enacted amount of $22.8 billion (see Table 5 ). Of the amount provided for medical services, the committee included bill language designating that not less than $2.8 billion be used for specialty mental health care, which included funding for the treatment of Post-Traumatic Stress Disorder (PTSD), and funding for the three "Centers of Excellence" for mental health care treatment, established by last year's appropriations act ( P.L. 109-114 ). This was a $600 million increase in funding for mental health programs compared to FY2006. The MilCon-Qual appropriations bill for FY2007 also provided $3.3 billion for medical administration, $100 million above the Administration's request of $3.2 billion, and $3.6 billion for medical facilities, $25 million above the budget request. As stated in H.Rept. 109-464 , this increase was provided for the establishment of at least 10 new Community-Based Outpatient Clinics (CBOCs) in FY2007. These 10 CBOCs would be in addition to the 27 CBOCs that VHA plans to activate in FY2007. H.R. 5385 also provided $412 million for medical and prosthetic research, a 3.2% increase over the President's request of $399 million (see Table 5 ). During committee markup of H.R. 5385 , several amendments were offered to increase funding for veterans' health care; however, none of these amendments was adopted. H.R. 5385 provided $599 million for VA construction projects, including funding for Capital Asset Realignment and for Enhanced Services (CARES) projects (see Table 6 ). A large portion of this amount was for construction and building improvements of VA medical facilities. The committee-recommended amount was $83 million (12.2%) less than the President's request. The reason for this decrease was because the committee did not provide funding for several construction projects that were included in the President's budget request, including funding for refurbishment of the operating rooms at the Columbia, Missouri VA medical center, and for refurbishment of the Spinal Cord Injury Center at the Milwaukee, Wisconsin VA medical center. The committee believed that these are "low priority projects." In addition, the committee recommendation did not include funding for the replacement of the VA medical center in Denver, Colorado, because the estimate for construction of the new facility had almost doubled in less than two years, from $328 million to $621 million. According to the committee report, "this is a project at a stage where work can be halted before significant and irreversible financial damage is done." The Administration issued a statement on May 19, opposing the funding reduction for the CARES program. The Administration stated that "this reduction would slow CARES projects designed to renovate and modernize VA's health care infrastructure and provide greater access to high quality care for more veterans, closer to where they live." However, H.R. 5385 included funding for the upgrade and modernization of VA research facilities. The committee expressed its concern that many VA research facilities have run out of adequate research space, and that some facilities frequently need upgrades of their ventilation, electrical supply, and plumbing systems. The committee directed VA to institute a process by which research infrastructure needs are given full and careful consideration. The MilCon-Qual appropriations bill did not include any fee increases as requested by the Administration's budget proposal for VHA for FY2007. On July 20, 2006, the Senate Appropriations Committee reported out of committee its version of the Military Construction and Veterans Affairs and Related Agencies Appropriations bill (MilCon-VA appropriations bill) for FY2007 ( H.R. 5385 ; S.Rept. 109-286 ). On November 14, the Senate passed H.R. 5385 , as amended, by voice vote. The Senate-passed version provided $32.7 billion for VHA. This amount was almost equivalent to the President's request and the House-passed amount (see Table 5 ). H.R. 5385 , as amended, provided $28.7 billion for medical services, a 26.0% increase over the FY2006 enacted amount, a 12.5% increase over the President's request, and a 13.0% increase over the House-passed amount (see Table 5 ). The MilCon-VA appropriations bill combined the medical administration account into the medical services account. The Administration lauded the Senate-passed measure for merging the medical services account with the medical administration account. According to the Administration, "combining these appropriations into a single account would increase management flexibility to direct resources to best meet the overall health care needs of veterans." The Senate-passed version of H.R. 5385 also provided $3.6 billion for medical facilities (which is the same as the Administration's request and $25.0 million less than the House-passed amount) and $412 million for medical and prosthetic research. This amount is the same as the House-passed amount and $13.0 million above the President's request (see Table 5 ). Unlike the House-passed version of H.R. 5385 , the Senate bill did not earmark funding for mental health care programs, including PTSD. However, during committee markup of the bill, the Senate Appropriations Committee expressed interest in several areas related to veterans' health care. The committee indicated that it was keenly interested in knowing about progress made with the three Centers of Excellence specializing in mental health and PTSD, created by P.L. 109-114 , in Waco, Texas; San Diego, California; and Canandaigua, New York. It also directed the VA to begin implementing a plan to expand more outpatient blind rehabilitation services. During floor debate, the Senate adopted an amendment offered by Senator Kerry to provide discretionary authority to the VA to use up to $18 million of the funds appropriated to the department, to provide additional mental health care services to veterans who served in combat in Iraq and Afghanistan. These services would be provided through readjustment counseling centers (commonly known as "Vet Centers"). Furthermore, during committee markup of H.R. 5385 , the committee voiced concern about the growing number of veterans returning from combat operations overseas who were not being properly screened for Traumatic Brain Injury (TBI). The committee included report language encouraging the VA, in coordination with the four Polytrauma Centers in Minneapolis, Minnesota; Palo Alto, California; Richmond, Virginia; and Tampa, Florida, to establish a separate education and diagnosis screening program for VA medical centers and Vet Centers. The committee also indicated that it "recognizes the increased and ongoing pressures facing military families, and believes it is important to take a proactive, preemptive approach in helping veterans, particularly those in the National Guard and Reserves, and their families adjust to deployments and the transition home after the battlefield." Therefore, the committee directed the VA to look at a DOD program that has been successfully utilized by Army families, which "focuses on goals, family strengthening, and communication as tools to deal with stressful situations." According to S.Rept. 109-286 , "the program can be successfully facilitated by Vet Center staff and can help veterans and their families to deal with both the transition from active duty to civilian life and the call up to active duty for National Guardsmen and Reservists." The committee also included report language requesting VA to establish CBOCs in Bellingham and Centralia, Washington; Alpena, Michigan; and in rural Colorado. The Senate-approved version of H.R. 5385 provided $682 million for VA construction projects, including funding for CARES projects (see Table 6 ). This was a 14.0% increase over the House-passed amount, and the same as the President's request. A large portion of this amount would have been for the construction, alteration, and renovation of VA medical facilities. Furthermore, during floor debate of H.R. 5385 , the Senate adopted an amendment offered by Senator Craig to amend Section 8104 (a)(3)(A) of Title 38 United States Codes (U.S.C.), to increase the threshold for major medical facility projects from $7 million to $10 million. , This amendment also authorized the VA Secretary to carry out major medical facility construction projects and leases for which funds have already been appropriated, and also to carry out major medical facility projects authorized by P.L. 108-170 through September 30, 2007. During committee markup of the bill, the committee expressed concern about VA's construction schedule, and directed VA to provide reports on the delays in construction. It also included report language directing VA to provide a report on the Orlando, Florida, VA Medical Care Facility. According to S.Rept. 109-286 , "in FY2004, Congress appropriated $25 million for a medical care facility at Orlando, Florida. Since then, VA has made no progress on the design and construction of this hospital." Furthermore, the Senate Appropriations Committee urged VA to include $28.5 million in the FY2008 budget request for the construction of a 90-bed nursing home and adult day care center at the Beckley VA Medical Center in West Virginia, and to include $3.6 million for planning and design work associated with the renovation and expansion of primary, mental health, and specialty outpatient care facilities at the Martinsburg VA Medical Center, also in West Virginia. The MilCon-VA appropriations bill for FY2007 did not include any fee increases as requested by the Administration's budget proposal for VHA for FY2007, and the Senate Appropriations Committee strongly expressed its displeasure about the Administration's fee proposals: The [VA] continues to assume congressional approval of its policy and legislative proposals before the Congress has done so.... This practice of under-requesting the true needs of the Department to care for our veterans, with the mandate that the Congress either enact the fees, shortchange veterans healthcare, or make up the difference, is not responsible budgeting. In the strongest terms possible, this Committee directs [VA] not to submit another budget using assumed fees and copayments until such time as the Congress approves and authorizes the Department to implement new revenue enhancing policies. By the end of the 109 th Congress, Congress had not passed the MilCon-VA appropriations bill for FY2007 and funded most government agencies, including the VA, through a series of Continuing Appropriations Resolutions ( P.L. 109-289 , division B, as amended by P.L. 109-369 and P.L. 109-383 ). On January 31, 2007, the House passed the Revised Continuing Appropriations Resolution, 2007 ( H.J.Res. 20 , P.L. 110-5 ), and the Senate passed it without amendment on February 14. P.L. 110-5 provides $32.7 billion for VHA for FY2007. This is $3.3 billion above the FY2006 enacted amount and $14.7 million above the President's request. Under the VHA budget, the medical services account is funded at $25.5 billion, a $2.7 billion increase over the FY2006 enacted amount. The medical administration account is funded at $3.2 billion, and the medical facilities account is funded at $3.6 billion. The Revised Continuing Appropriations Resolution, 2007, provides $413.7 million for the medical and prosthetic research account, a $14.7 million increase over the Administration's request ( Table 5 ). P.L. 110-5 provides $683 million for VA construction projects, including funding for Capital Asset Realignment and for Enhanced Services (CARES) projects (see Table 6 ). A large portion of this amount is for construction and building improvements of VA medical facilities. The FY2007 enacted amount is slightly more than the President's request. In its FY2007 budget request, the Administration proposed several legislative changes that it asserts will "refocus the VA health care system to better meet the needs of highest priority veterans—those with service-connected conditions, those with lower incomes, and those with special health care needs." These proposals are similar to previous ones that were included in the Administration's budget requests for FY2003, FY2004, FY2005, and FY2006, and were rejected by Congress. The President's budget request includes three major policy proposals: assess an annual enrollment fee of $250 for all Priority 7 and 8 veterans; increase pharmaceutical copayments from $8 to $15 (for each 30-day prescription) for all enrolled veterans in Priority Groups 7 and 8; and bill veterans receiving treatment for nonservice-connected conditions for the entire copayment amount. A detailed description of these legislative proposals follows. The Administration proposes to establish an annual enrollment fee of $250 beginning October 1, 2006, for all Priority 7 and 8 veterans. Priority Group 7 veterans have incomes above $26,902 for a single veteran (see Appendix C for VA income thresholds) and below the Department of Housing and Urban Development (HUD) geographic means test level. Priority Group 8 veterans are those with incomes above $26,902 for a single veteran and above the HUD geographic means test amount. The HUD geographic means test is established at a local level such as county or city. For instance, a veteran with no dependents residing in Grant County, Arkansas, whose annual income in 2005 was $27,145, will be placed in Priority Group 7, because the veteran's annual income is above VA's means test threshold of $26,902 and below the FY2005 geographic means test threshold of $27,150 for that county. Similarly, a veteran with no dependents living in Orange County, California, whose annual income in 2005 was $42,250, will be placed in Priority Group 7, because the veteran's annual income is above VA's means test threshold of $26,902 and below the FY2005 geographic means test threshold for of $43,000 for Orange County. It should be noted that there is wide variation in annual incomes of veterans placed in Priority Groups 7 and 8. In its FY2004, FY2005, and FY2006 budget submissions, the President requested authority from Congress to levy an annual enrollment fee on all Priority 7 and Priority 8 veterans. However, Congress did not approve imposing such a fee. In its FY2007 Views and Estimates letter to the House Budget Committee, the House Veterans Affairs Committee did not support levying an enrollment fee. The letter states that "while the Committee understands the policy arguments providing the basis for the Administration's proposal for Priority 7 and 8 veterans to assume a greater share of the costs for their health care in the VA system, the majority of the Committee does not support these legislative proposals." The Chairman of the Senate Veterans' Affairs Committee, in his FY2007 views and estimates letter to the Senate Budget Committee, did agree that "during a time of high deficits and restrained spending in every account unrelated to national security, the President's proposal to shift a small portion of the cost of funding record growth in VA's budget on to lower priority veterans is reasonable. I have no objection to the proposals he has chosen, but I am not necessarily wed to them." P.L. 110-5 does not include any language assessing an enrollment fee. The Administration proposes increasing the pharmacy copayments from $8 to $15 for all enrolled Priority Group 7 and Priority Group 8 veterans, whenever they obtain medication from VA on an outpatient basis for the treatment of a nonservice-connected condition. The Administration put forward this proposal in its FY2004, FY2005, and FY2006 budget requests as well, but did not receive any approval from Congress. At present, veterans in Priority Groups 2-8 pay $8 for a 30-day supply of medication, including over-the-counter medications. The Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) authorized VA to charge most veterans $2 for each 30-day supply of medication furnished on an outpatient basis for treatment of a nonservice-connected condition. The Veterans Millennium Health Care and Benefits Act of 1999 ( P.L. 106-117 ) authorized VA to increase the medication copayment amount and establish annual caps on the total amount paid, to eliminate financial hardship for veterans enrolled in Priority Groups 2-6. When veterans reach the annual cap, they continue to receive medications without making a copayment. On November 15, 2005, VHA issued a directive stating that effective January 1, 2006, the medication co-payment will be increased to $8 for each 30-day supply of medication furnished on an outpatient basis for treatment of a nonservice-connected condition, and that the annual cap for veterans enrolled in Priority Groups 2-6 will be $960. There is no cap for veterans in Priority Groups 7 and 8 (see Appendixes B and C ). P.L. 110-5 does not include any bill language that would give VA the authority to increase copayments. VA estimates that about 200,000 veterans in Priority Groups 7 and 8 would be affected by the $250 annual enrollment fee and the increase in prescription drug copayments. According to VA's estimates, the enrollment fees and increased pharmacy copayments would generate $514 million in revenue and save VA an additional $251 million due to reduced demand, resulting in a decrease of $765 million in appropriations for FY2007. Together two recent studies suggest that veterans may be impacted by increased pharmaceutical copayments. In one published study it was indicated that patients with access to the VA's prescription drug coverage had lower rates of cost-related adherence problems than patients with Medicare or no insurance coverage. This study also found that VA patients were also less likely than some non-VA patients to report other detrimental consequences of medication cost pressures, such as foregoing necessities to pay for their medication or worrying frequently about how they could pay for their treatments. In another study that examined the impact of the increased copayment on veterans' use of antidepressant medication, VA researchers found that medication cost could be a prohibitive factor for veterans with copayment obligations. The researchers further state that veterans who had to pay copayments appear to fill the antidepressant prescriptions less frequently than veterans who are exempt from the copayment requirement. The Administration is requesting that Congress amend VA's statutory authority by eliminating the practice of reducing first-party copayment debts with third-party health insurance collections. VA asserts that this proposal would align VA with the DOD health care system for military retirees and with the private sector. With the enactment of P.L. 99-272 in 1986, Congress authorized VA to collect payments from third-party health insurers for the treatment of veterans with nonservice-connected disabilities, and it also established copayments from veterans for this care. Under current law, VA is authorized to collect from third-party health insurers to offset the cost of medical care furnished to a veteran for the treatment of a nonservice-connected condition. If VA treats an insured veteran for a nonservice-connected disability, and the veteran is also determined by VA to have copayment responsibilities, VA will apply the payment collected from the insurer to satisfy the veteran's copayment debt related to that treatment. Under the current copayment billing process, in cases where the cost of a veteran's medical care for a nonservice-connected condition appears to qualify for billing under reimbursable insurance and copayment, VA medical facilities sends the bill to the insurance provider. The veteran's copayment obligation is placed on hold for 90 days pending payment from the third-party payer. If no payment is received from the third-party payer within 90 days, then a bill is sent to the veteran for the full copayment amount. However, when insurers reimburse VA after the 90-day period, VA must absorb the cost of additional staff time for processing a refund if the veteran has already paid the bill. On all insurance policies, the entire amount of the claim payment is applied first to the copayment. The veteran is then billed only for the portion of the copayment not covered by the insurance reimbursement and the portion of the copayment for services not covered by the veteran's insurance plan (see Figure 1 ). According to two reports released by the Government Accountability Office (GAO), the practice of satisfying copayment debt with recoveries made from third-party insurers has resulted in reduced overall cost recoveries and increased administrative expenses. Under the Administration's proposal, VA would bill and collect copayments from patients regardless of any amounts recovered from the veterans private health insurance plan. As the patient's bill is generated, VA would bill the insurer for the full cost of VA care provided to a veteran for a nonservice-connected condition (see Figure 2 ). According to VA's estimates, if this proposal is enacted it would contribute approximately $31.0 million toward VA's collections. This issue was not addressed in the 109 th Congress. Appendix A. Priority Groups and Their Eligibility Criteria Appendix B. Veterans' Payments for Health Care Services by Priority Group Appendix C. Financial Income Thresholds for VA Health Care Benefits

The Department of Veterans Affairs (VA) provides benefits to veterans who meet certain eligibility rules. Benefits to veterans range from disability compensation and pensions to hospital and medical care. VA provides these benefits to veterans through three major operating units: the Veterans Health Administration (VHA), the Veterans Benefits Administration (VBA), and the National Cemetery Administration (NCA). VHA is primarily a direct service provider of primary care, specialized care, and related medical and social support services to veterans through an integrated health care system. The President's FY2007 budget proposal to Congress requested $32.7 billion for VHA, an 11.3% increase over the FY2006 enacted amount of $29.3 billion, and a 10% increase over the FY2005 enacted amount of $29.7 billion. As in previous budget proposals, the President's FY2007 budget request also includes a set of legislative proposals. The Administration is requesting authorization from Congress to assess an annual enrollment fee of $250 for all Priority 7 and 8 veterans, increase veterans' share of pharmaceutical copayments from $8 to $15 (for each 30-day prescription) for all enrolled veterans in Priority Groups 7 and 8, and bill veterans receiving treatment for nonservice-connected conditions for the entire copayment amount. On May 19, 2006, the House passed the Military Construction, Military Quality of Life, and Veterans Affairs Appropriations bill for FY2007 (H.R. 5385, H.Rept. 109-464). H.R. 5385 provides $32.7 billion for VHA for FY2007, an 11.4% increase over the FY2006 enacted amount. On November 14, the Senate passed its version of H.R. 5385 (S.Rept. 109-286). H.R. 5385, as amended by the Senate, provided $32.7 billion for VHA, about the same as the House-passed amount and the President's request. Neither version of H.R. 5385 included any provisions that would have given VA the authority to implement fee increases as requested by the President's FY2007 budget proposal. The 109th Congress did not enact H.R. 5385 and funded most federal government agencies through a series of Continuing Resolutions. The 110th Congress passed the Revised Continuing Appropriations Resolution, 2007 (H.J.Res. 20, P.L. 110-5) providing funding for the VHA for the rest of FY2007. P.L. 110-5 provides $32.7 billion for the VHA for FY2007, a $14.7 million increase over the President's request and $3.3 billion above the FY2006 enacted amount. This report will not be updated.

Following the terrorist attacks of 2001, the federal government determined that it would need new medical countermeasures (e.g., diagnostic tests, drugs, vaccines, and other treatments) to respond to an attack using chemical, biological, radiological, or nuclear (CBRN) agents. Representatives of the pharmaceutical industry attributed the paucity of CBRN agent countermeasures to the lack of a significant commercial market. They argued that because these diseases and conditions occur infrequently, the private sector perceives little economic incentive to invest the millions of dollars required to bring treatments to market. To encourage the development of new CBRN countermeasures, President Bush proposed Project BioShield in his 2003 State of the Union address. The 108 th Congress considered this proposal and passed the Project BioShield Act of 2004 ( P.L. 108-276 , signed into law July 21, 2004). This act has three main provisions. It provides the Department of Health and Human Services (HHS) expedited procedures for CBRN terrorism-related spending, including procuring products, hiring experts, and awarding research grants. It creates a government-market guarantee by allowing the HHS Secretary to obligate funds to purchase countermeasures while they still need several more years of development. It also authorizes the HHS Secretary to temporarily allow the emergency use of countermeasures that lack Food and Drug Administration (FDA) approval. The act relaxes procedures under the Federal Acquisition Regulation for procuring property or services used in performing, administering, or supporting CBRN countermeasure research and development (R&D). These expedited procedures decrease both the amount of paperwork required for these expenditures and the potential for oversight. The act increases the maximum amount, from $100 thousand to $25 million, for contracts awarded under simplified acquisition procedures. It also allows these purchases using other than full and open competition. According to the Government Accountability Office (GAO), HHS has used the simplified acquisitions procedure authority for only five contracts. These contracts were all executed between 2004 and 2005 totaled approximately $30 million. HHS has stated that it has not used its authority to use other than full and open competition. The Project BioShield Act authorizes the HHS Secretary to use an expedited award process for grants, contracts, and cooperative agreements related to CBRN countermeasure R&D, if the Secretary deems that a pressing need for an expedited award exists. This authority is limited to awards of $1.5 million or less. This expedited award process replaces the normal peer review process. Some scientists have expressed concerns that an expedited review process will reduce research quality. The normal peer review process is designed to provide proposals with greater scientific merit a higher probability of receiving funding, a factor potentially lost in an expedited process. According to the most recent data available from HHS, it awarded 14 grants through this expedited peer review process between July 2004 through July 2007. The National Institutes of Allergy and Infectious Diseases (NIAID) awarded these grants within three to five months after the application deadline. All these awards supported research on medical countermeasures to be used following radiation exposure. The Project BioShield act is designed to guarantee companies that the government will buy new, successfully developed CBRN countermeasures for the Strategic National Stockpile (SNS). The act allows the HHS Secretary, with the concurrence of the DHS Secretary and upon the approval of the President, to promise to buy a product up to eight years before it is reasonably expected to be delivered. Originally, a company was to be paid only on the delivery of a substantial portion of the countermeasure. The Pandemic and All-Hazard Preparedness Act ( P.L. 109-417 ) modified the Project BioShield Act to allow for milestone-based payments of up to half of the total award before delivery. Therefore, this guarantee reduces the market risk for the company and the milestone payments partially reduce its exposure to development risk (i.e., the risk that the countermeasure will fail during testing and be undeliverable). The Project BioShield Act allows HHS to purchase unapproved and unlicensed countermeasures. It requires the HHS Secretary to determine that "sufficient and satisfactory clinical experience or research data ... support[s] a reasonable conclusion that the product will qualify for approval or licensing ... within eight years." Because most drugs that begin these processes fail to become approved treatments, critics of this provision suggest that the government will end up purchasing countermeasures that may never be approved. To reduce the government's financial risk associated with this provision, the act allows HHS to write contracts so that unapproved products may be purchased at lower cost than approved products. HHS used some of these authorities when structuring each of the Project BioShield contracts discussed below (" Acquisitions "). The FDA and HHS approval and licensing processes are designed to protect people from ineffective or dangerous treatments. The Project BioShield Act allows the HHS Secretary to temporarily authorize the emergency use of medical products that are not approved by the FDA or HHS. To exercise this authority, the HHS Secretary must conclude that: (1) the agent for which the countermeasure is designed can cause serious or life-threatening disease; (2) the product may reasonably be believed to be effective in detecting, diagnosing, treating, or preventing the disease; (3) the known and potential benefits of the product outweigh its known and potential risks; (4) no adequate alternative to the product is approved and available; and (5) any other criteria prescribed in regulation are met. Such emergency use authorizations (EUA) remain in effect for one year unless terminated earlier by the Secretary. The Secretary may renew expiring authorizations. The HHS Secretary has issued several EUAs. Currently, five countermeasures to the 2009 H1N1 "swine" influenza outbreak are permitted to be used under EUA: the antiviral influenza treatments Tamiflu (oseltamivir) and Relenza (zananivir), N95 respirators, and two diagnostic kits to help identify cases of this disease. The other active EUA allows the distribution of antibiotic kits containing doxycycline hyclate to certain people participating in the Cities Readiness Initiative. In January 2005, the HHS Secretary used this authority to allow the vaccination of Department of Defense (DOD) personnel with a specified type of anthrax vaccine. This EUA expired in January 2006. The Project BioShield Act of 2004 requires the HHS Secretary to report annually to Congress the use of some of the authorities granted by this law. The reports must summarize each instance that the Department used the expedited procurement and grant procedures and allowed the emergency use of unapproved products. The reports must explain why HHS needed to use these authorities. The HHS has produced two such reports to date: one covering activities from July 2004 through July 2006 and another covering August 2006 to July 2007. This act also requires the Government Accountability Office (GAO) to assess actions taken under authorities granted by the act, determine the effectiveness of the act, and recommend additional measures to address deficiencies. In July 2009, GAO published two reports in response to this requirement. The first report recommends that HHS improve some of its internal controls implemented for the expedited contracting procedures (see " Expedited Procedures " above). The second report determined that HHS has used Project BioShield to support development and procurement of CBRN medical countermeasures. This report contained no recommendations for improving Project BioShield. The Project BioShield Act did not appropriate any funds. Instead, it authorized the appropriation of up to a total of $5.593 billion for countermeasures procurement from FY2004 through FY2013. The Department of Homeland Security Appropriations Act, 2004 ( P.L. 108-90 ) appropriated this amount into a special reserve fund with explicit time windows in which the money could be obligated. P.L. 108-90 specified that $3.418 billion was available for obligation for FY2004 to FY2008. The balance of the advance appropriation plus unobligated funds remaining from FY2004 to FY2008 became available in FY2009 for obligation from FY2009 to FY2013. The Project BioShield Act specified that these funds are only for the procurement of CBRN countermeasures using the Project BioShield authorities and may not be used for other purposes, such as for grants to support countermeasure development or program administration. Congress advance-appropriated the 10-year program but retained the power to annually increase or decrease the amount in the special reserve fund. Congress removed $25 million from this account through rescissions in the Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) and the Consolidated Appropriations Act, 2005 ( P.L. 108-447 ). See Table 1 . The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) transferred $412 million from the special reserve fund to HHS. Of this amount, $275 million went to fund countermeasure advanced research and development through the Biodefense Advanced Research and Development Authority (BARDA, see below), and $137 million went to help respond to and prepare for pandemic influenza. For FY2010, the Obama Administration has requested a transfer of $305 million from the BioShield special reserve fund to fund countermeasure advanced development through BARDA. See Table 2 . The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2010 ( H.R. 3293 ), which passed the House on July 24, 2009, would transfer $305 million to BARDA for advanced development activities. This act would also transfer $500 million from the BioShield special reserve fund to the National Institute of Allergy and Infectious Disease for basic research activities. The President has also requested that the remaining balances in the special reserve fund be transferred from the DHS "Biodefense Countermeasure" account into the HHS "Public Health and Social Services Emergency Fund" account. These funds would remain available for obligation through FY2013 for Project BioShield-related countermeasure purchases. The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2010 ( H.R. 3293 ) would make this transfer. The House Committee on Appropriations estimates that, after accounting for the Administration's estimated obligations from this fund in FY2009 and the transfers out of the Special Reserve Fund for other purposes, the remaining balance will be $764 million. The first Project BioShield contract was announced on November 4, 2004. The HHS contracted with VaxGen for delivery of 75 million doses of a new type of anthrax vaccine (rPA) within three years. This contract was worth $879 million. See Table 3 . On December 17, 2006, HHS terminated this contract because VaxGen failed to meet a contract milestone. Subsequent contracts include $690 million for 29 million doses of the currently approved AVA anthrax vaccine (Emergent BioSolutions); $165 million for 20 thousand doses of Raxibacumab, a treatment for anthrax (Human Genome Sciences); $144 million for 10 thousand doses of Anthrax Immune Globulin, a treatment for anthrax (Cangene); $505 million for 20 million doses of a new (MVA) smallpox vaccine (Bavarian Nordic); $416 million for 200 thousand doses of botulinum antitoxin, a treatment for botulinum toxin exposure (Cangene); $18 million for 5 million doses of a pediatric form of potassium iodide, a treatment for radioactive iodine exposure (Fleming & Company); and $22 million for 395 thousand doses of Ca-DTPA and 80 thousand doses of Zn-DTPA, two treatments for internal radioactive particle contamination (Akorn). Thus, excluding the canceled VaxGen contract, HHS has obligated approximately $1.96 billion to date. Future targets for Project BioShield procurement include countermeasures against anthrax, viral hemorrhagic fevers, and radiation. Congress has scrutinized the implementation and effectiveness of the Project BioShield Act since its enactment. In response to perceived problems with Project BioShield countermeasure procurement, the 109 th Congress created the Biodefense Advanced Research and Development Authority (BARDA) in HHS through the Pandemic and All-Hazards Preparedness Act ( P.L. 109-417 ). Congress determined that Project BioShield insufficiently encouraged the transition of promising basic research results into the product development stage. This period in development is often referred to as the "valley of death" for pharmaceuticals since some seemingly promising drugs are not developed past this point due to lack of funding. As discussed above, the Pandemic and All-Hazards Preparedness Act amended the Project BioShield Act to allow BioShield contracts to pay up to half the contract value as milestone payments. Thus companies could receive payments while continuing to develop their promising products. Additionally, Congress created in BARDA a dedicated infrastructure to manage and fund advanced development and commercialization of CBRN countermeasures. In theory, BARDA funding can take those promising drugs from the basic research through the advanced development stage, which may include clinical trials. Congress created the Biodefense Medical Countermeasure Development Fund to pay for such advanced development contracts. Although this account is separate from the Project BioShield account in DHS, Congress has funded the advanced development account through transfers from the Project BioShield account (see Table 1 and Table 2 ). Critics of government programs funding advanced development suggest that because of the high product failure rate in advanced development, the government will inevitably fund unusable products. In addition to removing the development risks traditionally borne by industry, directly funding advanced development inserts government decision makers into the countermeasure development process, a role critics argue is better suited to industry experts and entrepreneurs. Some critics would prefer to have the government set product requirements and have industry determine how best to meet them. As originally enacted, Project BioShield took this latter approach, an approach that Congress found insufficient in this particular case. Because advanced development activities generally take several years, it may take several more years to determine if this change has yielded better results than the original Project BioShield. In addition to funding the advanced development of countermeasures, BARDA manages HHS' role in Project BioShield. BARDA leads the efforts to determine countermeasure requirements and executes all Project BioShield contracts. The 111 th Congress faces several BioShield-related policy issues. These include: whether to grant the President's request to transfer the account from DHS to HHS; the diversion of BioShield funds for other purposes; how to replace stockpiled countermeasures as they expire; and whether this program has sufficiently encouraged the development of broad spectrum countermeasures. In the FY2010 budget request, President Obama has proposed transferring the entirety of the Project BioShield special reserve fund from DHS to HHS. Currently DHS manages the special reserve fund, while HHS designs and executes the Project BioShield contracts. As described above, DHS and Office of Management and Budget must approve each contract. If Congress decides to transfer the account to HHS, depending on how it is transferred, these roles may or may not be preserved. A simple transfer of the account in the absence of additional amendments of the Project BioShield Act provisions would likely maintain the current agency roles. Alternatively, Congress could amend the Project BioShield act to change the agencies' roles in contract approval. The House and Senate committees on appropriations have recommended transferring the account to HHS and otherwise maintaining the current agency roles. One of the distinguishing features of Project BioShield is the ten-year $5.6 billion advance appropriation. Potential countermeasure developers considered the establishment of an advance-funded separate account dedicated solely to countermeasure procurement as integral to their participation in this program. The advance funding helped assure developers that payment for countermeasures they successfully developed would not depend on future, potentially uncertain appropriations processes. Although advance-funding the Project BioShield account may have provided some assurance of stability to developers, in practice, these funds have been subject to the annual appropriations processes. Subsequent Congresses have removed approximately 8% of the advance appropriation through rescissions and transfers to other accounts. See Table 1 . These transfers fall into two categories: those still related to CBRN countermeasures research and development and those related to influenza pandemic preparedness. In FY2009, Congress transferred $275 million from the special reserve fund to BARDA to support CBRN countermeasure advanced research and development. President Obama has proposed a similar transfer for FY2010 of $305 million. The Administration justifies the proposed transfer by asserting that these funds will support "future successful acquisitions of medical countermeasures under Project BioShield." Thus, such transfers could be viewed as an attempt to improve the "lower than expected" rate of Project BioShield acquisitions. The House Committee on Appropriations reached a similar conclusion: H.R. 3293 would transfer the requested $305 million to BARDA and $500 million to NIAID to support basic research. If Congress agrees to this proposed transfer, the precedent set in FY2009 that research and development funding should be viewed as linked to procurement (and that such activities should be funded by transfers from the Project BioShield special reserve fund) may be reinforced. Annual transfers from this account to fund such activity would continue to lower the amounts available for procuring CBRN countermeasures, their originally intended purpose. However, if funding becomes a limitation to acquiring countermeasures, Congress could appropriate additional money for this purpose. However, such a course of events might cause potential countermeasure developers to feel dependent on the actions of future appropriators, precisely the situation that establishment of the special reserve fund was designed to ameliorate. Such funding transfers may modify the respective roles of the federal government and the private sector in Project BioShield. Congress originally designed Project BioShield to minimize the risk that the government would pay for countermeasures which fail during development (see " Market Guarantee " above). Developers were expected to manage this risk, using the government-market guarantee to entice investors to fund countermeasure development. Congress attempted to assure such potential investors that the funding of this program was not subject to the annual appropriations process by providing ten year advance funding. Industry spokespeople reportedly have asserted that transferring money from this account weakens the ability of private firms to raise capital necessary to sustain long-term research and development for countermeasures and hinders potential participation in Project BioShield. However, transferring the funds to support advanced development may reduce the amount that developers need to raise, since the government can directly fund the development. By shifting money from procurement to research and development, the government assumes more of the development risk (i.e., the government becomes more likely to spend money on developing countermeasures that will fail during development and never become available). In FY2009, Congress transferred $137 million from the Project BioShield special reserve fund to HHS for pandemic influenza preparedness and response. President Obama did not request a similar transfer for FY2010. President Obama did request that the conference committee on the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ) allow the purchase of influenza countermeasures using the Project BioShield special reserve fund. Critics of such a move charged that it would damage the biodefense countermeasure industry and "severely diminish the nation's efforts to prepare for WMD events and will leave the nation less, not more, prepared." The conferees declined to provide this authority. Similarly, in the Senate report to accompany the Department of Homeland Security Appropriations Act, 2010 ( S. 1298 ), the committee "strongly urges" not using the special reserve fund to purchase influenza countermeasures. All medicines, including those added to the Strategic National Stockpile through Project BioShield, have explicit expiration dates. They are not approved for use after this expiration date. As a consequence, HHS must procure a number of doses greater than that stored in the SNS at any given time. For example, HHS had to buy 29 million doses of anthrax vaccine to maintain a stockpile of at least 10 million doses from 2006 to 2011. In 2007, the GAO suggested that HHS and DOD establish an inventory-sharing agreement that would allow DOD to use the HHS vaccines in its active troop vaccination program before expiration. These agencies subsequently implemented a shared stockpile approach for anthrax vaccines and pandemic influenza countermeasures. However, this shared stockpile solution is not applicable for countermeasures lacking other high-volume users. The HHS may require additional periodic countermeasure purchases to replenish the stockpile to maintain a consistent readiness level. Congress may consider whether such purchases should be funded through the advance appropriated Project BioShield account or through annual SNS budget authorities. Between 2005 and 2007, BARDA purchased the AVA anthrax vaccine using Project BioShield funds ( Table 3 ). However, the purchase of 14.5 million doses of AVA vaccine in 2008 used SNS funds rather than BioShield funds. BARDA adoption of this approach for all expiring stockpiled countermeasures may require increased annual appropriations for SNS procurements. Many experts contend that broad spectrum countermeasures, those that address multiple CBRN agents, would be the most valuable additions to the SNS. Such nonspecific countermeasures might be a defense against currently unknown threats, such as emerging diseases or genetically engineered pathogens. Furthermore, such countermeasures are more likely to have other nonbiodefense-related applications. The Project BioShield does not exclude procuring such countermeasures; however, it does require that the presence of another commercial market be factored into the HHS Secretary's decision to purchase the countermeasure. HHS has stated its interest in using Project BioShield to acquire new broad spectrum countermeasures. However, Project BioShield contracts to date have specifically targeted individual threat agents, a strategy commonly described as "one bug, one drug." Congress may decide that HHS needs further guidance or authorities to encourage the development and acquisition of new broad spectrum countermeasures.

Many potential chemical, biological, radiological, and nuclear (CBRN) terrorism agents lack available countermeasures. In 2003, President Bush proposed Project BioShield to address this need. The Project BioShield Act became law in July 2004 (P.L. 108-276). This law has three main provisions: (1) relaxing regulatory requirements for some CBRN terrorism-related spending, including hiring and awarding research grants; (2) guaranteeing a federal government market for new CBRN medical countermeasures; and (3) permitting emergency use of unapproved countermeasures. The Department of Health and Human Services (HHS) has used each of these authorities. The HHS used expedited review authorities to approve grants relating to developing treatments for radiation exposure and used the authority to guarantee a government market to obligate approximately $2 billion to acquire countermeasures against anthrax, botulism, radiation, and smallpox. The HHS has also employed the emergency use authority several times, including allowing young children with H1N1 "swine" influenza to receive specific antiviral drugs. The Department of Homeland Security (DHS) Appropriations Act, 2004 (P.L. 108-90) advance-appropriated $5.593 billion for FY2004 to FY2013 for Project BioShield. Subsequent Congresses have removed approximately 8% of the advance appropriation through rescissions and transfers to other accounts. In FY2004 and FY2005, Congress removed a total of approximately $25 million through rescissions. In the Omnibus Appropriations Act, 2009 (P.L. 111-8), Congress transferred $412 million to other programs supporting countermeasure advanced research and development and pandemic influenza preparedness and response. For FY2010, President Obama has proposed transferring an additional $305 million to support countermeasure advanced research and development and transferring the account from DHS to HHS. The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2010 (H.R. 3293) would make both these requested transfers. This legislation would also make a transfer that was not in the President's request: $500 million out of the Project BioShield account to support basic research in HHS. Since passing the Project BioShield Act, subsequent Congresses have considered additional measures to further encourage countermeasure development. The 109th Congress passed the Pandemic and All-Hazard Preparedness Act (P.L. 109-417) which created the Biomedical Advanced Research and Development Authority (BARDA) in HHS. Amongst other duties, this office oversees all of HHS' Project BioShield activities. The Pandemic and All-Hazard Preparedness Act also modified the Project BioShield procurement process. Questions remain regarding whether these changes have sufficiently improved countermeasure development and procurement. The 111th Congress faces several challenging policy issues. Primary among them is assessing whether Project BioShield is successfully encouraging medical countermeasure development. A second issue is whether to allow additional diversions of the Project BioShield advance appropriation, a key element of the government's market guarantee, to support other activities. A third is whether to broaden Project BioShield's mandate beyond CBRN countermeasures in the face of other threats such as pandemic influenza.

T he Transatlantic Trade and Investment Partnership (T-TIP) is a potential reciprocal free trade agree ment that the United States and the European Union (EU) are negotiating with each other. Formal negotiations commenced in July 2013. Both sides had initially aimed to conclude the negotiations in two years but have more recently expressed interest in concluding the negotiations by the end of 2016. Through the negotiation, the United States and EU seek to enhance market access and trade disciplines by addressing remaining transatlantic barriers to trade and investment in goods, services, and agriculture by negotiating a "comprehensive and high-standard" T-TIP. The goals of the negotiation aim to reduce and eliminate tariffs between the United States and EU; further open services and government procurement markets; enhance cooperation, convergence, and transparency in regulations and standards-setting processes; and strengthen and develop new rules in areas such as intellectual property rights (IPR), investment, digital trade, trade facilitation, labor and the environment, localization barriers, and state-owned enterprises. For more background information on the negotiation, see CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . Agricultural issues have been an active topic of debate in the T-TIP negotiation. The EU is an important export market for U.S. agricultural exports; but growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets. Agricultural imports from Europe currently exceed U.S. exports to the EU. The U.S. Department of Agriculture (USDA) reports that the EU's import tariffs on U.S. agricultural products average well above U.S. tariffs on EU agricultural products. High EU average tariffs on U.S. exports are exacerbated by the EU's non-tariff barriers to U.S. agricultural products. The United States is among the world's largest net exporters of agricultural products, averaging more than $140 billion per year (2010-2015) worldwide. The EU is a leading export market for U.S. agricultural exports—absorbing roughly 10% of exports—and is ranked as the fifth largest market for U.S. food and farm exports. In recent years, however, growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets, and imports from Europe currently exceed U.S. exports to the EU. In 2015, U.S. exports of agricultural products to the EU totaled $12 billion, while EU exports of agricultural products totaled $20 billion, resulting in a substantial trade deficit of nearly $8 billion for the United States. This reverses the net trade surplus in U.S. agricultural exports during the early 1990s (see Figure 1 ). Overall, compared to the value of all merchandise trade (both agricultural and non-agricultural products) between the United States and EU, agricultural trade accounts for less than 5% of total trade annually. Major U.S. agricultural exports to the EU include tree nuts, soybeans, forest products, distilled spirits, vegetable oils, wine and beer, planting seeds and tobacco, and processed fruit and wheat. Major EU agricultural exports to the United States include wine and beer, essential oils, snack foods, processed fruits and vegetables, other vegetable oils, cheese, cocoa paste/butter, live animals, nursery products, and red meats. These statistics include data for all current 28 EU member states, including the United Kingdom (covering England, Scotland, Wales, and Northern Ireland), which voted in June 2016 to exit the EU (referred to as "Brexit"). Separate trade data for the UK is provided in the section titled " Potential Impacts of Brexit ." Agricultural issues have been actively debated in the T-TIP negotiation in the context of market access for agricultural products through reduced or eliminated agricultural import tariffs but also within regulatory and intellectual property rights discussions by addressing existing non-tariff measures that may be barriers to trade. These goals are generally shared by both U.S. and EU agricultural organizations. Negotiating agricultural issues regarding regulatory and intellectual property rights issues have focused, in part, on the goals of ensuring greater transparency, harmonization, and coherence to improve cooperation and streamline the regulatory approval process among the trading partners. However, negotiating such issues is often complicated by long-standing differences between the United States and EU in terms of laws and regulations governing food safety and sanitary and phytosanitary (SPS) measures. These include disputes over the use of hormones in beef production and pathogen reduction treatment for poultry, regulations related to bovine spongiform encephalopathy (BSE, commonly known as mad cow disease) and pesticide residues on foods, animal welfare, agricultural biotechnology (genetically modified organisms, or GMOs), and the use of certain product names and brands and so-called Geographical Indications (GIs). Negotiating documents that were made public in May 2016 were said to suggest that the EU was considering making concessions to its policies and standards regarding SPS and other issues. This interpretation of events has been largely discredited by policymakers in both the United States and EU. The Office of the United States Trade Representative (USTR) maintains a website that provides a summary of U.S. objectives, negotiating round and public forum information, blog posts, facts sheets, reports, and press releases. The European Commission (EC) maintains the EU's official website, which contains negotiating proposals and fact sheets on T-TIP, covering market access, and regulatory cooperation (including SPS, technical barriers to trade [TBT], and IPR issues), among other sectors and negotiation issues. A USDA study reports that removing tariffs and tariff rate quotas (TRQs) in U.S.-EU trade could have increased U.S. agricultural exports to the EU by an estimated $5.5 billion, measured against a 2011 base year. Gains would be greatest in the U.S. livestock sectors. EU exports to the United States are also estimated to be higher by $0.8 billion compared to the study's 2011 base year ( Table 1 ). On a percentage basis, accounting for trade diversions to and from other U.S. trading partners globally, U.S. agricultural exports would have been 2% higher, while U.S. imports would have risen by 1%. By comparison, changes in both EU agricultural exports and imports are estimated to be lower. These results suggest that while agricultural trade between the United States and EU is expected to increase, the overall gains to U.S. agricultural exports could be greater than gains in EU exports, mostly attributable to expected lower overall prices for U.S. products following the removal of EU tariffs and TRQs. USDA further reports that removing selected non-tariff barriers, in addition to removing tariffs and TRQs in U.S.-EU trade, could increase U.S. agricultural exports to the EU by an additional estimated $4.1 billion annually (measured against a 2011 base year). Gains would be greatest to the U.S. livestock and produce industries. EU exports to the United States are estimated to rise by an additional $1.2 billion ( Table 1 ). On a percentage basis, U.S. agricultural exports are estimated to increase by 2% while U.S. imports rise by less than 1%. By comparison, changes in both EU agricultural exports and imports are estimated to be lower. An EU-financed a study of the economic impacts of T-TIP—measured in terms of changes in gross domestic product, employment, and production at a sectoral level for most economic sectors, including the agricultural sector—concludes that the expected impact of T-TIP on agricultural output and employment would be low compared to estimated impacts in other sectors. However, some gains are expected in U.S.-EU agricultural trade. According to the study, the estimated percentage change in U.S. exports of cereals/grains and vegetables/fruit is generally expected to be greater than that estimated for the EU, while the change in EU imports of these same product categories is expected to be lower than that for the United States. Other studies also predict an increase in U.S. exports. Other studies have reported estimated effects by economic sector, including agriculture and food sectors, for each of the EU member states. Another study by the European Parliament acknowledges that gains from tariff cuts would be limited unless regulatory and administrative barriers are also addressed. All available studies of the possible trade gains under T-TIP were completed assuming an EU membership of 28 countries, and to date none have accounted for the possible exclusion of the UK from the agreement. The potential impact of Brexit on T-TIP remains unclear, and both parties are currently evaluating the effect of Brexit on the negotiations. Technically, the referendum is only advisory for the European Parliament, and a high degree of uncertainty remains about how the separation might work, which will likely take years. Nevertheless, the exclusion of the UK from the EU could be significant in terms of the reduction of potential trade gains under the T-TIP agreement. The UK is one of the largest among the European economies and accounts for a sizeable share (about 15%) of U.S. agricultural exports to the EU each year. In 2015, U.S. exports of agricultural products to the UK totaled $1.8 billion, consisting mostly of wine and beer, fruit products, oilseed and cereal grains, and other miscellaneous edible products. EU agricultural exports to the United States totaled $0.7 billion in 2015, consisting mostly of cheese and dairy products and also beer ( Figure 2 ). These statistics exclude distilled spirits, fish and seafood, and other agricultural products. Including these products yields a very different trade picture, as the U.S. and UK trade heavily in distilled spirits (e.g., whiskey and gin) and fish products. In 2015, U.S. exports of all agricultural, fisheries, and distilled spirits to the UK totaled $1.9 billion, while UK exports of these products to the United States totaled $2.3 billion. Among the types of issues cited by proponents of the UK exiting the EU were concerns about EU bureaucracy and regulations emerging out of Brussels as well as concerns about national sovereignty, among other issues. In the food industry, UK food manufacturers had supported remaining in the EU and expressed concern that leaving the EU would affect the food sectors, since most of the workforce is from the EU and much of the UK's food is supplied by other EU countries. Opinion among UK farmers was more mixed: Some worried about the loss of agricultural support under the EU's Common Agricultural Policy (CAP), while others wanted to remove the perceived burden of EU environmental regulations and restrictions on pesticide use. Overall, the UK imports more food than it exports to other EU countries. Increased market access by reducing or eliminating tariffs and modifying TRQs on agricultural products is a primary goal for U.S. agricultural exporters in negotiating the T-TIP. Some claim that high EU tariffs effectively price U.S. agricultural products out of the EU market and contribute to the U.S. trade deficit in agriculture trade. The World Trade Organization (WTO) reports that the simple average most-favored-nation (MFN) tariff applied to agricultural product imports in the United States was 5.1% in 2014, compared to an average MFN tariff of 12.2% for the EU. Including all products imported under an applied tariff and TRQ, USDA reports that the calculated average rate across all U.S. agricultural imports is roughly 12% overall, well below the EU's average of 30%. By commodity group, EU tariffs average more than 40% for imported meat products, grains, and grain products and average at or above 20% for most fruit and vegetable products. For some products EU tariffs are even greater, averaging more than 80% for imported dairy products, more that 50% for sugar cane and sweeteners, and nearly 350% for sugar beets. USDA further notes that other EU trading partners benefit from preferential tariff access to the EU, given that the EU has concluded FTAs with more than 30 countries and plans to negotiate agreements with a dozen more countries. This preferential access provides other U.S. export competitors an advantage over U.S. agricultural exporters. TRQs on agricultural products are also a concern for U.S. exporters. TRQs allow imports of fixed quantities of a product at a lower tariff. Once the quota is filled, a higher tariff is applied on additional imports. The EU allocates TRQs to importers using import licenses issued by the member states' national authorities. Only companies established in the EU may apply for import licenses. For exports under a U.S.-specific TRQ, a certificate of origin must be supplied. The EU has TRQs on exports of many beef and poultry products, sheep and goat meat, dairy products, cereals, rice, sugar, and fruit and vegetables. Some products are heavily protected by both TRQs and non-tariff SPS measures. Previous exchanges of proposals on market access mostly excluded agricultural products. According to press reports, in October 2015, the United States and EU exchanged their initial tariff and market access offers for agricultural and industrial products. Limited information is available on these proposals and the status of the negotiations. However, negotiating documents leaked in May 2016 suggest that the negotiations are focused on eliminating certain agricultural tariff lines over an undetermined phase-out period that could exceed seven years—a category known as the "T-box." For the United States, these include 19 lines for swine and lamb/sheep, 17 lines for dairy and cheese products, 13 lines for chocolate, four lines for olives, and 25 lines for food preparations and miscellaneous products. In addition, within fishery products, another 14 lines are being negotiated for sturgeon roe, sardines, tuna, fish sticks, and caviar. The EU's T-box tariff lines are roughly split between agricultural and industrial products. The EU's agricultural tariff lines include 23 lines for poultry meat, four lines for hams and swine meat preparations, eight lines for barley/maize/wheat and wheat flour, nine lines for rice, two lines for bakery and food preparations and fertilized eggs other than chicken, and another 51 lines for miscellaneous products. Other more recent information suggests the negotiations have not addressed tariff lines reserved for certain "sensitive" agricultural products, such as beef, pork, poultry, dairy, rice, and fruits and vegetables, many of which are protected by TRQs. The European Council of Young Farmers (CEJA) calls for the protection of certain sensitive sectors even if it involves safeguard clauses, such as import quotas or the "exclusion of some sectors, regarding a number of different factors (such as production costs, price, environmental standards, animal welfare, etc.)" especially in sectors "particularly threatened by competition (e.g.: beef)." In April 2016, Senate leadership sent a letter to USTR reiterating that a final agreement with "a strong framework for agriculture," including "tariff elimination on all products—including beef, pork, poultry, rice, and fruits and vegetables" and "liberalization in all sectors of agriculture" remains a priority, if the agreement is to obtain the support of Congress. The letter also addressed the importance of "longstanding regulatory barriers," including import approval of U.S. biotechnology products and addressing concerns about "geographical indication (GI) restrictions promoted by the EU." High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports, including SPS measures and other types of non-tariff barriers. Non -t ariff m easures (NTMs) generally refer to policy measures other than tariffs that may have a negative economic effect on international trade. NTMs include both technical and nontechnical measures. Technical measures include both SPS and TBTs and pre-shipment formalities and related requirements. Nontechnical measures include quotas, price control measures, rules of origin requirements, and government procurement restrictions. Non-tariff barriers affect agricultural trade in various ways, including delays in reviews of biotech products (creating barriers to U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (creating barriers to U.S. meat and poultry exports), and burdensome and complex certification requirements (creating barriers to U.S. processed foods, animal products, and dairy products). A report by the U.S. International Trade Commission notes that in addition to high EU tariffs, extensive EU regulations and difficulty finding up-to-date information are among the primary concerns of U.S. businesses, particularly for makers of processed foods. U.S. businesses report concerns about the lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, differences across countries in food labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations. USDA has calculated the ad valorem equivalent (AVE) effects for a range of agricultural commodities based on both U.S. and EU non-tariff barriers to imports. EU non-tariff barriers to U.S. agricultural exports are estimated to range from 23% to 102% for some more heavily protected products, including meat products, fruits and vegetables, and some crops ( Table 2 ). SPS measures are laws, regulations, standards, and procedures that governments employ as "necessary to protect human, animal or plant life or health" from the risks associated with the spread of pests, diseases, or disease-carrying and causing organisms or from additives, toxins, or contaminants in food, beverages, or feedstuffs. Examples include product standards, requirements for products to be produced in disease-free areas, quarantine and inspection procedures, sampling and testing requirements, residue limits for pesticides and drugs in foods, and limits on food additives. TBTs cover both food and non-food traded products. TBTs in agriculture include SPS measures and other types of measures related to health and quality standards, testing, registration, certification requirements, and packaging and labeling regulations. Examples include process and product standards; technical regulations; product environmental regulations; voluntary procedures relating to health, sanitation, and animal welfare; inspection procedures; product specifications; and approval and marketing of biotechnology. SPS/TBT measures regarding food safety and related public health protection are addressed in various multilateral trade agreements and are regularly notified to and debated within the WTO. International trade rules recognize the rights and obligations of governments to adopt and enforce such requirements. These rules are spelled out primarily in two WTO agreements: (1) the Agreement on Sanitary and Phytosanitary Measures, and (2) the Agreement on Technical Barriers to Trade. In general, under the SPS and TBT agreements, WTO members agree to apply such measures, based on scientific evidence and information, only to the extent necessary to protect human, animal, or plant life and health and to not arbitrarily or unjustifiably discriminate between WTO members where identical standards prevail. Member countries are also encouraged to observe established and recognized international standards. Improper use of SPS and TBT measures can create substantial barriers to trade when they are disguised protectionist barriers, are not supported by scientific evidence, or are otherwise unwarranted. For more background information see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade . Among the stated goals of T-TIP regarding SPS and TBT issues are to negotiate provisions that "go beyond" both the WTO SPS and the TBT agreements—referred to as "SPS-Plus" and "TBT-Plus"—as outlined in a report submitted by U.S. and EU trade officials as part of the so-called U.S.-EU High Level Working Group on Jobs and Growth (HLWG). The text box below describes the HLWG's recommendations regarding SPS and TBT issues. In addition, among the goals of the T-TIP negotiation are efforts to address regulatory differences that have plagued U.S.-EU agricultural trade in the past. Major differences exist in how the United States and the EU apply SPS and TBT measures and how each regulates food safety and related public health protection, including various administrative and technical review differences. One major difference is the EU's application of the so-called precautionary principle , which remains central to the EU's risk management policy regarding food safety and animal and plant health and is often cited as the rationale behind the EU's practice of taking a generally more risk-averse approach to risk management. The Appendix provides a more detailed discussion of the EU's use of the precautionary principle. (In the EU, the European Food Safety Agency [EFSA] is responsible for providing scientific advice and communication on food-borne risks.) Regulatory differences between the United States and EU have likely contributed to some long-standing trade disputes regarding SPS and TBT rules between the two trading blocs. The United States has several formal trade disputes regarding SPS/TBT measures with the EU. These include concerns regarding the EU's ban on U.S. meats treated with growth-promoting hormones, the EU's restrictions on chemical treatments ("pathogen reduction treatments" or "PRTs") on U.S. poultry, and the EU's approval process of biotechnology products. Other SPS concerns involve U.S. concerns over EU BSE-related regulations and other regulations involving plant processing, pesticides, endocrine-disrupting chemicals, and animal welfare requirements. Some of these types of trade concerns have not risen to the level of a formal WTO dispute. Table 3 provides a list of selected issues based on annual reporting by USTR. The EU has also reported concerns about certain agricultural policies in the United States, including perceived SPS barriers to EU exports of sheep and goat meat, egg products, and beef, certain dairy products, live bivalve mollusks, apples and pears and also difficulties protecting IPR, such as EU geographical indications on food and drinks. Other EU concerns have involved the use of "Buy American" restrictions in the United States governing public procurement. Some have expressed concern that T-TIP negotiations on public procurement may affect local food procurement, including restricting the use of bidding contract preferences contained in U.S. and EU farm-to-school programs. These types of issues are being addressed in the T-TIP negotiation but are not further addressed in this report. Some Members of Congress and other stakeholders hope that the T-TIP negotiations will resolve long-standing trade disputes regarding SPS rules between the two trading blocs and address SPS issues and other non-tariff barriers. A letter to USTR from Senate leadership in April 2016 addressed the importance of "longstanding regulatory barriers such as hormone use in U.S. beef, maximum residue limits in fruits and vegetables, and dairy certification requirements." Given such regulatory differences and also existing non-tariff barriers between the United States and the EU, particularly regarding SPS matters, some are concerned about whether T-TIP would be able to address such concerns or whether the agreement might exclude agricultural products altogether, given the range of sensitive agricultural products such as beef, pork, poultry, dairy, rice, and fruits and vegetables. Some in the EU have also expressed such concerns, suggesting that a less ambitious negotiated agreement (e.g., focused only on market access) would also be unacceptable to EU lawmakers. In the T-TIP negotiations, non-tariff barriers including SPS and TBT issues have been broadly grouped along with other issues related to regulatory coherence. The U.S. Chamber of Commerce defines regulatory coherence as "good regulatory practices, transparency, and stakeholder engagement in a domestic regulatory process" and regulatory cooperation as "the process of interaction between U.S. and EU regulators, founded on the benefits regulators can achieve through closer partnership and greater regulatory interoperability." (Related terminology may refer interchangeably to regulatory convergence, cooperation, and/or harmonization.) They further note that regulatory coherence will not threaten regulatory sovereignty, nor will it guarantee or bind regulatory outcome in either market. Regulatory coherence and cooperation are inherent to USTR's stated goals and objectives in the negotiation regarding non-tariff barriers and regulatory issues regarding SPS and TBT issues. These goals include to: eliminate or reduce non-tariff barriers that decrease opportunities for U.S. exports, provide a competitive advantage to products of the EU, or otherwise distort trade, such as unwarranted SPS restrictions that are not based on science, unjustified TBT restrictions, and other "behind-the-border" barriers, including the restrictive administration of tariff-rate quotas and permit and licensing barriers, which impose unnecessary costs and limit competitive opportunities for U.S. exports; achieve greater compatibility of U.S. and EU regulations and related standards development processes (while maintaining health, safety and environmental protection), with the objective of reducing costs associated with unnecessary regulatory differences and facilitating trade, inter alia by promoting transparency in the development and implementation of regulations and good regulatory practices, establishing mechanisms for future progress, and pursuing regulatory cooperation initiatives where appropriate; build on key principles and disciplines of the TBT agreement through strong cross-cutting disciplines and, as appropriate, sectoral approaches to achieve meaningful market access and establish ongoing mechanisms for improved dialogue and cooperation on TBT issues; build on key principles and disciplines of the SPS agreement to achieve meaningful market access, including commitments to base SPS measures on science and international standards or scientific risk assessments; apply them only to the extent necessary to protect human, animal, or plant life or health; develop such measures in a transparent manner without undue delay; and establish an ongoing mechanism for improved dialogue and cooperation addressing bilateral SPS issues. Similarly, the EU's initial goals regarding food safety and animal and plant health in the negotiation include pragmatic and speedy procedures and decisions on regulations related to trade, a single approval process for exports from all EU countries, clear and transparent processes and timelines, a basis for working together—including on animal welfare issues—to avoid differences that hinder trade, and mechanisms for resolving trade disputes. The stated goals in the EU's March 2016 revised proposal include "achieving more compatible regulations" between the EU and United States through a "commitment to an ambitious outcome on regulatory cooperation," including a "commitment to international regulatory cooperation by regulators" in both markets. The revised proposal emphasizes the need to "enhance or at least maintain the level of protection through regulatory cooperation" while providing for greater transparency and public participation and the possibility of "more compatibility of EU and U.S. regulations in specific areas," among other objectives. The EU's March 2016 draft chapter on agriculture includes provisions regarding geographical indications (for further discussion see " Geographical Indications ") but explicitly does not directly address SPS issues, which the EU expects could be addressed in a dedicated SPS chapter in the negotiation. Previous EU tabled text on SPS issues proposed to establish food safety equivalency on SPS issues. A number of challenges exist on specific issues. EU industry groups are also urging the T-TIP negotiators to address non-tariff barriers by focusing on regulatory cooperation and coherence, international standards, and trade facilitation, among other concerns. Some interest groups support maintaining existing "standards that are appropriate for human health and wellbeing, animal welfare and environmental sustainability." Specifically, the EU's proposed chapter on regulatory cooperation explicitly covers animal welfare (among other issues), which could prove to be a contentious point for U.S. negotiators who contend that animal welfare does not constitute an SPS issue. Previous EU tabled text on SPS issues proposed to "build upon and extend the scope" of the Veterinary Equivalency Agreement that the United States and EU signed in 1998 to include additional animal welfare protections. Such protections are generally opposed by some U.S. farm groups. Other types of regulatory coherence talking points involve notice-and-comment procedures, testing requirements, and other compliance issues, such as whether to allow for third-party labs (as in the United States) or self-certification (as in the EU). Various reports have further indicated that some U.S. and EU stakeholders seek to include a range of related policy issues that may or may not become part of the T-TIP negotiations. These include the use of certain pesticides and chemicals, the use of antibiotics in animal production, and the role of technology in agriculture, among other applications. Some issues have been raised as T-TIP proposals. For example, the EU has submitted a proposal to address anti-microbial resistance (AMR) in the SPS chapter of T-TIP "aimed at strong cooperation within the framework of T-TIP on jointly reducing the use of antibiotics in animal production in order to combat the development of antibiotic resistance." The United States is still actively considering how it will address the use of antibiotics in U.S. animal production, but some in Congress are supporting restrictions similar to those in the EU. Some issues of interest to the Unites States, such as concerns regarding the EU's prohibition on the use of ractopamine and hormones in livestock production—drugs and practices widely used in the United States—may be more difficult to raise as part of the T-TIP negotiation since some issues are already established in EU law. Other issues of potential concern to U.S. interests are also emerging. For example, in September 2015, the European Parliament voted to ban the cloning of all farm animals and the sale of cloned livestock, their offspring, and products derived from them. Cloning for research purposes would be permitted. The EU's position on cloning is at odds with that of the United States. The U.S. Food and Drug Administration (FDA) has found no significant differences between healthy clones and non-cloned animals. FDA also regards the products from cloned animals to be as safe as that from non-clones. The United States and Brazil raised concerns about the EU's proposal at a WTO TBT Committee meeting in November 2015. Other broad U.S. concerns may involve the EU's June 2016 temporary renewal of the widely used herbicide glyphosate, while some member states, including Germany and France, are reportedly considering further restrictions on its use. EFSA recently concluded that "glyphosate is unlikely to be genotoxic (i.e., damaging to DNA) or to pose a carcinogenic threat to humans." EU's proposal to restrict use is opposed by some U.S. agrochemical groups. Also in June 2016 the EU released a draft proposal to establish criteria for endocrine (hormone) disrupting chemicals, which are opposed by some U.S. groups. The EU is also considering changes to laws and regulations affecting the use of nanotechnology. CropLife America estimates that the EU's rules affecting endocrine disrupting chemicals could block $4 billion in U.S. agricultural exports annually and expects that the T-TIP talks will help avoid such trade disruption. It is unclear whether these issues will be directly addressed in the negotiation. In some cases, the U.S. Administration has explicitly pursued certain trade issues by outside the T-TIP negotiations, such as perceived import restrictions on pasteurized milk products by EU dairy producers trying to obtain Grade A certification from the United States. Issues involving biotechnology broadly fall under category of issues related to SPS and related non-tariff trade measures. Agricultural biotechnology refers primarily to the use of recombinant DNA techniques to genetically modify or bioengineer plants and animals so that they have certain desired characteristics. Most crops developed through recombinant DNA technology have been engineered to be tolerant of various herbicides or to be pest resistant by having a pesticide genetically engineered into the plant organism. U.S. soybean, cotton, and corn farmers have rapidly adopted genetically engineered (GE) varieties of these crops since their commercialization starting in 1996. Over the past few decades, GE varieties in the United States have increased. In recent years, USDA reports that U.S. farmers planted roughly 170 million acres of GE crops annually. Worldwide, 28 countries planted GE crops on an estimated 444 million acres in 2015. GE varieties now dominate soybean, cotton, and corn production in the United States, and they continue to expand rapidly in other countries. A 2016 study published by the National Academies of Sciences, Engineering, and Medicine found "no substantiated evidence that foods from GE crops were less safe than foods from non-GE crops" based on a review of the scientific literature. In general, EU officials have been cautious in allowing GE crops—commonly referred to in Europe as genetically modified organisms (GMOs)—to enter the EU market, and all GE-derived food and feed must be labeled as such. The EU's regulatory framework regarding biotechnology is generally regarded as one of the most stringent systems worldwide. This regulatory framework requires all GE food and feed to undergo an authorization (approval) process, be labeled and traceable, and "co-exist" with non-GE (conventional) food and feed. This approach stipulates that "growing GM crops requires authorization based on a rigorous safety assessment (environmental and health impact); food and feed derived from GM crops must be labelled as such, to inform consumers; [and] technical and administrative measures must be taken to ensure GM crops can sustainably coexist with conventional or organic farming (e.g. limiting cross-fertilization of plants in neighboring fields)." GE crops play a limited role in the EU's agricultural production. Currently, Monsanto's Bt corn (MON 810) is the only GE plant authorized (approved) for cultivation in the EU and is grown only in Spain, Portugal, the Czech Republic (Czechia), Slovakia, and Romania ( Table 4 ). The EU's Bt corn production peaked at 367,300 acres in 2015, accounting for about 1% of the EU's total corn acreage. Most production (94%) is in Spain, with another 5% in Portugal. Other GE products are authorized for food or feed use in the EU, including certain varieties of corn, cotton, soybean, canola (rapeseed), sugar beet, and microorganisms (bacterial and yeast biomass). A listing of genetically modified food and feed approved (authorized) in the EU is available through its register. As of July 2016, the EU had authorized or is considering renewal of 57 GE varieties. Another 22 registrations are still under review. An authorization permit applies to all EU countries. Soybean meal is the main GE product imported in the EU, mostly from Brazil. Even if a GE variety is approved, an EU member state is able to ban cultivation. Several EU countries have banned the cultivation of GE crops in their territories or have specific rules on the trade of GE seeds. A series of regulations, directives, and recommendations govern the EU's handling of food and feed derived from genetic engineering. The text box summarizes key directives and regulations. Even though a GE variety has been approved, further authorization is required to allow for the cultivation or "deliberate release into the environment" of a GE variety. EFSA grants authorization by assessing the environmental and health risks according to the EU's deliberate release rules. EU regulations further establish a minimum threshold of "adventitious presence" or "technically unavoidable traces" of authorized GE material, below which these products need not be labeled (Article 21). In the EU, this minimum threshold is set at 0.9%. Although some major U.S. trading partner countries have established certain allowable tolerance levels for GE as part of their labeling laws, the United States does not specify such tolerance levels for GE in any of its laws, policies, or guidance. Moreover, USDA "has not established an official tolerance level for the specific amount of unintended GE material that can be found in organically grown and other non-GE products." Some private processors, retailers, and buyers in countries without regulatory requirements may also set a minimum tolerance level. USDA reports that many U.S. organic and non-GE food manufacturers and retailers adhere to the 0.9% tolerance level, such as under the Non-GMO Project Verified protocol. Other EU regulations address labeling and traceability of GMOs in the EU market. In January 2015, the European Parliament adopted new legislation to allow each EU member state to ban or approve GE crops in its respective country. Proposals to implement these new directives were released in March 2015. Many in the United States believe the EU's proposal lacks a scientific basis and question whether the measures might violate the SPS agreement. As of October 2015, a reported 19 member states have requested to restrict GE cultivation. Several EU countries have signed a "joint declaration" calling for the development of a GE-free agricultural model in Europe. Other proposed efforts seeking to ban or restrict the use or sale of EU-approved GE products in member territories have been rejected by the European Parliament. The new legislation allows member states to ban cultivation of a GE crop even if it has been approved for cultivation. To date, EU countries opting out of GE crop cultivation include Austria, Bulgaria, Croatia, Cyprus, Denmark, France, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, and Slovenia ( Figure 3 ). Belgium and Britain requested opt-out for only part of their countries' respective territories—Wallonia in Belgium and Northern Ireland, Wales, and Scotland in the UK. Germany has requested a partial opt-out to allow research. Several EU countries have not opted out of GE crop cultivation. These include Sweden, Finland, Estonia, Ireland, part of the United Kingdom (England), parts of Belgium, the Czech Republic (Czechia), Slovakia, Romania, Portugal, and Spain. Public opinion remains strongly opposed to GE food and the cultivation of GE crops in most EU member states, although national political leaders are generally considered to be more supportive. A 2010 survey by the EC suggests overall "suspicion" of GE foods among the European public: 70% agree that GE food is "fundamentally unnatural," and 61% agree that GE food "makes them feel uneasy." In addition, roughly 60% of Europeans disagree that the development of GE food should be encouraged. The same number disagree that GE food is safe for their health and that of their families and disagree that GE food is safe for future generations. Concerns regarding agricultural biotechnology issues in T-TIP, among other free trade negotiations, mostly involve the asynchronous approval of GE crops worldwide. According to Biotechnology Innovation Organization (BIO) and European Association for Bioindustries (EuropaBio)—two trade associations representing biotechnology companies and related organizations—these concerns include an increasing number of GE product approval requests in the EU, a growing gap between approval timelines in major markets, failure by EU regulators to act as prescribed by EU law, and a growing complexity of approvals from "stacked traits" in biotech products. Many in Congress have highlighted these concerns. In April 2016, Senate leadership sent a letter to USTR complaining that "EU members continue to miss key deadlines for import approvals of biotechnology products" and that "currently there are at least three products that have been awaiting import approval since 2011 and 2012." The Senators further claim that approvals have been delayed despite positive evaluations by EFSA. Previously, in October 2014, Senator Chuck Grassley sent a letter to the EC to press for the completion of the review process for eight pending approvals covering soy, corn, canola, and cotton that had received positive reviews from EFSA. U.S. farm groups sent similar letters to USTR and the EC. In April 2015, the EC authorized imports of 17 GM products, which EuropaBio claims had been pending on average 6.5 years from the time of submission until the final authorization. They further claim that over 40 additional GM applications for import are waiting in the system. The United States continues to reiterate its concerns regarding EU measures affecting the approval and marketing of biotech products within the WTO. U.S. producer groups have long asserted that U.S. agricultural exports to the EU have been limited by EU labeling and traceability regulations and by lack of timelines and transparency in the administrative process for admitting GE crops. In a dispute brought by the United States and other WTO members, a dispute settlement panel determined that the EU had maintained a de facto moratorium on GE products between 1999 and 2003. EU regulations released in 2013, providing the basis upon which companies submit applications for authorization and EFSA risk assessment, were intended to clarify the application for authorization procedures and improve the process. USDA, however, claims that these regulatory changes will "unlikely ... speed up the process, and the flexibility of risk assessors to adapt the approach used on a case-by-case basis will be reduced by imposing mandatory studies." Moreover, U.S. producers continue to assert that continuing EU labeling and traceability regulations and lack of timelines and transparency in the EU process for admitting GMO products have caused U.S. exports of certain crops, such as soybeans, to decline over time. Some in Congress question whether they would approve T-TIP negotiating language that does not address the EU's biotechnology approval process. BIO expects that the negotiation will help establish "a long-term solution to normalize trade in products derived from agricultural biotechnology" and provide for greater transparency and benchmarking in the EU's regulatory process and the weight of scientific evidence in EU risk assessment, streamline the EU's approval process for stacked GE events, and provide for ways to address low-level GE presence. Other recommendations regarding the EU guidance documentation include aligning risk assessment requirements and adhering to legislated timelines, adopting commercially viable low-level presence policy, and improving accountability with regard to avoiding and resolving disputes, among other regulatory coherence recommendations. Accordingly, U.S. negotiators are seeking more consistent and timely biotech approvals and want the EU to "commit to doing what their law says" to reduce the risk of trade disruption resulting from gaps between the respective approval processes in the United States and EU. Several U.S. farm and feed groups have expressed concerns about the potential effect of the EU's biotechnology policies on feed grains and on Europe's livestock industries due to feed shortages and prices. Several EU trade associations representing feed grain suppliers have also expressed similar concerns. Among the types of factors cited for the EU's hesitation in completing the approvals are opposition to GE crop approvals from a majority of EU member states and support to allow for national bans on GE crop cultivation. Some groups have also expressed concern that T-TIP negotiations could lessen EU standards and also threaten efforts to label GE products in the United States. However, press reports indicate that EU negotiators have rejected a U.S. proposal intended to speed up the approval process for GE products through certain regulatory changes, such as allowing for trace elements of unauthorized biotechnology traits in otherwise approved shipments, which was reportedly perceived to suggest that the EU has changed its regulatory process to focus more on a cost-benefit approach, among other changes. EU officials argue that the number of product approval requests is increasing, but some agricultural industry stakeholders assert that the time for processing (close to 3.5 years in the EU, in contrast to an average of 1.5 years in the United States) and the backlog in approvals continue to disrupt trade. These stakeholders suggest that legally prescribed timelines, transparency, and risk assessment (among other things) could be established to address these issues. The United States is actively seeking to speed up the approval process for GE crops, which is viewed by some European and U.S. advocacy groups as the United States using the trade negotiation to weaken the EU's risk assessment procedures and commit the EU to faster approvals of future products made with new agricultural technologies. Some groups that support the EU's more cautious approach to the use of biotechnology contend that U.S. laws do not provide for adequate regulation and testing of GE crops, and they further support the EU's labeling requirements for GE products. Some in the European Parliament further claim that the United States is using the negotiation in an attempt to "water down" EU regulations and risk assessment procedures for GE products. The United States continues to oppose the EU's directives allowing each EU member state to ban or approve GE crops within its territory. Along with other WTO members, the United States has expressed concerns about the EU's opt-out policies and claim that they violate the WTO's SPS agreement. In August 2015, the United States submitted comments to the EU, urging that it should notify its policies to the WTO's SPS Committee. Geographical indications (GIs) are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs by giving certain foods recognition for their distinctiveness, differentiating them from other foods in the marketplace. In this manner, GIs can be commercially valuable. GIs may also be eligible for relief from acts of infringement or unfair competition. The use of GIs may also protect consumers from deceptive or misleading labels. Examples of GIs include Parmesan cheese and Parma ham from the Parma region of Italy, Tuscan olive oil, Roquefort cheese, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Ceylon tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines. GIs are an example of IPR, along with other types of intellectual property such as patents, copyrights, trademarks, and trade secrets. The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers. In general, some consider GIs to be protected intellectual property, while others consider them to be generic or semi-generic terms. GIs are included among other IPR issues in the current U.S. trade agenda. In the T-TIP negotiation, GIs have been an active area of debate between the United States and EU. Laws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. Within a potential T-TIP agreement, GIs may likely be included as part of either a chapter on IPR or an agriculture chapter in the agreement. The EU's March 2016 draft chapter on agriculture includes its proposal regarding GIs. GIs are protected by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets binding minimum standards for IP protection that are enforceable by the WTO's dispute settlement procedure. Under TRIPS, WTO members must recognize and protect GIs as intellectual property. The United States is a signatory of TRIPS and is subject to its rights and obligations. Accordingly, under TRIPS, the United States and EU have committed to providing a minimum standard of protection for GIs (i.e., protecting GI products to avoid misleading the public and prevent unfair competition) and an "enhanced level of protection" to wines and spirits that carry a GI, subject to certain exceptions. TRIPS builds on treaties administered by the World Intellectual Property Organization (WIPO). WIPO is a specialized agency in the United Nations with the mission to "lead the development of a balanced and effective international intellectual property (IP) system." WIPO also oversees the "International Register of Appellations of Origin" established in the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration. The agreement's multilateral register covers food products and beverages and related products, as well as non-food products (including Cuban cigars). For other background information, see CRS Report R44556, Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . In the EU, a series of regulations governing GIs was initiated in the early 1990s covering agricultural and food products, wines, and spirits. Legislation adopted in 1992 covered agricultural products (not including wines and spirits), but it was changed in 2006 following a WTO panel ruling that found some aspects of the EU's scheme inconsistent with WTO rules. The new rules came into force in January 2013. The EU laws and regulations cover three EU-wide quality labeling schemes: (1) Protected Designation of Origin (PDO), (2) Protected Geographical Indication (PGI), and (3) Traditional Specialties Guaranteed (TSG). Product registration markers for these three quality schemes, along with the relevant regulations, are shown in text box below. The EU regulations establish provisions regarding products from a defined geographical area, given linkages between the characteristics of products and their geographical origin. The EU defines a GI as "a distinctive sign used to identify a product as originating in the territory of a particular country, region or locality where its quality, reputation or other characteristic is linked to its geographical origin." According to the EU, GIs matter "economically and culturally" and "can create value for local communities through products that are deeply rooted in tradition, culture and geography" and "support rural development and promote new job opportunities in production, processing and other related services." EU trade policy actively supports better protection of GIs internationally, including as part of its multilateral and bilateral negotiations, given concerns about GI "violations throughout the world" from misuse and imitation. Regarding protection of GIs, the EU is seeking certain "TRIPS-Plus" provisions that would establish a list of EU names to be protected "directly and indefinitely" in countries outside the EU, allow co-existence with prior trademarks (if they are "registered in good faith"), phase out other uses of EU names, ensure a right to use (as opposed to trademark license system), guarantee administrative protections, and create a cooperation mechanism and dialogue. As of May 2016, more than 4,500 product names were registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries ( Table 5 ). Nearly two-thirds are wine registrations. Overall, about one-fourth of all registrations are for non-EU ("third country") registrations, but they are also overwhelmingly wine registrations. For more information on the EU's protection of GIs, see CRS Report R44556, Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . In the United States, GIs generally fall under the common law right of possession or "first in time, first in right" as trademarks or collective or certification marks under the purview of the existing trademark regime, administered by the U.S. Patent and Trademark Office (PTO) and protected under the U.S. Trademark Act. Trademarks are distinctive signs that companies use to identify themselves and their products or services to consumers and can take the form of a name, word, phrase, logo, symbol, design, image, or a combination of these elements. Trademarks do not refer to generic terms, nor do they refer exclusively to geographical terms. Trademarks may refer to geographical names to indicate the specific qualities of goods either as certification marks or as collective marks. PTO does not have a special database register for GIs in the United States. PTO's trademark register, the U.S. Trademark Electronic Search System, contains GIs registered as trademarks, certification marks, and collective marks. Statements by USTR claim that EU farm products hold nearly 12,000 trademarks. These register entries are not designated with any special field (such as "geographical indications") and cannot be readily compiled into a complete list of registered GIs. In addition, the Alcohol and Tobacco Tax and Trade Bureau (TTB) oversees the labeling resources and guidance for wine, malt beverages, beer, and distilled spirits. For more information on the protection of GIs in the United States, see CRS Report R44556, Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . U.S. trade policy is actively engaged in addressing concerns in the United States regarding the EU's GI protections to ensure that they "do not undercut U.S. industries' market access" and to defend the use of certain "common food names." In general, the United States is seeking protection for current U.S. owners of trademarks that overlap with EU-protected GIs, the ability to use U.S. trademarked names in third countries, and the ability to use U.S. trademarked names in the EU. Many U.S. food manufacturers view the use of common or traditional names as generic terms and the EU's protection of its registered GIs as a way to monopolize the use of certain food and wine terms and as a form of trade protectionism. Specifically, several industry groups have expressed concern that the EU is using GIs to impose restrictions on the use of common names for some foods—such as parmesan, feta, and provolone cheeses and certain wines—and limit U.S. food companies from marketing these foods using these common names. The United States does not protect a geographic term that is considered "generic," being "so widely used that consumers view it as designating a category of all of the goods/services of the same type, rather than as a geographic origin." According to USTR, "The United States continues to have serious concerns with the EU's system for the protection of GIs, including with respect to its negative impact on the protection of trademark and market access for U.S. products that use generic names." Bilateral trade concerns arise when a product name recognized as a protected GI in Europe is considered a generic name in the United States. For example, in the United States, "feta" is considered the generic name for a type of cheese. However, it is protected as a GI in Europe. As such, feta cheese produced in the United States may not be exported for sale in the EU since only feta produced in countries or regions currently holding GI registrations may be sold commercially. Complicating this issue further are GI protections afforded to registered products in third country markets. This has become a concern for U.S. agricultural exporters following a series of recently concluded trade agreements between the EU and countries such as Canada, South Korea, South Africa, and other countries that are, in many cases, also major trading partners with the United States. Specifically, provisions in these agreements may provide full protection of GIs and not defer to a country's independent assessment of generic status for key product names. For example, separate recent agreements negotiated by the EU with Canada and South Africa could reportedly recognize up to 200 EU GIs for milk and dairy products. Similar types of GI protections are reportedly also in other trade agreements between the EU and other countries, affecting a range of food products and wine. In addition to facing trade restrictions for U.S. products in the EU market, these protections may limit the future sale of U.S. exported products bearing such names to these third countries, regardless of whether the United States may have been exporting such products carrying a generic name for years. With these concerns in mind, USTR's 2016 Special 301 Report on the status of global IPR protection and enforcement outlines GI-related concerns in both the U.S.-EU trade negotiations and other initiatives with Canada, China, Costa Rica, El Salvador, Japan, Jordan, Morocco, the Philippines, South Africa, and Vietnam, among others. Some Members of Congress have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. They are also concerned about the implementation of GI protections in other trade agreements that have been or are being negotiated by the EU with other countries. USDA Secretary Tom Vilsack has also expressed concerns that the EU's system of protections for GIs "doesn't fit well into our trademark system" because U.S. law seeks to protect the end agricultural product, not the process through which it is made." Previously, Secretary Vilsack indicated that the United States would not agree to EU demands to reserve certain food names for EU producers. Others note that the GI debate in the T-TIP negotiation threatens U.S. commercial interests by blocking current and future U.S. exports of agricultural products (particularly cheese exports), discriminating against U.S. branded products that have greatly expanded the visibility and demand for certain GI products, and creating inconsistency in EU lists of generic terms (for example, through the inclusion of new and expanded protected names, such as feta). Many U.S. food producers are also members of the Consortium for Common Food Names (CCFN), along with producers in other countries including Canada, Mexico, Argentina, Chile, and Costa Rica. This group aims to protect the right to use common food names and protect legitimate food-related GIs. Among the U.S. agricultural groups that are supporting these efforts are the Wine Institute, the American Farm Bureau Federation, Agri-Mark, the International Dairy Foods Association, the American Cheese Society, the American Meat Institute, and the Northwest Horticultural Council. Some U.S. agricultural industry groups, however, are trying to create a system similar to the EU GI system for U.S. agricultural producers. Specifically, the American Origin Products Association (AOPA) is seeking to protect American Origin Products (AOPs) in the marketplace from fraud and deceptive labeling, increase the value-added for all AOPs as a distinct food category, and create a national system to recognize AOPs through certification, among other goals. AOPA contends that "GIs respond to new trends in consumer demand, including the growth in a 'foodie' culture; a consumer-driven interest in wine education; the creation of new specialty meats and cheeses; the search for food with a story and a greater demand for regional products." Members include Napa Valley Vintners, California Dried Plum Board, Cuatro Puertas/New Mexico Native Chile Peppers, the Ginseng Board of Wisconsin, the Idaho Potato Commission, the International Maple Syrup Institute, the Kona Coffee Farmers Association, the Maine Lobstermen's Association, Missouri Northern Pecan Growers, and Vermont Maple Sugar Makers. This divide is particularly evident in the U.S. wine industry, which had largely considered some of its concerns regarding the use of traditional and semi-generic names, among other related bilateral trade concerns, to have been partly addressed following bilateral negotiations and the existing agreement on wine in the 2006 U.S.-EU Agreement on Trade in Wine. The 2006 agreement addressed a range of issues regarding wine production, labeling, and import requirements and was intended to establish predictable conditions for bilateral wine trade. Among the key provisions in the 2006 agreement were measures regarding the U.S. industry's use of 16 "semi-generic" names of wine that originate in the EU (including Sherry, Chablis, and Chianti) as well as the use of certain traditional labeling terms (such as Chateau and Vintage). The EU also agreed to accept all current U.S. winemaking practices and establish a process to approve new practices. Despite this agreement, ongoing trade concerns include GIs and "semi-generic" terms, market access issues regarding "traditional" terms, new winemaking practices and related technical issues, and issues related to "regulatory coherence" (especially testing and certification). For more information on the agreement, see CRS Report R43658, The U.S. Wine Industry and Selected Trade Issues with the European Union . Not only have EU officials publicly declared their intentions to maintain GI protections as part of the T-TIP negotiations, but the EU's tabled March 2016 proposals included annex lists with roughly 200 protected food and agricultural products, including meats and cheese, fruits and vegetables, and wines and spirits. EU member state Greece has also threatened to veto T-TIP unless GIs are protected, including feta cheese—a name claimed by the Greeks under the EU's GI regime. According to dairy industry representatives, cheese names on the EU's GI list represent about 14% of U.S. cheese production, valued at approximately $4.2 billion per year. More recent reports suggest that the EU might consider prioritizing this list to roughly 50 GIs. The EU's March 2016 proposal further notes the need to include specific GI provisions in T-TIP, given perceived shortcomings in the U.S. system relating to GIs. Among the types of concerns the EU cites regarding the PTO system are registration and judicial costs, ineffective protection against fraud and infringements, and misleading indications of origin. USTR continues to maintain that the U.S. trademark system provides adequate protection for European products in the United States. Given concerns voiced primarily by the U.S. dairy industry and the seeming reluctance of either party to compromise on GIs, some have speculated whether this issue would need to be addressed at a higher political level than the T-TIP negotiators. For more information, see CRS Report R44556, Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . The T-TIP negotiations present Congress with the challenge of whether the United States and the EU will be able to conclude a final agreement that is "comprehensive and high standard." Such an outcome depends on a number of factors. The United States and the EU, like all economies, have offensive and defensive interests. These include recognition that some sectors are import-sensitive, including certain agricultural products, which may constrain the level of ambition in the T-TIP negotiations. For more information on the overall status of the negotiations, see CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . Addressing agricultural market access and other non-tariff barriers is an important goal for many on both sides of the negotiation. A study by a European organization identified agri-business and multinational food companies as the leading constituency lobbying European leadership on aspects of the T-TIP negotiation in terms of the number of contacts with government officials. Given a number of sensitive agricultural products—such as beef, pork, poultry, dairy, rice, and fruits and vegetables—along with regulatory differences between the United States and the EU, particularly regarding SPS matters, some have questioned whether the agreement might exclude agricultural products altogether. Officials on both sides have suggested that an agreement that does not include agriculture would not be acceptable. Senate leadership has expressed its expectation that any final T-TIP agreement should have "a strong framework for agriculture." U.S. food and agriculture organizations have also indicated their expectation that a T-TIP deal address agriculture, including EU non-tariff trade barriers. In addition, USTR is urging completion of the negotiation given that the EU has negotiated agreements with a number of U.S. trading partners—including Canada, Vietnam, and Singapore—and is actively negotiating bilateral agreements with other countries, including Japan, Mexico, Brazil, Argentina, India, and others. The impact of Brexit on the T-TIP negotiation remains unclear. The UK is a close ally of the United States and has been one of the strongest advocates of T-TIP among the EU bloc. Also, in general, the regulatory framework of the UK's food industries and actions taken by its Food Standards Agency is often more aligned with those in the United States. Were the UK to break with the EU, it could lose its preferential market access under a T-TIP agreement. Previously, USTR had indicated that the United States is "not particularly in the market for free trade agreements with individual countries" when addressing the possibility that the UK might separate from the EU. However, since the Brexit vote, some in Congress have indicated the possibility of the United States negotiating a separate bilateral FTA with the UK. As the UK begins the process of exiting the EU, it will likely remain subject to the same tariffs and trade-related measures as countries outside of the network of U.S. FTAs. The near-term prospects for U.S. agricultural producers, however, are likely to be impacted given the sharp drop in the value of the British pound relative to the U.S. dollar following the Brexit vote, effectively making U.S. exports more expensive in the UK. Stakeholders have expressed concern that the T-TIP negotiations have not advanced as quickly as hoped and that political momentum and public support for the negotiation has waned. Some hope that the successful conclusion of the Trans-Pacific Partnership (TPP) negotiations might inject new momentum into the T-TIP negotiations. At the same time, many in the U.S. agricultural sectors are looking to the TPP for indications on how certain proposals in T-TIP could be negotiated, particularly on issues such a regulatory coherence and GI names. Stakeholders in the United States are also looking to other ongoing separate negotiations between the EU and countries such as Canada, Japan, and Mexico. They are tracking how those negotiations might address certain SPS and GI issues and are concerned about the potential implications for global agricultural trade under these preferential agreements between the EU and its trading partners, as well as establishing precedent on certain issues. The precautionary principle remains central to the EU's risk management policy regarding food safety and animal and plant health, among other concerns. It was reportedly referenced as part of the 1992 treaty establishing the EU, and its use was further outlined in a 2000 communication and then formally established in EU food legislation in 2002 (Regulation EC No 178/2002). The EU's regulatory definition (Article 7) states: In specific circumstances where, following an assessment of available information, the possibility of harmful effects on health is identified but scientific uncertainty persists, provisional risk management measures necessary to ensure the high level of health protection chosen in the Community may be adopted, pending further scientific information for a more comprehensive risk assessment. The EU's 2000 communication further outlines guidelines for applying the precautionary principle, including implementation, the basis for invoking the principle, and the general standards of application. In international trade, under EU law, application of the precautionary principle provides for "rapid response" to address "possible danger to human, animal, or plant health, or to protect the environment" and can be used to "stop distribution or order withdrawal from the market of products likely to be hazardous." Although its application may not be used as a pretext for protectionist measures, many countries have challenged as "protectionist" some EU actions that have invoked the precautionary principle. No universally agreed-upon definition of the precautionary principle exists, and many differently worded or conflicting definitions can be found in international law. However, within the context of the WTO and the SPS agreement, the precautionary principle (or precautionary approach) allows a country to set higher standards and methods of inspecting products. It also allows countries to take "protective action"—including restricting trade of products or processes—if they believe that scientific evidence is inconclusive regarding their potential impacts on human health and the environment (provided the action is consistent and not arbitrary). The text box provides more information on the precautionary principle in the context of the WTO and SPS agreement. For more information, see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade . Application of the precautionary principle by some countries remains an ongoing source of contention in international trade, particularly for the United States, and is often cited as a reason why some countries may restrict imports of some food products and processes. A 2013 paper authored by researchers at several U.S. land grant universities and USDA cites the following criticisms of the precautionary principle: (1) the ambiguity and lack of definition of the precautionary principle; (2) the arbitrariness in how it is used and applied; and (3) bias against new technologies, such as biotechnology and nanotechnology. The authors conclude that the precautionary principle has become "unworkable and counterproductive." Many U.S. agricultural and food organizations contend that the precautionary principle undermines sound science and innovation and results in "unjustifiable restrictions" on U.S. exports. The stated policy of the U.S. Chamber of Commerce is also to support a "science-based approach to risk management, where risk is assessed based on scientifically sound and technically rigorous standards" and "oppose the domestic and international adoption of the precautionary principle as a basis for regulatory decision making." Its strategy aims to "educate consumers, businesses, and federal policymakers about the implications of the precautionary principle." Several U.S. agricultural and manufacturing groups continue to oppose the EU's application of the precautionary principle and argue that it allows EU regulations to disregard scientific evidence demonstrating that certain food products and processes are safe, based on evidence from available scientific risk assessments, allowing the EU and other importing countries to engage in disguised protectionism. Some in the U.S. agriculture and food industry are urging that the T-TIP agriculture negotiations address the use and application of the principle, which is central to the EU's risk management policy. Some contend that the EU's use of the precautionary principle contributes to its practice of taking a generally "more risk-averse approach to risk management" and "allows EU regulators to put in place restrictions on products or processes when they believe that scientific evidence on their potential impact on human health or the environment is inconclusive." Many in the United States claim that "science-based decision making and not the precautionary principle must be the defining principle in setting up mechanisms and systems" to address SPS concerns. Other T-TIP objectives for some U.S. agricultural and food groups include calls for changes to the EU's approach for approving and labeling biotechnology products. However, some wish to further strengthen the EU's application of the precautionary principle and believe the SPS agreement too severely limits its use. Many in the EU continue to defend the application of the precautionary principle to a range of agricultural issues, and U.S. agriculture and food groups have expressed concern that "a resolution regarding the T-TIP passed by the European Parliament on April 24 [2013] strongly expresses the intent of the EU to maintain the precautionary principle, which would undermine sound science and ultimately the agreement itself." Some groups have expressed concern that the T-TIP negotiations might cause the EU to relax its food safety laws and standards, which some believe to be superior to laws and standards in the United States. The EU's proposals on regulatory cooperation, released in March 2016, restate the ability of each party to "apply its fundamental principles governing regulatory measures in its jurisdiction, for example in the areas of risk assessment and risk management," which some broadly interpreted as covering the EU's continued application of the precautionary principle. Recent developments further illustrate this divide. Negotiating documents made public in May 2016 were said to suggest, based on the analysis by environmental advocates who released them, that the EU had made compromises in certain areas, including the "precautionary principle." Related criticisms suggest that a U.S. proposal regarding the EU's biotechnology approval process would likely commit the EU to faster approvals of GE products and would change EU policies regarding traces of GE product found in otherwise approved GE or conventional shipments. Policymakers in both the United States and EU have discredited this interpretation of events. Press reports indicate that USTR has called these interpretations as "misleading" and "wrong." The EU's trade commissioner, Cecilia Malmström, responded that the EU's proposal for regulatory coherence that was tabled during the February 2016 round and made public "includes references to the precautionary principle, and points out our well-established public consultation procedures that are open to all stakeholders." Specifically, the introduction to the EU's proposal stated: "We stress our commitment to enhance or maintain the levels of protection in public policy areas, to respect the right to regulate and the application of our fundamental principles such as the precautionary principle for the EU side." The statement further says: "No EU trade agreement will ever lower our level of protection of consumers, or food safety, or of the environment. Trade agreements will not change our laws on GMOs, or how to produce safe beef, or how to protect the environment." Also in response to press reports, the European Parliament's trade committee chairman, Bernd Lange, said: "The S&D [Socialists and Democrats] Group demands that the EU be equally tough in upholding our own values, including safeguarding the EU's precautionary principle which guarantees high levels of protection for our citizens. We will not accept a T-TIP that includes any lowering of standards." The EU's chief negotiator, Ignacio Garcia Bercero, also dismissed media reports about negotiated changes to the EU's precautionary principle and added, "We have made crystal clear that we would not agree on anything that implies changes of our regulatory regime on GMOs." More recently, another EU official, John Clarke, reiterated that EU "laws are not on the table" and that efforts to harmonize regulations between the United States and EU would not weaken EU food safety standards. Previously, in 2015, Garcia Bercero stated that the "EU is not going to change its food safety legislation" because of T-TIP. This position dates back even earlier.

The Transatlantic Trade and Investment Partnership (T-TIP) is a potential reciprocal free trade agreement being negotiated between the United States and the European Union (EU). Formal negotiations began in July 2013. Through the negotiations, both sides are seeking to liberalize transatlantic trade and investment, set globally relevant rules and disciplines that could boost economic growth, support multilateral trade liberalization through the World Trade Organization (WTO), and address third-country trade policy challenges. Agricultural issues have been an active topic of debate in the negotiations, given the potential market access gains for both sides and the potential to address a series of regulatory and intellectual property rights issues. The United States is among the world's largest net exporters of agricultural products. The EU is an important export market for U.S. agricultural exports and ranks as the fifth largest market for U.S. food and farm exports. However, in recent years, growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets, and imports from Europe currently exceed U.S. exports to the EU. In 2015, U.S. exports of agricultural products to the EU totaled $12 billion, while EU exports of agricultural products to the United States totaled $20 billion, resulting in a trade deficit of nearly $8 billion for the United States and reversing the net trade surplus in U.S. agricultural exports to the EU during the 1990s. (These statistics include data for all current 28 EU member states, including the United Kingdom, which voted in June 2016 to leave the EU, a process that could take many years.) Addressing market access for U.S. agricultural exports to the EU is among the major goals of the T-TIP negotiation. The U.S. Department of Agriculture (USDA) reports that the EU's average agricultural tariff is 30%, well above the average U.S. agricultural tariff of 12%. Restrictive tariff rate quotas (TRQs) on agricultural products are also a concern for U.S. exporters. A USDA study reports that removing tariffs and TRQs could increase U.S. agricultural exports to the EU by an estimated $5.5 billion (compared to a 2011 base year). EU exports to the United States are estimated to rise by $0.8 billion. These totals cover all current 28 EU member states. High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports. Addressing non-tariff barriers is another major goal of the U.S. agricultural sectors in the negotiation, covering certain sanitary and phytosanitary (SPS) concerns. These include delays in reviews of biotech products (limiting U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (limiting U.S. meat and poultry exports), and burdensome and complex certification requirements (limiting U.S. exports of processed foods, animal products, and dairy products). As such, T-TIP negotiations on agricultural products are conditioned by a number of these long-standing, high-profile transatlantic trade disputes between the United States and EU. Other EU regulations of concern to U.S. exporters include lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, lack of cohesive labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations. USDA reports that removing select non-tariff barriers affecting meats, field crops, and fruits and vegetables could raise U.S. exports to the EU by an additional $4.1 billion over gains estimated from removing tariffs and TRQs (compared to a 2011 base year) across all current 28 EU member states. Other U.S. concerns involve the EU's use of geographical indications (GIs)—certain protected product names that many U.S. food producers consider to be generic names. Further complicating negotiations regarding GIs are underlying regulatory and administrative differences between the United States and the EU in how each addresses GIs within their respective borders.

T he Animal Welfare Act (AWA; 7 U.S.C. 2131 et seq. ) is intended to ensure the humane treatment of animals that are intended for research, bred for commercial sale, exhibited to the public, or commercially transported. Under the AWA, businesses and others with animals covered by the law must be licensed or registered, and they must adhere to minimum standards of care. Farm animals are among those not covered by the act, which nonetheless provides a broad set of statutory protections for animals. The law was first passed in 1966 following several years of lobbying by animal welfare organizations and growing public outcry over allegations that large numbers of pets were being "dognapped" for sale to medical research laboratories. Congress amended the original law in 1970, 1976, 1985, 1990, and 2002. These amendments generally were intended to expand the scope of the AWA or to clarify various provisions. The U.S. Department of Agriculture's (USDA's) Animal and Plant Health Inspection Service (APHIS) administers the AWA. The House and Senate Agriculture Committees have exercised primary legislative jurisdiction over the act and its amendments. The AWA applies to any live or dead dog, cat, nonhuman primate, guinea pig, hamster, rabbit, or other warm-blooded animal determined by the Secretary of Agriculture to be for research or exhibition, or used as a pet. The AWA also excluded birds, rats, and mice bred for research; horses not used for research; and other farm animals used in the production of food and fiber. Retail pet facilities were not covered, unless they sold wild or exotic animals. Cold-blooded animals like fish and reptiles also were excluded from coverage. In 2002, an amendment to the AWA changed the definition of "animal" to include birds, rats, and mice. However, APHIS has yet to promulgate a rule to implement this change in the definition. As of late 2015, APHIS stated that it is moving forward with a final rule, but has not stated a timeline for its publication. Generally, animal dealers and exhibitors must obtain a license, for which an annual fee is charged. APHIS does not issue a license until it inspects the facility and finds it to be in full compliance with its regulations. If a facility loses its license, it cannot continue its regulated activity. Those who conduct research, and general carriers that transport regulated animals, do not need a license but must still register with APHIS and undergo periodic inspections. Specific details follow. Dealers , including pet and laboratory animal breeders and brokers, auction operators, and anyone who sells exotic or wild animals, or dead animals or their parts, must have an APHIS license for that activity. So-called Class A licensees are breeders who deal only in animals they breed and raise; all others are called Class B licensees. Exempt from the law and regulations are retail pet stores, those who sell pets directly to pet owners, hobby breeders, animal shelters, and boarding kennels. Exhibitors must be licensed by APHIS as such. These so-called Class C licensees include zoos, marine mammal shows, circuses, carnivals, and promotional and educational exhibits. The law and regulations exempt agricultural shows and fairs, horse shows, rodeos, pet shows, game preserves, hunting events, and private collectors who do not exhibit, among others. Animal transporters must be registered, including general carriers (e.g., airlines, railroads, and truckers). Businesses that contract to transport animals for compensation are considered dealers and must have licenses. Research facilities must be registered. They include state and local government-run research institutions, drug firms, universities, diagnostic laboratories, and facilities that study marine mammals. Federal facilities, elementary and secondary schools, and agricultural research institutions are among those exempt from registration. Animal fighting is prohibited by the AWA. The ban includes dogfights and bear and raccoon baiting; sponsors and exhibitors are subject to penalties. The AWA also has banned bird fights, except in the states where they are not prohibited by state law (namely Louisiana and New Mexico), and the sponsor or exhibitor was unaware that the transaction had occurred in interstate commerce. Under provisions of the 2014 farm bill, spectators at animal fighting venues are now in violation of the AWA. Retail pet stores were originally exempt from AWA licensure. Over the years, selling animals sight-un seen (often over the Internet) raised concerns about humane treatment of these unregulated retail sales. In September 2013, APHIS announced a regulatory change to redefine a retail pet store to mean a place where a buyer could personally observe the animal prior to purchase. Other retail outlets now require licensure and inspection under AWA. Retail pet stores that sell animals in face-to-face transactions remain exempt from AWA licensure. The regulation further exempts anyone selling animals (except wild or exotic animals) that derives no more than $500 gross income from the sale of such animals. The rule would also increase from three to four the number of breeding female dogs or cats, and/or small exotic or wild mammals, that a person may maintain on premises and remain exempt from AWA licensing and inspection. All licensed and registered entities must comply with USDA-APHIS regulations, including recordkeeping and published standards of care. These standards deal with humane handling, shelter, space requirements, feeding, watering, sanitation, ventilation, veterinary care, and transport. (AWA regulations are found at 9 C.F.R. §1.1 et seq. ) APHIS's Animal Care (AC) program oversees implementation of the AWA. For 2015, AC had an annual budget of approximately $28 million. AC officials make unannounced inspections of registered and licensed facilities to ensure compliance with all rules. Under the AWA, research facilities are to be inspected at least annually. Federal research institutions are exempt from AWA licensing and inspection. Inspection frequency for other AWA-regulated facilities is based on risk; for example, moderate-risk facilities are to be visited about once yearly. APHIS inspectors also conduct searches to identify unlicensed or unregistered facilities. Failure to correct deficiencies can result in confiscation of animals, fines, cease-and-desist orders, or license suspensions. In 2010, USDA's Office of the Inspector General (OIG) released an audit of AC's investigations of large-scale dog dealers (i.e., breeders and brokers) that failed to provide humane treatment for the animals under their care. In a previous audit of laboratory animals, the OIG found that AC did not aggressively pursue enforcement actions against violators of AWA. The May 2010 audit determined that (1) AC's enforcement process was ineffective against dealers with repeated violations; (2) APHIS misused its guidelines to lower penalties for AWA violators; and (3) some large breeders circumvented AWA by selling animals over the Internet. APHIS concurred with the OIG's findings and implemented 13 of the 14 recommendations, including a change in the definition of retail pet store to no longer exempt retail pet stores that were not selling animals in face-to-face transactions. Although long known as the Animal Welfare Act, the original law was passed simply as P.L. 89-544, and referred to as the "Laboratory Animal Welfare Act" of August 24, 1966. The law requires dealers in dogs and cats for research purposes to obtain a USDA license and to abide by USDA-set humane treatment requirements. It also requires a research facility to register with USDA only if it uses dogs or cats and either (1) purchases them in interstate commerce or (2) receives federal research money. The law authorizes the Secretary of Agriculture to set humane handling standards for guinea pigs, nonhuman primates, rabbits, and hamsters as well as dogs and cats—but only dealers and research facilities with dogs and cats are subject to these standards. Farmers and pet owners are among those exempted from the law. Other provisions spell out recordkeeping requirements, enforcement authorities and penalties for noncompliance. P.L. 91-579 renamed the "Laboratory Animal Welfare Act" the Animal Welfare Act and expanded animal coverage to include all warm-blooded animals determined by the Secretary to be used for experimentation or exhibition, except horses not used in research and farm animals used in food and fiber research. The 1970 law also incorporated exhibitors; defined research facilities; and exempted from coverage retail pet stores, agricultural fairs, rodeos, dog and cat shows. The 1976 amendments ( P.L. 94-279 ) added Section 26 to the AWA. Section 26 is directed at animal fighting and made illegal (1) sponsoring or exhibiting an animal in an animal fighting venture; (2) interstate shipment of animals to be used in animal fighting ventures; and (3) use of U.S. mails or communication systems to advertise or promote animal fighting ventures. Section 26 contained its own definitions, authority for investigations, and penalty provisions. The 1976 amendments also clarified and expanded previous regulations covering animal transport and commerce. Hunting animals are generally exempt. The amendments passed over the objections of USDA and the U.S. Attorney General, who believed that animal fighting was a state and local law enforcement issue. These amendments were passed as Title XVII, Subtitle F, of the Food Security Act of 1985 ( P.L. 99-198 , the omnibus 1985 farm bill). The law directs the Secretary to set new minimum standards of care for handling, housing, feeding, water, sanitation, ventilation, and so forth. One new provision that was highly contentious at the time singles out two species by requiring standards for the exercise of dogs and the psychological well-being of primates. The law provides that research facilities must have procedures that minimize pain and stress to the animals, and describes practices considered to be painful. Each research facility must establish an Institutional Animal Care and Use Committee to review research proposals that involve animal experimentation and to provide oversight of laboratories. The amendments also increase civil and criminal penalties for AWA violations, and establish an animal welfare information center at USDA's National Agricultural Library. Section 2503 of the Food Agriculture, Conservation, and Trade Act of 1990 ( P.L. 101-624 , the 1990 farm bill) extended pet protections. It required public and private animal shelters and research facilities that acquire dogs and cats to hold them for at least five days to allow time for either adoption or recovery by the original owner before they could be sold to a dealer. Dealers are prohibited from selling dogs and cats they did not breed unless they provide certified records on, among other things, the animals' origin. Other new recordkeeping requirements also were specified. Title X, Subtitle D, of the Farm Security and Rural Investment Act of 2002 ( P.L. 107-171 , the omnibus 2002 farm bill) makes it a misdemeanor to ship a bird in interstate commerce for fighting purposes, or to sponsor or exhibit any bird in a fight with knowledge that any of the birds were so shipped (even fights within a state where the practice is permitted). The law also increases the maximum financial penalty for a violation (a misdemeanor) of the anti-fighting provisions of the AWA, to $15,000 from $5,000. The 2002 law also explicitly excludes from AWA coverage birds, rats, and mice bred for research purposes. The Secretary of Agriculture had previously published regulations excluding these animals from coverage, which the Animal Legal Defense Fund challenged in federal court. When USDA agreed to settle the case by essentially reversing its regulations, Congress (in P.L. 106-387 , the FY2001 agriculture appropriation bill) blocked the action by prohibiting funds for such a rule change. The 2002 law made the exclusion a permanent part of the AWA. The 2002 farm bill also amended the AWA's definition of "animal" to include rats, mice, and birds as animals covered under the AWA. Birds, rats, and mice bred for use in research were excluded from the amended definition. APHIS has, as of late 2015, not published its final rule implementing the definition change. P.L. 110-22 , signed into law May 3, 2007, made a violation of the animal fighting provisions of the AWA a felony punishable by up to three years in prison, under Title 18 of the U.S. Code (Crimes and Criminal Procedure). The law, based on companion bills ( H.R. 137 / S. 261 ), also made it a felony to trade, in interstate and foreign commerce, knives, gaffs, or other sharp objects designed for use in animal fighting, or to use the Postal Service or other "interstate instrumentality to trade in such devices, or to promote an animal fighting venture." Proponents of various animal fighting bills had observed that in 2001, the House and Senate approved strong animal fighting sanctions in their respective farm bills, but that conferees on the final 2002 farm bill ( P.L. 107-171 ) removed the felony language. Proponents argued that stronger deterrents were needed because animal fighting is a brutal, inhumane practice closely associated with criminal activity, endangers children where aggressive dogs are being reared, and may contribute to the spread of avian influenza in the case of live birds. Opponents countered that such measures would violate provisions in the U.S. Constitution that protect states' rights, including the Commerce Clause, and that recognize private citizens' right to travel for economic reasons. Other opponents argued that completely banning and/or stiffening penalties for all animal fighting activities would drive them further underground, undermining efforts to protect animals and the public from any disease problems created by such activities. The 2008 farm bill ( P.L. 110-246 ) contained a number of amendments to the AWA. One section (§14207) strengthened further the definitions of, and penalties for, activities related to animal fighting. For example, the amendments increased maximum imprisonment to five years from three years. The animal fighting provision was based on language in S. 1880 and H.R. 3219 (110 th Congress)—bills introduced shortly after the July 17, 2007, indictment of National Football League quarterback Michael Vick on charges related to dog fighting—to more explicitly ban various dog fighting activities, and to define the term. The 2008 farm bill also required regulations prohibiting importation for resale of dogs unless they were at least six months of age, in good health, and had all necessary vaccinations. There were exemptions for research, veterinary treatment, or imports into Hawaii from certain countries. Another section (§14214) increased the maximum penalty for a general violation of the act from the current $2,500 to $10,000 for each violation. The regulations require that live dogs imported into the United States for resale, research, or veterinary treatment be accompanied by an import permit issued by APHIS. APHIS published its proposed rule in September 2011, and the final rule was published August 2013. While animal fighting or hosting an animal fighting exhibit were prohibited under P.L. 110-22 , attendance at animal fighting exhibitions was not. The Animal Fighting Spectator Prohibition Act ( H.R. 366 , S. 666 ) was reintroduced in the 113 th Congress. The bill would have imposed criminal penalties for attendance at animal fighting exhibitions, or for causing a minor to attend an animal fight. This prohibition on attendance was added to both the 2013 House ( H.R. 1947 ) and Senate ( S. 954 ) farm bills and included in the final bill (Section 112308, P.L. 113-79 ). The 2014 farm bill also establishes a new "de minimis" standard for the AWA. The "de minimis" provision apples to the entire AWA and gives APHIS new discretionary authority to exclude licensing and registration requirements for animal dealers and exhibitors dealers "if the size of the business is determined by the Secretary to be 'de minimis.'" The "de minimis" provision will likely allow a large number of current dealers and exhibitors to avoid APHIS registration and licensing who otherwise would, without the "de minimis" standard, be required to have an AWA license. As of late 2015, the "de minimis" is still in the APHIS clearance process. The Horse Protection Act (HPA), enacted in 1970 (P.L. 91-540), prohibits the showing, sale, auction, exhibition, or transport of sored horses. Soring is a practice primarily used in the training of Tennessee Walking Horses, racking horses, and related breeds to accentuate the horse's gait. Horse soring is accomplished by several techniques, including the application of chemicals to irritate or blister a horse's forelegs, or the use of various mechanical devices. APHIS is responsible for administrating the HPA and for conducting inspections at horse shows, exhibitions, and auctions. In 1976, the Horse Protection Act Amendments were enacted ( P.L. 94-360 ) in response to APHIS's weak enforcement of the HPA. The act established what became the Designated Qualified Person (DQP) Program, an organizational structure that organizes inspections at horse events. The DQP program was implemented in 1979 (9 C.F.R. 11.7). A DQP is a person who, under the provisions of Section 4 of the HPA, is appointed and delegated authority by the management of a horse show or sale to detect horses that are sored. DQPs are USDA-accredited veterinarians with equine experience, or they are farriers, horse trainers, or other who have been formally trained and licensed by USDA-certified Horse Industry Organization (HIO). In 2010, USDA's Office of the Inspector General issued a report on enforcement of the HPA. The report revealed serious shortcomings in the inspection process, with lax enforcement, repeat offenders receiving little or no sanctions, and poor documentation of inspections and sanctions. In particular, the report found that the industry's self-regulation system had not been adequate to ensure that these horses were not being abused. In the wake of this report, the Animal and Plant Health Inspection Service agreed with the analysis and the need to put into place better efforts to enforce the regulations of the HPA. The Prevent All Soring Tactics (PAST) Act ( H.R. 3268 / S. 1121 ) would amend the HPA to ban "action devices" on horses, modify the existing DQP inspection system, and impose new penalties on HPA violations. The "action devices," like other soring techniques, produce a more pronounced gait in a Tennessee walking horse, a racking horse, or a spotted saddle horse. The amendments apply only these breeds and apply to the sale, showing, or transportation of such horses. The PAST Act would also end the horse industry's ability to self-police with industry-selected inspectors by creating a new licensing process requiring APHIS to appoint inspectors for HPA-regulated activities and venues. Hiring inspectors would be the responsibility of the show, sale, or auction. The definition of "event management" would be expanded to include "sponsoring organizations" and "event managers." This expansion would make them potentially liable for HPA violations. The bill would also increase the maximum fine for HPA violations from $3,000 to $5,000 as well as raise maximum prison sentence to three years. Trainers with three violations could get a lifetime ban from participating in shows, exhibitions, or auctions. These changes would be applicable to all horse breeds subject to HPA regulation. Animal welfare organizations have been active supporters of the bills (e.g., American Horse Protection Association, Humane Society of the United States, American Horse Council, and Association for the Prevention of Cruelty to Animals, Animal Welfare Institute, American Association of Equine Practitioners). Horse breeder associations have generally opposed the bill or major portions of the proposed amendments (e.g., Tennessee Walking Horse Breeders and Exhibitors Association, Tennessee Walking Show Horse Organization, Racking Horse Association of America, National Spotted Horse Breeders and Exhibitors Association). Another bill introduced in the 114 th Congress addresses some of the major concerns of those opposed to the PAST Act. The Horse Protection Amendments Act of 2015 ( H.R. 4105 / S. 1161 ) would establish how inspectors are to be appointed and the manner of conducting inspections. The bill would direct USDA to establish the Horse Industry Organization governed by a nine-member board. This board would have two members appointed by the Commissioner of Agriculture for Tennessee and two members appointed by the Commissioner of Agriculture for Kentucky. These members would serve a term of four years. Two additional members of this board would represent the Tennessee Walking Horse Industry and be appointed by the two Commissioners of Agriculture. These representatives would serve a term of three years. The remaining three members of the board would be appointed by the other six members. This proposed board would establish requirements to appoint individuals to conduct inspections of horses. USDA would certify the Horse Industry Organization for purposes of licensing inspectors. These individuals would be "qualified to detect and diagnose a horse which is sore." To address potential conflicts of interest by inspectors, the board would prohibit any potential inspector from having employment with, or providing services to any show manager, trainer, owner, or exhibitor of Tennessee Walking Horses, Spotted Saddle Horses, or Racking Horses. Nor could a potential inspector train, exhibit, show, breed, or sell Tennessee Walkers, Racking Horses, or Spotted Saddle Horses. In January 2015, the New York Times (NYT) published an exposé of research activities at the U.S. Meat Animal Research Center located near Clay Center, Nebraska. The center is a USDA facility overseen by USDA's Agricultural Research Service (ARS). The news article described "unsanitary housing and brutal treatment of pigs; violent forced mating between bulls and cows; and hormonal experiments conducted on sheep," among other animal welfare issues. The research practices reported in the NYT article raised significant public concern about animal welfare standards at the center. It prompted the Secretary of Agriculture to order USDA staff to deliver an updated Animal Welfare Strategy plan for the center and other ARS laboratories within 60 days. The Secretary also announced the appointment of an animal welfare ombudsman to coordinate USDA's review of animal welfare at the center and other ARS laboratories. The AWA currently excludes farm animals from AWA coverage, and also excludes federal research institutions from AWA registration and inspection. H.R. 746 / S. 388 (the Animal Welfare in Agricultural Research Endeavors Act) would amend the AWA to require that farm animals and federal laboratories using farm animals be subject to AWA regulations. The bill was referred to the House Agriculture Committee, but no further action was taken as of late 2015. Critics have long asserted that the limited number of Class B dealers who still collect dogs and cats from random sources, including "free to a good home" classified ads, auctions, and flea markets, are more concerned about profit than animal welfare. Others have contended that passage would leave no viable sources of random source dogs and cats, which are needed by medical and veterinary researchers because of their genetic and age diversity, and that the majority of Class B dealers are in compliance with the AWA. A National Research Council (NRC) report on the issue published in May 2009 concluded that random source dogs and cats may be desirable and necessary for certain types of biomedical research but that "it is not necessary to acquire them through Class B dealers, as there are adequate numbers of such animals from shelters and other sources." The NRC noted that of the more than 1,000 Class B dealers in the United States, at last count only 11 of them acquired and sold live dogs and cats for research and teaching. The report's conclusions and recommendations applied only to these 11 dealers that may supply such animals for research funded by the National Institutes of Health. The report discussed in more detail the advantages and disadvantages of random source dogs and cats, which constitute less than 1% of all laboratory animals; evaluates the Class B dealer system, under which (it found) animal standards of care appear to vary greatly; and offers alternative options for obtaining random source animals. These alternatives include partnering with pet owners, veterinarians, breeders, and others; obtaining animals from Class A dealers and through donations from small breeders and hobby clubs; and acquiring animals directly from pounds and shelters, among others. The Pet Safety and Protection Act was reintroduced in the 114 th Congress as H.R. 2849 and would amend the AWA to limit the sources of random source dogs and cats to a licensed dealer (under Section 3 of the AWA) who has bred and raised the animal; a publicly owned or operated pound or shelter that meets certain qualifications; someone donating the dog or cat that bred and raised the animal or owned it for not less than one year; and research facilities licensed by the Secretary of Agriculture. The bill also would subject violators to a fine of $1,000 per violation, over and above any other applicable penalties. The bill was referred to committee, and no further action was taken as of late 2015. The Enforcement Transparency Act would require the Secretary of Agriculture to publish guidelines on USDA's website relating to the calculation of civil fines for violations under the AWA. The guidelines would require quarterly updates and the updates published in the Federal Register. Disasters can leave animals as vulnerable as humans. Past natural disasters such as Hurricanes Katrina and Sandy highlighted the need for planning to minimize the effects of such disasters. The Animal Emergency Planning Act would amend the AWA to require research facilities, animal dealers, handlers, exhibitors, and carriers to develop and document a contingency plan to provide for the humane handling, treatment, housing, and care of animals in the event of an emergency or disaster. Humane care and handling of marine mammals are also covered under AWA regulation. Following widespread dissemination in 2015 of a film about captive orcas at Sea World ("Black Fish"), media and public attention to captive marine mammals (e.g., porpoises, whales, orcas) increased significantly. The Orca Responsibility and Care Advancement Act would amend both the AWA and the Marine Mammal Protection Act of 1972 to prohibit the capture, importation, and exportation of orcas for purposes of public display. The bill would also amend the AWA to prohibit the breeding of orcas for exhibition purposes. Animal welfare activists have argued that hauling horses in double-decker trailers is dangerous and inhumane. Because double-deckers were designed for hauling cattle and hogs, the trailers do not provide sufficient headroom for horses to stand up straight. S. 946 and H.R. 1282 would amend the Transportation title (49 U.S.C. 80502) to prohibit interstate transportation of horses in motor vehicles containing two or more levels stacked on top of one another. The National Wildlife Refuge System, managed by the Fish and Wildlife Service, permits wildlife trapping in over half the system's refuges. Body-gripping traps such as snares and steel-jaw leg-hold traps can kill and maim non-target animals. Even when trapping target animals, the traps are considered to be cruel and inhumane by animal welfare groups. The Refuge from Cruel Trapping Act would amend the National Wildlife Refuge System Act of 1966 (16 U.S.C. 668dd et seq.) by banning the possession or use of body-gripping traps in wildlife refuges, and impose civil fines and forfeiture for violations. In March 2015, APHIS filed public notices in the Federal Register regarding the agency's consideration of two petitions they had received that could require changes to existing AWA regulations. The first petition, received in 2013, was from the Physicians Committee for Responsible Medicine. The petition requests that APHIS initiate rulemaking to add a definition of the term "alternatives" in order to define what a primary investigator at a facility using animals as research models is required to consider in lieu of a procedure that may cause more than momentary or slight pain or distress to an animal. The petition further requests that APHIS amend the existing definition of "painful procedure" to codify long-standing APHIS policy that a procedure should be considered painful if it may cause more than momentary or slight pain or distress to the animal. APHIS is currently considering public comments and supporting documents received by May 29, 2015. The second petition, published May 1, 2015, concerns the social and psychological well-being of primates in captivity. Following a decision by the National Institutes of Health in 2013 to retire most of its chimpanzees used in biomedical research, and to house them in sanctuaries suitable to their natural social groups and behaviors, animal welfare activists turned their attention to the estimated 110,000 other primates in research laboratories. These primates, like chimpanzees, are also highly social animals. The New England Anti-Vivisection Society filed a petition with APHIS asking for specific rules on the care of all primates regarding their social and psychological well-being. APHIS took public comments until June 30, 2015, and is currently considering them.

In 1966, Congress passed the Laboratory Animal Welfare Act (P.L. 89-54) to prevent pets from being stolen for sale to research laboratories, and to regulate the humane care and handling of dogs, cats, and other laboratory animals. Farm animals are not covered by the AWA. The law was amended in 1970 (P.L. 91-579), changing the name to the Animal Welfare Act (AWA). The AWA is administered by the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS). Congress periodically amends the act to strengthen enforcement, expand coverage to more animals and activities, or curtail practices viewed as cruel (e.g., animal fighting), among other things. Congress also addresses animal welfare issues through other legislation (e.g., the Horse Protection Act), but the AWA remains the central federal statute governing the humane care and handling of mammals, including marine mammals. Animal welfare bills introduced in the 114th Congress include the Pet Safety and Protection Act (H.R. 2849), which would amend the AWA to ensure that all cats and dogs used in research were properly obtained. H.R. 3136, the Enforcement Transparency Act of 2015, would amend the AWA to require USDA to issue guidelines relating to civil fines imposed for violating the AWA. H.R. 3193, the Animal Emergency Planning Act of 2015, would amend the AWA to require that research facilities, animal dealers, exhibitors, handlers, and carriers under the AWA, develop and implement emergency contingency plans for animals in their charge. The Orca Responsibility and Care Advancement Act of 2015 (H.R. 4019) would amend both the AWA and the Marine Mammal Protection Act of 1972 to prohibit the capture, importation, and exportation of orcas for public display. The bill would amend the AWA to prohibit the breeding of orcas for exhibition purposes. The Safe Transport for Horses Act (S. 946) and the Horse Transportation Safety Act (H.R. 1282) would amend the Transportation title (49 U.S.C. 80502) to prohibit the interstate transportation of horses in motor vehicles containing two or more levels stacked on top of one another. The Refuge from Cruel Trapping Act (S. 1081/H.R. 2016) would ban body-gripping traps from National Wildlife Refuges. Each of these bills has been referred to committees, but no further action was taken as of late 2015. Following publication of USDA Inspector General's report on the inadequacy of the current horse soring inspection system, legislation to amend the Horse Protection Act (P.L. 91-540) was introduced. H.R. 3268/S. 1121, the Prevent All Soring Techniques (PAST) Act, would amend the current soring inspection system to place inspections under APHIS control rather than under the horse industry as it is currently. The Horse Protection Amendments Act (S. 1161) would also modify the inspection system, but retain inspection control within the horse industry. Also introduced in the 114th Congress were bills that would end the exemption of farm animals from regulation under the AWA, and bring federal research under AWA registration and inspection. H.R. 746/S. 388, the Animal Welfare in Agricultural Research Endeavors Act, is a response to a widely reviewed article in the New York Times on the research activities at the Meat Animal Research Center, a USDA Agricultural Research Serviced facility. Among APHIS regulatory actions in 2015 concerning the AWA, APHIS announced in May 2015 that it was seeking public comment on a petition from several animal welfare groups asking for specific rules on the care of all primates regarding their social and psychological well-being. APHIS also announced receiving a petition in 2013 from the Physicians Committee for Responsible Medicine to amend the AWA to define alternatives to procedures that may cause pain or distress to animals and to establish standards to consider these alternatives. APHIS is currently considering public comments that it received regarding these two petitions.

International law consists of "rules and principles of general application dealing with the conduct of states and of international organizations and with their relations inter se , as well as with some of their relations with persons, whether natural or juridical." While the United States has long understood international legal commitments to be binding upon it both internationally and domestically since its inception, the role of international law in the U.S. legal system often implicates complex legal principles. The United States assumes international obligations most frequently when it makes agreements with other nations or international bodies that are intended to be legally binding upon the parties involved. Such legal agreements are made through treaty or executive agreement. The U.S. Constitution allocates primary responsibility for such agreements to the executive branch, but Congress also plays an essential role. First, in order for a treaty (but not an executive agreement) to become binding upon the United States, the Senate must provide its advice and consent to treaty ratification by a two-thirds majority. Secondly, Congress may authorize executive agreements. Thirdly, the provisions of many treaties and executive agreements may require implementing legislation in order to be judicial enforceable in U.S. courts. The effects of customary international law upon the United States are more ambiguous and difficult to decipher. While there is some Supreme Court jurisprudence finding that customary international law is incorporated into domestic law, this incorporation is only to the extent that "there is no treaty, and no controlling executive or legislative act or judicial decision" in conflict. This report provides an introduction to the role that international law and agreements play in the United States. For purposes of U.S. law and practice, pacts between the United States and foreign nations may take the form of treaties, executive agreements, or nonlegal agreements, which involve the making of so-called "political commitments." In this regard, it is important to distinguish "treaty" in the context of international law, in which "treaty" and "international agreement" are synonymous terms for all binding agreements, and "treaty" in the context of domestic American law, in which "treaty" may more narrowly refer to a particular subcategory of binding international agreements that receive the Senate's advice and consent. Under U.S. law, a treaty is an agreement negotiated and signed by a member of the executive branch that enters into force if it is approved by a two-thirds majority of the Senate and is subsequently ratified by the President. In modern practice, treaties generally require parties to exchange or deposit instruments of ratification in order for them to enter into force. A chart depicting the steps necessary for the United States to enter a treaty is in the Appendix . The Treaty Clause—Article II, Section 2, Clause 2 of the Constitution—vests the power to make treaties in the President, acting with the "advice and consent" of the Senate. Many scholars have concluded that the Framers intended "advice" and "consent" to be separate aspects of the treaty-making process. According to this interpretation, the "advice" element required the President to consult with the Senate during treaty negotiations before seeking the Senate's final "consent." President George Washington appears to have understood that the Senate had such a consultative role, but he and other early Presidents soon declined to seek the Senate's input during the negotiation process. In modern treaty-making practice, the executive branch generally assumes responsibility for negotiations, and the Supreme Court stated in dicta that the President's power to conduct treaty negotiations is exclusive. Although Presidents generally do not consult with the Senate during treaty negotiations, the Senate maintains an aspect of its "advice" function through its conditional consent authority. In considering a treaty, the Senate may condition its consent on reservations, declarations, understandings, and provisos concerning the treaty's application. Under established U.S. practice, the President cannot ratify a treaty unless the President accepts the Senate's conditions. If accepted by the President, these conditions may modify or define U.S. rights and obligations under the treaty. The Senate also may propose to amend the text of the treaty itself, and the other nations that are parties to the treaty must consent to the changes in order for them to take effect. Some international law scholars occasionally have criticized the Senate's use of certain reservations, understandings, and declarations (RUDs). For example, some critics have argued RUDs that conflict with the "object and purpose" of a treaty violate principles of international law . And scholars debate whether RUDs specifying that some or all provisions in a treaty are non-self-executing (meaning they require implementing legislation to be given judicially enforceable domestic legal effect) are constitutionally permissible. However much debate RUDs may have engendered among academics, they have produced little detailed discussion in courts. The Supreme Court has accepted the Senate's general authority to attach conditions to its advice and consent. And U.S. courts frequently interpret U.S. treaty obligations in light of any RUDs attached to the instrument of ratification. Where a treaty is ratified with a declaration that it is not self-executing, a court will not give its provisions judicially enforceable domestic legal effect. The great majority of international agreements that the United States enters into are not treaties, but executive agreements—agreements entered into by the executive branch that are not submitted to the Senate for its advice and consent. Federal law requires the executive branch to notify Congress upon entry of such an agreement. Executive agreements are not specifically discussed in the Constitution, but they nonetheless have been considered valid international compacts under Supreme Court jurisprudence and as a matter of historical practice. Although the United States has entered international compacts by way of executive agreement since the earliest days of the Republic, executive agreements have been employed much more frequently since the World War II era. Commentators estimate that more than 90% of international legal agreements concluded by the United States have taken the form of an executive agreement. Executive agreements can be organized into three categories based on the source of the President's authority to conclude the agreement. In the case of congressional-executive agreements , the domestic authority is derived from an existing or subsequently enacted statute. The President also enters into executive agreements made pursuant to a treaty based upon authority created in prior Senate-approved, ratified treaties. In other cases, the President enters into sole executive agreements based upon a claim of independent presidential power in the Constitution. A chart describing the steps in the making of an executive agreement is in the Appendix . The constitutionality of congressional-executive agreements is well- settled. Unlike in the case of treaties, where only the Senate plays a role in approving the agreement, both houses of Congress are involved in the authorizing process for congressional-executive agreements. Congressional authorization takes the form of a statute which must pass both houses of Congress. Historically, congressional-executive agreements have been made for a wide variety of topics, ranging from postal conventions to bilateral trade to military assistance. The North American Free Trade Agreement and the General Agreement on Tariffs and Trade are notable examples of congressional-executive agreements. Agreements made pursuant to treaties are also well established as constitutional, though controversy occasionally arises as to whether a particular treaty actually authorizes the Executive to conclude an agreement in question. Because the Supremacy Clause includes treaties among the sources of the "supreme Law of the Land," the power to enter into an agreement required or contemplated by the treaty lies within the President's executive function. Sole executive agreements rely on neither treaty nor congressional authority to provide their legal basis. The Constitution may confer limited authority upon the President to promulgate such agreements on the basis of his foreign affairs power. For example, the Supreme Court has recognized the power of the President to conclude sole executive agreements in the context of settling claims with foreign nations. If the President enters into an executive agreement addressing an area where he has clear, exclusive constitutional authority—such as an agreement to recognize a particular foreign government for diplomatic purposes—the agreement may be legally permissible regardless of congressional disagreement. If, however, the President enters into an agreement and his constitutional authority over the agreement's subject matter is unclear, a reviewing court may consider Congress's position in determining whether the agreement is legitimate. If Congress has given its implicit approval to the President entering the agreement, or is silent on the matter, it is more likely that the agreement will be deemed valid. When Congress opposes the agreement and the President's constitutional authority to enter the agreement is ambiguous, it is unclear if or when such an agreement would be given effect. Examples of sole executive agreements include the Litvinov Assignment, under which the Soviet Union purported to assign to the United States claims to American assets in Russia that had previously been nationalized by the Soviet Union, and the 1973 Vietnam Peace Agreement ending the United States' participation in the war in Vietnam. Recently, some foreign relations scholars have argued that the international agreement-making practice has evolved such that some modern executive agreements no longer fit in the three generally recognized categories of executive agreements. These scholars contend that certain recent executive agreements are not premised on a defined source of presidential authority, such as an individual statute or stand-alone claim of constitutional authority. Nevertheless, advocates for a new form of executive agreement contend that identification of a specific authorizing statute or constitutional power is not necessary if the President already possesses the domestic authority to implement the executive agreement; the agreement requires no changes to domestic law; and Congress has not expressly opposed it. Opponents of this proposed new paradigm of executive agreement argue that it is not consistent with separation of powers principles, which they contend require the President's conclusion of international agreements be authorized either by the Constitution, a ratified treaty, or an act of Congress. Whether executive agreements with mixed or uncertain sources of authority become prominent may depend on future executive practice and the congressional responses. There has been long-standing scholarly debate over whether certain types of international agreements may only be entered as treaties, subject to the advice and consent of the Senate, or whether a congressional-executive agreement may always serve as a constitutionally permissible alternative to a treaty. A central legal question in this debate concerns whether the U.S. federal government, acting pursuant to a treaty, may regulate matters that could not be reached by a statute enacted by Congress pursuant to its enumerated powers under Article I of the Constitution. Adjudication of the propriety of congressional-executive agreements has been rare, in significant part because plaintiffs often cannot demonstrate that they have suffered a redressable injury giving them standing, or fail to make a justiciable claim. As a matter of historical practice, some types of international agreements have traditionally been entered as treaties in all or many instances, including compacts concerning mutual defense, extradition and mutual legal assistance, human rights, arms control and reduction, taxation, and the final resolution of boundary disputes. State Department regulations prescribing the process for coordination and approval of international agreements (commonly known as the "Circular 175 procedure") include criteria for determining whether an international agreement should take the form of a treaty or an executive agreement. Congressional preference is one of several factors (identified in the text box below) considered when determining the form that an international agreement should take. In addition, the Circular 175 procedure provides that "the utmost care" should be exercised to "avoid any invasion or compromise of the constitutional powers of the President, the Senate, and the Congress as a whole." In 1978, the Senate passed a resolution expressing its sense that the President seek the advice of the Senate Committee on Foreign Relations in determining whether an international agreement should be submitted as a treaty. The State Department subsequently modified the Circular 175 procedure to provide for consultation with appropriate congressional leaders and committees concerning significant international agreements. Consultations are to be held "as appropriate." Not every pledge, assurance, or arrangement made between the United States and a foreign party constitutes a legally binding international agreement. In some cases, the United States makes "political commitments" with foreign States, also called "soft law" pacts. Although these pacts do not modify existing legal authorities or obligations, which remain controlling under both U.S. domestic and international law, such commitments may nonetheless carry significant moral and political weight. In some instances, a nonlegal agreement between States may serve as a stopgap measure until such time as the parties may conclude a permanent legal settlement. In other instances, a nonlegal agreement may itself be intended to have a lasting impact upon the parties' relationship. The executive branch has long claimed the authority to enter such pacts on behalf of the United States without congressional authorization, asserting that the entering of political commitments by the Executive is not subject to the same constitutional constraints as the entering of legally binding international agreements. An example of a nonlegal agreement is the 1975 Helsinki Accords, a Cold War agreement signed by 35 nations, which contains provisions concerning territorial integrity, human rights, scientific and economic cooperation, peaceful settlement of disputes, and the implementation of confidence-building measures. Under State Department regulations, 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 Executive's authority to enter such arrangements—particularly when those arrangements contemplate the possibility of U.S. military action—has been the subject of long-standing dispute between Congress and the Executive. In 1969, the Senate passed the National Commitments Resolution, stating the sense of the Senate that "a national commitment by the United States results only from affirmative action taken by the executive and legislative branches of the United States government by means of a treaty [or legislative enactment] . . . specifically providing for such commitment." The Resolution defined a "national commitment" as including "the use of the armed forces of the United States on foreign territory, or a promise to assist a foreign country . . . by the use of armed forces . . . either immediately or upon the happening of certain events." The National Commitments Resolution took the form of a sense of the Senate resolution, and accordingly had no legal effect. Although Congress has occasionally considered legislation that would bar the adoption of significant military commitments without congressional action, no such measure has been enacted. Unlike in the case of legally binding international agreements, there is no statutory requirement that the executive branch notify Congress of every nonlegal agreement it enters on behalf of the United States. State Department regulations, including the Circular 175 procedure, also do not provide clear guidance for when or whether Congress will be consulted when determining whether to enter a nonlegal arrangement in lieu of a legally binding treaty or executive agreement. Congress normally exercises oversight over such non-binding arrangements through its appropriations power or via other statutory enactments, by which it may limit or condition actions the United States may take in furtherance of the arrangement. The Iran Nuclear Agreement Review Act of 2015 is a notable exception where Congress opted to condition U.S. implementation of a political commitment upon congressional notification and an opportunity to review the compact. The act was passed during negotiations that culminated in the Joint Comprehensive Plan of Action (JCPOA) between Iran, and six nations (the United States, the United Kingdom, France, Russia, China, and Germany—collectively known as the P5+1). Under the terms of the plan of action, Iran pledged to refrain from taking certain activities related to the production of nuclear weapons, while the P5+1 agreed to ease or suspend sanctions that had been imposed in response to Iran's nuclear program. Because the JCPOA was not signed by any party and purported rely on a series of "voluntary measures," the Obama Administration considered it a political commitment that did not alter domestic or international legal obligations. Despite the JCPOA's nonbinding status, the Iran Nuclear Agreement Review Act provided a mechanism for congressional consideration of the JCPOA prior to the Executive being able to exercise any existing authority to relax sanctions to implement the agreement's terms. The effects that international legal agreements entered into by the United States have upon U.S. domestic law are dependent upon the nature of the agreement; namely, whether the agreement (or a provision within an agreement) is self-executing or non-self-executing, and possibly whether the commitment was made pursuant to a treaty or an executive agreement. Some provisions of international treaties or executive agreements are considered "self-executing," meaning that they have the force of domestic law without the need for subsequent congressional action. Provisions that are not considered self-executing are understood to require implementing legislation to provide U.S. agencies with legal authority to carry out the functions and obligations contemplated by the agreement or to make them enforceable in court. The Supreme Court has deemed a provision non-self-executing when the text manifests an intent that the provision not be directly enforceable in U.S. courts or when the Senate conditions its advice and consent on the understanding that the provision is non-self-executing. Although the Supreme Court has not addressed the issue directly, many courts and commentators agree that provisions in international agreements that would require the United States to exercise authority that the Constitution assigns to Congress exclusively must be deemed non-self-executing , and implementing legislation is required to give such provisions domestic legal effect. Lower courts have concluded that, because Congress controls the power of the purse, a treaty provision that requires expenditure of funds must be treated as non-self-executing. Other lower courts have suggested that treaty provisions that purport to create criminal liability or raise revenue must be deemed non-self-executing because those powers are the exclusive prerogative of Congress. Until implementing legislation is enacted, existing domestic law concerning a matter covered by a non-self-executing provision remains unchanged and controlling law in the United States. While it is clear that non-self-executing provisions in international agreements do not displace existing state or federal law, there is significant scholarly debate regarding the distinction between self-executing and non-self-executing provisions, including the ability of U.S. courts to apply and enforce them. Some scholars argue that, although non-self-executing provisions lack a private right of action, litigants can still invoke non-self-executive provisions defensively in criminal proceedings or when another source for a cause of action is available. Other courts and commentators contend that non-self-executing provisions do not create any judicially enforceable rights, or that that they lack any status whatsoever in domestic law. At present, the precise status of non-self-executing treaties in domestic law remains unresolved. Despite the complexities of the self-execution doctrine in domestic, treaties and other international agreements operate in dual international and domestic law contexts. In the international context, international agreements traditionally constitute binding compacts between sovereign nations, and they create rights and obligations that nations owe to one another under international law. But international law generally allows each individual nation to decide how to implement its treaty commitments into its own domestic legal system. The self-execution doctrine concerns how a treaty provision is implemented in U.S. domestic law, but it does not affect the United States' obligation to comply with the provision under international law. When a treaty is ratified or an executive agreement concluded, the United States acquires obligations under international regardless of self-execution, and it may be in default of the obligations unless implementing legislation is enacted. When an international agreement requires implementing legislation or appropriation of funds to carry out the United States' obligations, the task of providing that legislation falls to Congress. In the early years of constitutional practice, debate arose over whether Congress was obligated—rather than simply empowered—to enact legislation implementing non-self-executing provisions into domestic law. But the issue has not been resolved in any definitive way as it has not been addressed in a judicial opinion and continues to be the subject of debate occasionally. By contrast, the Supreme Court has addressed the scope of Congress's power to enact legislation implementing non-self-executing treaty provisions. In a 1920 case, Missouri v. Holland , the Supreme Court addressed a constitutional challenge to a federal statute that implemented a treaty prohibiting the killing, capturing, or selling of certain birds that traveled between the United States and Canada. In the preceding decade, two federal district courts had held that similar statutes enacted prior to the treaty violated the Tenth Amendment because they infringed on the reserved powers of the states to control natural resources within their borders. But the Holland Court concluded that, even if those district court decisions were correct, their reasoning no longer applied once the United States concluded a valid migratory bird treaty. In an opinion authored by Justice Holmes, the Holland Court concluded that the treaty power can be used to regulate matters that the Tenth Amendment otherwise might reserve to the states. And if the treaty itself is constitutional, the Holland Court held, Congress has the power under the Necessary and Proper Clause to enact legislation implementing the treaty into the domestic law of the United States without restraint by the Tenth Amendment. Commentators and jurists have called some aspects of the Justice Holmes's reasoning in Holland into question, and some scholars have argued that the opinion does not apply to executive agreements. But the Supreme Court has not overturned Holland 's holding related to Congress's power to implement treaties. Nevertheless, principles of federalism embodied in the Tenth Amendment continue to impact constitutional challenges to U.S. treaties and their implementing statutes, including in the 2014 Supreme Court decision, Bond v. United States . Bond concerned a criminal prosecution arising from a case of "romantic jealously" when a jilted spouse spread toxic chemicals on the mailbox of a woman with whom her husband had an affair. Although the victim only suffered a "minor thumb burn," the United States brought criminal charges under the Chemical Weapons Convention Act of 1998—a federal statute that implemented a multilateral treaty prohibiting the use of chemical weapons. The accused asserted that the Tenth Amendment reserved the power to prosecute her "purely local" crime to the states, and she asked the Court to overturn or limit Holland 's holding on the relationship between treaties and the Tenth Amendment. Although a majority in Bond declined to revisit Holland 's interpretation of the Tenth Amendment, the Bond Court ruled in the accused's favor based on principles of statutory interpretation. When construing a statute interpreting a treaty, Bond explained, "it is appropriate to refer to basic principles of federalism embodied in the Constitution to resolve ambiguity . . . ." Applying these principles through a presumption that Congress did not intend to intrude on areas of traditional state authority, the Bond Court concluded that the Chemical Weapons Convention Act did not apply to the jilted spouse's actions. In other words, the majority in Bond did not disturb Holland 's conclusion that the Tenth Amendment does not limit Congress's power to enact legislation implementing treaties, but Bond did hold that principles of federalism reflected in the Tenth Amendment may dictate how courts interpret such implementing statutes. Sometimes, a treaty or executive agreement will conflict with one of the three main tiers of domestic law—U.S. state law, federal law, or the Constitution. For domestic purposes, a ratified, self-executing treaty is the law of the land equal to federal law and superior to U.S. state law, but inferior to the Constitution. A self-executing executive agreement is likely superior to U.S. state law, but sole executive agreements may be inferior to conflicting federal law in certain circumstances (congressional-executive agreements or executive agreements pursuant to treaties are equivalent to federal law), and all executive agreements are inferior to the Constitution. In cases where ratified treaties or certain executive agreements are equivalent to federal law, the "last-in-time" rule establishes that a more recent federal statute will prevail over an earlier, inconsistent international agreement, while a more recent self-executing agreement will prevail over an earlier, inconsistent federal statute. Treaties and executive agreements that are not self-executing, on the other hand, have generally been understood not to displace existing state or federal law in the absence of implementing legislation. "The responsibility for transforming an international obligation arising from a non-self-executing treaty into domestic law falls to Congress." Accordingly, it appears unlikely that a non-self-executing agreement could be converted into judicially enforceable domestic law absent legislative action through the bicameral process. When analyzing an international agreement for purposes of its domestic application, U.S. courts have final authority to interpret the agreement's meaning. As a general matter, the Supreme Court has stated that its goal in interpreting an agreement is to discern the intent of the nations that are parties to it. The interpretation process begins by examining "the text of the [agreement] and the context in which the written words are used." When an agreement provides that it is to be concluded in multiple languages, the Supreme Court has analyzed foreign language versions to assist in understanding the agreement's terms. The Court also considers the broader "object and purpose" of an international agreement. In some cases, the Supreme Court has examined extratextual materials, such as drafting history, the views of other state parties, and the post-ratification practices of other nations. But the Court has cautioned that consulting sources outside the agreement's text may not be appropriate when the text is unambiguous. The executive branch frequently is responsible for interpreting international agreements outside the context of domestic litigation. While the Supreme Court has final authority to interpret an agreement for purposes of applying it as domestic law in the United States, some questions of interpretation may involve exercise of presidential discretion or otherwise may be deemed "political questions" more appropriately resolved in the political branches. In Charlton v. Kelly , for example, the Supreme Court declined to decide whether Italy violated its extradition treaty with the United States, reasoning that, even if a violation occurred, the President "elected to waive any right" to respond to the breach by voiding the treaty. Moreover, the executive branch often is well-positioned to interpret an agreement's terms given its leading role in negotiating agreements and its understanding of other nations' post-ratification practices. Thus, even when a question of interpretation is to be resolved by the judicial branch, the Supreme Court has stated that the executive branch's views are entitled to "great weight" —although the Court has not adopted the executive branch's interpretation in every case. Congress also possesses power to interpret international agreements by virtue of its power to pass implementing or other related legislation. And because the Constitution expressly divides the treaty-making power between the Senate and the President, the Supreme Court has examined sources that reflect these entities' shared understanding of a treaty at the time of ratification. The Senate's ability to influence treaty interpretation directly, however, may be limited to its role in the advice and consent process. The Senate may, and frequently does, condition its consent on a requirement that the United States interpret a treaty in a particular fashion. But after the Senate provides its consent and the President ratifies a treaty, resolutions passed by the Senate that purport to interpret the treaty are "without legal significance" according to the Supreme Court. The Constitution sets forth a definite procedure whereby the President has the power to make treaties with the advice and consent of the Senate, but it is silent as to how to terminate them. Although the Supreme Court has recognized directly the President's power to conclude certain executive agreements, it has not addressed presidential power to terminate those agreements. The following section discusses historical practice and jurisprudence related to the withdrawal from and termination of international agreements. In the case of executive agreements, it appears generally accepted that, when the President has independent authority to enter into an executive agreement, the President may also independently terminate the agreement without congressional or senatorial approval. Thus, observers appear to agree that, when the Constitution affords the President authority to enter into sole executive agreements, the President also may unilaterally terminate those agreements. This same principle would apply to political commitments: to the extent the President has the authority to make nonbinding commitments without the assent of the Senate or Congress, the President also may withdraw unilaterally from those commitments. For congressional-executive agreements and executive agreements made pursuant to treaties, the mode of termination may be dictated by the underlying treaty or statute on which the agreement is based. For example, in the case of executive agreements made pursuant to a treaty, the Senate may condition its consent to the underlying treaty on a requirement that the President not enter into or terminate executive agreements under the authority of the treaty without senatorial or congressional approval. And for congressional-executive agreements, Congress may dictate how termination occurs in the statute authorizing or implementing the agreement. Congress also has asserted the authority to direct the President to terminate congressional-executive agreements. For example, in the Comprehensive Anti-Apartheid Act of 1986, which was passed over President Reagan's veto, Congress instructed the Secretary of State to terminate an air services agreement with South Africa. And in the Trade Agreements Extension Act of 1951, Congress directed the President to "take such action as is necessary to suspend, withdraw or prevent the application of" trade concessions contained in prior trade agreements regulating imports from the Soviet Union and "any nation or area dominated or controlled by the foreign government or foreign organization controlling the world Communist movement." Presidents also have asserted the authority to withdraw unilaterally from congressional-executive agreements, but there is an emerging scholarly debate over the extent to which the Constitution permits the President to act without the approval of the legislative branch in such circumstances. Some scholars assert that the President has the power to withdraw unilaterally from congressional-executive agreements, although he may not terminate the domestic effect of an agreements implementing legislation. But others argue that Congress must approve termination of executive agreements that implicate exclusive congressional powers, such as the power over international commerce, and that received congressional approval after they were concluded by the executive branch. Although this debate is still developing, unilateral termination of congressional-executive agreements by the President has not been the subject of a high volume of litigation, and prior studies have concluded that such termination has not generated large-scale opposition from the legislative branch. Unlike the process of terminating executive agreements, which historically has not generated extensive opposition from Congress, the constitutional requirements for the termination of Senate-approved, ratified treaties have been the subject of occasional debate between the legislative and executive branches. Some commentators have argued that the termination of treaties is analogous to the termination of federal statutes. Because domestic statutes may be terminated only through the same process in which they were enacted —i.e., through a majority vote in both houses and with the signature of the President or a veto override—these commentators contend that treaties likewise must be terminated through a procedure that resembles their making and that includes the legislative branch. On the other hand, treaties do not share every feature of federal statutes. Whereas statutes can be enacted over the president's veto, treaties can never be concluded without the Senate's advice and consent. Moreover, whereas an enacted federal statute can only be rescinded by a subsequent act of Congress, some argue that, just as the President has some unilateral authority to remove executive officers who were appointed with senatorial consent, the President may unilaterally terminate treaties made with the Senate's advice and consent. The United States terminated a treaty under the Constitution for the first time in 1798. On the eve of possible hostilities with France, Congress passed, and President Adams signed, legislation stating that four U.S. treaties with France "shall not henceforth be regarded as legally obligatory on the government or citizens of the United States." Thomas Jefferson referred to the episode as support for the notion that only an "act of the legislature" can terminate a treaty. But commentators since have come to view the 1798 statute as a historical anomaly because it is the only instance in which Congress purported to terminate a treaty directly through legislation without relying on the President to provide a notice of termination to the foreign government. Moreover, because the 1798 statute was part of a series of congressional measures authorizing limited hostilities against the French Republic, some view the statute as an exercise of Congress's war powers rather than precedent for a permanent congressional power to terminate treaties. During the 19th century, government practice treated the power to terminate treaties as shared between the legislative and executive branches. Congress often authorized or instructed the President to provide notice of treaty termination to foreign governments during this time. On rare occasions, the Senate alone passed a resolution authorizing the President to terminate a treaty. Presidents regularly complied with the legislative branch's authorization or direction. On other occasions, Congress or the Senate approved the President's termination after-the-fact, when the executive branch had already provided notice of termination to the foreign government. At the turn of the 20th century, government practice began to change, and a new form of treaty termination emerged: unilateral termination by the President without approval by the legislative branch. During the Franklin Roosevelt Administration and World War II, unilateral presidential termination increased markedly. Although Congress occasionally enacted legislation authorizing or instructing the President to terminate treaties during the 20th century, unilateral presidential termination became the norm. The president's exercise of treaty termination authority did not generate opposition from the legislative branch in most cases, but there have been occasions in which Members of Congress sought to block unilateral presidential action. In 1978, a group of Members filed suit in Goldwater v. Carter seeking to prevent President Carter from terminating a mutual defense treaty with the government of Taiwan as part of the United States' recognition of the government of mainland China. A divided Supreme Court ultimately ruled that the litigation should be dismissed, but it did so without reaching the merits of the constitutional question and with no majority opinion. Citing a lack of clear guidance in the Constitution's text and a reluctance "to settle a dispute between coequal branches of our Government each of which has resources available to protect and assert its interests[,]" four Justices concluded that the case presented a nonjusticiable political question. This four-Justice opinion, written by Justice Rehnquist, has proven influential since Goldwater , and federal district courts have invoked the political question doctrine as a basis to dismiss challenges to unilateral treaty terminations by President Reagan and President George W. Bush. Customary international law is defined as resulting from "a general and consistent practice of States followed by them from a sense of legal obligation." This means that all, or nearly all, nations consistently follow the practice in question and they must do so because they believe themselves legally bound, a concept often referred to as opinio juris sive necitatis ( opinio juris ). If nations generally follow a particular practice but do not feel bound by it, it does not constitute customary international law. Further, there are ways for nations to avoid being subject to customary international law. First, a nation that is a persistent objector to a particular requirement of customary international law is exempt from it. Second, under American law, the United States can exempt itself from customary international law requirements by passing a contradictory statute under the "last-in-time" rule. As a result, the impact of customary international law that conflicts with other domestic law appears limited. In examining nations' behavior to determine whether opinio juris is present, courts might look to a variety of sources, including, inter alia, relevant treaties, unanimous or near-unanimous declarations by the United Nations General Assembly concerning international law, and whether noncompliance with an espoused universal rule is treated as a breach of that rule. Uncertainties and debate frequently arise concerning how customary international law is defined and how firmly established a particular norm must be in order to become binding. Some particularly prevalent rules of customary international law can acquire the status of jus cogens norms—peremptory rules which permit no derogation, such as the international prohibition against slavery or genocide. For a particular area of customary international law to constitute a jus cogens norm, State practice must be extensive and virtually uniform. For much of the history of the United States, courts and U.S. officials understood customary international law to be binding U.S. domestic law in the absence of a controlling executive or legislative act. By 1900, the Supreme Court stated in The Paquete Habana that international law is "part of our law[.]" Although this description seems straightforward, twentieth century developments complicate the relationship between customary international law and domestic law. In a landmark 1938 decision, Erie Railroad Co. v. Tompkins , the Supreme Court rejected the then-longstanding notion that there was a "transcendental body of law" known as the general common law, which federal courts are permitted to identify and describe in the absence of a conflicting statute. Erie held that the "law in the sense in which courts speak of it today does not exist without some definite authority behind it" in the form of a state or federal statute or constitutional provision. Some jurists and commentators have argued that, because judicial application of customary international law requires courts to rely on the same processes used in discerning and applying the general common law, Erie should be interpreted to foreclose application of customary international law in U.S. courts. Many commentators, however, disagree with this view. Although the Supreme Court has not passed directly on the issue, in 1964, it discussed with approval a law review article in which then-professor and later judge of the International Court of Justice Philip C. Jessup argued that it would be "unsound" and "unwise" to interpret Erie to bar federal courts' application of customary international law. And in a 2004 case, the High Court rejected the view that federal courts have lost "all capacity" to recognize enforceable customary international norms as a result of Erie . Consequently, at present, the precise status of customary international law in the U.S. legal system remains the subject of debate. While there is some uncertainty concerning the customary international law's role in domestic law, the debate has largely focused on circumstances in which customary international law does not conflict with an existing federal statute. When a federal statute does conflict with customary international law, lower courts consistently have concluded that the statute prevails. And there do not appear to be any cases in which a court has struck down a federal statute on the ground that it violates customary international law. Further, the Supreme Court's pre- Erie jurisprudence could be read to support the view that federal statutes prevail over customary international law. In The Paquete Habana , the Court explained that customary international law may be incorporated into domestic law, but only to the extent that "there is no treaty, and no controlling executive or legislative act or judicial decision" in conflict. While it appears that federal statutes will generally prevail over conflicting custom-based international law, customary international law can potentially affect how courts construe domestic law. Under the canon of statutory construction known as the Charming Betsy canon, when two constructions of an ambiguous statute are possible, one of which is consistent with international legal obligations and one of which is not, courts will often construe the statute so as not to violate international law, presuming such a statutory reading is reasonable. Customary international law plays a direct role in the U.S. legal system when Congress incorporates it into federal law via legislation. Some statutes expressly reference customary international law, and thereby permit courts to interpret its requirements and contours. For example, federal law prohibits "the crime of piracy as defined by the law of nations . . . ." And the Foreign Sovereign Immunities Act removes the protections from lawsuits afforded to foreign sovereign nations in certain classes of cases in which property rights are "taken in violation of international law . . . ." Perhaps the clearest example of U.S. law incorporating customary international law is the Alien Tort Statute (ATS). The ATS originated as part of the Judiciary Act of 1789, and establishes federal court jurisdiction over tort claims brought by aliens for violations of either a treaty of the United States or "the law of nations." Until 1980, this statute was rarely used, but in Filártiga v. Pena-Irala , the U.S. Court of Appeals for the Second Circuit relied upon it to award a civil judgment against a former Paraguayan police official who had allegedly tortured the plaintiffs while still in Paraguay. In doing so, the Filártiga Court concluded that torture constitutes a violation of the law of nations and gives rise to a cognizable claim under the ATS. Filártiga was a highly influential decision that caused the ATS to "skyrocket" into prominence as a vehicle for asserting civil claims in U.S. federal courts for human rights violations even when the events underlying the claims occurred outside the United States. But the expansion of the claims grounded in the ATS was not long-lived. Beginning with a 2004 decision, Sosa v. Alvarez-Machain , the Supreme Court began to place outer limits on the statute's application. Sosa held that not all violations of international norms are actionable under the ATS—only those that "rest on a norm of international character accepted by the civilized world" and are defined with sufficient clarity and particularity. And even when a claim meets these standards, Sosa explained that federal courts must exercise "great caution" before deeming a claim actionable. Nine years later, in Kiobel v. Royal Dutch Petroleum Co ., the Supreme Court further limited the ATS's reach by holding that courts should apply the canon of construction known as the presumption against extraterritoriality to the statute. Under Kiobel, foreign plaintiffs cannot sue foreign defendants in ATS suits when the relevant conduct occurred overseas. And in Jesner v. Arab Bank, PLC , a 2018 decision, the High Court concluded that foreign corporations are not subject to the liability under the ATS. Although the ATS remains a clear example of a U.S. statute incorporating customary international law, the Supreme Court's narrowing of ATS jurisdiction in Sosa , Kiobel , and Jesner has caused some commentators to question its continued relevance. Although the United States has long understood international legal commitments to be binding both internationally and domestically, the relationship between international law and the U.S. legal system implicates complex legal dynamics. In some areas, courts have established settled rules. For example, courts clearly have recognized that the Constitution permits the United States to make binding international commitments through both treaties and executive agreements. And the Supreme Court has held that only self-executing international agreements have the status of judicially enforceable domestic law. But other issues concerning the status of international law in the U.S. legal system have never been fully resolved. The scope of presidential power to make executive agreements, the role of non-self-executing agreements and customary international law, and the division of power to withdraw from international agreements—like many international-law-related issues—have long been the subject of debate. Because the legislative branch possesses significant powers to shape and define the United States' international obligations, Congress is likely to continue to play a critical role in dictating the outcome of these debates in the future.

International law is derived from two primary sources—international agreements and customary practice. Under the U.S. legal system, international agreements can be entered into by means of a treaty or an executive agreement. The Constitution allocates primary responsibility for entering into such agreements to the executive branch, but Congress also plays an essential role. First, in order for a treaty (but not an executive agreement) to become binding upon the United States, the Senate must provide its advice and consent to treaty ratification by a two-thirds majority. Secondly, Congress may authorize congressional-executive agreements. Thirdly, many treaties and executive agreements are not self-executing, meaning that implementing legislation is required to render the agreement's provisions judicially enforceable in the United States. The status of an international agreement within the United States depends on a variety of factors. Self-executing treaties have a status equal to federal statute, superior to U.S. state law, and inferior to the Constitution. Depending upon the nature of executive agreements, they may or may not have a status equal to federal statute. In any case, self-executing executive agreements have a status that is superior to U.S. state law and inferior to the Constitution. Courts generally have understood treaties and executive agreements that are not self-executing generally to have limited status domestically; rather, the legislation or regulations implementing these agreements are controlling. In addition to legally binding agreements, the executive branch also regularly makes nonlegal agreements (sometimes described as "political agreements") with foreign entities. The formality, specificity, and intended duration of such commitments may vary considerably, but they do not modify existing legal authorities or obligations, which remain controlling under both U.S. domestic and international law. Nonetheless, such commitments may carry significant moral and political weight for the United States and other parties. Unlike in the case of legal agreements, current federal law does not provide any general applicable requirements that the executive branch notify Congress when it enters a political agreement on behalf of the United States. The effects of the second source of international law, customary international practice, upon the United States are more ambiguous. While there is some Supreme Court jurisprudence finding that customary international law is "part of" U.S. law, domestic statutes that conflict with customary rules remain controlling, and scholars debate whether the Supreme Court's international law jurisprudence still applies in the modern era. Some domestic U.S. statutes directly incorporate customary international law, and therefore invite courts to interpret and apply customary international law in the domestic legal system. The Alien Tort Statute, for example, which establishes federal court jurisdiction over certain tort claims brought by aliens for violations of "the law of nations." Although the United States has long understood international legal commitments to be binding both internationally and domestically, the relationship between international law and the U.S. legal system implicates complex legal dynamics. Because the legislative branch possesses important powers to shape and define the United States' international obligations, Congress is likely to continue to play a critical role in shaping the role of international law in the U.S. legal system in the future.

The Financial Services and General Government (FSGG) appropriations bill includes funding for the Department of the Treasury (Title I), the Executive Office of the President (EOP, Title II), the judiciary (Title III), the D istrict of Columbia (Title IV), and more than two dozen independent agencies (Title V). The bill typically funds mandatory retirement accounts in Title VI, which also contains additional general provisions applying to the funding provided agencies funds through the FSGG bill. Title VII contains general provisions applying government-wide. The House and Senate FSGG bills fund the same agencies, with one exception. The Commodities and Futures Trading Commission (CFTC) is funded through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. This structure has existed in its current form since the 2007 reorganization of the House and Senate Committees on Appropriations. Although financial services are a major focus of the bills, FSGG appropriations bills do not include many financial regulatory agencies, which are instead funded outside of the appropriations process. On February 2, 2015, President Obama submitted his FY2016 budget request, which sought a total of $46.8 billion for agencies funded through the FSGG appropriations bill, including $322 million for the Commodity Futures Trading Commission (CFTC). On July 9, 2015, the House Committee on Appropriations (hereinafter "the House committee") reported the Financial Services and General Government Appropriations Act, 2016 ( H.R. 2995 , H.Rept. 114-194 ). H.R. 2995 as reported would have provided $41.6 billion for agencies funded through the House FSGG Appropriations Subcommittee bill. The House FY2016 Agriculture appropriations bill ( H.R. 3049 , H.Rept. 114-205 ) would have provided $245 million for the CFTC. Total FY2016 funding in the two House bills would have been $41.8 billion, about $4.9 billion below the President's FY2016 request. On July 30, 2015, the Senate Committee on Appropriations reported the Financial Services and General Government Act, 2016 ( S. 1910 , S.Rept. 114-97 ). S. 1910 would have appropriated $42.1 billion for FY2016, about $4.7 billion below the President's request. Neither FSGG appropriations bill was considered on the floor prior to the end of FY2015. 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 generally provided budget authority for ongoing projects and activities at the rate they were funded during FY2015. Most projects and activities funded in the P.L. 114-53 were subject to an across-the-board decrease of less than 1% (0.2108%). The FSGG section of the CR also included a small number of provisions that designate exceptions to the formula and purpose for which any referenced funding is extended (referred to as anomalies ). The FSGG anomalies included in P.L. 114-53 were as follows: Section 124—District of Columbia Local Funds . This section provided 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—Recovery Board : Section 125 provided that no funds be included in the CR for the Recovery Accountability and Transparency Board, which was established by the American Recovery and Reinvestment Act (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. Before 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 was slated to sunset on September 30, 2015. Section 126—Small Business Administration : 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 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, the Continuing Appropriations Resolution, 2015 ( P.L. 113-164 ) increased the ceiling from $17.5 billion to $18.5 billion, and the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) 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—Internet Tax Freedom Act : Section 127 extended a moratorium preventing state and local governments from taxing Internet access or imposing multiple or discriminatory taxes on electronic commerce. The moratorium was originally enacted as the Internet Tax Freedom Act (ITFA) in 1998. 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 the Continuing Appropriations Act, 2014 ( P.L. 113-46 ) extended them through December 11, 2014. P.L. 113-235 then further extended these provisions through September 30, 2015. The Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), discussed further below, made the IFTA moratorium permanent. To avoid a lapse in annual appropriations prior to the expiration of continuing appropriations, two more continuing resolutions were enacted. P.L. 114-96 continued funding through December 16, 2015, and P.L. 114-100 continued funding through December 22, 2015, under the same provisions established in the first CR. The Consolidated Appropriations Act, 2016 ( P.L. 114-113 / H.R. 2029 ) was passed by the House and Senate and signed by the President on December 18, 2015. The FSGG appropriations were included as Division E, whereas the CFTC was funded by the Agriculture appropriations in Division A. The total provided for FSGG agencies for FY2016, including the CFTC, was $44.8 billion, about $2 billion below the President's request. Division O of P.L. 114-113 also included some provisions relating to financial regulators that had appeared in the Senate FSGG bill. Table 1 reflects the status of FSGG appropriations measures at key points in the appropriations process. Table 2 lists FSGG agencies' enacted amounts for FY2015, the President's FY2016 request, the FY2016 amounts from H.R. 2995 as reported by the House Committee on Appropriations, the FY2016 amounts from S. 1910 as reported by the Senate Committee on Appropriations, and the enacted amounts from P.L. 114-113 . Although financial services are a focus of the FSGG bill, the bill does not actually include funding for the regulation of much of the financial services industry. Financial services as an industry is often subdivided into banking, insurance, and securities. Federal regulation of the banking industry is divided among the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of Comptroller of the Currency (OCC), and the Bureau of Consumer Financial Protection (generally known as the Consumer Financial Protection Bureau, or CFPB). In addition, credit unions, which operate similarly to many banks, are regulated by the National Credit Union Administration (NCUA). None of these agencies receives its primary funding through the appropriations process, with only the FDIC inspector general and a small program operated by the NCUA currently funded in the FSGG bill. Insurance generally is regulated at the state level with some oversight at the holding company level by the Federal Reserve. There is a relatively small Federal Insurance Office (FIO) inside of the Treasury, which is funded through the Departmental Offices account, but FIO has no regulatory authority. Federal securities regulation is divided between the SEC and the CFTC, both of which are funded through appropriations. The CFTC funding is a relatively straightforward appropriation from the general fund, whereas the SEC funding is provided by the FSGG bill, but then offset through fees collected by the SEC. Although funding for many financial regulatory agencies may not be provided by the FSGG bill, legislative provisions that would affect some of these agencies have often been included. Both House and Senate bills would have changed the funding procedure for the CFPB, with future funding to be provided by congressional appropriations rather than the current situation in which primary CFPB funding is provided through unappropriated funds transferred from the Federal Reserve. The Senate bill also included the full text of S. 1484 , a broad financial regulatory reform bill that was previously reported by the Senate Committee on Banking, Housing, and Urban Affairs. Many provisions of S. 1484 amend the Dodd-Frank Act and some have proven controversial in the past. P.L. 114-113 did not include the provisions relating to CFPB funding from the committee bills and included a relatively small number of the provisions relating to financial regulation from S. 1484 / S. 1910 . The House and Senate Committees on Appropriations reorganized their subcommittee structures in early 2007. Each chamber created a new Financial Services and General Government Subcommittee. In the House, the jurisdiction of the FSGG Subcommittee comprised primarily 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: the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and the Small Business Administration (SBA). 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: the FCC, FTC, SEC, and SBA. In addition, most of the agencies that had been under the jurisdiction of the TTHUD Subcommittee were assigned to the FSGG Subcommittee. As a result of this reorganization, the House and Senate FSGG Subcommittees have nearly identical jurisdictions, except that the CFTC is under the jurisdiction of the FSGG Subcommittee in the Senate and the Agriculture Subcommittee in the House. Table 3 below lists various departments and agencies funded through FSGG appropriations and the names and contact information for the CRS expert(s) on these departments and agencies.

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. The House and Senate FSGG bills fund the same agencies, with one exception. The Commodities and Futures Trading Commission (CFTC) is funded through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. This structure has existed since the 2007 reorganization of the House and Senate Committees on Appropriations. On February 2, 2015, President Obama submitted his FY2016 budget request. The request included a total of $46.8 billion for agencies funded through the FSGG appropriations bill, including $322 million for the CFTC. On July 9, 2015, the House Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2016 (H.R. 2995, H.Rept. 114-194). Total FY2016 funding in the reported bill would be $41.6 billion, with another $245 million for the CFTC included in the Agriculture appropriations bill (H.R. 3049, H.Rept. 114-205), which was reported on July 14, 2015. The combined total of $41.8 billion would be about $4.9 billion below the President's FY2016 request. On July 30, 2015, the Senate Committee on Appropriations reported the Financial Services and General Government Act, 2016 (S. 1910, S.Rept. 114-97). S. 1910 would appropriate $42.1 billion for FY2016, about $4.7 billion below the President's request. No full FY2016 FSGG appropriations bill was enacted prior to the beginning of the new fiscal year. In response, a number of continuing resolutions (CR) for FY2016, were enacted. P.L. 114-53 continued funding through December, 11, 2015; P.L. 114-96 continued funding through December 16, 2015; P.L. 114-100 continued funding through December 22, 2015. The CRs generally provided budget authority for ongoing projects and activities at the rate they were funded during FY2015. The Consolidated Appropriations Act, 2016 (P.L. 114-113/H.R. 2029) was passed by the House and Senate and signed by the President on December 18, 2015. The FSGG appropriations bill was included as Division E, whereas the CFTC was funded with the Agriculture appropriations in Division A. The total provided for FSGG agencies for FY2016, including the CFTC, was $44.8 billion, about $2 billion below the President's request. Although financial services are a major focus of the FSGG appropriations bills, these bills do not include many financial regulatory agencies, which are funded outside of the appropriations process. Both H.R. 2995 and S. 1910 included language that would have altered the appropriations status of the Consumer Financial Protection Bureau (CFPB), changing its primary funding source to the FSGG bill instead of unappropriated funds provided through the Federal Reserve. The Senate committee FSGG bill also included the text of S. 1484, a broad financial regulatory reform package that was previously reported by the Senate Banking Committee, but has not been considered by the full Senate. P.L. 114-113 did not change the funding structure of the CFPB, but did include some of the S. 1484 provisions in Division O.

The federal government has employed government corporations to achieve policy goals for over a century. Among Members of Congress, the executive branch, and the scholarly community, interest in the government corporation option, and variations on this class of agency, has increased in recent decades. In the typical contemporary Congress, several bills are introduced to establish government corporations. At the time of publication of this report, two bills had been introduced in the 112 th Congress to improve U.S. infrastructure by establishing government corporations— H.R. 404 and S. 652 . Similarly, in the 111 th Congress, government corporations bills included ones that would have created an Indian Development Finance Corporation ( H.R. 1607 ), a Green Bank ( H.R. 1698 ), and a National Infrastructure Development Bank ( H.R. 2521 ). At least three factors may contribute to the interest in government corporations. First, the restrictive character of the federal budget encourages agencies to develop new sources of revenue (e.g., outsourcing services to the private sector and to other agencies) and to attempt to avoid increasing outlays. Second, experience suggests that it is politically easier for corporate bodies to be exempted by Congress from the federal government's general management laws (e.g., the Freedom of Information Act and employee compensation restrictions) than it is for traditional agencies. Finally, the corporate concept appears to many, correctly or otherwise, to be supportive of the "New Public Management" that emphasizes entrepreneurship, risk-taking, and private sector practices in federal administration. The continuing interest in the government corporation prompts questions as to their legal character, their utility vis-à-vis traditional agencies, and their limitations as units of governmental institutions. A government corporation is not always an the optimal administrative entity for achieving governance objectives. There are times when it may be an appropriate choice and times when it may not. Understanding the unique character of government management, based as it is upon tenets of public law, provides guidance in weighing these choices. What is a federal government corporation, and what are the essential characteristics of a government corporation? As defined in this report, a federal government corporation is an agency of the federal government, established by Congress to perform a public purpose, which provides a market-oriented product or service and is intended to produce revenue that meets or approximates its expenditures. By this definition, there are 17 entities that are government corporations. The U.S. Code does not provide a single definition of the term "government corporation." Title 5 of the U.S. Code defines a "government corporation" as "a corporation owned or controlled by the Government of the United States" (5 U.S.C. 103). Meanwhile, the Government Corporation Control Act ((GCCA) 31 U.S.C. 9101-10) states that the term "government corporation" means "a mixed-ownership Government corporation and a wholly-owned government corporation." It then lists 28 entities—some, like the Pennsylvania Avenue Development Corporation, now defunct—as being "government corporations" for the purposes of chapter 91 of Title 31. In addition to the enumeration of corporations provided in the GCCA, there have been several other listings of corporations available, each different and based upon the definition employed by the compiler. Corporations cover the spectrum from such large, well-known corporations as the United States Postal Service and the Federal Deposit Insurance Corporation to such small, low-visibility corporate bodies as the Federal Financing Bank in the Treasury Department and Federal Prison Industries (UNICOR) in the Justice Department. The number of federal corporations is in moderate flux. New corporations are established from time to time (e.g., the Valles Caldera Trust in 2000), and existent ones are dissolved (e.g., the Rural Telephone Bank in 2008). Government corporations should not be confused with quasi governmental entities, such as government-sponsored enterprises (GSEs). A GSE (e.g., Fannie Mae) is a privately owned, federally chartered financial institution with nationwide scope and lending powers that benefits from an implicit federal guarantee to enhance its ability to borrow money. GSEs are important institutions worthy of separate analysis, but they are not discussed, except in passing, in this report. Unlike government corporations, with GSEs and other quasi governmental entities, the legal and political lines of accountability can be ambiguous. In 1996, for instance, the Office of Personnel Management (OPM) created the United States Investigation Services Corporation as an employee stock-ownership plan (ESOP), an entry into the quasi government category that sparked debate regarding its status and authority. Historically, the federal government has been involved in few commercial enterprises. There were some early instances of the federal government participating in otherwise private corporate enterprises on a shared ownership basis, most notably the first and second Banks of the United States. This practice came into question, however, as a consequence of a Supreme Court ruling in 1819. From that time to today, the federal government has tended to avoid sharing ownership with private entities. The first time the federal government acquired a corporation outright occurred in 1903, when the Panama Railroad Company was purchased from the French Panama Canal Company. Since then, a number of corporate bodies have been established as part of the federal government, with growth in that number tending to come in spurts and generally in response to emergencies. The first large-scale use of the corporate option accompanied the mobilization for World War I. Later, the Depression of the 1930s fostered numerous corporations (e.g., the Reconstruction Finance Corporation, and the Tennessee Valley Authority). Finally, World War II prompted the establishment of additional federal corporations. After the passing of each of these emergencies, many of the corporations that dealt with them were abolished or absorbed into the permanent executive branch agencies. In 1945, partly in response to the proliferation of corporate bodies created for the war effort, Congress passed the Government Corporation Control Act (GCCA; 59 Stat. 841; 31 U.S.C. 9101-9110). The act standardized budget, auditing, debt management, and depository practices for corporations. Notwithstanding unusual provisions that may be present in their enabling statute, government corporations remain "agencies" of the United States, and are therefore subject to all laws governing agencies, except where exempted from coverage by provisions of general management laws. The GCCA is not a general incorporation act such as is in effect in the states. The charter for each federal government corporation is the separate enabling legislation passed by Congress. The GCCA also does not offer a general definition of what constitutes a government corporation. It simply enumerates the organizations covered by the act. In addition to the enumeration of corporations in the GCCA, there have been several other listings of corporations available, each different and based upon the definition employed by the compiler. The corporations cover the spectrum from such large, well-known corporations as the United States Postal Service and the Federal Deposit Insurance Corporation to such small, low-visibility corporate bodies as the Federal Financing Bank and Federal Prison Industries (UNICOR). In the absence of a general incorporation act with organizational definitions, how is one to know when a government corporation is the most suitable option, and what criteria should be met before a government corporation is established? In an effort to provide criteria to determine when the corporate option was appropriate, President Harry Truman, in his 1948 budget message, stated: Experience indicates that the corporate form of organization is peculiarly adapted to the administration of government programs which are predominately of a commercial character—those which are revenue producing, are at least potentially self-sustaining and involve a large number of business-type transactions with the public. In their business operations such programs require greater flexibility than the customary type of appropriations budget ordinarily permits. As a rule, the usefulness of a corporation rests on its ability to deal with the public in a manner employed by private enterprise for similar work. That said, Congress has created many entities titled "government corporations" and "corporations" that do not meet these criteria. The Legal Services Corporation (LSC), the Corporation for Public Broadcasting (CPB), and the newly established International Clean Energy Foundation are examples of "corporations" that do not perform commercial functions and rely upon annual appropriations. A principal intention behind assigning this status and title was to provide considerable insulation from oversight by the central management agencies and the application of the general management laws. No two federal government corporations are completely alike. However, there are sufficient commonalities among the several corporations, that it is possible to make some generalizations about their authorities, organization, mission, and behavior. Government corporations, no matter what function they perform or how "private" they may appear to the public or to themselves, are agents of the state subject to constitutional limitations. As the Supreme Court concluded in the 1995 Lebron case, a government corporation has certain inherent legal characteristics that cannot be shed simply by legislative language or by corporate fiat. The nature of the function performed (e.g., managing a railroad) has no effect upon its governmental character. The governmental and private sectors are fundamentally separate and distinct, with the distinctions based largely in legal theory, not economic theory. This understanding is essential to recognizing both the potentialities and limitations of the government corporate concept. The government corporation remains governmental in character until Congress determines it shall be fully private, thereby coming under private law. As a general proposition, the attorney general is vested with central control over the litigation to which the U.S. government is a party. Various statutes recognize that the attorney general is the chief legal officer for all departments and agencies. However, in an uneven pattern over the years, exceptions have been permitted to this central authority. The independent regulatory commissions, for instance, have some independence (although the degree of independence varies considerably from commission to commission) in their litigation authority. While the Justice Department has consistently favored central coordination of litigation, this view has been difficult to maintain in practice. With the relatively small staff of the department and its understandable reluctance to become responsible for routine litigation, there has been a trend toward awarding greater authority and flexibility to the departments and agencies in their legal affairs. With respect to government corporations, though, often their enabling legislation assigns them a legal personality distinct from that of the United States. Most are subject to, and may initiate, civil suits. Government corporations, being agencies of the United States, have their employees come under the limited waiver of immunity provided in the Federal Tort Claims Act (FTCA). Distinguished public administrator Harold Seidman notes: "As a body corporate, a government corporation has a separate legal personality distinct from that of the United States. A corporation, therefore, does not enjoy the traditional immunity of the United States from being sued without its consent." Generally, a corporation is provided authority "to determine the character and the necessity for its expenditures, and the manner in which they shall be incurred, allowed and paid." Some corporations may borrow funds through the Federal Financing Bank of the Treasury Department. In practical terms, the purpose of permitting corporations to sue and be sued in their own name is to enable a private business to contract with a government corporation under the assurance that if something goes amiss, it can go to court to settle the matter. With a regular government agency, however, a contractual dispute must normally go through a laborious process in the Court of Claims; if the contractor wins, he must wait for an appropriation; the Departments of Justice and Treasury, the Office of Management and Budget (OMB), the President, and both houses of Congress may become involved in the claim. With the government corporation, however, this process is simplified, and when a contractor prevails, he can usually obtain a prompt settlement. The budget process is a useful management tool for planning as well as for maintaining accountability. Regular agencies of the executive branch, with few exceptions, are subject to uniform rules and regulations with respect to the budgets. Both the President and Congress use agency budgets as management tools. Government corporations, on the other hand, are exempt either individually or collectively from many executive branch budgetary regulations. These exemptions are predicated, for the most part, on the idea that with the corporate structure, consumers of corporations' products and services, rather than the general taxpayer, are the principal source of revenue. The GCCA, as amended in 1982 (96 Stat. 1042), provides that each wholly owned government corporation shall prepare and submit to the President a "business-type budget" in a way and before a date the President prescribes by regulation for the budget program. This budget program shall contain estimates of the financial condition and operation of the corporation for the current and following fiscal years and the condition and results of operations of the last fiscal year. Further, it shall contain statements of financial condition, income and expense, and sources and uses of money, an analysis of surplus and deficit, and additional statements and information to make known the financial condition and operations of the corporation, including estimates of operations by major activities, administrative expenses, borrowings, the amount of U.S. Government capital that will be returned to the Treasury during the fiscal year, and appropriations needed to restore capital impairment." (31 U.S.C. 9104) The objective of the budget program is to permit the corporation sufficient financial flexibility to carry out its activities. The President, after review and revision, submits these budget programs to Congress with the executive branch budget. Under the Chief Financial Officers Act of 1990 (CFOA), government corporations must submit to Congress annual management reports, which are to include statements of financial position, operations, and cash flows, a reconciliation to the budget report of the government corporation (if applicable), and a statement on internal accounting and administrative control systems. Traditional agencies of the United States receive the preponderance of their financial support from funds appropriated by Congress. Government corporations, on the other hand, generally receive most, if not all, their funds from users of their services. Thus, the latter relationship has a business character in which it is the obligation of the corporate body to provide services as long as the buyers are willing to pay. This being the case, revenues, expenditures, and even personnel will tend to fluctuate according to consumer demand. Many Members of Congress feel somewhat uneasy with broad, "business type budgets," also referred to as "budget programs." To be sure, Congress can alter these budget programs and can limit the use of corporate funds for any purpose, but this option is seldom employed. Faced with complex projections and agencies with little direct budgetary impact, Members understandably give corporate bodies marginal attention. As a general assessment, the corporations come under comparatively little congressional scrutiny, except when there is some political or financial threat evident. As Seidman notes, "In essence, the business-type budget provides for a qualitative rather than a quantitative review of proposed corporate expenses." Until 1975, GAO was responsible under the GCCA for performing annual financial audits of government corporations. At the request of GAO, the GCCA was amended to provide for audits of the financial transactions of wholly owned corporations at least once every three years, rather than annual audits. In 1990, as part of the CFOA, GAO's recommendation that government corporations be subject once again to annual audits was accepted. Henceforth, however, the audit is to be conducted by the corporation's inspector general "or by an independent external auditor, as determined by the inspector general or, if there is no inspector general, the head of the corporation," according to accepted government auditing standards. The Comptroller General, however, continues to be authorized to review the financial statements of government corporations. The location, structure, and governance of government corporations varies greatly. Corporations have been located in executive departments (e.g., the St. Lawrence Seaway Development Corporation in the Department of Transportation), or assigned independent status (e.g., the Export-Import Bank). Government corporations have been structured so that they are but financial entities whose employees are actually employees of the parent agency (e.g., the Federal Financing Bank in the Department of the Treasury and the Commodity Credit Corporation in the Department of Agriculture). There is no one form of governance necessarily associated with government corporations. Whether a government corporation is best managed by a full-time board (e.g., TVA, formerly), a chief executive officer selected by a part-time board and responsible to it (e.g., TVA currently), a part-time board consisting of Cabinet-level officials of other agencies (e.g., Pension Benefit Guaranty Corporation), a mixed board of governmental and private appointees (e.g., Overseas Private Investment Corporation), or a single administrator responsible to a department secretary, and ultimately to the President (e.g., Government National Mortgage Association, "Ginnie Mae"), is an open question. There are positives and negatives to the various options for corporate governance. A board of directors is the trademark of a government corporation, according to many lawmakers and attorneys. Marshall Dimock, an academic writing in 1949, argued that a board of directors was considered an essential element for an "authentic" government corporation. "Being a separate and distinct entity, headed by its own board of directors, the corporation is inherently better able to succeed than the ordinary department of government." A few years later, Harold Seidman challenged the view that a board of directors was an essential and necessarily desirable element for a government corporation. Dimock's view, he asserted, was based on an inappropriate borrowing of state practice by the federal government. State incorporation laws require boards of directors for private corporations to insure representation where ownership is held by more than one party. In government corporations, under this reasoning, because ownership resides in the government alone, there is no inherent need for a board of directors. Government corporations, Seidman pointed out, have existed and operated without boards of directors. A board of directors may well be found advisable and useful under some circumstances, but, Seidman said, it is not the sine qua non of a government corporation. Whether or not a board of directors is essential or desirable for a government corporation, the fact is that all but two federal government corporations presently have boards of directors. The two exceptions are Ginnie Mae and the St. Lawrence Seaway Development Corporation. In a study published in 1981, the National Academy of Public Administration was critical of boards of directors in general: We believe that this arrangement, borrowed from the private corporation model, has more drawbacks than advantages and that in most cases the governing board would be better replaced by an advisory board and the corporation managed by an administrator with full executive powers. A governing board may cut or confuse the normal lines of authority from the President or departmental secretary to the corporation's chief executive officer. With an advisory board, the secretary's authority to give that officer policy instruction is clear, as is the officer's right to report directly to the secretary and to work out any exemptions from or qualifications of administration or departmental policies and practices which the corporation requires. There is little doubt that a board of directors, particularly a part-time, "outsiders" board, is a "buffer" between the corporation's top executive and political officials, including the President. Whether such a buffer is a desirable feature in the overall administrative system, however, is a question subject to debate. Notably, it is also argued that corporation board appointments are patronage plums for the White House since the jobs are not generally demanding. The effectiveness and utility of boards is dependent upon a number of factors: the coherency of the enabling legislation, the conceptual integrity and soundness of the program itself, and the number and quality of membership. Large boards (comprising more than 12 members), for instance, may experience difficulty in making decisions. The play of internal factors, such as the size of the board, the primary loyalties of board members (whether to the corporation or to an outside constituency group), and the relationship of the board to the corporate management all also have their place in the managerial equation. There is, at present, little central management agency oversight or supervision of government corporations as a category of agency in the executive branch. Nor is there any central unit charged with designing government corporations from the perspective of presidential or central management interests. Government corporations today are largely perceived as discrete entities, each with its own political and administrative requirements, and each with its own route and degree of political accountability. Individual corporations come under scrutiny from time to time by OMB and Congress, or more precisely, a congressional committee responsible for oversight. More often than not, the immediate impetus for the oversight follows from indications that a corporation is operating at financial risk or there is an appearance of wrongdoing. The current absence of systematic oversight of corporations as a class runs counter to the intentions of the sponsors of the GCCA. The Bureau of the Budget (BOB), predecessor organization to OMB, was instrumental in the passage of the GCCA, and created a separate office to oversee the formation, and monitor the operation, of government corporations on behalf of the President. During the 1960s, this specialized staff function atrophied until at some point in the 1970s it is fair to conclude that there was little remaining central executive staff capacity to provide information, expert advice, or oversight of government corporations or to develop and implement consistent policies governing their formation, authorities, and operations. Government corporations are not considered by OMB to be a category of organization to be supervised collectively. OMB, in support of its position, contends: The responsibility for oversight of government corporations was not changed by the OMB 2000 reorganization. That is, government corporations will continue to be reviewed by the Resource Management Office (RMO) which has responsibility for the functional area most closely associated with the corporation's mission.... OMB does not review government corporations separately from other government organizations that perform similar functions. The executive branch treatment of management responsibilities respecting government corporations as a class of organization tends to place additional burdens on Congress and its committees to determine if the corporations are respecting the provisions of the general management laws (e.g., the National Environmental Protection Act, 42 U.S.C. 4321). One corollary of limited central management oversight of government corporations is the lack of answers to fundamental issues regarding when and how government corporations ought to be created and utilized. There are at least two schools of thought respecting the proper use of the government corporation option relating to its structure, authority, and financial systems. One school holds that government corporations, including agencies called corporations but which do not perform commercial activities, should be encouraged, provided maximum policy and financial autonomy, and be subject to such oversight as is appropriate for other agencies and instrumentalities in the same policy field. The legal responsibilities of the corporation should be located in its enabling statute. The position of the second school is that government corporations should be established only when appropriate criteria and standards, developed by a central management agency, are met. Such standards should be reflected in a national incorporation law and apply to all proposed and functioning corporate bodies properly defined. Government corporations should be considered to be part of the executive branch, but with recognition of their distinctive needs and oversight requirements as a category of institutions. The government corporation concept may be considered a useful alternative to privatization of some agency, or it may be employed as a transition step toward eventual full privatization. Our interest here is limited to the corporation as a transition option. The principal utility of the transitional government corporation is that it can demonstrate marketability and asset value, critical elements in any successful privatization venture. An early successful example of the government corporation concept as a transition vehicle involved Conrail. Conrail was created by Congress as a government corporation in 1976 from the remnants of seven private, bankrupt railroads. It took some 10 years and an investment of $8 billion by the federal government to bring Conrail up to industry standards before entertaining a reasonable expectation that the railroad would be attractive to private investors. The federal government received approximately $2 billion from the sale, but the real payoff was that the northeastern region of the country was once again provided a viable freight rail system. The transition period as a government corporation was necessary to develop a record as a potentially profit-making venture prior to a successful privatization (divestiture) effort. More recently, the U.S. Enrichment Corporation (USEC) has completed its transitional process toward full privatization, with mixed results. The USEC, until 1993 a regular agency in the Department of Energy (DOE), operated uranium enrichment plants in Kentucky and Ohio. In the 1950s, the plants produced highly enriched uranium (HEU) for defense purposes. Times changed and the United States was successfully challenged by new international entrants into the market. The Energy Policy Act of 1992 ( P.L. 102-486 ; 106 Stat. 2776) established the U.S. Enrichment Corporation as a wholly owned government corporation. The general intent of the legislation was to "privatize" the two plants and let them compete in the world market. A privatization plan was delivered by the USEC to the President and Congress in 1995. The plan suggested that there were two primary methods of corporate divestiture: an initial public offering (IPO) and a merger or acquisition with another corporation or group of corporations. After considerable discussion, the IPO option was selected, as it had been with Conrail. The IPO of stock was completed on July 28, 1998, and raised an estimated $1.9 billion for the federal government. The USEC transition process highlighted, however, one of the perennial problems in privatization efforts. Congress may intend a corporation to be private, but it also may want the corporation to continue to be involved in public policy implementation. In this instance, Congress wanted the corporation to participate in implementing a foreign policy objective, which was to purchase at above market rates a substantial amount of Russian enriched uranium otherwise destined for Russian weapons. Under the HEU agreement, the USEC received enriched uranium from Russian nuclear weapons and, in addition to its payment for the material, returned an equivalent amount of natural (unenriched) uranium to Russia to sell on the world market. This arrangement, from the corporation's perspective, was not viable and in October 1999, the USEC solicited Congress for "relief." Another characteristic of a private corporation, legally organized and defined as such, is the right to cancel a program or withdraw from an activity if it is not deemed in the fiduciary interests of the shareholders. To the consternation of DOE officials, such a decision was reached recently by the USEC board of directors. One of the assets transferred from the DOE to the USEC in the divestiture was the right to commercialize a new enrichment technology called "atomic vapor laser and isotope separation" (AVLIS), a technology in which DOE had invested over $2 billion. On June 9, 1999, the board of directors of the USEC determined that AVLIS was not commercially viable and canceled the program. The board's decision made manifest the fiduciary distinctions between a government and private corporation. The federal government may, for whatever reason, choose to directly divest itself of a commercial activity or asset and not follow the transition corporation option to establish its value in the market. Although a transition corporation had been recommended by an outside study, the Department of Energy determined to directly divest itself of the California fields of the Elk Hills National Petroleum Reserves. The government corporation form of federal agency is a useful option to consider when establishing or reorganizing an agency with revenue potential. It is helpful to bear in mind, however, that there is no general provision in law that defines what, precisely, government corporations are. When writing the GCCA, Congress and the executive branch simply viewed the various corporate bodies, and defined them by enumeration, rather than by required characteristics. This relatively unstructured approach has meant that some corporate bodies (e.g., the U.S. Postal Service) are not included in the GCCA enumeration, whereas other bodies, arguably non-corporate in function and authority (e.g., the Corporation for National and Community Service) are listed. There is little managerial oversight at present of government corporations as an institutional category by either the President or Congress. What oversight there is tends to be corporation-specific. In the case of Congress, corporations are assigned to committees of subject-matter jurisdiction. A GAO report recommended that corporations properly require both subject matter and management oversight, and that the GCCA should be reconstituted to establish in law the characteristics of various types of corporate bodies. Government corporations may be viewed as permanent agencies to perform a continuing governmental function (e.g., the Federal Deposit Insurance Corporation); a temporary agency (e.g., the Pennsylvania Avenue Development Corporation); or a transition agency to facilitate the process whereby a governmental agency or program is divested and transferred to the private sector (e.g., the U.S. Enrichment Corporation). These options indicate the flexibility of the government corporation concept and may provide models for extending the corporate organization to other appropriations-funded agencies (e.g., the U.S. Patent and Trademark Office and the U.S. Mint). Both the latter agencies and their programs meet the basic criteria for a government corporation and suggestions to this effect have been made. The future of government corporations as a category of federal organization appears generally bright although they are not widely understood in executive management circles. The need for the executive branch and Congress to develop new organizational structures that take into account both the public law requirements of governmental status, and the flexibility that properly accompanies corporate bodies dependent upon revenues for services may increase. The managerial quality of the law establishing a corporation, may be a critical variable in determining the success or failure of that enterprise. If the conceptual basis of the law establishing a corporation or economic assumptions therein are faulty, as was allegedly the case with the Synthetic Fuels Corporation in the late 1970s, a government corporation may become a liability to the executive branch and face a short tenure. On the other hand, if a federal government corporation is designed to conform with public law, governmental management principles, and sound economics, a corporate agency may provide a creative instrument to promote the public policy objectives of elected officials. Although it has been the purpose of this report to emphasize the distinctive characteristics of federal government corporations, it is important to conclude with a statement of their shared characteristics with other federal agencies. The mission of both regular, appropriations-financed agencies and of government corporations is the same, to implement the laws passed by Congress.

To assist Congress in its oversight activities, this report provides an overview of the government corporation as an administrative model. As defined in this report, a government corporation is a government agency that is established by Congress to provide a market-oriented public service and to produce revenues that meet or approximate its expenditures. By this definition, currently there are 17 government corporations. In the typical contemporary Congress, several bills are introduced to establish government corporations. At the time of publication of this report, two bills had been introduced in the 112th Congress to improve U.S. infrastructure by establishing government corporations—H.R. 404 and S. 652. Similarly, in the 111th Congress, government corporations bills included ones that would have created an Indian Development Finance Corporation (H.R. 1607 ), a Green Bank (H.R. 1698), and a National Infrastructure Development Bank (H.R. 2521). The government corporation model has been utilized by the federal government for over a century. Today's government corporations cover the spectrum in size and function from large, well-known entities, such as the U.S. Postal Service and the Federal Deposit Insurance Corporation, to small, low-visibility corporate bodies, such as the Federal Financing Bank in the Department of the Treasury and Federal Prison Industries in the Department of Justice. The federal government does not possess a general incorporation statute as states do. Each government corporation is chartered through an act of Congress. The use of separate acts to charter each corporation has resulted in wide variance in the legal and organizational structure of government corporations. That said, the Government Corporation Control Act of 1945, as amended, does provide for the standardized budget, auditing, debt management, and depository practices for those corporations listed in the act. Within the executive branch, no one agency is responsible for the oversight and supervision of government corporations. Neither the House nor the Senate have single committees with the responsibility to oversee all government corporations. Instead, each corporation is overseen by the committee(s) with jurisdiction over its policy area. Many government corporations, such as the Tennessee Valley Authority, have been established to exist in perpetuity. Other government corporations, such as the U.S. Enrichment Corporation, though, have been designed to serve as transition vehicles to transform from governmental entities into private firms. Congress at times has found the government corporation an attractive governance option. A well-designed and -operated government corporation does not require annual appropriations because it generates revenues from the provision of goods and services. Moreover, each government corporation may be endowed with the administrative flexibilities required to accomplish its goals while remaining responsive to Congress and the President. Finally, as noted above, the government corporation may be established to serve an enduring purpose or may serve as a vehicle for privatization. This report will be updated in the event of a significant development.

This report discusses how drought is defined (e.g., why drought in one region of the country is different from drought in another region), and why drought occurs in the United States. How droughts are classified, and what is meant by moderate, severe, and extreme drought classifications, are also discussed. The report briefly describes periods of drought in the country's past that equaled or exceeded drought conditions experienced during the 20 th century. This is followed by a discussion of the future prospects for a climate in the western United States that might be drier than the average 20 th -century climate. The report concludes with a primer on policy challenges for Congress, such as the existing federal/nonfederal split in drought response and management and the patchwork of drought programs subject to oversight by multiple congressional committees. Following are brief answers to frequently asked questions related to drought. What is drought? Drought is commonly defined as a lack of precipitation over an extended period, usually a season or more, relative to some long-term average condition. History suggests that severe and extended droughts are inevitable and part of natural climate cycles. While forecast technology and science have improved, regional predictions remain limited to a few months in advance. What causes drought? The physical conditions causing drought in the United States are increasingly understood to be linked to sea surface temperatures (SSTs) in the tropical Pacific Ocean. Studies indicate that cooler-than-average SSTs have been connected to the severe western drought in the first decade of the 21 st century, severe droughts of the late 19 th century, and precolonial North American "megadroughts." The 2011 severe drought in Texas is thought to be linked to La Niña conditions (cooler-than-average SSTs) in the Pacific Ocean. What is the future of drought in the United States ? The prospect of extended droughts and more arid baseline conditions in parts of the United States could suggest new challenges to federal programs and water projects, which were conceived or constructed largely on the basis of 20 th -century climate conditions. Some studies suggest a transitioning of the American West to a more arid climate, possibly resulting from the buildup of greenhouse gases in the atmosphere, raising concerns that the region may become more prone to extreme drought than it was in the 20 th century. Some models of future climate conditions also predict greater fluctuations in wet and dry years; however, the net effect of such fluctuations is difficult to predict. What is federal drought policy? Although drought impacts can be significant, no comprehensive national drought policy exists. Developing a national policy would be challenging because of split federal and nonfederal responsibilities; the existing patchwork of federal programs; and differences in regional conditions, risks, and available responses. In 2000, the National Drought Policy Commission provided recommendations to Congress to improve drought policy. Congress has acted on some of the recommendations (e.g., authorizing the National Integrated Drought Information System), but not others (e.g., creation of a National Drought Council and a fund to support drought planning). Given current conditions, Congress may review the functioning and adequacy of existing federal responses and programs (e.g., access to and level of assistance provided, incentives for mitigation of drought risk, and preparedness of federal facilities). The likelihood of extended periods of severe drought, similar to conditions experienced centuries ago, and its effects on 21 st -century society in the United States raise several issues for Congress. These issues include how to respond to recurrent drought incidents, how to prepare for future drought, and how to coordinate federal agency actions. For example, drought often results in agricultural losses, which can have local, regional, and national effects. It also can affect other industries and services, including power and energy resource production, navigation, recreation, municipal water supplies, and natural resources such as fisheries, aquatic species, and water quality. How to address these impacts is an often recurring issue for Congress. Addressing drought on an emergency basis is costly to individuals, communities, and businesses. Additionally, millions and sometimes billions of dollars in federal assistance can be expended in response to drought's social consequences. Thus, another recurrent policy issue is how to prepare and mitigate future drought impacts and how to do so efficiently across the many federal agencies with various and sometimes overlapping drought responsibilities. Drought has afflicted portions of North America for thousands of years. Severe, long-lasting droughts may have been a factor in the disintegration of Pueblo society in the Southwest during the 13 th century, and in the demise of central and lower Mississippi Valley societies in the 14 th through 16 th centuries. In the 20 th century, droughts in the 1930s (Dust Bowl era) and 1950s were particularly severe and widespread. In 1934, 65% of the contiguous United States was affected by severe to extreme drought, resulting in widespread economic disruption and displacement of populations from the U.S. heartland. Drought conditions are broadly grouped into five categories: (1) abnormally dry, (2) moderate, (3) severe, (4) extreme, and (5) exceptional. Some part of the country is almost always experiencing drought at some level. Since 2000, no less than 6.6% of the land area of the United States has experienced drought of at least moderate intensity each year. The land area affected by drought of at least moderate intensity varies by year and also within a particular year. For example, since 2000, the total U.S. land area affected by drought of at least moderate intensity has varied from as little as 6.6% (July 6, 2010) to as much as 55% (September 25, 2012). Based on weekly estimates of the areal extent of drought conditions since 2000, the average amount of land area across the United States affected by at least moderate-intensity drought has been 26%. While the previous percentages refer to the extent of drought nationally, there is particular concern about those locations experiencing the most intense drought conditions. Nearly every year, extreme drought affects some portion of the country. Since 2000, extreme drought or drier conditions have affected approximately 6.4% of the nation on average. During August 2012, extreme drought extended over 20% of the country. Since 2000, exceptional drought conditions have affected approximately 1.4% of the nation on average. Of particular note were the conditions between June and October 2011; exceptional drought occurred over the largest land area—greater than 9%—during those months, with the affected areas concentrated in Texas. This year, 2013, is likely to be another exceptional year in terms of the breadth of drought conditions throughout the country, particularly in the Great Plains and eastern portions of the Midwest. The severe to exceptional drought conditions throughout the central and western parts of the United States appear to be persisting during spring 2013. (See Figure 1 .) In mid-August 2012, the extent of the drought conditions was significant: over 70% of the land area of the United States (including Alaska and Hawaii) was affected by abnormally dry and drought conditions. The percentage of land area affected by abnormally dry or drought conditions stayed at or above 65% through February 2013, and remains above 60% as of mid-April, 2013. The intensity of the drought varied across the country, but the regions of extreme and exceptional drought were clustered across the Midwest, Great Plains, Southwest, and in the Southeast, particularly Georgia in 2012. The widespread nature of drought and excessive heat conditions in the Midwest and Great Plains in the summer of 2012 contributed to sharply lower yields for major crops, including corn and soybeans. For example, the average U.S. corn yield was 123.4 bushels per acre, down more than 40 bushels from expectations before the onset of drought. For all crops, crop insurance indemnities for 2012 losses totaled $16 billion. In 2013, continuation of drought in the Great Plains and western parts of the Midwest is affecting prospects for wheat and other crops as well as pasture and forage conditions for livestock producers. Figure 2 shows that Texas and portions of Florida and Georgia experienced exceptional drought conditions (the worst category of drought) in early 2012, while the upper Midwest, including most of the Mississippi Valley experienced normal conditions. A year later, in early 2013, the drought had eased somewhat in portions of Georgia and Florida, but intensified throughout the center of the country from Texas to the Canadian border. Nearly 12% of the contiguous United States was in exceptional drought conditions from late June 2011 through October 2011, compared to approximately 6% of the country the following year. However, exceptional drought conditions persisted over nearly 6% of the contiguous United States from mid-August 2012 through mid-February 2013. Although less severe for portions of the country, such as Texas and Florida, the 2012-2013 drought affected broader swaths of the agricultural heartland compared to 2011 ( Figure 2 ). The 2012-2013 experience illustrates that the extent, timing, and particular features of areas affected by drought—dryland versus irrigated farm regions, or regions that are still recovering from previous droughts—are important in addition to the relative severity of drought conditions. Figure 2 shows a snapshot of drought conditions for March in North America for 2010-2013. In 2010 most of North America and the United States were experiencing near-normal conditions. The extent and severity of the 2012-2013 drought raised questions regarding its origin, and whether the drought was consistent with the range of natural variability in the U.S. Midwest and Plains, or whether it was linked to longer-term changes in the Earth's climate system, such as human-induced global warming. Although the images presented in Figure 2 may seem to indicate a steady progression of drought in the middle portion of the country from near-normal conditions in 2010 to widespread and intense drought in 2012-2013, a March 2013 analysis concludes that the 2012 intense drought was a discrete extreme event. The report states that "the event did not appear to be just a progression or a continuation of the prior year's record drought event that developed in situ over the central U.S." Instead, the report asserted that the drought developed suddenly, with near normal precipitation during winter and spring 2012 over the Great Plains. The drought resulted from an extreme lack of precipitation during the summer months: 2012 was the driest summer in the historical record for the region, experiencing even less rainfall than the years 1934 and 1936, when the central Great Plains were about 0.5 o C warmer than 2012. Essentially the rains abruptly stopped in May over the central Great Plains, and did not return for the summer. The report further stated that the 2012 summer drought was a "climate surprise," because summertime Great Plains rainfall has been trending upward since the early 20 th century, and the last major drought occurred 25 years ago in 1988. Further, the report concluded that neither sea surface temperatures, which have been rising generally due to global warming, nor changes in greenhouse gases in the atmosphere, were responsible for producing the anomalously dry conditions over the central Great Plains in 2012. (A brief discussion of climate change and drought is below.) Drought has a number of definitions; the simplest may be a deficiency of precipitation over an extended period of time, usually a season or more. Drought is usually considered relative to some long-term average condition, or balance, between precipitation, evaporation, and transpiration by plants (evaporation and transpiration are typically combined into one term: evapotranspiration). An imbalance could result from a decrease in precipitation, an increase in evapotranspiration (from drier conditions, higher temperatures, higher winds), or both. It is important to distinguish between drought, which has a beginning and an end, and aridity, which is restricted to low rainfall regions and is a relatively permanent feature of an area's climate (e.g., deserts are regions of relatively permanent aridity). Higher demand for water for human activities and vegetation in areas of limited water supply increases the severity of drought. For example, drought during the growing season would likely be considered more severe—in terms of its impacts—than similar conditions when cropland lies fallow. For policy purposes, drought often becomes an issue when it results in a water supply deficiency: Less water is available than the average amount for irrigation, municipal and industrial supply (M&I), energy production, preservation of endangered species, and other needs. These impacts can occur through multiple mechanisms: decreased rainfall and soil moisture affecting dryland farming; low reservoir levels decreasing allocations for multiple purposes (including irrigation, navigation, energy production, recreation, fish and wildlife needs, and other water supplies); low stream flows limiting withdrawals for multiple purposes, including municipal and industrial supplies, among others; decreased exchange of water in lakes resulting in water quality problems limiting recreation (e.g., blue-green algae restrictions in multiple lakes in Oklahoma and Texas during 2011 and 2012 drought conditions). At the national level, drought is monitored and reported by the National Drought Mitigation Center in an index known as the U.S. Drought Monitor, which synthesizes various drought indices and impacts, and represents a consensus view of ongoing drought conditions between academic and federal scientists. Drought can also relate and contribute to other phenomena, such as fires and heat waves. Drought and "normal" conditions can vary considerably from region to region. For example, the U.S. Drought Monitor shows that the southern tip of Texas, including Corpus Christi, faced extreme to exceptional drought in early April 2013 ( Figure 1 ). Similarly, the city of Albuquerque, New Mexico, was in extreme drought during the same time period. However, Corpus Christi receives on average a total of 5.19 inches of precipitation over the three-month period January through March. In contrast, Albuquerque receives on average 1.54 inches of precipitation over the same period. Both cities faced extreme drought in early April 2013, but what was normal for Corpus Christi was very different for what was normal for Albuquerque. To deal with these differences, meteorologists use the term meteorological drought—usually defined as the degree of dryness relative to some average amount of dryness and relative to the duration of the dry period. Meteorological drought is region-specific because atmospheric conditions creating precipitation deficiencies vary from region to region, as described above for Corpus Christi and Albuquerque. In the past, U.S. Drought Monitor maps used an "A" to indicate that the primary physical effects are agricultural (crops, pastures, and grasslands) and an "H" to indicate that the primary impacts of drought are hydrological (to water supplies such as rivers, groundwater, and reservoirs). When both effects are apparent, the letters are combined, appearing as "AH." In the newer versions of the maps, such as the one shown in Figure 1 , the "A" and "H" are replaced with an "S" and "L." These are experimental designations, according to the National Drought Mitigation Center, which produces the U.S. Drought Monitor maps. The "S" designation is intended to indicate a combination of drought indices that reflect impacts that respond to precipitation over several days up to a few months (short-term effects). These would include impact to agriculture, topsoil moisture, unregulated streamflows, and aspects of wildfire danger. The "L" designation approximates responses to precipitation over several months up to a few years (long-term effects). These would include reservoir levels, groundwater, and lake levels. Figure 1 shows that for early April the nation, predominantly the western half, was experiencing a combination of all three types, S, L, and SL. The U.S. Drought Monitor maps also indicate the intensity of a drought, ranging from abnormally dry (shown as D0 on the maps) to exceptional drought (shown as D4). How these conditions are assessed and how drought is classified is discussed below. To assess and classify the intensity and type of drought, certain measures, or drought indices, are typically used. Drought intensity, in turn, is the trigger for local, state, and federal responses that can lead to the flow of billions of dollars in relief to drought-stricken regions. The classification of drought intensity, such as that shown in Figure 1 for April 9, 2013, may depend on a single indicator or several indicators, often combined with expert opinion from the academic, public, and private sectors. The U.S. Drought Monitor uses five key indicators, together with expert opinion, with indices to account for conditions in the West where snowpack is relatively important, and with other indices used mainly during the growing season. The U.S. Drought Monitor intensity scheme—D0 to D4—is used to depict broad-scale conditions but not necessarily drought circumstances at the local scale. For example, the large regions depicted as red in Figure 1 faced extreme to exceptional drought conditions for the week of April 9, 2013, but they may contain local areas and individual communities that experienced less (or more) severe drought. In early April 2011, over 80% of Texas was experiencing severe to extreme drought, and nearly 10% of the state was in exceptional drought, the most severe level of drought intensity published by the National Drought Mitigation Center. The 2011 drought in Texas represented a dramatic shift compared to the same time period in 2010, when approximately 4% of the total land area in Texas was experiencing drought conditions, with no exceptional drought conditions anywhere in the state. (See Figure 3 , comparing 2010, 2011, 2012, and 2013.) Drought conditions worsened in Texas through the beginning of October 2011, when 88% of the state experienced exceptional drought conditions (and only 3% of the state was not classified as extreme or exceptional drought). Drought conditions generally improved throughout the rest of 2011, but large portions of the state were still affected by extreme or exceptional drought until late winter and early spring of 2012, when the eastern portion of the state recovered to normal or abnormally dry conditions (the least severe category) because of above-normal rainfall from December 2011 through February 2012. In April 2012 the drought in Texas had eased somewhat; slightly more than 50% of the state was experiencing severe drought or worse, down from 80% a year before. Conditions in April 2013 have worsened compared to a year earlier, however; approximately 70% of the state was experiencing at least severe drought in April 2013, and extreme and exceptional drought were 30% and 12%, respectively. (See Figure 3 .) According to Texas state climatologist John Nielsen-Gammon, 2011 may have been the worst one-year drought on record for Texas. Compounding the effects of abnormally low precipitation, the June-August average temperature in Texas was approximately 2.5 degrees Fahrenheit greater than any previous Texas summer since 1895 and 5 degrees Fahrenheit (F) greater than the long-term average. The 2011 U.S. Drought Monitor showed that Texas had been experiencing both hydrological and agricultural drought, indicating that the drought had caused deficiencies in water supplies as well as deficiencies of water to crops, plants, and grasses. The most severe Texas drought overall occurred from 1950 to 1957, and had substantial impacts on water supplies across the state because it lasted over many years. Because of the longevity and severity of the 1950s drought, municipal water supplies in Texas today are designed to withstand a drought of similar magnitude, according to the state climatologist. Long-term precipitation patterns in Texas are influenced by a configuration of sea surface temperatures known as the Pacific Decadal Oscillation (PDO). Similar conditions also prevailed from the 1940s through the 1960s, encompassing the Texas drought of record (1950-1957). The 2007-2009 California drought was complicated by decades of tension over water supply deliveries for irrigation and M&I uses, and the preservation of water flows to protect threatened and endangered species. Dry conditions that began in 2007 continued through the 2009 water year (October 2008 through September 2009) and into the fall of 2009. According to the California Department of Water Resources, the 2007-2009 drought was the 12 th -driest three-year period in California history since measurements began. Although hydrological conditions were classified as below normal in 2010 and "wet" (well above average) in 2011, the 2012 water year was classified as "below normal" for the Sacramento River basin and "dry" for the San Joaquin River basin. Above-average reservoir storage at the end of 2011 mitigated reductions to water users. Although the drought was declared over in spring 2011, by August 2012, the U.S. drought monitor again showed increasing severity of drought in the eastern portion of the state. Water deliveries to state and federal water project contractors were restricted again in 2012. California's dry conditions from 2007 through 2009 exacerbated an already tight water supply, where federal and state water deliveries had been reduced in response to a court order to prevent extinction of the Delta smelt. Similar factors are still in play today. Water deliveries from state and federal water projects for 2013 are restricted due to legal actions to protect threatened and endangered species, water quality requirements, and hydrological factors. Some federal agricultural water supply contractors are projected to receive just 20% of contract water supplies from the Bureau of Reclamation's Central Valley Project as of April 5, 2013, while some municipal and industrial contractors are scheduled to receive 70% of contract supplies. The April 9, 2013, drought monitor shows abnormally dry to severe drought conditions in almost every corner of the state. (For more information on project water deliveries, see CRS Report R40979, California Drought: Hydrological and Regulatory Water Supply Issues , by [author name scrubbed], [author name scrubbed], and Cynthia Brougher.) Spanning parts of Arizona, California, Colorado, New Mexico, Nevada, Utah, and Wyoming, the Colorado River basin is a critical water supply for the West and portions of northwestern Mexico. Based on inflows observed over the last century, the river is over-allocated, and some contend that supply and demand imbalances are likely to increase in the future. The March 2013 forecast is for flows below average for 2013, as has been the case for 10 of the last 13 years. The 2013 forecast for Lake Powell, the basin's largest reservoir, was for half of its normal inflow as the result of below average snowpack; that is, the inflow is anticipated at 5.3 million acre-feet. As called for in the water compact and interim guidelines that prescribe water sharing in the basin, the Bureau of Reclamation will most likely release from Lake Powell 8.2 million acre-feet from the reservoir for downstream purposes, thus resulting in a net drop in the lake level by the end of the water year. The dry conditions in 2013 are following the dry conditions of 2012. If forecasted conditions transpire, the basin will have storage levels in September 2013 near the historic lows of 2005. Reclamation predicts that Lake Powell storage levels will be 44% of capacity—10.78 million acre-feet—at that time. Drought in part of the basin, particularly the upper basin, which is the source of most of the river's flow, exacerbates tensions over the sharing of the resource and results in difficult tradeoffs among the multiple uses of water (e.g., municipal, agricultural, hydropower, energy, recreation, and ecosystem and species demands). How water resources are allocated among these uses within a state is largely determined by state water law, compliance with federal and state laws (including interstate compacts, and environmental and resource management laws and regulations), and court decisions. In the case of the Colorado River, apportionment of water supplies among the seven basin states is done in accordance with the Colorado River Compact and a body of law known as the "Law of the River." Low water availability in the Colorado River basin has effects beyond the basin boundaries. For example, Colorado River water is transported from Colorado's Western Slope to the state's Front Range; this water represents a significant contribution to the water available for agricultural and municipal uses in many eastern Colorado counties. Similarly, much of the lower basin allocation (4.4 million acre-feet) is diverted to southern California under the Colorado River Compact. The immediate cause of drought is: the predominant sinking motion of air (subsidence) that results in compressional warming or high pressure, which inhibits cloud formation and results in lower relative humidity and less precipitation. Regions under the influence of semi permanent high pressure during all or a major portion of the year are usually deserts, such as the Sahara and Kalahari deserts of Africa and the Gobi Desert of Asia. Prolonged droughts occur when these atmospheric conditions persist for months or years over a certain region that typically does not experience such conditions for a prolonged period. Predicting drought is difficult because the ability to forecast surface temperature and precipitation depends on a number of key variables, such as air-sea interactions, topography, soil moisture, land surface processes, and other weather system dynamics. Scientists seek to understand how all these variables interact and to further the ability to predict sustained and severe droughts beyond a season or two in advance, which is the limit of drought forecasting abilities today. In the tropics, a major portion of the atmospheric variability over months or years seems to be associated with variations in sea surface temperatures (SSTs). Since the mid- to late 1990s, scientists have increasingly linked drought in the United States to SSTs in the tropical Pacific Ocean. Cooler than average SSTs in the eastern tropical Pacific region—"la Niña-like" conditions—have been shown to be correlated with persistently strong drought conditions over parts of the country, particularly the West. A number of studies have made the connection between cooler SSTs in the eastern Pacific and the 1998-2004 western drought, three widespread and persistent droughts of the late 19 th century, and past North American "megadroughts" that occurred between approximately 900 and 1300 A.D. The precolonial megadroughts apparently lasted longer and were more extreme than any U.S. droughts since 1850, when instrumental records began. Some modeling studies suggest that within a few decades the western United States may again face higher base levels of dryness, or aridity, akin to the 900-1300 A.D. period. Although the relationship between cooler than normal eastern tropical Pacific SSTs (La Niña-like conditions) and drought is becoming more firmly established, meteorological drought is probably never the result of a single cause. Climate is inherently variable, and accurately predicting drought for one region in the United States for more than a few months or seasons in advance is not yet possible because so many factors influence regional drought. What is emerging from the scientific study of drought is an improved understanding of global linkages—called teleconnections by scientists—between interacting weather systems, such as the El Niño-Southern Oscillation, or ENSO. (See box for a description of ENSO.) For example, some scientists link La Niña conditions between 1998 and 2002 with the occurrence of near-simultaneous drought in the southern United States, Southern Europe, and Southwest Asia. Some scientists refer to severe drought as "the greatest recurring natural disaster to strike North America." That claim stems from a reconstruction of drought conditions that extends back over 1,000 years, based on observations, historical and instrumental records where available, and on tree-ring records or other proxies in the absence of direct measurements. What these reconstructions illustrate is that the coterminous United States has experienced periods of severe and long-lasting drought in the western states and also in the more humid East and Mississippi Valley. The drought reconstructions from tree rings document that severe multidecadal drought occurred in the American Southwest during the 13 th century, which anthropologists and archeologists suspect profoundly affected Pueblo society. Tree ring drought reconstructions also document severe drought during the 14 th , 15 th , and 16 th centuries in the central and lower Mississippi Valley, possibly contributing to the disintegration of societies in that region. More recently, a combination of tree ring reconstructions and other proxy data, historical accounts, and some early instrumental records identify three periods of severe drought in the 19 th century: 1856-1865 (the "Civil War drought"), 1870-1877, and 1890-1896. The 1856-1865 drought, centered on the Great Plains and Southwest, was the most severe drought to strike the region over the last two centuries, according to one study. The 1890-1896 drought coincided with a period in U.S. history of federal encouragement of large-scale efforts to irrigate the relatively arid western states under authority of the Carey Act . Congressional debate also occurred over a much larger federal role in western states irrigation, which led to the Reclamation Act of 1902. In the 20 th century, the 1930s "Dust Bowl" drought and the 1950s Southwest drought are commonly cited as the two most severe multiyear droughts in the United States. (The 1987-1989 drought was also widespread and severe, mainly affecting the Great Plains but also instigating extensive western forest fires, including the widespread Yellowstone fire of 1988.) According to several studies, however, the 19 th and 20 th century severe droughts occurred during a regime of relatively less arid conditions compared to the average aridity in the American West during the 900 to 1300 A.D. megadroughts. One study indicates that the drought record from 900 to 1300 A.D. shows similar variability—drought periods followed by wetter periods—compared to today, but the average climate conditions were much drier and led to more severe droughts. The relationship between climate change and future trends in droughts is complex and its scientific understanding appears to be evolving. In 2007 the Intergovernmental Panel on Climate Change (IPCC) released its Fourth Assessment Report, which stated that, globally, very dry areas have more than doubled since the 1970s due to a combination of El Nino-Southern Oscillation (ENSO) events and global surface warming. The IPCC report added that very wet areas declined by about 5% globally. The report asserted that documented trends in severe droughts and heavy rains show that hydrological conditions are becoming more intense in some regions. In 2012, however, the IPCC issued a new report that noted: "There are still large uncertainties regarding observed global-scale trends in droughts." The new report noted that its earlier assessment, that very dry areas have more than doubled since the 1970s, was based largely on only one study, which relied on a measurement largely related to temperature, not moisture. A different study, which looked at soil moisture simulations, found that trends in drought duration, intensity, and severity predominantly were decreasing , not increasing, but with strong regional variation. The 2012 IPCC report assigned medium confidence that there has been an overall slight tendency toward less dryness in North America (i.e., a wetting trend with increasing soil moisture and runoff). It noted that the most severe droughts in the 20 th century occurred in the 1930s and 1950s, where the 1930s drought was the most intense and the 1950s drought was the most persistent. In comparison to the severe megadroughts that occurred in North America hundreds and thousands of years ago, as documented using paleoclimate evidence (discussed elsewhere in this report), these recent droughts were not unprecedented, according to the 2012 IPCC report. The report concluded that despite new studies that have furthered the understanding of mechanisms leading to drought, there is still limited evidence to attribute observed changes. The IPCC assessed that there was medium confidence that anthropogenic influence has contributed to changes in drought patterns in the second half of the 20 th century, but gave low confidence to the attribution of changes in drought patterns at the regional level. The report noted that some regions of the world have experienced trends towards more intense and longer droughts, such as southern Europe and West Africa. But in other regions, such as central North America and northwestern Australia, droughts have become less frequent, less intense, or shorter. How the 2011-2012 drought in the central United States may change that assessment in the forthcoming IPCC report (2014) remains to be seen. Further adding to the complexity and challenge to the scientific understanding of what causes drought was work presented at the European Geosciences Union meeting in April 2013 that attempted to simulate megadroughts that occurred in the past. The simulations produced a number of megadroughts that lasted for decades; however, they did not match the timing of the past documented megadroughts. The scientists presenting their work at the meeting concluded that the model they used seemed to miss some of the dynamics that drive large droughts. Several recent droughts triggered federal responses. When a drought is declared for a locality or region by the U.S. President, U.S. Secretary of Agriculture, or a state governor, it sets in motion a series of alerts, recommendations, activities, and possible restrictions at the local, regional, or state level, depending on the drought length and severity. Ultimately, a drought could initiate a federal response and transfer of federal dollars to the affected area. Before drought severity reaches a level triggering a federal response, many states take action. The National Drought Mitigation Center posts online copies of drought management, mitigation, or response plans for states and localities, nationwide. The California and Texas governors also have in recent years issued state drought emergency declarations triggering state drought assistance. Some states have also instituted water banks and water transfer mechanisms to deal with water supply shortages (e.g., California, Idaho, and Texas). When a state's resources are lacking, a state governor may request drought disaster assistance through the U.S. Secretary of Agriculture, who can declare an agricultural disaster due to drought and make available low-interest loans for qualified farmers and ranchers and other emergency assistance. However, under a new Farm Services Agency (FSA) streamlined process, any portion of a county experiencing severe drought according to the U.S. Drought Monitor for eight consecutive weeks can receive a "nearly" automatic USDA disaster declaration. Further, any county for which a portion is identified in the U.S. Drought Monitor as undergoing severe drought (or worse) may also be declared a disaster area. As of August 13, 2012, more than 1,400 U.S. counties in 33 states had been designated as drought disaster areas by the Secretary. As of April 17, 2013, more than 1,180 counties had been designated as drought disaster areas for the 2013 crop loss purposes (primary and contiguous county designations). For more on emergency assistance, see the box "USDA Emergency Assistance: Status and Legislation." In addition, if the effects of a drought overwhelm state or local resources, the President, at the request of the state governor, is authorized under the Stafford Act (42 U.S.C. 5121 et seq.) to issue major disaster or emergency declarations resulting in federal aid to affected parties. However, the last presidential drought or water shortage disaster declaration in the continental United States was for New Jersey in 1980. More recent drought declarations have been issued for U.S. territories in the Pacific. The infrequency of presidential domestic drought declarations increases the uncertainty about the circumstances under which such a declaration is likely to be made. The de facto policy since the 1980s has been that the U.S. Secretary of Agriculture is the lead in responding and declaring drought and eligibility for drought assistance. Although agricultural losses typically dominate drought impacts, congressional interest in federal drought assistance is not limited to the USDA. For example, the 2012 drought raised interest in whether and to what extent other federal agencies have and are using authorities to assist with managing drought. For example, in addition to operations of federal water resource facilities (discussed below), the U.S. Army Corps of Engineers and the U.S. Bureau of Reclamation also have limited emergency drought authorities and funding; the drought response and recovery authorities for the Corps, Reclamation, and the Farm Service Agency are provided in Appendix A . While the Corps and Reclamation authorities have experienced some use, the frequency, impact, and coordination of their use with other federal and state drought efforts have not been monitored and assessed. Most of the Corps drought response and recovery authorities are limited to providing limited and temporary water from its reservoirs for a fee. The exception is its authority to assist with well construction and transport of water to drought-distressed farmers, ranchers, and political subdivisions; the construction costs are a nonfederal responsibility, while the transport costs can be federally funded. Congress has provided Reclamation with a broader set of authorities that allow it to assist with drought response and recovery; these authorities, however, are limited to the 17 western states and Hawaii. Other federal agencies are also reviewing drought response actions and committing resources or temporarily changing policies that may ease drought burdens. For example, the President in early August 2012 convened a White House Rural Council to review and assess federal agency activities and capabilities. Shortly following the gathering, the Administration announced new measures to address drought impact, as well as a listing of ongoing federal agency efforts to address the 2012 drought. Among the new efforts announced were waivers for federal trucking regulations and additional emergency funding for crop and livestock producers. Operations of federal water resource facilities, particularly reservoirs behind dams, can both assist in meeting water supply needs during droughts and be vulnerable to droughts. Federal dams, particularly in the West, were constructed in part to provide multi-year storage to help with variations in seasonal and annual precipitation. Sustained hydrological drought nonetheless affects operations of federally managed reservoirs, dams, locks, hydroelectric facilities, and other components of the nation's water infrastructure. For example, numerous Corps reservoirs have drought management plans that result in the curtailing of some benefits (e.g., navigation, hydropower) in order to maintain other benefits (e.g., in-stream flows to support water quality, aquatic species, and river withdrawals for electric power cooling and municipal and industrial water supplies). The Corps' operations of its facilities in the Apalachicola-Chattahoochee-Flint River system during 2007-2008 illustrate management tradeoffs during drought (see box below). Similarly, drought conditions in California from 2007 to 2009, coupled with declining fish species, resulted in operational changes to Reclamation facilities, including significantly reduced water deliveries to Central Valley Project contractors, as well as to California's State Water Project (SWP) contractors. Reclamation, whose facilities currently serve over 31 million people in the West and deliver a total of nearly 30 million acre-feet of water annually, faces operational challenges because of conflicts among its water users during drought in states it serves. For example, severe drought conditions in 2001 in the Klamath River basin, on the Oregon-California border, exacerbated competition for scarce water resources among farmers, Indian tribes, commercial and sport fishermen, other recreationists, federal wildlife refuge managers, environmental groups, and state, local, and tribal governments. Reclamation's decision in April 2001 to withhold water from farmers for in-stream flows for three fish species listed as endangered or threatened under the Endangered Species Act sparked congressional debate that continues today. The Klamath basin again experienced drought conditions in 2010 and again in 2012. Project water flows to Klamath refuges were halted from December 2011 through March 2012. Dry conditions contributed to a cholera outbreak among migrating birds during this time, resulting in the death of thousands of birds that visit the refuges. Early spring precipitation improved hydrological conditions such that Reclamation projected full irrigation deliveries for 2012. However, low lake levels and inflows by April 1, 2013, have resulted in Reclamation postponing spring water deliveries by one to two weeks. Final water deliveries are also affected by flows necessary to protect federally listed Coho salmon and two sucker species. A new biological opinion on project operations through February 2014 is expected in April 2013, which may again affect water deliveries. The droughts in California, the Southeast, and the Klamath River basin underscore an underlying difficulty of managing federal reservoirs to meet multipurpose water needs. In the future, the United States might face severe and sustained periods of drought not experienced in the 20 th century. If so, disputes over federal infrastructure management like those in California, the ACF basin, and Klamath River basin may increasingly determine short-term actions by Reclamation and the Corps, and result in long-term consequences for congressional oversight and funding. Predicting the severity and duration of severe drought over a specific region of the country is not yet possible more than a few months in advance because of the many factors that influence drought. Nevertheless, some modeling studies suggest that a transition to a more arid average climate in the American West, perhaps similar to conditions in precolonial North America, may be underway. Some studies have suggested that human influences on climate, caused by emissions of greenhouse gases, may be responsible for a drying trend; however, other studies appear to indicate an opposite trend or possibility (see above section on " Drought and Climate Change "). Whether future greenhouse gas-driven warming can be linked to La Niña-like conditions, or other phenomena related to the El Niño-Southern Oscillation, is unclear. A likely consequence of higher temperatures in the West would be higher evapotranspiration, reduced precipitation, and decreased spring runoff. These impacts would result from an "acceleration" of the hydrologic cycle, due to increased warming of the atmosphere, which in turn increases the amount of water held in the atmosphere. A possible consequence is more frequent, and perhaps more severe, droughts and floods. However, these changes are unlikely to occur evenly across the United States. Observations of water-related changes over the last century suggest that runoff and streamflow in the Colorado and Columbia River basins has been decreasing, along with the amount of ice in mountain glaciers in the West, and the amount of annual precipitation in the Southwest. Yet the understanding of hydrologic extremes, such as drought, is confounded by other effects such as land cover changes, the operation of dams, irrigation works, extraction of groundwater, and other engineered changes. Forecasting drought conditions at the regional scale, for example for river basins or smaller, is difficult because current climate models are less robust and have higher uncertainty at smaller scales. (For example, see box below on the Colorado River's Lake Mead.) Even though forecasting drought at the regional scale is difficult, understanding potential changes in long-term trends is important for water managers at all levels—federal, state, local, and tribal. Water project operations and state water allocations are typically based on past long-term hydrological trends; significant deviations from such trends may result in difficult challenges for water managers and water users alike. An example of such a dilemma can be observed in the Colorado River basin. Conditions in the Colorado River basin over the last decade, including recent low reservoir levels in Lake Mead and Lake Powell, and low flows in the Upper Basin, raise the issue of what is the baseline for average hydrologic cycles now and in the future. The allocation of Colorado River water supplies was agreed upon by lower and upper basin states in the early part of the 20 th century based on hydrologic data from what scientists now know was a relatively wet period in the history of the Colorado River basin. If long-term reduced runoff predictions for the basin are borne out (see box above on Colorado River's Lake Mead and earlier section on " Conditions in the Colorado River Basin "), then water allocation policies for regions like the Colorado River basin may again need to be revisited. In the meantime, Colorado River basin states have negotiated "shortage criteria" and "interim guidelines" for managing Colorado River water supplies during times of shortages. Additionally, Reclamation in December 2012 released a new Colorado River basin supply and demand study, which examined several different future water supply and demand scenarios. Severe drought can cause significant economic harm, affect nearly all areas of the country, and exacerbate water competition. Nonetheless, several key factors make comprehensive drought policy at the national level a challenge, including: the gradual, or "creeping," nature of drought; split federal and nonfederal drought response and management responsibilities; a patchwork of federal programs and oversight with little coordination; and differences in regional conditions and drought risk in terms of the drought hazard, vulnerability, and potential consequences. Drought conditions often develop slowly, are not easily identified initially, and are challenging to forecast beyond 30 to 90 days. Consequently, drought declarations are made well after onset—typically once impacts are felt. This situation makes it difficult to mitigate or prevent drought impacts. Further, even though drought generally is continuously occurring somewhere in the United States, the unpredictability of its location, duration, and severity complicates preparation for implementation of responses. When severe meteorological drought affects a region, the supply of available water often shrinks before use is reduced. Adjusting down the use of water as drought persists and supplies shrink can be difficult. Actually, droughts can increase demand on water supplies (e.g., lower soil moisture results in increased demand for irrigation and landscape watering). The lack of flexibility of existing water access and use arrangements sometimes limits the scope and speed of some drought responses. Federal, state, and local authorities make water resource decisions within the context of multiple and often conflicting laws and objectives, competing legal decisions, and entrenched institutional mechanisms, including century-old water rights and long-standing contractual obligations (i.e., long-term water delivery and power contracts). Typically, how access to and competition for water is managed (e.g., permitting of water withdrawals) and how reductions in water supply are managed (e.g., shared reductions under a riparian system of water rights versus reductions based on the priority in time of a water right) is determined by state law and at times through interstate compacts. Additionally, state and local laws can determine how easily water can be transferred among users. These access, reduction, and transfer arrangements can significantly affect the behavior, incentives, and opportunities available to water users during droughts. Fundamental changes to the access, reduction, and transfer arrangements are largely outside of the realm of federal action, and are largely determined by each state; however, such activities might be directly or indirectly influenced by changes in federal policies and activities. A mismatch between supply and demand during droughts underscores the responsibility of stakeholders to anticipate the influence of drought and plan and act accordingly. The federal government has several drought monitoring and response programs. While drought planning and mitigation responsibilities lie largely at the state and local level, the federal government also provides some drought planning assistance. Much of this assistance historically has been concentrated on the West. Additionally, the federal government often provides emergency funding for drought relief that is primarily aimed at easing the economic impacts. The National Drought Commission and others have noted, however, that federal relief programs and emergency funding provide little incentive for state and local planning and efforts to reduce social and economic vulnerability to drought. A policy issue particularly relevant to state and local decision makers is the role and types of demand management tools to employ during a drought (e.g., lawn watering restrictions, incentives to curtail irrigation during droughts, scarcity pricing). How a state distributes and administers its waters among competing uses can affect what drought response tools are available to it and to water users. A further challenge is lack of a cohesive national drought policy at the federal level, and lack of a lead agency coordinating federal programs. Rather, several federal programs have been developed over the years, often in response to specific droughts. Additionally, occasional widespread economic effects have prompted creation of several federal relief programs. These programs are overseen by different congressional committees. Whether this fragmentation results in duplication, waste, and gaps, or whether it reflects the complexity of preparing and responding to drought and the different responses needed by a wide range of stakeholders (e.g., irrigated agriculture, dry land farming, municipal water utilities) is part of the debate about how to proceed with cost-effective management of the nation's drought risk and who bears the consequences of drought. (See box below for an example of how water access and transfer arrangements played a significant role in shaping Australia's drought resilience and adaptation.) The 2012 drought, like other recent severe weather events, has contributed to the ongoing public and policy discussion about the influence of human actions on climate and the future of U.S. actions on climate change mitigation. For a discussion of climate change science and policy, see CRS Report RL34266, Climate Change: Science Highlights , by [author name scrubbed]; and CRS Report R41973, Climate Change: Conceptual Approaches and Policy Tools , by [author name scrubbed], respectively. Congress has long recognized the lack of coordinated drought planning and mitigation activities among federal agencies and the predominance of a crisis management approach to dealing with drought. Over the last 15 years, legislative action has focused on the question of whether there is a need for a national drought policy. For example, in 1998, Congress passed the National Drought Policy Act ( P.L. 105-199 ), which created the National Drought Policy Commission. In 2000, the commission submitted to Congress a comprehensive report that included policy recommendations. Congress has considered recommendations from the commission's 2000 report; to date, it has enacted one part of the recommendations (the National Integrated Drought Information System, discussed below). Congress also considered, but did not enact, legislation creating a National Drought Council during deliberations on the 2008 farm bill. Recent congressional deliberations focused on the 2012 reauthorization of the farm bill, which was given a one-year extension (through 2013) in January 2013, although other legislation is also pending. The commission findings, the proposed council, and the 2008 and 2013 farm bills are discussed below. In passing the National Drought Policy Act of 1998, Congress found that "at the Federal level, even though historically there have been frequent, significant droughts of national consequences, drought is addressed mainly through special legislation and ad hoc action rather than through a systematic and permanent process as occurs with other natural disasters." Further, Congress found an increasing need at the federal level to emphasize preparedness, mitigation, and risk management. Those findings are consistent with a recognition of the inevitability, albeit unpredictability, of severe drought occurring. The act created the National Drought Policy Commission, and required it to conduct a study and report to Congress on what is needed to respond to drought emergencies; what federal laws and programs address drought; what are the pertinent state, tribal, and local laws; and how various needs, laws, and programs can be better integrated while recognizing the primacy of states to control water through state law. In May 2000, the commission submitted its report. The commission concluded that the United States needed to embrace a national drought policy with preparedness at its core. It recommended that Congress enact a National Drought Preparedness Act, which would establish a federal-nonfederal partnership through a National Drought Council. The council would function to further national drought policy goals. The commission's report provided 29 specific recommendations to achieve the goals of national drought policy. Most of the specific recommendations were targeted at the President and federal agencies, coupled with calls for Congress to fund drought-related activities in support of the recommendations. ( Appendix B of this report lists the five goals and illustrative recommendations from the commission's report.) As background for its recommendations, the commission noted the patchwork nature of drought programs, and that despite a major federal role in responding to drought, no single federal agency leads or coordinates drought programs—instead, the federal role is more of "crisis management." National Drought Preparedness Act bills were introduced in 2002 (107 th Congress), 2003 (108 th Congress), and 2005 (109 th Congress), but were not enacted. Similar stand-alone legislation was introduced in the 110 th Congress; however, the House-passed version of H.R. 2419 , the Farm, Nutrition, and Bioenergy Act of 2008 (also known as the 2008 farm bill), contained a section creating a National Drought Council. This section of the 2008 farm bill would have charged the council with creating a national drought policy action plan, which would have incorporated many of the components recommended in the commission's report; however, it was not included in the conference agreement. Although the Senate version of H.R. 2419 did not contain a similar section, the Senate bill authorized permanent disaster payments in hopes of precluding the need for ad hoc disaster payments. The conference agreement on the 2008 farm bill ( P.L. 110-246 , enacted June 18, 2008) included a new $3.8 billion trust fund to cover the cost of making agricultural disaster assistance available on an ongoing basis over the following four years. The assistance was available for disasters occurring on or before September 30, 2011. In January 2013, as part of a one-year extension of the 2008 farm bill, four of the five disaster programs were reauthorized through FY2013, but Congress provided no funding. With farm bill programs expiring in 2013, the 113th Congress is expected to consider the reauthorization of an omnibus farm bill, including agricultural disaster programs (see box on page 18 ). Although Congress has not enacted comprehensive national drought preparedness legislation, it acted on the second of five commission goals by passing the National Integrated Drought Information System (NIDIS) Act of 2006 ( P.L. 109-430 ). That goal called for enhanced observation networks, monitoring, prediction, and information delivery of drought information. P.L. 109-430 established NIDIS within the National Oceanic and Atmospheric Administration (NOAA) to improve drought monitoring and forecasting abilities. The NIDIS authorization expired in 2012. A NIDIS reauthorization bill, S. 376 , has been introduced in the 113 th Congress. Drought is a natural hazard with potentially significant economic, social, and ecological consequences. History suggests that severe and extended droughts are inevitable and part of natural climate cycles. Drought has for centuries shaped the societies of North America and will continue to do so into the future. Current understanding is that the physical conditions causing drought in the United States are linked to sea surface temperatures in the tropical Pacific Ocean. For example, the 2011 severe drought in Texas is thought to be linked to La Niña conditions in the Pacific Ocean. Increasingly, studies are projecting the long-term role that droughts may play in regional climate patterns. Nonetheless, available technology and science remains limited to forecasting specific drought a few months in advance for a region. The prospect of extended droughts and more arid baseline conditions in parts of the United States represents a challenge to existing public policy responses for preparing and responding to drought, and to federal water resource projects in particular, because their construction was based largely on 19 th - and 20 th -century hydrologic conditions. Over time, Congress has created various drought programs, often in response to specific droughts and authored by different committees. Crafting a broad drought policy that might encompass the jurisdiction of many different congressional committees is often difficult. Additionally, although many water allocation and other water management responsibilities largely lie at the state or local level, localities and individuals often look to the federal government for relief when disasters occur. This is similar to the situation for flood policy, and water policy in general, at the national level. The National Drought Policy Commission recognized these patterns, and they underlie many of its recommendations to Congress. The currently fragmented approach can be costly to national taxpayers; however, it is not certain that increased federal investment (especially vis-à-vis the potential for tailored local and state investment) in drought preparation, mitigation, and improved coordination would produce more economically efficient outcomes. The overall costs to the federal government and the nation as a result of extreme drought, apart from relief to the agricultural sector, are difficult to assess in part because of the broad nature of drought's impacts. Drought can result in water restrictions affecting municipal and industrial users, decreased hydropower generation and power plant cooling efficiency, navigation limitations and disruptions, harm to drought-sensitive species (benefits to other species), and increased fire risk, among other effects. Congress may opt to revisit the commission's recommendations and reevaluate whether current federal practices could be supplemented with actions to coordinate, prepare for, and respond to the unpredictable but inevitable occurrence of drought. Given the daunting task of managing drought, Congress also may consider proposals to manage drought impacts, such as assisting localities, industries, and agriculture with developing or augmenting water supplies. This could take multiple forms: construction or permitting of reservoirs, the reallocation of water supplies at existing facilities, promotion of alternative water sources (e.g., reuse, desalination), or water conservation and efficiency. Congress also may move to examine how the two major federal water management agencies, the Corps and Reclamation, plan for and respond to severe drought and account for its impacts. Appendix A. Drought-Related Federal Response and Recovery Authorities Appendix B. Excerpts from the 2000 National Drought Policy Commission Report to Congress In 2000, the National Drought Policy Commission published its report to Congress, Preparing for Drought in the 21 st Century—A Report of the National Drought Policy Commission. The commission concluded that the United States needed to embrace a national drought policy with preparedness at its core. It recommended that Congress enact a National Drought Preparedness Act, which would establish a federal-nonfederal partnership through a National Drought Council. The council would function to further national drought policy goals. The council's recommended duties included promoting cooperation and effective delivery of drought programs, evaluation of regional needs and opportunities, and assessments of drought-related assistance and initiatives, and post-drought impact assessments. The commission also recommended five broad national policy goals and a number of recommendations for furthering each of the goals. Below are the five goals and below those are some examples of the types of recommendations accompanying each of the goals; many more recommendations are proposed in the commission's report. To date, Congress has enacted legislation furthering Goal 2 on improved observation. Congress also has taken action on insurance and financial strategies; their effect on improving drought preparedness (i.e., reducing drought vulnerability) versus increasing the relief for the impacts of drought has not been evaluated. This type of assessment potentially would fall under the duties of a National Drought Council as recommended by the commission. Policy Statement Favor preparedness over insurance, insurance over relief, and incentives over regulation. Set research priorities based on the potential of the research results to reduce drought impacts. Coordinate the delivery of federal services through cooperation and collaboration with nonfederal entities. Goals Goal 1. Incorporate planning, implementation of plans and proactive mitigation measures, risk management, resource stewardship, environmental considerations, and public education as the key elements of effective national drought policy. Goal 2. Improve collaboration among scientists and managers to enhance the effectiveness of observation networks, monitoring, prediction, information delivery, and applied research and to foster public understanding of and preparedness for drought. Goal 3. Develop and incorporate comprehensive insurance and financial strategies into drought preparedness plans. Goal 4. Maintain a safety net of emergency relief that emphasizes sound stewardship of natural resources and self-help. Goal 5. Coordinate drought programs and response effectively, efficiently, and in a customer-oriented manner. Illustrative Recommendations for Goal 1 : Planning and Mitigation Congress should adequately fund existing drought preparedness programs. President should direct appropriate federal agencies to effectively meet the drought planning needs of those areas not traditionally served (e.g., eastern United States). The President should direct all appropriate federal agencies to study their programs for potential impacts on drought. The president should direct all appropriate federal agencies to develop and implement drought management plans for federal facilities (e.g., military bases, federal office complexes, federal prisons).

Drought is a natural hazard with often significant societal, economic, and environmental consequences. Public policy issues related to drought range from how to identify and measure drought to how best to prepare for, mitigate, and respond to drought impacts, and who should bear associated costs. Severe drought in 2011 and 2012 fueled congressional interest in near-term issues, such as current (and recently expired) federal programs and their funding, and long-term issues, such as drought forecasting and various federal drought relief and mitigation actions. Continuing drought conditions throughout the country contribute to ongoing interest in federal drought policies and responses. As of April 2013, drought has persisted across approximately two-thirds of the United States and is threatening agricultural production and other sectors. More than 1,180 counties so far have been designated as disaster areas for the 2013 crop season, including 286 counties contiguous to primary drought counties. In comparison, in August 2012, more than 1,400 counties in 33 states had been designated as disaster counties by the U.S. Secretary of Agriculture. Most attention in the 112th Congress focused on the extension of expired disaster assistance programs in separate versions of a 2012 farm bill. Attention in the 113th Congress again is expected to focus on farm bill legislation; however, other bills addressing different aspects of drought policy and response have also been introduced. (For information regarding drought disaster assistance for agricultural producers, see CRS Report RS21212, Agricultural Disaster Assistance. For information on the 2012 bill, see CRS Report R42552, The 2012 Farm Bill: A Comparison of Senate-Passed S. 3240 and the House Agriculture Committee's H.R. 6083 with Current Law.) Although agricultural losses typically dominate drought impacts, federal drought activities are not limited to agriculture. For example, the 2012 drought raised congressional interest in whether and to what extent other federal agencies have and are using authorities to address drought. Similarly, the President in August 2012 convened the White House Rural Council to assess executive branch agencies' responses to the ongoing drought. The Administration shortly thereafter announced several new administrative actions to address the drought. While numerous federal programs address different aspects of drought, no comprehensive national drought policy exists. A 2000 National Drought Policy Commission noted the patchwork nature of drought programs, and that despite a major federal role in responding to drought, no single federal agency leads or coordinates drought programs—instead, the federal role is more of "crisis management." Congress may opt to revisit the commission's recommendations. Congress also may consider proposals to manage drought impacts, such as authorizing new assistance to develop or augment water supplies for localities, industries, and agriculture—or providing funding for such activities where authorities already exist. Congress also may address how the two major federal water management agencies, the U.S. Army Corps of Engineers and the Bureau of Reclamation, plan for and respond to drought. This report describes the physical causes of drought, drought history in the United States, and policy challenges related to drought. It also provides examples of recurrent regional drought conditions. For information on federal agricultural disaster assistance and related legislation, see the CRS reports noted above. This report will not be updated. For further information about the causes and current understanding of drought in the United States, see CRS Report R43407, Drought in the United States: Causes and Current Understanding.

In addition to their jobs, workers have obligations—civic, familial, and personal—to fulfill that sometimes require them to be absent from the workplace (e.g., to serve on a jury, retrieve a sick child from day care, or attend a funeral). The U.S. government generally has allowed individual businesses to decide whether to accommodate the nonwork activities of employees by granting them leave (with or without pay) rather than firing them. In other countries, national governments or the international organizations to which they belong more often have developed social policies that entitle individuals to take time off from the workplace for a variety of reasons. For example, workers in countries that are part of the European Union have a minimum vacation benefit with pay of some 20 days per year; in Spain, employees can take paid time off to perform jury service among other civic duties; and 169 countries guarantee women leave with income in connection with childbirth. Policies specifically intended to reconcile the work and family lives of individuals—which include leave benefits, child-care subsidies, and flexible work arrangements—have garnered increased attention in the 30-member Organization for Economic Cooperation and Development (OECD). In the United States, which is an OECD member, congressional interest has coalesced around family-friendly paid leave proposals. They would entitle individuals to time off with pay to accomplish parental and caregiving obligations (e.g., bonding with a newborn or newly placed adopted child or assisting a seriously ill spouse). Women are regarded as the chief beneficiaries of these proposals because women are the typical informal (unpaid) caregivers to family and friends, and a majority of women are in the workforce, with both husbands and wives employed in about one-half of married-couple families. Two approaches have been proposed in Congress to guarantee workers the right to take paid leave to attend to family and medical needs. One is an employer mandate (e.g., H.R. 2460 / S. 1152 ); the other, a temporary disability insurance program (e.g., H.R. 1723 ). In addition, the Obama Administration's FY2011 budget for the Labor Department includes a request for $50 million to help states plan and set up paid family leave programs. Relatedly, H.R. 2339 (The Family Income to Respond to Significant Transitions Act) would initiate a grant program to assist states interested in supplementing the income of parents who take leave for such reasons as the birth or adoption of a child, or to care for a newly born or adopted child, or who leave their jobs to care for a seriously ill infant. While "[d]uring the past two decades, the generosity of paid parental leave has increased in all OECD countries, with the exceptions of Ireland, the United Kingdom and several countries with no legislation mandating paid leave [such as the United States]," the organization remains focused on leave and other policies thought to ameliorate work-family conflict. The continuing interest of these governments in encouraging more women to participate in the labor force is partly motivated by concern about the impact of population aging on the future labor supply, and hence, the future rate of economic growth, in member nations. The economic rationale underlying paid family leave is that it will increase the amount of labor supplied by women with child care (and increasingly elder care) obligations and thereby mitigate the slowdown in overall labor force growth. In the United States, concern about an impending labor shortfall because of an aging population also contributes to interest in greater involvement of the federal government in the provision of paid family-related leave. So too does the end of years of escalating labor force participation by married mothers, especially mothers of infants. Most recently, a public health rationale has been added to the economic rationale for increased employee access to paid family-related leave. Specifically, the success of one part of the federal government's prescription for containing the spread of "swine flu"—namely, employees staying home from work to care for themselves or for a sick child—likely is dependent upon the availability of paid family and sick leave. This report begins by reviewing U.S. government regulation of time off from work for any purpose. It then examines the incidence of paid leave benefits voluntarily provided by U.S. firms. Access to paid leave by various employee and employer characteristics also is analyzed. Estimates from a government survey of the direct cost to U.S. businesses of the different types of leave offered are presented as well. Indirect employer costs that might arise in connection with some types of leave more than others, such as the greater likelihood of hiring and training temporary replacements for employees absent because of maternity versus bereavement reasons, are not included. Neither are estimates of potential gains to companies (e.g., a more stable and experienced workforce, and increased productivity due to greater worker morale) and society (e.g., improved public health, lower formal caregiving costs, and broader participation in civic affairs). By and large, the U.S. government does not require employers to offer employees nonwage compensation, that is, benefits (e.g., health insurance, retirement plans, and leave). The few employment-based benefits that Congress has mandated are social security, unemployment compensation, workers' compensation, and most recently, unpaid family-medical leave. An overview follows of past and present federal laws and regulations that relate to time off from work. State statutes may require the provision of leave beyond that in federal law. Employers and unions may negotiate paid time off as a supplement to wages in collective bargaining agreements. Complete coverage of leave benefits that originate from these non-federal sources is beyond the scope of this report. The primary law setting standards for wages paid to and hours worked by most employed persons in the United States is the Fair Labor Standards Act (FLSA). Although people often think that the act regulates time not worked, the FLSA largely is silent on the subject. It does not require that firms provide employees time off for breaks (e.g., to use a bathroom), meals, illness, holidays, and the like. Although the FLSA applies to both the private and public sectors, federal employees are entitled to "legal holidays" with pay as prescribed by the Office of Personnel Management under Title 5 of the U.S. Code. Holidays also may be designated in state and municipal laws or regulations. Private sector employers may choose to follow the public sector's holiday practices and pay their employees for the time not worked. If businesses voluntarily close on holidays, firms can pay an employee they require to work the employee's usual hourly wage rate because the FLSA does not distinguish holidays from any other workday. The FLSA does require employees to be paid more than their regular hourly wage rate in another instance, namely, "overtime work." It is in connection with overtime that the act has become part of the debate over worktime flexibility to accommodate the family responsibilities of employees. The FLSA was enacted in 1938 during a period of extraordinarily high unemployment. Payment at one-and-one-half times an employee's standard hourly rate for working more than 40 hours in a week thus was required of companies as a penalty for extending the workweek of current employees rather than hiring unemployed persons. About 50 years later, Congress allowed employers in one industry—federal, state and local government—to offer employees time off in lieu of the overtime pay they had earned. That is to say, a government can offer its workers the option of taking leave in the future rather than immediately compensating them for overtime worked. Those who want to extend "comp-time" to the private sector began in the 1990s to put the worktime arrangement in a family-friendly context by arguing that it would afford workers the opportunity to accumulate hours they could later take off for caregiving or any other reason "if the use of the compensatory time does not unduly disrupt the operations of the employer." In the Davis-Bacon Act of 1931 and Service Contract Act of 1965, Congress required that certain contractors pay at least prevailing wages and benefits to their workers employed on federal and federally assisted construction and service projects. The Wage and Hour Division in the U.S. Department of Labor (DOL) develops "wage determinations." They list the wage rates and fringe benefit rates DOL determines are prevailing in a given area for particular jobs. Paid sick, vacation, and holiday leave are among the benefits that can be included in a wage determination. No nationwide program exists that compensates individuals for wages lost while they are absent from the workplace due to short-term health conditions (e.g., childbirth, the flu) or injuries unrelated to employment. It was during the severe depression of the thirties that the United States began its national social insurance programs of unemployment insurance and old-age insurance. Consequently, providing protection against costs of sickness that are more or less recurring regardless of economic conditions did not seem to have the same urgency as providing protection against cyclical unemployment and old-age dependency. In 1946, however, the Federal Unemployment Tax Act was amended to allow states in which employees contribute to their unemployment insurance programs to use those contributions toward cash payments for persons unable to work as a result of temporary nonoccupational illnesses or injuries. California, New Jersey, New York, and Rhode Island passed Temporary Disability Insurance (TDI) laws during the 1940s. Two additional jurisdictions—Hawaii and Puerto Rico—enacted TDI legislation in the late 1960s. Today, employees and employers contribute to four of the jurisdictions' social insurance programs. Rhode Island and California continue to rely on only employee payroll deductions. The governments usually do not make contributions. Both employed and unemployed workers may receive TDI benefits. How this is accomplished varies among the jurisdictions depending in part on whether employers are allowed to substitute a private insurance plan for a state-operated plan. Most employees in the private sector are covered because the laws generally apply to businesses with one or more workers. Jurisdictions may cover their own government employees and the self-employed as well. The value of payments and their duration also differ by jurisdiction. In addition, the way in which TDI benefits are coordinated with employer-provided paid sick leave and other accrued leave benefits varies. The TDI laws do not require employers to retain individuals on their payrolls while receiving benefits. However, employers must comply with other laws that regulate treatment of employees experiencing short-term nonwork disabilities. The Pregnancy Discrimination Act of 1978 (PDA, P.L. 95-555 ), which amended Title VII of the Civil Rights Act of 1964, makes it illegal for employers with 15 or more employees to fire, refuse to hire, or withhold a promotion because an individual is pregnant. The act further prohibits these employers from treating women who are limited in their ability to work because of pregnancy, childbirth, or related health conditions differently from other employees experiencing disabling medical conditions unrelated to work. If a firm has a policy permitting temporarily disabled employees to take sick leave, then it must allow a woman unable to perform her job due to pregnancy or childbirth to take leave on the same terms. Thus, a firm "must hold open a job for a pregnancy-related absence the same length of time jobs are held open for employees on sick or disability leave." Title VII and the Americans with Disabilities Act of 1990 do not require employers to provide leave to employees to attend to their own short-term illnesses. They also do not require employers to offer employees time off to care for sick family members. But, as in the case of a company with sick or disability leave benefits, a firm that has instituted a family leave policy is prohibited from administering it in a discriminatory manner. For example, men and women must be afforded the same opportunity to take the same amount of time off to care for their children under an employer's family leave plan. Taking action against "family responsibilities discrimination" may be difficult, however, because "Congress has never prohibited discrimination based on caregiver status so such claims must be 'indirect' applications of existing prohibitions against sex bias, disability discrimination, and unequal pay." In May 2007, the Equal Employment Opportunity Commission released clarifying guidance that addresses unlawful disparate treatment founded on sex-based stereotyping of pregnant workers and of employees who are family caregivers, disparate treatment of employees caring for family members with disabilities, and harassment that creates a hostile work environment for employees providing family care. Relatedly, differences across states in leave benefit laws may make multistate companies susceptible to discrimination complaints for interfering with the rights of employees. For example, California's Family Sick Leave (Kin Care) law requires all employers in the state that offer paid sick leave to allow employees to use some of their time off to care for sick children, parents, spouses or domestic partners. But, in Minnesota, employers with at least 21 employees must permit them to use their personal sick leave to care for sick children. Such variability in leave policies also means that families have quite different options depending on the state in which they live. In 2002, California became the first state to mandate a paid family leave benefit by establishing Family Temporary Disability Insurance, commonly known as Paid Family Leave (PFL) insurance. Beginning in mid-2004, both male and female workers could take up to six weeks of paid time off to bond with their new biological, adopted, or foster children. In addition, they became entitled to wage replacement while absent from work to care for seriously ill children, parents, spouses, or domestic partners. Employers may require workers to use a maximum of two weeks of accrued vacation time before drawing payments from the insurance fund. Like the state's TDI program, employers must make deductions from the wages of employees to pay for PFL. The deductions are deposited in the state's disability fund. PFL must be taken concurrently with the maximum of 12 weeks of unpaid family-medical leave available to eligible employees of covered employers under the California Family Rights Act (CFRA). The act was passed in 1991 and amended in 1993 to conform to federal legislation discussed immediately below. The most noteworthy differences between CFRA and PFL/TDI are that the former provides workers at firms with at least 50 employees unpaid time off with the right to continued health benefit coverage and guaranteed reinstatement to the same or a comparable job; the latter provides almost all employees cash benefits during their short-term absence but not job protection. Two other states have since enacted paid family leave legislation, although only one program is operating at the present time. In 2008, New Jersey enacted family leave legislation that, starting July 1, 2009, enables almost all workers to take up to six weeks of paid time off to bond with a newborn or newly adopted child, and to care for a child, spouse, domestic partner, civil union partner, or parent. Employers may require workers to use a maximum of two weeks of any paid sick leave, vacation time, or other leave before being eligible to draw payments from the insurance fund. As in California, which also is a TDI state, the New Jersey family leave program is funded by employees through payroll deduction and the cash benefits must run concurrently with unpaid job-protected leave taken under the federal Family and Medical Leave Act. In contrast, a family leave insurance program passed by Washington state in 2007, without a financing mechanism and with an effective date of October 1, 2009, is not currently in operation.. After a task force was unable to agree on a long-term financing mechanism for the program and in light of the state's budget shortfall, the legislature delayed implementation of the program until October 1, 2012. Many more states have mandated the unpaid job-protected approach to family-medical leave found in the California Family Rights Act than have adopted the insurance approach. Some 35 states and the District of Columbia either proposed or passed unpaid job-protected time-off legislation shortly after the first family-medical leave bill was introduced in Congress in 1985. Congress passed and President Clinton signed the Family and Medical Leave Act (FMLA, P.L. 103-3 ) in 1993. Until recently, the federal law entitled eligible employees at covered employers to leave without pay for the following four reasons: the birth of a child of the employee and to care for the newborn child, the placement with the employee of a child for adoption or foster care and to care for the newly placed child, to care for an immediate family member (i.e., spouse, child under age 18 or any age if incapable of self-care due to an activity-limiting disability, or parent) with a serious health condition that necessitates the employee's presence, or to care for the employee's own serious health condition (including maternity-related disability) that makes the employee unable to perform the functions of his/her position. The FY2008 and FY2010 Department of Defense authorization bills added two other reasons for leave-taking under the FMLA: to attend to matters arising from members of the National Guard, Reserves, or Armed Forces deployed to active duty in a foreign country; and to care for members of the National Guard, Reserves, or Armed Forces and veterans who recently became seriously ill or injured as a result of their military service. The latest Labor Department survey shows that the predominant reason for leave-taking under the FMLA in 1999-2000, at 49%, was to attend to the employee's own health (including maternity-related disability). Caregiving for newborn, newly adopted, or newly placed foster children followed at almost half the rate. About the same fraction of FMLA leave-takers used their time off to care for ill family members. Employees who take leave under the act are generally guaranteed the right to reemployment in the same or comparable positions. Employers cannot retaliate against workers for taking FMLA leave by, for example, firing them. But, employers are allowed to terminate leave-takers for legitimate business reasons (e.g., the duties of the unit in which the employee works are outsourced). Private sector firms that had 50 or more employees on their payrolls for at least 20 workweeks in the current or preceding calendar year must allow employees to take leave under the act if the employees worked for them at least 12 months, a minimum of 1,250 hours, and at a facility where at least 50 employees are employed by the firm within 75 miles. Regardless of their size, public sector employers (e.g., federal and local governments, Congress and its agencies) also must provide FMLA leave. The act's 12 workweeks of leave in a 12-month period, firm-size threshold, and reasons for leave are minimum standards. Employees who work for employers that offer or are covered by collective bargaining agreements that include more expansive family-medical leave, or who work in jurisdictions that have enacted more comprehensive statutes are entitled to the more generous benefits. The FMLA differs from TDI by being national in scope, providing more reasons for leave, continuing health benefit coverage for absent workers, and guaranteeing job security. The TDI programs, for their part, provide cash benefits and do not have firm-size exclusions. Employees drawing TDI benefits cannot be terminated, however, if they have not exhausted their entitlement to leave under the FMLA or comparable state laws. President Clinton directed the Department of Labor (DOL) to propose regulations enabling states to utilize tax dollars accumulated in the federal-state Unemployment Compensation (UC) program to partially replace the wages of parents who opt to take time off to bond with their newborn or newly adopted children. The purpose of the Birth and Adoption Unemployment Compensation (BAA-UC) experiment, popularly known as Baby UI, was to allow DOL to determine if the availability of cash benefits to working parents within 52 weeks of the birth or placement for adoption of a child encourages long-term attachment to the labor force. Unlike the FMLA, BAA-UC leave was not guaranteed nationwide and employers did not have to retain employees receiving BAA-UC unless they were also FMLA-eligible. The reasons for leave under BAA-UC were much narrower than under the FMLA as well. Alternatively, the firm-size requirements of the FMLA did not apply to BAA-UC, which was guided by the much broader employer coverage of the UC program. DOL included model state legislation in an appendix to the BAA-UC regulations, which went into effect in mid-2000. The model Baby UI bill envisioned the availability of BAA-UC for a maximum of 12 weeks, and the time not worked would be counted toward the maximum duration of unemployment benefits. It also assumed that states would base the amount of BAA-UC benefits on the same criteria (earnings and employment histories) as their individual UC programs and would deduct other income (e.g., employer-provided paid sick or family leave and the value of employer contribution to disability insurance) from BAA-UC payments. In commentary attached to the regulation, DOL noted that it was not imposing solvency requirements on states before their enactment of BAA-UC. The department stated its expectation that states would not initiate BAA-UC without first examining the impact on the solvency of their UC trust funds. In late 2003, the Bush Administration rescinded BAA-UC as part of a review of all DOL regulations. The review was undertaken in the context of a recession having led to much reduced balances in state UC funds and a challenge in federal district court to the consistency of BAA-UC with federal UC law. The Bush Administration declared BAA-UC to be "a misapplication of federal UC law relating to the A&A requirements," which state that a person must be able and available for suitable work to be eligible for unemployment benefits. It disagreed with the Clinton Administration's explanation of the BAA-UC rule as "part of an evolving interpretation of the A&A requirements that recognizes practical and economic realities" (e.g., not terminating or denying UC benefits to individuals while they are awaiting recall to the firms that temporarily laid them off). The Bush Administration declared that the intended recipients of BAA-UC generally do not meet this test as they have initiated their separation from the workforce and it is their personal situation, rather than the lack of available work, that has removed them from the labor market. Because the BAA-UC experiment is based on an assumption of increased future labor force attachment, the payment of BAA-UC will likely be made for periods where parents have completely suspended their labor force attachment. Indeed, in cases where the parent is on approved leave from a job, BAA-UC more closely resembles a paid-leave program than a UC program. It further stated that "Congress intended the UC system to be subordinate to the main task of getting people back to work.... BAA-UC is not consistent with this goal since it encourages parents to refuse available work." Some 24 Baby-UI bills were introduced in 20 states in 2001, the year after the BAA-UC regulation became effective. But no state had passed legislation before the regulation was removed in November 2003. In light of the inaction of states while the BAA-UC regulation was in effect and the handful of states with TDI laws, they appear reluctant to require family-medical leave benefits by taking either an approach based on unemployment or disability insurance. The belief that higher taxes paid by companies located in states that adopt either approach—arguably putting them at a competitive disadvantage with firms in non-adopting states—might contribute to this reluctance on the part of individual states. The UC program is largely financed through state and federal payroll taxes of employers. And, three of the five states with TDI programs partly finance them through a payroll tax on employers. Unlike the abundant data on wages and salaries, less information is available on the benefits paid to workers. According to the latest data available from the U.S. Bureau of Labor Statistics (BLS), benefits account for 30% of the total compensation (wages and benefits) of employees in the civilian economy. Leave benefits—which represent 7% of total compensation—receive short shrift compared to the information on some other supplements to wages voluntarily provided by employers. For example, the government's primary survey of the labor force—the Current Population Survey (CPS)—does not ask households about time off from work, while it does ask about health and retirement benefits. (These benefits respectively account for about 8% and almost 5% of total compensation). As a result, there is limited publicly available data on gender, age, and other demographic characteristics of workers by employer provision of paid leave. BLS more often looks to employers for information on benefits because they "typically furnish more reliable information than households do on the details of employer-provided benefit plans and the employers' costs for providing those benefits." The National Compensation Survey (NCS) collects information from companies on benefit incidence as well as compensation cost levels and trends. Firm size, as measured by the number of employees, is one of the company characteristics for which the NCS obtains data. Again, employer rather than household surveys are a better source of size information. Although the NCS lacks demographic information on employees receiving benefits, it does afford data by job characteristics (e.g., occupation, industry, and earnings). Some private firms conduct compensation surveys, but the results may be proprietary, very expensive to access, or not representative of typical business practices (e.g., if the survey covers primarily large corporations). For these reasons, the analysis below is derived from the NCS, and to provide demographic information, from the National Survey of America's Families and the Medical Expenditures Panel Survey. The latter two are nationally representative surveys of households in the noninstitutionalized civilian population, similar to the CPS. More than three-fourths of employees at firms in the private sector are provided paid vacations and holidays, making these the most widely available leave benefits. (See Table 1 .) About seven of every 10 workers have access to paid funeral leave and time off for jury duty. Considerably fewer employees in the private sector—61%—have sick leave as part of their compensation package. Companies continue to pay almost one-half of employees who are absent from work to fulfill military obligations. Less than two in five workers can take paid leave for personal reasons. Employers in the private sector offer paid family leave to a very small percentage of their workers (8%). As shown in Table 1 —regardless of the type of paid leave—it usually is true that relatively more private sector employees in white-collar occupations (i.e., management, professional, and related; sales and office) than blue-collar occupations (i.e., natural resources, construction, and maintenance; production, transportation, and material moving) or service occupations (e.g., food, cleaning, personal, health, and protective service workers) have access to leave with pay; relatively more full-time than part-time workers receive paid leave; relatively more union than nonunion employees have the opportunity to take leave with pay; and relatively more higher- than lower-paid employees are provided leave as part of their compensation package. In terms of company rather than worker characteristics, it generally is the case that—regardless of the type of paid leave— relatively more employees of larger than smaller establishments receive leave with pay; and relatively more employees at firms in the New England and Middle Atlantic regions, compared to other regions, are provided paid leave. The picture is more mixed for incidence of paid time off by sector of employment. Substantially larger percentages of businesses that produce goods rather than services offer employees leave for vacations and holidays. The opposite is true for sick leave. If government is added to the private service-producing sector shown in Table 1 , the gap in sick leave provision between the two sectors is even wider. In March 2009, according to NCS data, 89% of employees in state and local governments had access to paid sick leave. Federal employees similarly have near-universal access to paid sick leave as well as many of the other benefits for which data are collected in the NCS. They also are permitted to use their annual leave not only for vacations but also for personal reasons. In addition, they can use sick leave for family caregiving and bereavement. Some state governments also permit their employees to use sick leave for other reasons (e.g., family caregiving). The generosity of sick leave varies by worker and job characteristics. In March 2009, according to NCS data, the average number of paid sick days earned by workers in the private sector was eight after one year or after five years of employment. While full-time employees are provided eight sick days, on average, part-time workers are provided six days. Although full-time employees are provided nine sick days after at least 10 years of service, long-time employees who work part-time schedules receive the same number of sick days as less-senior part-timers. Employees of firms with 1-99 workers are granted an average of six days after one year of employment and seven days after five years of employment. In contrast, employees of firms with 100-499 workers are granted an average of seven sick days after either one or five years of service while employees of firms with 500 or more workers are granted an average of 11 days after one year and 12 days after five years. The pattern of many more sick days awarded to employees of the largest firms is evident among workers with longer service as well: employees of firms with 1-99 workers earned seven sick days after they had worked at least 10 years, while those at firms with 100 or more workers earned 10 days after 10 years of employment and 11 days after 20 years of employment. Utilizing data from the National Survey of America's Families (NSAF), the Urban Institute published information on the characteristics of working parents 18-54 years old with any type of paid leave. Significantly more fathers (83.5%) than mothers (76.2%) report having any time off with pay. Married parents (81.5%) are significantly more likely than single parents (73.8%) to have access to paid leave. Receipt of paid leave increases with age of parents and age of youngest child; as a result, it appears that "workers with a great need for leave—parents with very young children—are the least likely to have access to leave." Access to paid leave benefits increases in step with family income measured as a percentage of the federal poverty level. Three other studies similarly estimated a direct relationship between family income and receipt of paid time off from work. On the basis of data from the National Longitudinal Study of Youth, 76% of families in the bottom quartile of the income distribution lacked paid sick leave and 58% lacked paid vacations at some point while employed between 1990 and 1996. In contrast, 40% of families in the top quartile of the income distribution lacked paid sick leave, and 41% lacked paid vacations. Similarly, results from the Kaiser Foundation's Women's Health Survey show that 64% of employed women with family income below 200% of the federal poverty level are not paid when they miss work to care for a sick child compared to 37% of working women in higher-income families. And, based on their analysis of 2003-2004 data from the Medical Expenditures Panel Survey, Clemens-Cope et al. estimated that while 81% of children in employed families with incomes at least 200% above the federal poverty level had at least one parent with access to paid sick leave, only 36% of lower-income children had one or more parents with access to paid sick leave. Welfare receipt at any time significantly reduces a parent's likelihood of having paid leave, according to the analysis of NSAF data. But leave availability is greater among those no longer receiving welfare than among current recipients—with almost three in five working parents currently on welfare lacking any type of paid time off. The study's author describes the low rate of access to paid leave among parents currently receiving welfare as "troubling" because These parents may be trying to move off public assistance. Without ample work supports, including job-protected leave, they may be unable to keep their ties to the labor market in the event of a family crisis, or even just a sick child. The data from the NSAF (household) survey accord with that from the NCS (employer) survey in terms of the relationship of benefit access to hours worked and firm size. Employees who work fewer hours are less likely to be offered time off with pay, and the incidence of paid leave is lower at smaller than larger employers. The availability of paid leave among working parents generally increases with job tenure. For poor working parents, however, access to any kind of paid leave is as likely for those with less than one year on the job as for those with two or more years of tenure. This might be the case if poor parents tend to work part-time, in service occupations (e.g., food preparers, building cleaners), or for small businesses—each associated with low provision of paid leave benefits (see Table 1 ). The Medical Expenditures Panel Survey (MEPS), co-sponsored by the Agency for Healthcare Research and Quality and the National Center for Health Statistics, asks a nationally representative sample of households in the civilian noninstitutional population about demographic characteristics, job characteristics, and access to paid sick leave. In the following analysis of the household component of MEPS data for 2007 undertaken by the Congressional Research Service, individuals are considered employed if they had a job when they were interviewed or had a job to return to on the date of the interview. Sick leave coverage is for the main job held on the interview date. Self-employed persons and individuals who did not respond to the sick leave question are excluded. About three in five workers (60.4%) reported that their employers provide paid sick leave. As also shown in Table 2 , relatively more employed women (62.0%) than men (58.8%) have sick leave in their compensation package—a small but statistically significant difference. Married persons (67.2%) also are significantly more likely than never-married individuals (45.3%), a group that could include single parents, to have access to the leave benefit. Although more than 60% of employees age 25 and older receive paid sick leave, this is true for fewer than half as many younger workers. The high rate of part-time employment among young workers and the low incidence of sick leave among part-timers may partly account for this finding. Similarly, Hispanics are significantly less likely to receive paid sick leave than the non-Hispanic groups. The industry employment pattern among Hispanics may contribute to this outcome, because they work at well above-average rates in a few industry groups where access to paid sick leave is limited (i.e., construction, agriculture, leisure and hospitality). As shown in Table 3 , the fraction of workers with sick leave in these industry groups was well below the average of 60.4% in 2007; 34.9% of workers in construction, 24.8% in leisure and hospitality, and 27.3% in natural resources had paid sick leave. (Leisure and hospitality is an exception to the above-average incidence of paid sick leave in the service-producing sector noted in Table 1 , as is the "other services" industry group that includes automotive repair and maintenance shops, beauty salons, and religious organizations). MEPS data suggest a positive relationship between educational attainment and the incidence of paid sick leave. (See Table 4 .) Just 28.1% of employees with less than 12 years of schooling have paid sick leave, compared to 78.9% of those who completed four years of college. Occupational employment patterns may help explain this pattern because, as shown in Table 1 , employers generally require higher schooling levels for white-collar (e.g., professional) positions than for blue-collar (e.g., construction) jobs or service (e.g., hairdresser) jobs. The MEPS data in Table 5 provide more detailed information on receipt of sick leave benefits by occupation than the NCS data shown in Table 1 . Persons in all but one white-collar occupational group report above-average access to paid sick leave. Persons in blue-collar occupations (e.g., automotive service technicians and mechanics, carpenters) and service occupations (e.g., nursing, psychiatric, and home health aides; child care workers) report well below average receipt of sick leave. A positive relationship between employee earnings and the prevalence of paid sick leave appears in the MEPS data, which echoes the pattern found in the NCS shown in Table 1 . Just 15.6% of persons who earned $7.25 an hour or less in 2007 received sick leave according to the data in Table 6 . The share almost quadruples among those who earned between $7.26 and $23.00 per hour. The percentage of employees who had access to the benefit was still higher, over 80%, for those paid more than $23.00 an hour. Part of the reason low-wage workers are less frequently offered paid sick or other leave benefits may be that employers consider them more easily replaceable than higher-skilled workers in whom they tend to make greater investments (e.g., training). Paid time off from work composes a considerable part of the employee benefit package. The cost to employers of offering leave with pay—$2.07 per hour worked on average in nonfarm private industries and state and local government—nonetheless comes in behind insurance ($2.50) and legally required benefits ($2.28). (See Table 7 .) If Congress were to pass either of two proposed paths to paid family-medical leave—a mandate, or a TDI program funded in part through a payroll tax on employers—one would expect the compensation costs of employers to increase. Because employees generally are no more valuable (i.e., productive) to businesses after imposition of a benefit, however, they have no economically sound reason to raise their workforce's total compensation as a result of either congressional action. Economists therefore theorize that firms will try to finance the added benefit cost by reducing or slowing the growth of other components of compensation. BLS computes benefit costs across all surveyed employers, whether or not they provide the benefit. Therefore, the cost per hour worked will be affected by the incidence of benefit provision. Not surprisingly, then, in light of the above-described frequency of provision by type of leave, the employer's average cost per hour worked is highest for vacations followed by holidays. The lower incidence of sick leave benefits is reflected in its average cost being about one-third that for vacations and one-half that for holidays. A good deal of variation exists between private firms and state and local government in labor costs for time not worked. The widest disparity between the two types of employers occurs in connection with paid sick leave: the time off allowed employees to care for illness or injury costs private firms 23 cents per hour worked on average; it costs state and local government 82 cents. Once again, this difference reflects the generally greater prevalence of sick leave among government workers. Within the private sector, the cost of leave benefits per hour worked usually is less on average at smaller than larger companies because relatively few small businesses offer paid leave. (See Table 8 .) For example, the provision of paid sick leave at workplaces with 99 or fewer employees averages 14 cents per hour worked; at workplaces with 100 or more employees, 33 cents per hour worked. There is little variability in the average cost of sick leave provision between firms with 1 to 49 employees versus 50 to 99 employees. However, the average cost of offering employees sick leave almost doubles between firms with 100 to 499 employees and 500 or more employees. Access to the paid time off from work that employers voluntarily provide is not evenly distributed across employees. This unevenness appears to exacerbate wage inequality, with leave benefits more often available to higher- than lower-paid workers, to more- rather than less-educated workers, to white-collar compared to blue-collar or service workers, to persons working full- rather than part-time, and to employees of larger in contrast to smaller firms. The U.S. government has a comparatively limited role in mandating or regulating leave benefits. The sole leave entitlement Congress passed—unpaid time off under the FMLA—has a long, hotly debated history. State governments have been more active in this policy area than the federal government. Nonetheless, very few states appear interested in enacting individually a family-medical leave statute that provides both cash benefits and job security. Businesses for their part have been loosening the link between employment and benefit provision in the last several years (e.g., the shift from traditional pensions to 401k retirement plans and ceasing to extend employee health insurance to retirees).

In addition to their jobs, workers have obligations—civic, familial, and personal—to fulfill that sometimes require them to be absent from the workplace (e.g., to serve on a jury, retrieve a sick child from day care, or attend a funeral). The U.S. government generally has allowed individual employers to decide whether to accommodate the nonwork activities of employees by granting them leave, with or without pay, rather than firing them. In other countries, national governments or the international organizations to which they belong more often have developed social policies that entitle individuals to time off from the workplace (oftentimes paid) for a variety of reasons (e.g., maternity and vacations). Public policies specifically intended to reconcile the work and family lives of individuals—which include leave benefits, child-care subsidies, and flexible work arrangements—have garnered increased attention among countries in the Organization for Economic Cooperation and Development (OECD). In the United States, which is an OECD member, congressional interest has coalesced around family-friendly paid leave proposals (e.g., H.R. 2460/S. 1152 and H.R. 1723). Typically, they would entitle workers to time off with pay to accomplish parental and caregiving obligations to help women in particular balance work and family responsibilities because they are the typical unpaid family caregiver and most women work for pay, with both spouses employed in about one-half of married-couple families. Currently, there are few federal statutes that pertain directly or indirectly to employer provision of leave benefits for any purpose. This report begins by reviewing those policies, including the Pregnancy Discrimination Act and the Family and Medical Leave Act. Temporary Disability Insurance (TDI) programs, which five states have established to compensate for lost wages while workers are recovering from nonoccupational illnesses and injuries, are discussed as well. So too are the California and New Jersey family leave insurance programs, which essentially extend the TDI programs of the two states to employees caring for family members. The Obama Administration has requested $50 million as part of the Labor Department's FY2011 budget for grants to states to help them plan and set up paid family leave programs. The report then examines the incidence of different types of paid leave that U.S. employers voluntarily provide as part of an employee's total compensation. For example, vacations and holidays are the most commonly offered leave benefits: more than three-fourths of employees in the private sector receive paid time off for these reasons. Access to leave by various employee and employer characteristics also is analyzed. Particular attention is focused on paid sick leave, which was offered to 61% of private sector employees in June 2009, according to the latest data from the U.S. Bureau of Labor Statistics. The report closes with results from a federal government survey of the average direct cost to businesses of different types of leave. Indirect employer costs that might arise in connection with some types of leave more than others (e.g., the greater likelihood of hiring and training temporary replacements for employees absent because of maternity versus bereavement reasons) are not included. Neither are estimates of potential gains to employers (e.g., a more stable, experienced workforce) and society (e.g., improved public health and broader participation in civic affairs).

The power to prescribe rules as to which aliens may enter the United States and which aliens may be removed resides solely with the federal government, and primarily with Congress. Concomitant to its exclusive power to establish rules which determine which aliens may enter and which may stay in the country, the federal government also has the power to proscribe activities that subvert this system and establish penalties for those who undertake prohibited activities. These powers have primarily been implemented through the Immigration and Nationality Act of 1952, as amended (INA). The INA establishes a comprehensive set of requirements for legal immigration, naturalization, and the removal of aliens, as well as rules governing aliens' continued presence in the United States. The INA also establishes an enforcement regime to deter violations of federal immigration law, including through the imposition of penalties upon persons who violate INA requirements. In examining the INA, it is crucial to distinguish between its civil and criminal provisions. For example, the INA generally makes it a criminal offense for an alien to enter the United States without authorization, with heightened penalties available in cases where an alien unlawfully reenters after having previously been ordered removed from the country. Moreover, persons who transport unauthorized aliens into or within the United States, or harbor such aliens within the country, are generally subject to criminal penalty. On the other hand, some violations of the INA are subject to civil penalties. For example, an entity that knowingly hires an alien who is not authorized to work in the United States may be subject to a civil monetary penalty. Moreover, alien removal (deportation) and associated administrative processes are civil in nature. For example, an alien's unauthorized immigration status makes him removable, but absent additional factors (e.g., having reentered the United States after being formally removed), unlawful presence does not constitute a criminal offense. In some cases, conduct may potentially be subject to both civil and criminal sanction under the INA. For instance, an alien who unlawfully enters the United States may be subject to criminal penalty as well as deportation. However, the fact that an alien may be subject to both criminal sanction and removal for an immigration violation does not mean that each tool shall be employed. Congressional authority to prescribe rules on immigration does not necessarily imply exclusive authority to enforce those rules. Congress may expressly authorize states and localities to assist in enforcing federal law. Moreover, there is a notion that has been articulated in some federal courts and by the executive branch that states may possess "inherent" authority to assist in the enforcement of federal immigration law, even in the absence of express authorization by federal statute. Nonetheless, state enforcement of federal immigration law must always be consistent with federal authority. The Supremacy Clause of the Constitution establishes that federal law, treaties, and the Constitution itself are "the supreme Law of the Land." States can therefore be precluded from taking actions that are otherwise within their authority if federal law would thereby be thwarted. Congressional intent is paramount in the analysis as to whether federal law preempts state or local activity; accordingly, a court must determine whether Congress expressly or implicitly intended to preempt state or local action. Generally, a court will determine that Congress intended to preempt state regulation or activity when (1) Congress expresses preemptive intent in "explicit statutory language"; (2) a state entity regulates "in a field that Congress intended the Federal Government to occupy exclusively"; or (3) a state entity's activity "actually conflicts with federal law." A question of ongoing legal dispute concerns the extent to which state and local law enforcement may be preempted from directly enforcing federal immigration law in the absence of express authorization by federal statute. Recently, several states have enacted measures to facilitate the detection of unlawfully present aliens by state and local law enforcement officials. Many of these measures are the subject of ongoing litigation. The U.S. Department of Justice (DOJ), in particular, has challenged measures enacted by several states which are intended to deter the presence of unlawfully present aliens within their jurisdiction. In a 2012 ruling in the case of Arizona v. United States , the Supreme Court ruled that one such measure enacted by Arizona, commonly referred to as S.B. 1070, was largely preempted by federal immigration law. In the course of its decision, the Court indicated that states' ability to enforce federal immigration law, at least as it pertains to non-criminal immigration status violations, is limited in the absence of either direct authorization by federal law or coordination of enforcement efforts with federal authorities. This report discusses the authority of state and local law enforcement to assist in the enforcement of federal immigration law through the investigation and arrest of persons believed to have violated such laws. It describes current provisions in federal law that permit state and local police to enforce immigration law directly; analyzes major cases concerning the ability of states and localities to assist in immigration enforcement, including the Supreme Court's ruling in Arizona v. United States ; and briefly examines opinions on the issue by the Office of Legal Counsel (OLC) within the Department of Justice. This report does not discuss legal issues raised by state and local measures intended to supplement federal immigration laws through the imposition of additional criminal or civil penalties. For more discussion of the legal implications of such measures, see CRS Report R42719, Arizona v. United States: A Limited Role for States in Immigration Enforcement , by [author name scrubbed] and [author name scrubbed], and CRS Report R41991, State and Local Restrictions on Employing Unauthorized Aliens , by [author name scrubbed]. The enforcement of federal immigration law by state and local police is most clearly permissible when Congress has evidenced intent to authorize such activity. In exercising its power to regulate immigration, Congress is free to delegate to the states, among other things, the authority to arrest, hold, and transport aliens into federal custody. Indeed, Congress has created several avenues for states and localities to assist in the enforcement of federal immigration law. The following sections discuss notable provisions in federal statutes that expressly authorize state and local law enforcement to directly engage in immigration enforcement activities, including arresting persons who have violated federal immigration law. This section does not discuss those provisions of federal law that, while contemplating participation by state and local authorities in immigration enforcement matters (such as the sharing of immigration status information between federal, state, and local authorities) , do not directly authorize state and local police to perform immigration enforcement duties. One of the broadest grants of authority for state and local immigration enforcement activity stems from Section 133 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), which amended INA Section 287 to permit the delegation of certain immigration enforcement functions to state and local officers. Pursuant to INA Section 287(g), the Attorney General (now the Secretary of Homeland Security ) is authorized to enter into a written agreement with a State, or any political subdivision of a State, pursuant to which an officer or employee of the State or subdivision, who is determined by the [Secretary of Homeland Security] to be qualified to perform a function of an immigration officer in relation to the investigation, apprehension, or detention of aliens in the United States (including the transportation of such aliens across State lines to detention centers), may carry out such function at the expense of the State or political subdivision and to the extent consistent with State and local law. Agreements entered pursuant to INA Section 287(g) (commonly referred to as "287(g) agreements") enable specially trained state or local officers to perform specific functions relative to the investigation, apprehension, or detention of aliens, during a predetermined time frame and under federal supervision. In order for state or local officers to perform functions pursuant to a 287(g) agreement, they must "have knowledge of and adhere to" federal law governing immigration officers and be certified as having received "adequate training" regarding the enforcement of immigration laws. State or local officers performing functions pursuant to 287(g) agreements are not considered federal employees, except for purposes relating to certain tort claims and compensation matters, but are considered to be acting under color of federal law for purposes of liability and immunity from suit in any civil actions brought under federal or state law. INA Section 287(g)(10) specifies that a written agreement is not required for state or local officials to engage in certain cooperative functions with federal immigration authorities (though these officials would not be entitled to the same rights and immunities as persons operating under a 287(g) agreement). Specifically, no agreement is necessary for a state or local officer to communicate with federal authorities concerning the immigration status of any person, including persons believed to be unlawfully present in the United States. More broadly, no agreement is necessary in order for a state or local officer "otherwise to cooperate … in the identification, apprehension, detention, or removal of aliens not lawfully present in the United States." An unsettled issue concerning state efforts to enforce federal immigration law is whether the "cooperation" contemplated under INA Section 287(g)(10) requires states and localities to consult and coordinate their immigration enforcement efforts with federal authorities. However, in Arizona v. United States , discussed infra , the Supreme Court stated that although "[t]here may be some ambiguity as to what constitutes cooperation under the federal law[,] … no coherent understanding of the term would incorporate the unilateral decision of state officers to arrest an alien for being removable absent any request, approval, or other instruction from the Federal Government." The 287(g) agreements follow two different models. Under the jail enforcement model (also referred to as the "detention model"), designated officers within state or local detention facilities are authorized to identify and process criminal aliens in preparation for removal by federal immigration authorities. Under the task force model, designated officers may, during the course of their regular law enforcement duties within the community or under the direction of a supervising federal immigration officer, identify and arrest certain removable aliens. Some 287(g) agreements singularly employ a task force or detention model, while others use both. In 2009, U.S. Immigration and Customs Enforcement (ICE), the agency within the Department of Homeland Security which administers the 287(g) program, renegotiated agreements with participating jurisdictions in an effort to bolster federal oversight, training, and communication within the 287(g) program, and to prioritize the arrest and detention of aliens involved in serious criminal activity. As of August 31, 2012, agreements pursuant to INA Section 287(g) were in place with 64 law enforcement agencies within 24 states. It should be noted that federal immigration authorities have entered cooperative arrangements with states pursuant to statutory authorities other than INA Section 287(g). For example, under the Criminal Alien Program (CAP), ICE officers assigned to federal, state, and local prisons are tasked with identifying criminal aliens in order to facilitate their removal, including through the placement of detainers upon such aliens so that federal immigration authorities may take them into custody upon completion of their criminal sentences. A separate program, Secure Communities, is also used to identify criminal aliens in local law enforcement custody. This program—which was first implemented in 14 jurisdictions in 2008 and is scheduled for implementation nationwide in 2013—relies upon the sharing of information regarding persons arrested by state and local law enforcement to identify aliens who may be removable. Specifically, the fingerprints of persons arrested by state and local officers are sent to the Federal Bureau of Investigation's (FBI's) Integrated Automatic Fingerprint Identification System (IAFIS), which then sends them to ICE's Automated Biometric Identification System (IDENT). This system automatically notifies ICE personnel whenever the fingerprints of persons arrested by state and local officers match those of a person previously encountered and fingerprinted by immigration officials. ICE personnel then review other databases to determine whether the person is here illegally or otherwise removable, and may issue detainers for any aliens who appear removable. Unlike 287(g) agreements, neither CAP nor the Secure Communities initiative involves direct enforcement of federal immigration law by state or local law enforcement officers or agencies. Moreover, whereas CAP is effectuated via formal arrangements between federal and state authorities, the Secure Communities program, though initially effectuated through written agreements between ICE and state identification bureaus, is now implemented through an information-sharing arrangement between federal authorities. In addition to formal agreements, federal immigration authorities sometimes have informal cooperative arrangements with state or local law enforcement, particularly along the northern and southern borders, in which officers will provide support to one another in the performance of their law enforcement duties. Section 372 of IIRIRA amended INA Section 103(a) to authorize the Attorney General (now the Secretary of Homeland Security ) to call upon state and local police to perform immigration enforcement functions in response to an actual or imminent mass influx of aliens. Specifically, INA Section 103(a) provides: In the event that the [Secretary of Homeland Security] determines that an actual or imminent mass influx of aliens arriving off the coast of the United States or near a land border presents urgent circumstances requiring an immediate Federal response, the [Secretary] may authorize any State or local law enforcement officer, with the consent of the head of the department, agency or establishment under whose jurisdiction the individual is serving, to perform or exercise any of the power, privileges or duties conferred or imposed by the Act or regulations issued thereunder upon officers or employees of the service. Thus, state and local officers may exercise the civil or criminal arrest powers of federal immigration officers when certain criteria are met: (1) the designated state and local officers are expressly authorized by the Secretary of Homeland Security to exercise such authority; (2) the head of the relevant state or local law enforcement agency has given its consent to the performance of federal immigration functions by the agency's officers; and (3) the Secretary has made a determination that an imminent or ongoing mass influx of aliens requires an immediate response. Any authority delegated to state or local law enforcement officers under this provision can only be exercised for the duration of the emergency. In 2002, the DOJ issued a final rule that implemented INA Section 103(a)(10) and described the cooperative process by which state or local governments could agree to place authorized state and local law enforcement officers under the direction of the INS in exercising federal immigration enforcement authority. The following year the DOJ found it necessary to amend the previous regulations, determining that the regulations did not provide the Attorney General with sufficient flexibility to address unanticipated situations that might occur during a mass influx of aliens. When such action is deemed necessary to protect public safety, public health, or national security, the new rules also allow the abbreviation or waiver of training requirements for state and local law enforcement. Although one preemptory agreement was entered with Florida pursuant to INA Section 103(a)(1) in 1998, which could go into effect in the event that a mass influx of aliens is declared, it does not appear that any other agreements have been entered pursuant to this authority. Section 439 of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA, P.L. 104-132 ) authorizes state and local law enforcement officers to arrest unlawfully present criminal aliens who have presumably violated INA Section 276 (concerning the reentry of previously removed aliens). Section 439 states in part: [T]o the extent permitted by relevant State and local law, State and local law enforcement officials are authorized to arrest and detain an individual who—(1) is an alien illegally present in the United States; and (2) has previously been convicted of a felony in the United States and deported or left the United States after such conviction, but only after the State or local law enforcement officials obtain appropriate confirmation from the Immigration and Naturalization Service of the status of such individual and only for such period of time as may be required for the Service to take the individual into Federal custody for purposes of deporting or removing the alien from the United States. This provision originated as a floor amendment during congressional consideration of AEDPA, and its sponsor intended it to overcome a perceived federal limitation on state and local officers' ability to arrest and detain criminal aliens so that they could be transferred to the custody of federal immigration authorities. There is some debate as to whether such a limitation actually existed prior to the enactment of AEDPA, and whether states and localities are now only permitted to arrest and detain aliens on account of their unlawful reentry pursuant to the procedure established under AEDPA Section 439 (i.e., when state or local officers have obtained prior confirmation of a suspect's unauthorized immigration status from federal immigration authorities). As discussed infra , the U.S. Court of Appeals for the Ninth Circuit appears to have construed AEDPA Section 439 in this manner, while the U.S. Court of Appeals for the Tenth Circuit has recognized that federal law pre-AEDPA was not intended to displace any preexisting authority permitting states and localities to enforce federal immigration law. The Supreme Court did not squarely assess the intended effect of AEDPA Section 439 in its 2012 ruling in Arizona v. United States , though it cited the provision as one of the few avenues through which state and local police could make arrests on the basis of aliens' suspected removability. Congress appears to have authorized state and local police to enforce INA Section 274, which criminalizes activities relating to the smuggling, transport, or harboring of unauthorized aliens. INA Section 274(c), entitled "Authority to Arrest," states that "No officer or person shall have authority to make any arrest for a violation of any provision of this section except officers and employees of the Service designated by the Attorney General, either individually or as a member of a class, and all other officers whose duty it is to enforce criminal laws ." The plain language in this subsection seems to indicate that state and local law enforcement officers are permitted to make arrests for violations of the federal alien smuggling statute, as they are "officers whose duty it is to enforce criminal laws." The legislative history of INA Section 274 seems to confirm this understanding. The Senate-passed version of this provision stated that arrests for violations could only be made by federal immigration agents and "other officers of the United States whose duty it is to enforce criminal laws." The House, however, struck the words "of the United States," so that state and local officials could enforce this provision as well. Although the federal alien smuggling provision appears to permit state and local officials to directly enforce its provisions, other INA provisions which criminalize immigration-related conduct do not contain similar authorizing language. Nonetheless, as discussed infra , reviewing courts have thus far recognized that state and local law enforcement may arrest persons for criminal violations of the INA, regardless of whether the applicable INA provision expressly authorizes such arrests. The Supreme Court in Arizona declined to definitively resolve this issue. At least until the Supreme Court's decision in Arizona v. United States , there had been considerable debate concerning the power of state and local police to enforce federal immigration law in the absence of express authorization in federal statute. For decades, the prevailing view had been that states were not precluded from arresting persons for criminal violations of the INA, but that they were generally preempted from arresting persons for civil violations making them removable. More recently, however, some courts appeared to take the view that state and local police could generally arrest persons for either criminal violations of federal immigration laws or civil violations making them removable. A few states subsequently passed measures that authorized state police to arrest certain categories of aliens who committed immigration status violations making them removable. Many of these measures were subsequently challenged in federal court on preemption grounds. The Supreme Court agreed to review one such challenge, concerning a comprehensive immigration enforcement measure enacted by Arizona, and held that states are generally preempted from arresting or detaining aliens on the basis of suspected removability under federal immigration law. It should be noted that inquiries by state and local law enforcement that touch upon the immigration status of stopped individuals do not always constitute attempts to enforce federal immigration law. Such inquiries might arise in the normal course of an investigation unrelated to immigration enforcement. For example, an officer investigating an offense under state or local law might question a person regarding his identity, and such questioning might possibly touch upon that person's immigration status (e.g., requesting the production of any documents that may verify the person's purported identify, including perhaps any federal immigration documents in the person's possession). These situations might not raise the same legal issues as situations where questioning regarding immigration status either serves as the legal justification for a person's initial stop, detention, or arrest, or constitutes a basis for detaining a person beyond the period necessary to resolve any non-immigration related matters that justified the person's stop or detention. In June 2012, the Supreme Court issued its decision in Arizona v. United States , ruling that some aspects of an Arizona law intended to deter unlawfully present aliens from remaining in the state were preempted by federal law, but also holding that Arizona police were not facially preempted from running immigration status checks on persons stopped for state or local offenses (though the Court left the door open for future challenges to this provision). The Court's ruling indicates that states' ability to enforce federal immigration law is limited in the absence of either direct authorization by federal law or coordination of enforcement efforts with federal immigration authorities. The Arizona measure, commonly referred to as S.B. 1070, was enacted in 2010 and almost immediately challenged by the DOJ on the grounds that it conflicted with federal immigration law and policy and was therefore unenforceable under the Supremacy Clause. A federal district court preliminarily enjoined enforcement of four of the five provisions of S.B. 1070 that were challenged by the DOJ, pending a final ruling in the case, and the injunction was upheld by a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit. Arizona appealed this ruling to the Supreme Court. Arguments at the Supreme Court centered on four major provisions of S.B. 1070, which can be divided into two categories: (1) those provisions seeking to bolster direct enforcement of federal immigration law by Arizona law enforcement, including through the identification and apprehension of unlawfully present aliens; and (2) those provisions that criminalize conduct which may facilitate the presence of unauthorized aliens within the state. The Arizona Court found that the provisions imposing state criminal penalties on two types of immigration-related conduct were preempted by federal law. However, the Court split on the permissibility of the two provisions of S.B. 1070 involving direct enforcement of federal immigration law by Arizona police. The Court held that Arizona police were generally preempted from arresting or detaining aliens solely on the basis of immigration status violations. However, state and local police were not facially preempted from running immigration status checks with federal authorities when they reasonably suspected a person stopped for a state or local offense was a removable alien. A five-Justice majority ruled that Section 6 of S.B. 1070, which authorized the warrantless arrest of aliens who committed certain criminal offenses that constitute grounds for removal under federal law, was facially preempted. Writing for the majority, Justice Kennedy found that Section 6 would confer broader authority to Arizona police to arrest aliens on the basis of removability than is granted to federal immigration authorities under federal law. The majority also deemed it significant that the arrest authority conferred on Arizona police could be "exercised without any input" from federal authorities, which would "allow the State to achieve its own immigration policy" and potentially lead to unnecessary harassment of certain aliens who were unlikely to be removed by federal authorities. More broadly, the majority recognized that states and localities "may perform the functions of an immigration officer" only in "limited circumstances" specified by federal law. In particular, the Supreme Court held that states are generally preempted from arresting and detaining persons for suspected immigration status violations, except when done pursuant to (1) a written agreement under INA Section 287(g); (2) some other specific federal statutory authorization; or (3) pursuant to a "request, approval, or instruction from the Federal Government." The scope of activities permitted under the third category seems likely to be the subject of continued debate. Three Justices dissented from this portion of the Court's ruling, and would have recognized that state and local police are generally not precluded from assisting in the enforcement of federal immigration law, including by arresting aliens on the basis of their removability under federal law. It is important to note that the Arizona Court's discussion of states' limited authority to enforce federal immigration law was in reference to arrests for immigration status violations, which are non-criminal in nature. The Court did not opine as to whether state law enforcement agencies are also precluded from making arrests for criminal violations of federal immigration law. As previously mentioned, reviewing courts have generally recognized that state and local police are not preempted from making such arrests. Still, the Arizona Court appeared to leave the door open to a possible preemption challenge in the event that a person is arrested or detained by state authorities based on "reasonable suspicion of illegal entry or another immigration crime." Although a majority of the Arizona Court found that most of the challenged provisions of S.B. 1070 were preempted by federal law, the sitting Justices unanimously agreed that Section 2(b) of S.B. 1070, which requires Arizona police, whenever practicable, to investigate the immigration status of persons reasonably suspected of being unlawfully present when such persons are stopped for a state or local offense, is not facially preempted. The Court emphasized that federal law contemplates the sharing of immigration information among federal, state, and local authorities. Similar reasoning was employed by the Court last year, when it rejected a facial preemption challenge to another Arizona law that required the use of a federal work authorization database and imposed licensing sanctions upon Arizona businesses that hire unauthorized aliens, after the Court found that federal law either permitted or encouraged the type of regulation that had been adopted by the state. Nonetheless, a majority of the Arizona Court appeared to take the view that while state police may ask the federal government about the immigration status of stopped individuals, future challenges to the provision might be made depending upon how the requirement was interpreted and applied (e.g., if Arizona police delayed the release of persons in their custody "for no reason other than to verify their immigration status"). Following the Arizona ruling, lower courts have applied the Supreme Court's decision to state laws modeled after Arizona's S.B. 1070. In August 2012, for example, the U.S. Court of Appeals for the Eleventh Circuit ("Eleventh Circuit") issued decisions concerning immigration enforcement measures adopted by Alabama and Georgia soon after the enactment of the Arizona statute. While finding that some provisions of these measures were likely preempted by federal immigration law, the Eleventh Circuit ruled that a provision in the Georgia statute which authorized state police to run immigration status checks on persons stopped for state offenses (which had been modeled on Arizona's S.B. 1070) was not facially preempted, though the court left the door open for a future challenge in the event that the checks result in the prolonged detention of persons. Prior to the Supreme Court's ruling in Arizona , there were conflicting judicial opinions regarding the degree to which state and local police officers could, in the absence of express authorization by federal law, act to enforce federal immigration law. The U.S. Court of Appeals for the Ninth Circuit ("Ninth Circuit") and the U.S. Court of Appeals for the Sixth Circuit ("Sixth Circuit") issued opinions which recognized that state and local law enforcement agencies were generally preempted from making arrests for civil violations of the INA in the absence of clear authorization under federal law, though each either expressly or impliedly endorsed the notion that states were not barred from arresting persons for criminal violations of federal immigration law. On the other hand, the U.S. Court of Appeals for the Tenth Circuit ("Tenth Circuit") issued a series of rulings which appeared to support the position that state and local law enforcement have implicit authority to investigate and arrest persons for either criminal or civil violations of federal immigration law. The continuing validity of these rulings, and in particular those of the Tenth Circuit, is uncertain in the aftermath of the Supreme Court's ruling in Arizona . Nonetheless, it is possible that these decisions may still provide some guidance to future courts and policymakers, particularly to the extent that they may be viewed as supplementing the Court's analysis of immigration enforcement activity by the states, or addressing matters not squarely addressed by the Arizona ruling, including the authority of state and local police to make arrests for criminal violations of federal immigration law. The issue of whether state and local law enforcement agencies are precluded from enforcing provisions of the INA was analyzed by the Ninth Circuit in the 1983 case of Gonzales v. City of Peoria and the 2011 case of United States v. Arizona (which was reviewed by the Supreme Court on appeal as Arizona v. United States , discussed supra ). In Gonzales , a three-judge panel examined a Peoria policy that authorized local officers to arrest aliens who violated INA Section 275, which makes it a criminal offense for an alien to enter the United States unlawfully. The petitioners, who had been questioned and detained pursuant to the city's policy, claimed that enforcement of federal immigration laws was the exclusive responsibility of the federal government, precluding any concurrent enforcement activities by states or localities. The appellate court disagreed. As an initial matter, the Gonzales court noted that the "general rule is that local police are not precluded from enforcing federal statutes," and that federal regulation of a particular field "should not be presumed to preempt state enforcement activity 'in the absence of persuasive reasons—either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained.'" The court concluded that the enforcement of the criminal provisions of the INA by states and localities did not inherently conflict with federal interests. Moreover, the court found that neither the structure nor legislative history of the INA manifested an intent by Congress to preclude state or local enforcement of the INA's criminal provisions. Accordingly, the Gonzales court declared that local police officers may, subject to state law, constitutionally stop or detain individuals when there is reasonable suspicion or, in the case of arrest, probable cause that such persons have violated, or are in the process of violating, the criminal provisions of the INA. In the course of its analysis of the preemptive effect of federal immigration law, the Gonzales court appeared to distinguish the preemptive effect of the INA's civil and criminal provisions, and assumed that the former constituted a pervasive and preemptive regulatory scheme, whereas the latter did not. The court stated: We assume that the civil provisions of the [INA], regulating authorized entry, length of stay, residence status, and deportation, constitute such a pervasive regulatory scheme, as would be consistent with the exclusive federal power over immigration. However, this case does not concern that broad scheme, but only a narrow and distinct element of it—the regulation of criminal immigration activity by aliens. The statutes relating to that element are few in number and relatively simple in their terms. They are not, and could not be, supported by a complex administrative structure. It therefore cannot be inferred that the federal government has occupied the field of criminal immigration enforcement. Whereas the Ninth Circuit had "assumed" in Gonzales that state and local police were precluded from directly enforcing the civil provisions of federal immigration law, a more definitive pronouncement to that effect was made by the circuit court in Arizona . As discussed earlier, the case centered on an Arizona law intended to deter the entry or presence of aliens within the state who lack lawful status under federal immigration law. The DOJ and a number of private entities filed separate lawsuits to prevent aspects of the Arizona statute from going into effect. The reviewing federal district court granted the federal government's request to preliminarily enjoin most of the challenged provisions of the Arizona law, after it found that the DOJ was likely to prevail in its argument that these provisions were preempted by federal immigration law and policy. On appeal, a three-judge panel of the Ninth Circuit affirmed the lower court's ruling. While unanimous on some aspects of its decision, the panel split on the permissibility of those provisions of S.B. 1070 concerning immigration status verifications and warrantless arrests of deportable aliens by state and local police. By a 2-1 decision, the panel held that state and local police officers generally lacked the authority to enforce the non-criminal provisions of the INA, and also held that states may not mandate that police investigate the immigration status of persons suspected of being unlawfully present aliens. In reaching this conclusion, the panel majority construed those provisions of INA Section 287(g) permitting state and local officers to perform immigration enforcement functions pursuant to a written agreement with the Secretary of Homeland Security as indicative of congressional intent for state involvement in immigration enforcement to generally occur under federal supervision. The majority further found that INA Section 287(g)(10), which refers to state and local "cooperation" in immigration enforcement in the absence of a 287(g) agreement, encompasses only assistance on "an incidental and as needed basis" when requested by the Secretary of Homeland Security or otherwise necessary. The majority also viewed the Arizona statute as being inconsistent with congressional intent, on the ground that it would permit state and local police to arrest aliens for civil deportation violations in a broader set of circumstances than had been authorized under AEDPA Section 439. The panel majority further found that the government was likely to prevail in its preemption challenge because of the Arizona measure's "deleterious effect" on foreign relations, as well as "the threat of 50 states layering their own immigration enforcement rules on top of the INA." In a partial dissent from the majority's ruling, one member of the panel criticized the majority for holding that states and localities are generally preempted from enforcing the civil provisions of the INA or investigating the immigration status of persons suspected of being deportable aliens. The dissent characterized most jurisprudence as supporting the proposition that state and local officers are generally not preempted from making arrests for violations of federal law, including arrests for immigration violations. The dissent also construed INA Section 287(g)(10) as reflecting congressional recognition that state police may assist in the enforcement of both the civil and criminal provisions of the INA, even in the absence of a 287(g) agreement. The dissent further claimed that AEDPA Section 439 was not intended to define the parameters of state authority to arrest aliens for civil immigration violations. The dissenting judge also construed 8 U.S.C. Section 1373(c), which requires federal authorities to respond to immigration status requests by state and local authorities, as being indicative of congressional support for state and local participation in immigration enforcement activities. It should be noted that while the circuit panel majority found that state and local police are generally preempted from making arrests for civil violations of the INA, its related ruling that S.B. 1070's immigration verification requirements were preempted (a ruling subsequently overruled by the Supreme Court) appeared to be based on the "mandatory" nature of these requirements. Thus, the court's decision would not necessarily have barred Arizona law enforcement from attempting to verify the immigration status of persons on a more limited, case-by-case basis. The panel majority's opinion apparently contemplated such attempts at verification in limited circumstances. The DOJ also seemed to suggest in its argument before the district court that it did not view discretionary attempts by state or local law enforcement to verify the immigration status of individuals as raising the same preemption concerns as Arizona's "mandatory" requirements relating to status verification. As discussed supra , the Ninth Circuit's ruling was subsequently reviewed by the Supreme Court. Although the Court agreed with the Ninth Circuit regarding the preemptive effect that federal law had upon many provisions of S.B. 1070, it disagreed that the mandatory immigration status requirements imposed by the Arizona law were facially preempted. In the 2008 case of United States v. Urrieta , a three-judge circuit panel similarly appeared to construe federal immigration law as generally precluding states and localities from arresting or detaining persons for civil immigration violations. The case concerned the lawfulness of the petitioner's extended detention following the issuance of a traffic citation by local law enforcement, during which time the officer attempted to determine whether the petitioner was an unlawfully present alien. During the extended detention, the petitioner consented to a search of his vehicle, which resulted in the discovery of firearms and fraudulent documents. In his subsequent criminal trial for unlawful possession of these items, the petitioner sought to have the evidence discovered during his extended detention suppressed, arguing that his extended detention beyond the period necessary to issue a traffic citation was unlawful. The circuit panel concluded that the petitioner's extended detention could not be justified solely on account of the police officer's reasonable suspicion that the petitioner was an unlawfully present alien. In so doing, the panel characterized INA Section 287(g) as "stating that local law enforcement officers cannot enforce completed violations of civil immigration law (i.e., illegal presence) unless specifically authorized to do so by the Attorney General under special conditions that are not applicable in the present case." Although the majority opinion in Urrieta appeared to recognize that state or local law enforcement could detain a person on account of a criminal violation of the INA, it indicated that an alien could not be detained solely on account of unauthorized immigration status in the absence of a 287(g) agreement or other express federal authority. Because the local officer did not have "reasonable suspicion that [the petitioner] was engaged in some nonimmigration-related illegal activity" that could justify his extended detention, the court ruled that the petitioner was unlawfully detained and ordered the evidence discovered during this detention to be suppressed in subsequent criminal proceedings. In contrast to the approach taken by the Sixth and Ninth Circuits, the Tenth Circuit Court of Appeals issued a series of rulings that arguably supported the view that state and local officers were not preempted from investigating and arresting persons who have violated either the criminal or civil provisions of the INA. Although these cases arose in the context of criminal investigations, they concerned activities undertaken by state or local officers involving the enforcement of the civil provisions of federal immigration law—namely, the arrest or extended detention of persons in order to determine whether they were unlawfully present aliens. In the 1984 case of United States v. Salinas-Calderon , a three-judge circuit panel considered a case involving a state trooper who had pulled over the criminal defendant for driving erratically, and who had subsequently found six individuals in the back of the defendant's truck. Because neither the driver nor the six individuals spoke English or carried identification documentation, and another passenger (the driver's wife) stated that they were from Mexico, the state trooper arrested them and attempted to verify their immigration status. The driver was subsequently charged with the criminal offense of unlawfully transporting unauthorized aliens, but moved to suppress statements made by himself and the six passengers in which they admitted their unauthorized immigration status. Examining the record, the circuit panel found that, based on the observable facts that had been available, the trooper had probable cause to detain and arrest all of the individuals. Moreover, the court rejected the defendant's argument that the state trooper lacked authority to detain the passengers in order to inquire into their immigration status. The court determined that a "state trooper has general investigatory authority to inquire into possible immigration violations," and that based on his questioning of the defendant and passengers, the trooper had "probable cause to make a warrantless arrest for violation of the immigration laws." In 1999, the Tenth Circuit Court of Appeals once again considered state and local authority to enforce federal immigration laws in the case of United States v. Vasquez-Alvarez . The case concerned an Oklahoma police officer's arrest of an individual, who was being monitored by the officer partially due to suspicion of drug trafficking, following the individual's admission that he was an "illegal alien." Subsequently, the alien admitted that he had a felony record and had previously been deported from the United States, and was charged by federal authorities with the criminal offense of unlawfully reentering the United States. As discussed previously, Section 439 of AEDPA expressly permits state and local law enforcement to arrest previously deported aliens who have been convicted of criminal activity and thereafter unlawfully reenter the United States, but requires that law enforcement acting pursuant to this authority first obtain confirmation of the alien's immigration status prior to making an arrest. In the instant case, however, the law enforcement officer did not act pursuant to the authority conferred under AEDPA Section 439. Instead, the arrest was premised upon Oklahoma state law, which permitted state and local law enforcement to make arrests for any violation of federal law. The Vasquez-Alvarez court rejected the defendant's argument that because his arrest was not in accordance with the procedure detailed in AEDPA Section 439, it was therefore unlawful. Citing Salinas-Calderon , the circuit court noted that it had previously "held that state law-enforcement officers have the general authority to investigate and make arrests for violations of federal immigration laws." Examining the language and legislative history of AEDPA Section 439, the court determined that the provision neither expressly nor implicitly limited or displaced "the preexisting general authority of state or local police officers to investigate and make arrests for violations of federal law, including immigration law." Instead, the circuit panel held that AEDPA Section 439 "merely creates an additional vehicle for the enforcement of federal immigration law," besides any independent authority to make such arrests under state law. In the 2001 case of United States v. Santana-Garcia , the Tenth Circuit once again addressed the role of state and local law enforcement in immigration matters, reaffirming and expanding upon its prior rulings in Salinas-Calderon and Vasquez-Alvarez . The case concerned a traffic stop by a Utah state trooper. The driver of the car did not possess a driver's license, a misdemeanor under Utah law, and did not speak English. The passenger in the car spoke limited English and explained that he and the driver were traveling from Mexico to Colorado, which prompted the officer to ask if they were "legal." The passenger and the driver appeared to understand the question and answered "no." Following further inquiry, the driver and passenger consented to a search of their vehicle, which revealed illegal drugs. In subsequent criminal proceedings, the driver and passenger moved to suppress this evidence on the grounds that the police lacked reasonable suspicion to detain them beyond the purpose of the initial stop. The circuit panel upheld the admission of the evidence, finding that the state trooper had probable cause to arrest the defendants for violations of state criminal law (i.e., driving without a valid driver's license) and federal law at the time they consented to a search of the vehicle. With respect to federal law, the court held that the defendants' admission of unlawful status provided the state officer with probable cause to arrest them for suspected violations of federal immigration law. The Santana-Garcia panel also seemed to dismiss the suggestion that state law must explicitly authorize state and local officials to make such arrests. The court relied upon a number of inferences from earlier decisions that recognized the "implicit authority" or "general investigatory authority" of state officers to inquire into possible immigration violations. The court also seemed to rely upon a broad understanding of a Utah state law that empowers officers to make warrantless arrests for any public offense committed in the officer's presence to include violations of federal law. Although the defendants in Santana-Garcia were apparently in violation of a civil provision of the INA (i.e., unauthorized presence), the Santana-Garcia court made no distinction between state and local police officers' ability to enforce either the civil or criminal provisions of federal immigration law, although the supporting cases which the court cited generally involved arrests for criminal matters. Moreover, it remains unclear how the court, pursuant to its broad understanding of Utah state law, would have ruled if there had not been an independent legal basis supporting the state officer's stop (i.e., a traffic violation) unrelated to the investigation as to whether a civil violation of federal immigration laws had occurred. In any event, the Supreme Court's decision in Arizona would seem to preclude arguments that state and local police may independently act to enforce federal immigration law through the arrest and detention of persons for non-criminal immigration status violations. In recent decades, the executive branch has repeatedly opined on the scope of potential state and local involvement in the enforcement of federal immigration law. Over the years, it has modified its views as to whether state and local officials may enforce the civil provisions of the INA. In a 1978 press release, the DOJ "reaffirmed … that the enforcement of the immigration laws rests with [federal immigration authorities], and not with state and local police." The DOJ further urged state and local police not to "stop and question, detain, arrest, or place an 'immigration hold' on any persons not suspected of crime, solely on the ground that they may be deportable aliens." In 1983, the DOJ announced revisions to this policy to encourage greater involvement by state and local police in the enforcement of immigration laws, but emphasized that federal authorities "remain responsible for all arrests for [civil] immigration violations." In 1989, the DOJ's OLC opined that while state and local law enforcement could enforce the provisions of the INA concerning criminal offenses, it was "unclear" whether they could enforce non-criminal federal statutes. In 1996, the OLC reached a more definitive conclusion on the question, issuing an opinion which found that while state and local police are not preempted from making arrests for criminal violations of the INA, they "lack recognized legal authority" to enforce the INA's civil provisions. The opinion acknowledged that "[i]t is well-settled that state law enforcement officers are permitted to enforce federal statutes where such enforcement activities do not impair federal regulatory interests." Such enforcement is "subject to the provisions and limitations of state law." However, the OLC concluded, based upon an examination of jurisprudence, that "state and local police lack recognized legal authority to stop and detain an alien solely on suspicion of civil deportability, as opposed to a criminal violation of the immigration laws or other laws." In particular, the OLC construed the Ninth Circuit's ruling in Gonzales v. City of Peoria as holding that state and local authority to enforce the INA "is limited to criminal violations." In 2002, the OLC issued a memorandum which concluded that "federal law did not preempt state police from arresting aliens on the basis of civil deportability," and it withdrew the advice of the 1996 opinion which had suggested otherwise. The 2002 OLC Opinion described the states, like the federal government, as possessing the status of "sovereign entities." Because of this status, states do not require affirmative delegation of federal authority in order to make arrests for violations of federal law—"[i]nstead, the power to make arrests inheres in the ability of one sovereign to accommodate the interests of the other." The 2002 OLC Opinion recognized that the exercise of states' inherent authority to arrest persons for federal violations may be subject to federal preemption. However, it concluded that "federal law should be presumed not to preempt this arrest authority," because "it is ordinarily unreasonable to assume that Congress intended to deprive the federal government of whatever assistance States may provide in identifying and detaining those who have violated federal law." The 2002 OLC Opinion explicitly rejected the 1996 opinion's conclusion that federal law preempts state or local enforcement of the civil provisions of the INA, because "[o]n re-examination, we believe that the authorities we cited in the 1996 OLC opinion provide no support for our conclusion that state police lack the authority to arrest aliens solely on the basis of civil deportability." In particular, it construed the Ninth Circuit's statements in Gonzales v. City of Peoria regarding the preemptive nature of the INA's civil provisions as "mere assumption in dictum ," and instead emphasized Tenth Circuit jurisprudence supporting the inherent authority of state and local police to enforce both the criminal and civil provisions of federal immigration law. Some critics of the 2002 OLC Opinion have characterized it as "deeply flawed" and unsupported by judicial precedent or historical practice in the field of immigration. For example, even prior to the Supreme Court's ruling in Arizona , some critics argued that immigration has long been understood to be a distinctly federal concern, and that Congress would not have provided express statutory authorization for state and local enforcement of civil immigration laws in limited circumstances (e.g., pursuant to INA Section 287(g)) unless it was understood that state and local police were otherwise preempted from making arrests for civil immigration violations. It should be noted that the 2002 OLC Opinion concerned whether states are preempted from arresting persons for violations of federal immigration law. The opinion characterized this as "an extremely limited … preemption question," which does not, "[u]nlike the typical preemption scenario," involve a state enacting its own immigration-related measures, which might "arguably conflict with federal law or intrude into a field that is reserved to Congress or that federal law has occupied." OLC opinions are generally viewed as providing binding interpretive guidance for executive agencies and reflecting the legal position of the executive branch, but they cannot compel state action and do not have the same weight as an act of Congress. Generally, courts will consider opinion letters by executive agencies on legal matters to the extent that they "have the power to persuade." It remains to be seen whether the OLC will modify or supplement any of the conclusions reached in its 2002 opinion, in light of the Supreme Court's ruling in Arizona. The Court's opinion indicates that state and local police do not enjoy broad discretion to determine when and whether to arrest or detain persons for immigration status violations. If such enforcement activity is not directly authorized by federal statute, it must still, at minimum, be pursuant to the "request, approval, or instruction from the Federal Government."

The power to prescribe rules as to which aliens may enter the United States and which aliens may be removed resides solely with the federal government, and primarily with Congress. Concomitant to its exclusive power to determine which aliens may enter and which may stay in the country, the federal government also has the power to proscribe activities that subvert this system. Congress has defined our nation's immigration laws in the Immigration and Nationality Act (INA), a comprehensive set of laws governing legal immigration, naturalization, work authorization, and the entry and removal of aliens. These requirements are bolstered by an enforcement regime containing both civil and criminal provisions. Deportation and associated administrative processes related to the removal of aliens are civil in nature, while certain violations of federal immigration law, such as smuggling unauthorized aliens into the country, carry criminal penalties. Congressional authority to prescribe rules on immigration does not necessarily imply exclusive authority to enforce those rules. In certain circumstances, Congress has expressly authorized states and localities to assist in enforcing federal immigration law. Moreover, there is a notion that has been articulated in some federal courts and by the executive branch that states may possess "inherent" authority to assist in the enforcement of federal immigration law, even in the absence of clear authorization by federal statute. Nonetheless, states may be precluded from taking actions if federal law would thereby be thwarted. At least until the Supreme Court's decision in the 2012 case of Arizona v. United States, there had been considerable legal debate concerning the power of state and local police to enforce federal immigration law in the absence of express authorization in federal statute. For decades, the prevailing view had been that states were not precluded from arresting persons for criminal violations of the INA, but were generally preempted from arresting persons for civil violations making them removable. More recently, however, some courts (and the Department of Justice (DOJ) in a 2002 legal opinion) took the view that state and local police were not preempted from arresting persons for any violation of federal immigration law, including immigration status violations. A few states subsequently passed measures that authorized state police to arrest certain categories of aliens who committed immigration status violations making them removable. In Arizona, however, the Supreme Court held that states are generally preempted from arresting or detaining aliens on the basis of suspected removability under federal immigration law. Such action may be taken only when there is specific federal statutory authorization, or pursuant to "request, approval, or instruction from the Federal Government." This report discusses the authority of state and local law enforcement to assist in the enforcement of federal immigration law through the investigation and arrest of persons believed to have violated such laws. It describes federal statutes that expressly permit state and local police to enforce immigration law directly, and discusses the Supreme Court's ruling in Arizona v. United States and significant, pre-Arizona lower court decisions concerning the ability of states and localities to assist in immigration enforcement. The report also briefly examines pre-Arizona opinions on the issue by the DOJ's Office of Legal Counsel. This report does not directly address legal issues raised by states and localities enacting their own immigration-related sanctions, including measures intended to supplement federal law through the imposition of additional criminal or civil penalties. For further discussion of the legal implications of such measures, see CRS Report R42719, Arizona v. United States: A Limited Role for States in Immigration Enforcement, by [author name scrubbed] and [author name scrubbed], and CRS Report R41991, State and Local Restrictions on Employing Unauthorized Aliens, by [author name scrubbed].

C alculations indicating that the current Social Security program will not be financially sustainable in the long run under the present statutory scheme have fueled the current debate regarding Social Security reform. This report addresses selected legal issues that may be raised regarding entitlement to Social Security benefits as Congress considers possible changes to the Social Security program in view of projected long-range shortfalls in the Social Security Trust Funds. Social Security benefits are administered pursuant to Title II of the Social Security Act, known as the Old Age, Survivors and Disability Insurance (OASDI) program . Title II is part of a larger social insurance program in which Congress uses its power to tax and spend for the general welfare to promote the social goals of aiding the aged, survivors of workers, disabled persons, and persons of limited means. Beneficiaries under Title II have a legal entitlement to receive Social Security benefits as set forth by the Social Security Act and as administered by the Social Security Administration (SSA), an independent agency in the executive branch. An individual's right to Social Security benefits is in a sense "earned," since there is a general relationship between OASDI benefits and wages earned and the tax paid thereon. However, benefits are not directly measured by the amount of payments made through the years into the system. Thus, the fact that Social Security benefits are financed by taxes on an employee's wages does not provide a limit on Congress's power to fix the levels of benefits under the Social Security Act, or the conditions upon which they may be paid. The Supreme Court's landmark decision in Flemming v. Nestor provided an analysis of the relationship between a beneficiary's legal entitlement to receive Social Security benefits and the power of Congress to change that entitlement by amending the underlying statute. The Court in that case upheld a provision, Section 202(a) of the Social Security Act, that terminated Social Security benefits to a person deported for membership in the Communist Party. Nestor at one time had been a member of the Communist Party. Later he began receiving Social Security benefits which were cut off when he was deported to his native Bulgaria. Nestor argued that he had a "property right" in his Social Security benefits and that, by cutting off those benefits, the government had made an unlawful "taking" of his benefits that contravened the Fifth Amendment. The Court, however, disagreed. Justice Harlan wrote: To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to everchanging conditions which it demands.... It was doubtless out of an awareness of the need for such flexibility that Congress included in the original Act, and has since retained, a clause expressly reserving to it "[t]he right to alter, amend, or repeal any provision" of the act. §1104, 49 Stat. 648, 42 U.S.C. §1304. That provision makes express what is implicit in the institutional needs of the program.... We must conclude that a person covered by the act has not such a right in benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment. The inherent ability of Congress to modify the provisions of Title II of the Social Security Act, even to the extent of affecting the benefits an individual is currently receiving, is thus well established. The same principle that current benefit amounts may be modified has been applied to other, similar programs involving pensions, such as Federal Civil Service Retirement. One significant example is the Supreme Court affirmance, without opinion, of a decision of a three-judge district court in National Association of Retired Federal Employees v. Horner. The district court in that case upheld a provision of the Balanced Budget and Emergency Deficit Control Act, which suspended paying a scheduled cost-of-living adjustment (COLA) for federal retirees, saying that it did not violate the Takings Clause of the Fifth Amendment, which states that private property shall not be taken for public use without just compensation. The dispute centered on whether the provision of the act, signed by the President on December 12, 1985, which suspended any automatic spending increase that first would be paid during the period beginning with the date of enactment, constituted a taking of private property of the retirees. The section providing for the COLA, 5 U.S.C. §8340(b), provided that it would take effect on December 1 of each year. While Section 8340(b) made the COLA effective on December 1, it was not scheduled to be paid until January 2, 1986. The retirees argued that the COLA for the 12 months after December 1, 1985, became their private property on December 1, 1985, and, consequently, that the suspension signed on December 12, 1985, took their property which had accrued between December 1 and 12 without compensation in violation of the Takings Clause. The court rejected their claim, asserting that, "It is utterly clear, however, that the statute [Section 8340(b)] cannot be read as plaintiffs wish." It cited an earlier case, Stouper v. Jones , as dispositive . The appellant in the Stouper case retired in 1953 and began receiving disability annuity payments pursuant to the law then in force. In 1956, Congress amended the law to discontinue benefits to recipients whose earning capacity was restored to a level fairly comparable to the current rate of pay for the position held immediately prior to retirement. After the Retirement Division of the Civil Service Commission determined that the appellant had been restored to that earning capacity, her disability annuity was terminated. The appellant asserted that the 1956 amendment could not constitutionally be applied in her case because at the time she retired she acquired a vested right to an annuity that could not be taken from her by subsequent legislation. The U.S. Court of Appeals for the District of Columbia in Stouper said that "[I]t is well settled that a pension granted by the government confers no right which cannot be revised, modified, or recalled by subsequent legislation. United States ex rel. Burnett v. Teller , 107 U.S. 64 (1882)." The court in the Stouper case added that benefits under the Civil Service Retirement Act are similar to those under the Social Security Act; they are not based on an employee's contributions to the retirement fund, but instead on the employee's earnings record and years of service. It was noted that the Retirement Act pays higher benefits when a deceased employee is survived by a widow or widower and children, than when he or she is survived only by a widow or widower even though the employee's contribution to the Civil Service Retirement and Disability Fund had been the same in either case. "We conclude that an employee has no right under the Retirement Act based on contractual annuity principles, and hold that the appellant had no vested right to the disability annuity which was terminated." The U.S. Supreme Court also has made clear that the payment of Social Security taxes conveys no contractual rights to Social Security benefits. In 1937 the High Court upheld the constitutionality of the Social Security Act in Helvering v. Davis . In doing so, the Court held that the Social Security program is not an insurance program. The court noted, "The proceeds of both employee and employer taxes are to be paid into the treasury like any other internal revenue generally, and are not earmarked in any way." The Court, in essence, deferred to Congress on the question of which welfare schemes fall within the ambit of the Constitution's General Welfare Clause. Later, in Flemming , the Court rejected any comparison of Social Security with insurance or an annuity: It is apparent that the noncontractual interest of an employee covered by the act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments. The absence of contractual rights extends to government pensions in general. In Dodge v. Board Education , a retired school teacher challenged the constitutionality of a state statute that reduced her retirement annuity from $1,500 to $500. The statute in effect when she retired said that, "Each person so retired ... shall be paid the sum of fifteen hundred ($1500) annually and for life from the date of such retirement." The Supreme Court did not interpret this mandatory language ("shall," "annually and for life") to supersede a subsequent state statute that reduced the amount of the annual annuity, saying that, "The presumption is that a law is not intended to create private contractual or vested rights but merely declares a policy until the legislature shall ordain otherwise." The presumption that pension statutes do not preclude Congress from decreasing or eliminating benefits at a future time rests on the recognition that legislative bodies require flexibility in public welfare matters. "[O]ur cases are clear that legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15-16 (1976). While acknowledging this latitude, the Supreme Court in Flemming nevertheless indicated that congressional action may be subject to some constitutional restraint: Quoting from an earlier case, the Court in Flemming said that "Whether wisdom or unwisdom resides in the scheme of benefits set forth in Title II [of the Social Security Act], it is not for us to say. The answer for such inquiries must come from Congress, not the courts. Our concern here, as often, is with power, not with wisdom." Helvering v. Davis, [301 U.S. 619] supra, at 644 [1937]. Particularly when we deal with a withholding of a noncontractual benefit under a social welfare program such as this, we must recognize that the Due Process Clause can be thought to interpose a bar only if the statute manifests a patently arbitrary classification, utterly lacking in rational justification. Thus, only if Congress were to act in a totally irrational and arbitrary manner would due process considerations invalidate a subsequent amendment. The Court reiterated this view in United States Railroad Retirement Board v. Fritz , which upheld congressional amendments to railroad retirement benefits that reduced benefits for some beneficiaries and eliminated benefits for others. These changes were challenged under the Due Process Clause on the ground that they irrationally distinguished between classes of annuitants. The Court held that because Congress could have eliminated benefits for all classes of employees, it was not constitutionally impermissible to draw lines between groups of employees for the purpose of phasing out the benefits. The Court said, "Where, as here, there are plausible reasons for Congress' action, our inquiry is at an end." The Court added that drawing lines between categories of beneficiaries "is a matter for legislative, rather than judicial, consideration." The Social Security program has faced funding shortfalls in the past, and Congress has enacted a variety of measures to deal with financial imbalances. Given the clear judicial precedents to the effect that Social Security benefits under Title II are not property rights and cannot be categorized as contractual in nature, the question may be raised whether Congress legislatively could create a new, legally enforceable right to the receipt of a certain level of benefits by individuals eligible for Social Security benefits. A legislative guarantee of a certain level of Social Security benefit payments with a corresponding obligation upon future Congresses for payment of such benefits would require either a finding of a contractual relationship between the federal government and individual certificate holders, the modification or repeal of which would be constitutionally impermissible, or a right stemming from Congress's implied promise not to enact legislation in the future that would bind a future Congress in the sense that the legislative enactment guaranteeing Social Security benefit payments could not be repealed or altered. A legally enforceable guarantee of a certain level of Social Security benefits set forth in legislation may be argued to create a contract between the federal government and individual Social Security recipients. It may be argued further that such a contract constitutionally protects an individual's right to continue to receive full benefits, and prohibits the federal government from abrogating such a contract by reducing or otherwise modifying the full payment of benefits an individual is entitled to receive. Under Article I, §10, cl.1, known as the Contracts Clause, the states are forbidden to pass laws impairing the obligation of contracts. Even as applied to the states, since Home Building & Loan Assn. v. Blaisdell , this restriction is not very severe, save for state efforts to void their own contracts. As for the federal government, there is no such clause, but this right is subsumed under the Fifth Amendment's Due Process Clause. And that right, as in the case of any economic right under the due process clause, is subject to standards that are not considered rigorous. Even insofar as the government's own contracts are concerned, the usual rule is that they too may be subject to alteration, especially when the right to alter laws is reserved. Thus, Congress, in Legal Tender Cases ( Knox v. Lee ) was held to have the authority to make Treasury notes legal tender in payment of debts previously contracted for payment in gold, and in Norman v. Baltimore & Ohio R. R., Congress was held to have the authority to invalidate provisions in private contracts calling for payment in gold coin. When the federal government seeks to abrogate its own contracts in order to serve its own financial purposes or to increase the public fisc, however, a more searching scrutiny, and usually invalidation, follows. The relevant distinction here is that the federal government acting as sovereign, and the federal government acting as contractor, constitute two separate roles. When the government acts as sovereign, in its legislative or executive capacity, rendering impossible the performance of its obligations, it cannot be held responsible in its capacity as a contractor. In Horowitz v. United States , the federal government contracted with the claimant for silk products and for the shipment of silk within a certain time, but the United States Railroad Administration subsequently placed an embargo on shipments of silk by freight. By the time the silk reached Horowitz, the price had fallen, rendering the deal unprofitable. The Court barred any damages award against the United States for the delay. "It has long been held by the Court of Claims that the United States as a contractor cannot be held liable for an obstruction to the performance of the particular contract resulting from its public and general acts as sovereign." If a recipient's right under law to a certain level of Social Security benefits is to be viewed as a contract between the recipient and the federal government, this contract arguably is not in the class of contracts that the federal government enters into in its proprietary capacity as a contractor. Title II recipients, whether receiving old age, survivors, or disability insurance benefits, have not, by virtue of the receipt of this promise, paid any money, provided any service or thing of value in exchange for the government's guarantee not to reduce the recipient's payments in the future. The government's commitment is unilateral, and it arguably remains subject to Section 1104 of the Social Security Act, which reserves the right of Congress to revise or modify the Social Security Act by subsequent legislation. While congressional modification of the express terms of the promise in law not to reduce benefits is limited by due process considerations, such constitutional concerns impose a bar only upon the enactment of an arbitrary modification that has no rational justification. It may be argued that Congress, by giving eligible individuals a legislative guarantee of a certain level of Social Security benefits, can legally bind itself in the future to pay the full amount of such Social Security benefits plus COLAs to certificate holders. There is no doubt that Congress may validly enact such a provision and promise to pay full Social Security benefits in the future. Congress may also provide for a funding mechanism and judicial recourse for non-compliance. Thereafter, Congress may decide to take whatever measures necessary to fulfill such a promise. The undeniably strong moral duty to do so, however, would not trump the underlying constitutional principle that a legislative enactment such as this cannot bind a future Congress in the sense that the legislative enactment cannot be repealed or altered. "The principle asserted is, that one legislature is competent to repeal any act which a former legislature was competent to pass; and that one legislature cannot abridge the powers of a succeeding legislature. The correctness of this principle, so far as respects general legislation, can never be controverted." To be sure, some congressional enactments, by their nature, are irrevocable. If Congress should admit a territory as a state, it could not subsequently repeal the law and make that state something else. Moreover, as discussed above, constitutional protection is accorded contracts when the federal government incurs financial obligations while acting in its proprietary capacity. In such cases federal efforts to avoid liabilities arising out of its own contracts have been found to deny due process. Where the federal government acts as lawmaker exercising its sovereign powers to provide for the general welfare, however, it cannot give up such powers by a binding contract. "Contractual arrangements, including those to which a sovereign itself is party, remain subject to subsequent legislation by the sovereign." Bowen v. Public Agencies Opposed to Social Security Entrapment . Illustrating this principle is the Supreme Court's holding in Stone v. Mississippi . The Mississippi legislature entered into a contract with a company to operate a lottery within the state, but the following year the state's voters adopted a constitutional amendment abolishing lotteries. Quoting a state case, the Court observed: Irrevocable grants of property and franchise may be made if they do not impair the supreme authority to make laws for the right government of the State; but no legislature can curtail the power of its successors to make such laws as they may deem proper in matters of police. These and other cases that might be cited demonstrate the limited role contract principles play in matters affecting the governmental functions, rather than the proprietary functions, of the states and the federal government. In essence, absent the kind of promise involving the essence of contracts covered by the Contracts Clause, a guarantee of the "full faith and credit" of the United States in backing bonds, for example, a statute which in fact promises future congressional action or inaction would likely not be held to constitute a contract enforceable by the courts. Legislative language that obligates the federal government to provide a guaranteed level of Social Security benefits to recipients purports to preclude the possibility that a recipient's benefits may be reduced in the future by either a repeal of the underlying law or by an amendment of the statutory provisions in Title II of the Social Security Act. The weight of judicial authority, however, suggests that Congress may not so bind itself, and that neither concepts of property rights nor contract would disable a future Congress from changing the benefits provided under Title II of the Social Security Act. The projected exhaustion of the Social Security Trust Funds, formally known as the Federal Old Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund, raises a question regarding whether that possibility would affect the legal right of beneficiaries to receive full Social Security benefits. On July 28, 2014, the Trustees of the Social Security Trust Funds stated that The Trustees project that annual OASDI cost will exceed non-interest income throughout the long-range period (2014 through 2088) under the intermediate assumptions. The dollar level of the theoretical combined trust fund reserves declines beginning in 2020 until reserves are depleted in 2033. Considered separately, the DI Trust Fund reserves become depleted in 2016 and the OASI Trust Fund reserves become depleted in 2034. The projected reserve depletion years were 2033 for OASDI, 2016 for DI, and 2035 for OASI in last year's report. Under current law, the projected cost of Social Security increases faster than projected income through about 2035 primarily because of the aging of the baby-boom generation and relatively low fertility since the baby-boom period. Cost will continue to grow faster than income, but to a lesser degree, after 2035 due to increasing life expectancy. Based on the Trustees' best estimate, cost exceeds non-interest income for 2014, as it has since 2010, and remains higher than non-interest income throughout the remainder of the 75-year projection period. Social Security's theoretical combined trust funds increase with the help of interest income through 2019 and allow full payment of scheduled benefits on a timely basis until the trust fund asset reserves become depleted in 2033. At that time, projected continuing income to the combined trust funds equals about 77 percent of program cost. By 2088, continuing income equals about 72 percent of program cost. The Trustees project that the OASI Trust Fund and the DI Trust Fund will have sufficient reserves to pay full benefits on time until 2034 and 2016, respectively. The OASDI Trust Funds are accounts maintained on the books of the U.S. Treasury. The system operates on a "pay-as-you-go" basis; current workers and their employers pay taxes on wages under the Federal Insurance Contributions Act (FICA) and the self-employed pay taxes on self-employment income under the Self-Employed Contributions Act (SECA). Taxes paid now finance benefits for today's beneficiaries. A full 100% of these payroll taxes is appropriated to the Social Security Trust Funds. Interest on and proceeds from the sale or redemption of government securities held in these funds are credited to and form a part of them. Moreover, amounts credited to the trust funds are the only source of funds to pay benefits. Social Security is a statutory entitlement program. Entitlement authority has been defined as "authority to make payments (including loans and grants) for which budget authority is not provided in advance by appropriation acts to any person or government if, under the provisions of the law containing such authority, the government is obligated to make the payments to persons or governments who meet the requirements established by law." Budget authority is the authority provided by law to enter into obligations that will result in immediate or future outlays involving federal government funds. According to a publication of the Government Accountability Office, formerly the General Accounting Office: Congress occasionally legislates in such a manner as to restrict its own subsequent funding options.... An example ... is entitlement legislation not contingent upon the availability of appropriations. A well known example here is Social Security benefits. Where legislation creates, or authorizes the administrative creation of, binding legal obligations without regard to the availability of appropriations, a funding shortfall may delay actual payment but does not authorize the administering agency to alter or reduce the "entitlement." ... Even under an entitlement program, an agency could presumably meet a funding shortfall by such measures as making prorated payments, but such actions would be only temporary pending receipt of sufficient funds to honor the underlying obligation. The recipient would remain legally entitled to the balance. An entitlement by definition legally obligates the United States to make payments to any person who meets the eligibility requirements established in the statute that creates the entitlement. A provision of the Antideficiency Act, 31 U.S.C. §1341, however, prevents an agency from paying more in benefits than the amount available in the source of funds available to pay the benefits, in this case the Old Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. Section 1341, in relevant part, provides that An officer or employee of the United States government or of the District of Columbia government may not— (A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation; (B) involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law; .... The Antideficiency Act prohibits making expenditures either in excess of an amount available in a fund or before an appropriation is made. It would appear to bar paying more money in benefits than the amount of the balance in the Social Security Trust Funds primarily because, as noted earlier, disability and old-age and survivor benefit payments shall be made "only" from the Disability Insurance Trust Fund and the Old Age and Survivors Insurance Trust Fund, respectively. Violations of the Antideficiency Act are punishable by administrative and criminal penalties. An officer or employee who violates the act's prohibitions is subject to appropriate administrative discipline, including, when circumstances warrant, suspension from duty without pay or removal from office. An officer or employee who knowingly and willfully violates the act can be fined not more than $5,000, imprisoned for not more than two years, or both. If the Social Security Trust Funds should become insolvent (i.e., unable to pay scheduled benefits in full on a timely basis), it appears that beneficiaries who should file suit to be paid the difference between the amount that receipts allow paying and the full benefit amount to which they are entitled would not be likely to succeed in getting the difference. The Supreme Court in Reeside v. Walker held that no officer of the government is authorized to pay any debt due from the United States, whether reduced to a court judgment or not, unless an appropriation has been made for that purpose. To support its holding, the Court cited Article I, Section 9, clause 7 of the Constitution, which states that, "No money shall be drawn from the Treasury, but in consequence of appropriations made by law." The Court reaffirmed this principle in Office of Personnel Management v. Richmond . Consequently, unless Congress amends applicable laws, it appears that beneficiaries would have to wait until the Trust Funds receive an amount sufficient to pay full benefits to receive the difference between the amount that can be paid from the Trust Funds and the full benefit amount. The Old Age Survivors Insurance and Disability Insurance program is a statutory entitlement program. Beneficiaries have a legal right to receive benefits if they meet the Social Security Act's eligibility requirements. Congress, however, has reserved the "right to alter, amend, or repeal any provision of this (Social Security) Act" and the U.S. Supreme Court has affirmed Congress's power to modify provisions of the Social Security Act in Flemming v. Nestor and subsequent court decisions. The Social Security program does not accord individuals either vested property rights or contractual rights with regard to future benefits. Congress may modify provisions of the Social Security Act as it exercises its constitutional power to provide for the general welfare. Congress has the power legislatively to guarantee to pay eligible individuals a certain level of Social Security benefits and not to reduce that level of benefits to such individuals in the future. While Congress may decide to take whatever measures necessary to fulfill such an obligation, courts would be unlikely to find that Congress's unilateral promise constitutes a contract that could not be modified or abrogated in the future. Congressional modification of the terms of a guarantee to pay a certain level of benefits would be limited by due process considerations, but these constitutional concerns would impose a bar only upon the enactment of an arbitrary modification that has no rational justification. In addition, a congressional promise not to reduce a specific level of Social Security benefits payable to certain eligible individuals would not overcome the constitutional principle that a legislative enactment in a social welfare program cannot bind a future Congress in the sense that the legislative enactment cannot be repealed or altered. The Trustees of the Old Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund have projected that these funds on a combined basis will be exhausted (i.e., unable to pay full benefits on time) in 2033. The Social Security Administration would not be able to pay beneficiaries full benefits at that time because the Social Security Act states that benefits shall be paid only from the Social Security Trust Funds. Social Security Administration officials are bound by the Antideficiency Act, which prohibits paying amounts that exceed the amount available in the source of funds available to pay them. Although the legal right of beneficiaries to receive full benefits would not be extinguished by the insufficient amount of funds in the Social Security Trust Funds, a court suit to obtain the difference between the amount in them available to pay partial benefits and the full benefit amount would not be likely to succeed in getting the difference. The Supreme Court has held that no officer of the government may pay a debt whether reduced to a court judgment or not unless Congress has appropriated funds to pay it. Consequently, unless Congress amends applicable laws, it appears that beneficiaries would have to wait until the trust funds receive an amount sufficient to pay full benefits to receive the difference between the amount that can be paid from them and the full benefit amount.

Calculations indicating that the Social Security program will not be financially sustainable in the long run under the present statutory scheme have fueled the current debate regarding Social Security reform. This report addresses selected legal issues that may be raised regarding entitlement to Social Security benefits as Congress considers possible changes to the Social Security program in view of projected long-range shortfalls in the Social Security Trust Funds. Social Security is a statutory entitlement program. Beneficiaries have a legal entitlement to receive Social Security benefits as set forth under the Social Security Act. The fact that Social Security benefits are financed by taxes on an employee's wages, however, does not limit Congress's power to fix the levels of benefits under the Social Security Act or the conditions upon which they may be paid. Congress's authority to modify provisions of the Social Security program was affirmed in the 1960 Supreme Court decision in Flemming v. Nestor, wherein the Court held that an individual does not have an accrued "property right" in his or her Social Security benefits. The Court has made clear in subsequent court decisions that the payment of Social Security taxes conveys no contractual rights to Social Security benefits. Congress has the power legislatively to promise to pay individuals a certain level of Social Security benefits, and to provide legal evidence of Congress's "guarantee" of the obligation of the federal government to provide for the payment of such benefits in the future. While Congress may decide to take whatever measures necessary to fulfill such an obligation, courts would be unlikely to find that Congress's unilateral promise constitutes a contract which could not be modified in the future. In addition, a congressional promise not to reduce a specific level of Social Security benefits payable to certain eligible individuals would likely not overcome the constitutional principle, subject to due process considerations, that one Congress may not bind a subsequent Congress to legislative action or inaction. The calculations concerning the possible future insolvency of the Social Security Trust Funds raise a question relating to whether that result would affect the legal right of beneficiaries to receive full Social Security benefits. While an entitlement by definition legally obligates the United States to make payments to any person who meets the eligibility requirements established in the statute that creates the entitlement, a provision of the Antideficiency Act prevents an agency from paying more in benefits than the amount in the source of funds available to pay the benefits. The Social Security Act states that Social Security benefits shall be paid only from the Social Security Trust Funds, and the act appropriates all payroll taxes to pay benefits. Although the legal right of beneficiaries to receive full benefits would not be extinguished by an insufficient amount of funds in the Social Security Trust Funds, it appears that beneficiaries would have to wait until the Trust Funds receive an amount sufficient to pay full benefits in the case of a shortfall unless Congress amends applicable laws.

The Military Construction Appropriations conference report, recommending $8.834 billion,was approved by the House on June 29, 2000, and the Senate on June 30, 2000. It became P.L.106-246 on July 13, 2000. In authorization action, on May 18, 2000, the House approved its defense authorization bill ( H.R. 4205 , H.Rept. 106-616 ). The Senate substituted their version of the defenseauthorization bill - S. 2549 , S.Rept. 106-292 - in H.R. 4205 and passedthat bill on July 13, 2000. The conference report ( H.Rept. 106-945 ) was passed by the House onOctober 11, 2000 and by the Senate on October 12, 2000. The conference authorized $8.8 billion,$787 million more than the President's request. The FY2001 defense authorization bill became P.L.106-398 on October 30, 2000. The Department of Defense (DOD) manages the world's largest dedicated infrastructure,covering over 40,000 square miles of land and a physical plant worth over $500 billion. The militaryconstruction appropriations bill provides a large part of the funding to maintain this infrastructure. The bill funds construction projects and real property maintenance of the active Army, Navy &Marine Corps, Air Force, and their reserve components; defense-wide construction; U.S.contributions to the NATO Security Investment Program (formerly called the NATO InfrastructureProgram); and military family housing operations and construction. The bill also provides fundingfor the Base Realignment and Closure (BRAC) account, which finances most base realignment andclosure costs, including construction of new facilities for transferred personnel and functions, andenvironmental cleanup at closing sites. The military construction appropriations bill is only one of several annual pieces of legislation that provide funding for national defense. Other major legislation includes (1) the defenseappropriations bill, that provides funds for all military activities of the Department of Defense,except for military construction; (2) the national defense authorization bill, that authorizesappropriations for national defense, (1) and (3) theenergy and water development appropriations bill,that provides funding for atomic energy defense activities of the Department of Energy. Two otherappropriations bills, VA-HUD-Independent Agencies and Commerce-Justice-State, also includesmall amounts for national defense. In addition, the energy and water development appropriationsbill provides funds for civil projects carried out by the U.S. Army Corps of Engineers. The annual defense authorization bill authorizes all the activities in the defense appropriation measures described above. Therefore, major debates over defense policy and funding issues,including military construction can be also found in the authorization bill. Since issues in thedefense authorization and appropriations bills intertwine, this report highlights salient parts of theauthorization bill, along with the military construction appropriation process. The separate military construction appropriations bill dates to the late 1950s when a large defense build-up occurred in response to intercontinental ballistic missile threats and the Sovietlaunch of Sputnik. Defense construction spending soared, as facilities were hardened, missile siloswere constructed, and other infrastructure was built. The appropriations committees established themilitary construction subcommittees to deal with this new level of activity. Consequently, theseparate military construction bill was created. The first stand-alone military construction bill wasin FY1959, P.L. 85-852. Previously, military construction funding was provided through annualdefense appropriations or supplemental appropriations bills. Military construction appropriations are the major, but not the sole, source of funds for facility investments by the military services and defense agencies. The defense appropriations bill providessome funds for real property maintenance in operation and maintenance accounts. In addition, fundsfor construction and maintenance of Morale, Welfare, and Recreation-related facilities are partiallyprovided through proceeds of commissaries, recreation user fees, and other income. Most funds appropriated by Congress each year must be obligated in that fiscal year. Military construction appropriations are an exception, since these funds are generally made available forobligation for five fiscal years. Consideration of the military construction budget starts when the President's budget is delivered to Congress early each year. For FY2001, the President requested $8.0 billion in funding for themilitary construction program. Table 1 shows the key legislative steps necessary for the enactment of the FY2001 militaryconstruction appropriations. Table 1. Status of Military Construction Appropriations,FY2001 Conference Appropriations Action. The Military Construction Appropriations conferencereport, recommending $8.834 billion, was approved by the House on June 29, 2000,and the Senate on June 30, 2000. It became P.L. 106-246 on July 13, 2000. Theconference report debate centered on domestic and defense items in the FY2000supplemental emergency appropriations. (For more details, see SenateAppropriations Emergency Appropriations Action for FY2000 section, below.) House Appropriations Action. On May 16, 2000, the House passed the FY2001 Military Construction AppropriationsAct ( H.R. 4425 ), by a 386-22 roll call vote. The House followed theHouse Appropriations Committee's lead and passed the bill with only oneamendment. The Traficant amendment prohibits any money in the bill from goingto individuals or companies convicted of violating the "Buy American" laws. The House Appropriations Committee decided, as written in its report ( H.Rept. 106-614 ) to: reprimand the Pentagon about serious shortfalls in the militaryconstruction request and the severe backlog in readiness, revitalization, and qualityof life projects, deny the Pentagon's advance appropriations requests, direct the DOD Comptroller to monitor the impact of nocontingency funding for construction and hopes this action will improve the Services'cost estimating, and expect the Pentagon to include facility modernization programsin its Quadrennial Defense Review. The $8.634 billion bill passed by voice vote. This bill is 4% over last year's billand some $600 million more than the President's FY2001 request. The bill provides$3.9 for military construction, $3.5 million for family housing and $1.2 billion forBase Realignment and Closure costs. (2) Senate Appropriations Action. On May 18, 2000, the Senate passed S. 2521 , by a vote of 96-4. Because emergency supplemental appropriations for FY2000 was added to this bill,the debate on S. 2521 has centered on domestic and defense ridersattached on the bill. (See below.) On May 9, 2000, the Senate Appropriations Committee reported out its version ( S. 2521 ), of the FY2001 military construction appropriations bill. The Senate Appropriations Committee decided, as written in its report ( S.Rept. 106-290 ) to: chastise the Pentagon for its inadequately-fundedproposal, require the Pentagon to add 5% contingency funding in itsFY2002 request, in order to promote flexibility in completing projects (the Pentagonproposed zero in FY2001), and continue to require the Pentagon to report repair projects inOperations and Maintenance account funding to Congress. The $8.634 billion bill passed by voice vote. This bill is $292 million over last year's bill and some $600 million more than the President's FY2001 request. The billprovides $3.81 for military construction, $3.5 million for family housing and $1.2billion for Base Realignment and Closure costs. (3) Senate Appropriations Emergency Supplemental Action for FY2000. FY2000 supplemental funding was attached tothis Senate bill, S. 2521 . Defense items include: peacekeeping costs inKosovo and East Timor, counter-terrorism, growth in fuel and health-care costs forDOD dependents and retirees, and counter-narcotics costs in Columbia. (For acomplete list of supplemental items attached to S. 2521 , see Appendix1.) The debate on S. 2521 is centering on supplemental riders on guncontrol and Kosovo. The most controversial provision that would have put adeadline to have U.S. troops withdraw from Kosovo, by July 1, 2001, was voteddown by the Senate. For background and comprehensive information on the supplemental, 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], et al. For background on the Kosovo operations, see CRS Issue Brief IB98041, Kosovo and U.S. Policy , by Steve Woehrel, and CRS Issue Brief IB10027, Kosovo: U.S. and Allied Military Operations, by [author name scrubbed]. On May 18, 2000, the House passed the defense authorization bill ( H.R. 4205 , H.Rept. 106-616 ) Following the lead of the MilitaryConstruction Subcommittee, the House recommended $8.4 billion dollars for militaryconstruction, $400 million more than the President's request. The Senate substituted their version of the defense authorization bill - S. 2549 , S.Rept. 106-292 - in H.R. 4205 and passed thatbill by 97-3 on July 13, 2000. The Senate recommended $8.46 billion for militaryconstruction, $430 million more than the President's request. The conference report ( H.Rept. 106-945 ) was passed by the House on October 11, 2000 and by the Senate on October 12, 2000. The FY2001 defense authorizationbill became P.L. 106-398 on October 30, 2000. The conference authorized $8.8 billion, $787 million more than the President's request. The conferees added over $200 million of the service chiefs' unfundedrequirements and emphasized additions to improved living and working conditionsfor military personnel and their families. The conference also agreed to extend the alternative authority for acquisition and improvement of military housing in Section 2806 - better known as MilitaryHousing Privatization Initiative. It is extended from February 10, 2001, to December31, 2004. (For more information on this initiative, see the Key Policy Issues sectionbelow.) Long-term Planning for Military Construction. Throughout the 1990s, Congress and Administrationhave debated whether military construction funding and long-term planning areadequate. Members of Congress have complained that poor planning and insufficientfunding on the Pentagon's part have made it difficult for Congress to insure thatmilitary construction plans meet pressing priorities. The Department of Defense uses a formal process called the Planning, Programming and Budgeting System (PPBS) to create its budget for Congress. (4) ThePPBS process is also used to prepare DOD's internal, long-term financial plan. Thelong-term plan extends over a six-year period and is known as the Future YearsDefense Plan (FYDP). During the 1990s, Congress has criticized the Pentagon'slong-term planning for military construction. In hearings on the FY2001 military construction request, legislators expressedcontinuing concern over military construction planning and the sufficiency offunding. Rep. Joel Hefley, Chair of the Military Installations and FacilitiesSubcommittee of the House Armed Services Committee (HASC) argued at a hearingon March 2, 2000, that the FY2001 budget request - like the previous FY1997-00requests - continues the poor planning and downward trend for military constructionbudgets. For the FY1997-2001 military construction requests, the Administrationrequested fewer funds than it had programmed in its budget assumptions in theprevious years' FYDP. This mismatch between plans and funding was cited in thecongressional criticism of the Pentagon's military construction planning. Since theFYDP and the requested amount decreases each year for military construction, Mr.Hefley states that he is finding it difficult to take Pentagon future plans for militaryconstruction seriously. That sentiment was echoed by the Senate AppropriationsMilitary Construction Subcommittee chair - Sen. Conrad Burns - who expresseddismay at the kind of long-term planning seen in the FY2001 military constructionproposal. At the March 2nd HASC hearing, Randall Yim, Deputy Under Secretary of Defense (Installations), outlined a new DOD approach to installation management,in response to the subcommittee's concerns about planning. Yim established anInstallation Policy Board, consisting of the senior service facilities leaders, seniorservice engineers and representatives from financing and program communities. ThisBoard, chaired by Yim, meets monthly to peer review and audit installationrequirements, to develop common standards between services and to provide a forumfor DOD-wide installations issues. Yim outlined three analytical tools that the Installation Policy Board is developing for more efficient planning. The first is a facilities strategic plan, soDOD knows what type of facilities are needed in the future. The second is thefacilities sustainment model, which uses auditable data to model and identify thefunds needed to keep facilities in good working order. The final tool is aninstallation readiness reporting system, so that installation readiness can beconsidered as part of operational readiness decisions. Reauthorization of the Military Housing Privatization Initiative. DOD is requesting that Congress amendSection 2885, Title 10, U.S.C. to extend the Military Housing Privatization Initiative(MHPI) pilot program for an additional five years. The MHPI is set to expire inFebruary 2001. The DOD believes the authorities that the MHPI provides willcontribute significantly to its plan to solve its housing situation by 2010, whencombined with traditional government-funded construction. The defense authorization conference report for FY 2001 ( H.Rept. 106-945 ) approved an extension of these authorities in Section 2806 for an additional 3-yearperiod - from February 2001 to December 2004. Background on Problems in Military Family Housing. In testimony to the House Armed ServicesCommittee on March 16, 2000, the official in charge of DOD installations - Randall Yim - described the continuing problem of military family housing. Hestated that approximately two-thirds of DOD's nearly 300,000 family housing unitsneed extensive renovation or replacement. Yim also testified that fixing this problemusing only traditional military construction methods would take 30 years and cost asmuch as $16 billion. In his testimony, Yim emphasized that privatization of military family housing is just one part of a three part program to fix the DOD housing problem by 2010. Two other important components are increasing housing allowances to eliminateout-of-pocket costs for servicemembers and a strong military construction program. Increasing the housing allowance will reduce demand for on-base housing and atraditional government-funded construction program will continue to help fix on-basehousing. Definition of MHPI Authorities. Recognizing the severity of the family housing problem, Congress passed theMilitary Housing Privatization Initiative in the FY1996 Defense Authorization Act( P.L. 104-106 ). This gave the Pentagon new authorities to obtain private sectorfinancing and expertise for military housing. The authorities are: guarantees, both loan and rental; conveyance or lease of existing property andfacilities; differential lease payments; investments, both limited partnerships and stock/bondownership; and direct loans. The legislation enabled the new authorities to be used individually, or in combination. (5) History on Use of MHPI Authorities. Yim gave the history of DOD's implementation of the MHPI. In the early days ofusing these authorities (1996-1998), the Department of Defense's HousingRevitalization Support Office (HRSO) coordinated the application of the newauthorities and oversaw all aspects of the process from initial site visits to finalsolicitation. During this phase - said Yim - significant strides were made indeveloping program criteria, financial models, legal documents and budget scoringguidelines. Only two on-base projects reached the solicitation stage, however,largely due to a problems in DOD's centralized management structure. In October 1998, the Pentagon changed tactics and devolved the execution of housing privatization projects to the Services. (6) Todate, there have been four projectsawarded and/or completed, twelve projects solicited and fourteen planned, using theMHPI process. (7) Evaluation of MHPI. Progress of the privatization initiative has been slow. Representative Gene Taylor, Ranking Memberof the Military Installations and Facilities Subcommittee of the HASC stated at theMarch 16, 2000 hearing that Congress has been disappointed with the pace ofprivatization implementation. Taylor hoped that DOD will be able to find the rightmix of public and private funding and that the housing privatization concept will liveup to its promise of providing high quality housing for our troops and their families. The General Accounting Office (GAO) highlighted some concerns with the privatization initiative when it reviewed DOD's military housing situation in July1998. (8) Initial evaluation of life-cycle costs ofprivatized housing versus traditionalmilitary housing showed a potential savings of only about 10% or less. The proposedlong-term time horizons for some privatization projects of 50 years or more raised concerns that the housing might not be needed that far into future. Also, the GAOargued that Pentagon planning for military housing remains poor. GAO stated thathousing requirements are not integrated with particular facilities and communityneeds, that the plans underutilize the use of local housing and that there is poorcommunication between offices responsible for housing allowances and militaryhousing construction. GAO recommended that comprehensive, better integratedplans could help maximize the privatization initiative while minimizing total housingcosts. A March 2000 GAO follow-up study on the privatization initiative (9) reported thatsince no projects under the initiative have been fully implemented, there is little basisto evaluate whether the initiative will ultimately achieve its goals of eliminatinginadequate housing more economically and faster than could be achieved throughtraditional military construction financing. Also, the GAO points out that the DODdoes not have an evaluation plan to assess the initiative. The GAO recommended that the DOD create a privatization evaluation plan to be used consistently by all the Services. The plan should include performancemeasures, such as evaluation of each authority, comparison of actual to estimatedcosts of projects, assessment of developer performance, collection of data on the useand satisfaction of housing by service members. DOD agreed with GAO'srecommendations and has begun to create an evaluation plan. Privatization Initiative for Utility Infrastructure. Yim testified on March 16th that DOD is pursuingutility privatization through the authority of Section 2871 of Title 10 for cost savingsand recapitalization of aging infrastructure. The DOD would like to privatize 1,700utility systems by 2003, in order have public and private sector experts run andupgrade these systems according to best business practices. This authority requires that the long-term economic benefit of utilityprivatization exceeds the long-term economic and utility services costs. To date, 12systems at 7 installations have been privatized, representing a savings of more than$10 million, according to DOD. Through this authority, DOD divests ownership of the utility system (i.e. wires and pipes) where it is economically feasible. In certain locations and markets, energymanagement may be included in a proposal in order to offer the best value to thegovernment. To give incentives to DOD installations to privatize utilities, the DOD is asking Congress to amend this utility privatization authority. With the proposed change, theServices would be able to keep savings generated by utility privatization in theirinstallations, instead of the savings going to the general treasury. The Funding Pattern for Military Construction Budgets. In recent years, Congress has added significant amountsto annual Administration military construction budget requests. This has been arecurring pattern in the 1990s. The President proposes what Congress calls aninadequate military construction budget, especially for Guard and Reserve needs. Congress then adds funding for military construction, with some attention to Guardand Reserve projects. For example, Congress added $479 million in FY1996, $850million in FY1997, $800 million in FY1998, and $875 million in FY1999 to themilitary construction accounts. Congressional additions to the military construction budget have been common and controversial throughout the 1990s. Three themes explain the pattern ofrecurring congressional additions. First, some members of the military constructionsubcommittees have believed that military construction has been chronicallyunderfunded. This theme was echoed in hearings on the FY2001 budget and the reports from the House Appropriations Committee and the defense authorizingcommittees on bills for FY1998-2000. Second, often Congress has differentpriorities than the Administration, as reflected in frequent congressional cuts tooverseas construction requests and contributions to the NATO Security InvestmentProgram. Third, other Members of Congress, as Senator Bond commented duringthe floor debate on FY1996 military construction appropriations, believe that thePentagon counts on Congress to add money to Guard and Reserve programs. Inrecent years, Congress has added large amounts for National Guard and Reserveconstruction projects, including a peak amount of $451.1 million in FY2000. (See Table 5 .) Low military construction budgets has led to growing maintenance backlogs, inadequate budgets for installation maintenance, and conflict between congressional& Pentagon military construction priorities. Military construction proponents,including facility advocates in the military services, argue that military facilities havebeen systematically underfunded for many years. For example, GAO reported itsresults of a review of the management of real property assets by the DOD and theservices, at a March 1, 2000 hearing to the House Armed Services Subcommittee onReadiness. The review focused on properties that the services maintain and repairusing operation and maintenance accounts. The GAO pointed out that Congress hasbeen concerned about the DOD's real property maintenance since the 1950s. Recently, the backlog for deferred maintenance has grown from $8.9 billion in 1992to $14.6 billion in 1998. Also, DOD facility managers have not met their goal to allocate 3% of the plant replacement value of DOD facilities for annual construction and maintenance (calledreal property maintenance at the Pentagon). Although this 3% goal is below theaverage for public facilities nationwide, actual DOD funding has typically run at 1to 2% of plant replacement value. For example, the Navy testified on March 1, 2000to the House Armed Services Subcommittee for Readiness that the Navy budgeted 1.8% for real property maintenance. As a result, facility proponents welcome anycongressional additions. Finally, congressional military construction subcommittees - authorization as well as appropriations subcommittees - have frequently taken issue withAdministration military construction priorities. In the early 1990s, for example, thecommittees frequently reduced amounts requested for construction overseas - on thegrounds that troop levels abroad should be reduced and that allied burden-sharingcontributions should increase - and reallocated the funds to domestic projects. Inaddition, congressional committees have added unrequested funds for quality of lifeimprovements, such as day care centers and barracks renovation. Congress hasargued that the military services have tended to neglect these areas in favor ofwarfighting investments. The Debate Over Added Projects. Since Congress has added significant amounts to military construction budgets overthe last 10 years, congressional debate has centered on how to prioritize worthyadditional projects. In 1994, the Senate debate on the military construction appropriations bill focused on the amount of congressional additions to the request despite constraintson overall defense spending. Senator McCain, in particular, objected to the provisionof substantial amounts for projects that the Administration had not requested. Heargued that such projects largely represented "pork barrel" spending, and came at theexpense of higher priority defense programs. In Senate floor consideration of themilitary construction bill that year, the managers accepted a McCain amendment thatcalled for criteria to be applied to additional projects. His amendment included aprovision that any added project should be on the military lists of critical yetunbudgeted projects. The McCain amendment was not incorporated into the finalconference version of the bill, however, and the conference agreement provided over$900 million for unrequested construction projects. The National Defense Authorization Act for FY1995 ( P.L. 103-337 ), however, incorporated Senator McCain's criteria as a "Sense of the Senate" provision, (10) providing that the unrequested projects should be: 1. essential to the DOD's national security mission, 2. not inconsistent with the Base Realignment and Closure Act, 3. in the services' Future Years Defense Plan (see above), 4. executable in the year they are authorized and appropriated, and 5. offset by reductions in other defense accounts, through advice from theSecretary of Defense. Since the 104th Congress, the House military construction authorizing and appropriations committees have also used similar criteria, in collaboration with thePentagon, to add projects to the military construction budget. Each potential projectneeds to pass the following criteria, similar to the McCain criteria: Is the projectessential to the DOD mission, consistent with BRAC plans, in the Future YearsDefense Plan and "executable" in the coming fiscal year? If the project can meetthose criteria, the military construction authorizing and appropriations committeesmay add the project. Debate over congressionally-added projects continues. In debate on the FY2000 military construction appropriations conference report, Senator McCaincontinued to discuss projects added by Congress. He noted that Congress addednearly $975 million of extra projects. Senator McCain presented his list ofquestionable projects in the Congressional Record , in a letter to the President and onhis web page http://www.senate.gov/~mccain/mil00cf.htm. The Administration has proposed $8.0 billion for the FY2001 militaryconstruction request. The conference report approved $8.8 billion. This totalcontinues a downward trend from the FY1996 level of $11.2 billion, the FY1997level of $9.8 billion, the FY1998 level of $9.3 billion, the FY1999 level of $9.0billion. The FY2001 enacted amount of $8.8 billion is more than the FY2000enacted amount of $8.4 billion. Table 2 shows overall military construction program funding since FY1996. Table 3 breaks down the FY2001 request by appropriations account and comparesit to FY1999 and FY2000 levels. Table 4 shows congressional action on militaryconstruction appropriations by account. Table 5 shows congressional militaryconstruction add-ons for Guard and Reserve projects from FY1985-2000. P.L. 106-246 , H.R. 4425 (Hobson) Making appropriations for military construction, family housing, and baserealignment and closure for the Department of Defense for the fiscal year endingSeptember 30, 2001, and for other purposes. The House Committee onAppropriations reported an original measure, H.Rept. 106-614 , May 11, 2000. Passed House, 386 - 22 (Roll No. 184) (text: CR H3074-3076), May 16, 2000. Conference report ( H.Rept. 106-710 ) filed June 29, 2000. Mr. Young (FL) broughtup conference report by previously agreed to special order, June 29, 2000. Conference report passed House, 306 - 110 (Roll no. 362), June 29, 2000; passedSenate, by voice vote, June 30, 2000. Signed into law July 13, 2000. S. 2521 (Burns) An original bill making appropriations for military construction, family housing,and base realignment and closure for the Department of Defense for the fiscal yearending September 30, 2001, and for other purposes. Committee on Appropriationsordered to be reported an original measure, May 9, 2000. By Senator Burns fromCommittee on Appropriations filed written report, H.Rept. 106-290 , May 11, 2000. Measure laid before Senate, May 11, 2000. Considered by Senate, May 15-18, 2000. Senate incorporated this measure in H.R. 4425 as an amendment, May18, 2000. Senate passed companion measure H.R. 4425 in lieu of thismeasure (96 - 4) on May 18, 2000. H.R.4205 (Spence) To authorize appropriations for fiscal year 2001 for military activities of theDepartment of Defense and for military construction, to prescribe military personnelstrengths for fiscal year 2001, and for other purposes. Reported (amended) by theCommittee on Armed Services ( H.Rept. 106-616 ), May 12, 2000. Considered bythe House, May 17-18, 2000. Passed House (353-63), May 18, 2000. Conferencereport H.Rept. 106-945 passed the House (382 - 31) on October 11, 2000. TheSenate agreed to conference report (90 - 3) on October 12, 2000. Became P.L.106-398 on October 30, 2000. S. 2549 (Warner) To authorize appropriations for fiscal year 2001 for military activities of theDepartment of Defense, for military construction, and for defense activities of theDepartment of Energy, to prescribe personnel strengths for such fiscal year for theArmed Forces, and for other purposes. Committee on Armed Services ordered to bereported an original measure, May 9, 2000. Report filed ( S.Rept. 106-292 ), May 11,2000. Considered by the Senate, June 6-8, June 14, and June 19-20, 2000. Senatestruck all after the Enacting Clause for H.R. 4205 and substituted thelanguage of S. 2549 as amended and this passed the Senate in lieu of S. 2549 with an amendment by Yea-Nay Vote, 97 - 3, on July 13, 2000. Table 2. Military Construction Appropriations,FY1996-2000 (budget authority in millions of dollars) Source: Actual FY1996-99 data, Estimate FY2000 and Request 2001 fromDepartment of Defense (DOD), Financial Summary Tables , Feb. 2000 & previousyears' reports. Enacted FY2001 data from H.Rept. 106-710 . Table 3. Military Construction Appropriations by Account:FY1999-2001 (in thousands of dollars) Source: FY1999-FY2001 Request from DOD, Financial Summary Tables , February2000. Table 4. Military Construction Appropriations by Account -Congressional Action (in thousands of dollars) Source: H.Rept. 106-614 , S.Rept. 106-290 , H.Rept. 106-710 . Table 5. Congressional Additions to Annual DOD BudgetRequests for National Guard and Reserve Military Construction,FY1985-2000 (current year dollars in thousands) Source: Department of Defense, Financial Summary Tables, successive years. CRS Issue Brief IB96022. Defense Acquisition Reform: Status and Current Issues , by [author name scrubbed]. CRS Report RL30002(pdf) . A Defense Budget Primer , by [author name scrubbed] and [author name scrubbed]. CRS Report RL30505 . Appropriations for FY2001: Defense , by [author name scrubbed]. CRS Report RL30447(pdf) . Defense Budget for FY2001: Data Summary , by [author name scrubbed] and [author name scrubbed]. U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), FY2001 Budget Materials http://www.dtic.mil/comptroller/fy2001budget/ U.S. Department of Defense, Installations Home Page http://www.acq.osd.mil/installation House Committee on Appropriations http://www.house.gov/appropriations Senate Committee on Appropriations http://www.senate.gov/~appropriations/ CRS Appropriations Products Guide http://www.loc.gov/crs/products/apppage.html#la Congressional Budget Office http://www.cbo.gov General Accounting Office http://www.gao.gov Office of Management & Budget http://www.whitehouse.gov/OMB/

The military construction (MilCon) appropriations bill finances (1) military construction projects in the United States and overseas; (2) military family housing operations and construction;(3) U.S. contributions to the NATO Security Investment Program; and (4) most base realignment andclosure costs. This report reviews the appropriations and authorization process for military construction. The congressional debate perennially centers on the adequacy of the President's budget for militaryconstruction needs and the necessity for congressional add-ons, especially for Guard and Reserveprojects. In recent years, Congress has frequently complained that the Pentagon has not adequatelyfunded military construction. The Administration's FY2001 budget request for military construction is $8.0 billion, which is 5.5% below the level provided in FY2000. This continues a downward trend from the peakFY1996 level of $11.2 billion, the FY1997 level of $9.8 billion, the FY1998 level of $9.3 billion,the FY1999 level of $9.0 billion and the FY2000 level of $8.4 billion. On May 16, 2000, the House passed the Military Construction Appropriations Act FY2001 ( H.R. 4425 ), by a 386-22 roll call vote. The House followed the House AppropriationsCommittee's lead and passed the $8.634 billion bill with only one amendment. On May 18, 2000, the Senate passed S. 2521 , their version of the FY2001 Military Construction Appropriations bill, on a 95-4 vote. Because emergency supplemental appropriationsfor FY2000 was added onto this bill, the conference debate has focused on domestic and defenseissues outside of military construction. For background and comprehensive information on theFY2000 supplemental funding, see CRS Report RL30457(pdf) , Supplemental Appropriations forFY2000: Plan Colombia, Kosovo, Foreign Debt Relief, Home Energy Assistance and OtherInitiatives , by [author name scrubbed], et al. The Military Construction Appropriations conference report, recommending $8.834 billion, was approved by the House on June 29, 2000, and the Senate on June 30, 2000. It became P.L. 106-246 on July 13, 2000. In authorization action, on May 18, 2000, the House approved its defense authorization bill ( H.R. 4205 , H.Rept. 106-616 ). The Senate substituted their version of the defenseauthorization bill - S. 2549 , S.Rept. 106-292 - in H.R. 4205 and passedthat bill on July 13, 2000. The conference report ( H.Rept. 106-945 ) was passed by the House onOctober 11, 2000 and by the Senate on October 12, 2000. The conference authorized $8.8 billion,$787 million more than the President's request. The FY2001 defense authorization bill became P.L.106-398 on October 30, 2000. Key Policy Staff Division abbreviations: FDT = Foreign Affairs, Defense, and Trade.

There has been significant activity in the 113 th Congress concerning legislative proposals to reform the nation's immigration laws. In June, the Senate passed an omnibus immigration bill ( S. 744 ) that addresses a broad array of issues, including immigration enforcement and border security, verification of aliens' employment eligibility, the temporary and permanent admission of foreign nationals into the country, and the creation of mechanisms for some unauthorized aliens to acquire legal status. The House, in contrast, is considering a number of stand-alone bills that would reform specific aspects of immigration law. The House Judiciary Committee has ordered several of these bills to be reported. Some of these legislative proposals contain provisions that broadly correspond with provisions found in the Senate bill, whereas other House proposals take a markedly different approach. H.R. 2278 , the Strengthen and Fortify Enforcement Act (SAFE Act), is aimed at increasing immigration control and enforcement, particularly within the interior of the United States. Many of the SAFE Act's provisions appear intended to address and override court decisions that have narrowly construed existing statutory authorities for immigration enforcement. The bill would heighten penalties associated with violations of federal immigration laws; clarify or establish rules intended to facilitate the detention and removal of aliens who lack authorization to remain in the United States, particularly when such aliens have been involved in criminal activity; impose additional requirements concerning security-related background checks and screening of aliens seeking admission, status, or benefits under immigration law; and encourage states and localities to play an increased role in immigration enforcement. During Judiciary Committee hearings, several significant amendments were made to the bill, including provisions which would generally make unlawful presence by an alien a criminal offense, require the establishment of a biometric entry/exit system within two years of the bill's enactment, and generally constrain the exercise of prosecutorial discretion in the removal process. While the SAFE Act contains a few provisions which resemble those found in S. 744 , there are notable differences in both the breadth of the bills' enforcement provisions and their approach to the unauthorized alien population. The SAFE Act generally imposes more significant penalties for immigration-related violations and more stringent requirements relating to the detention and removal of aliens than the Senate-passed bill. Perhaps most significantly, the SAFE Act would make an alien's knowing unauthorized presence a criminal offense, whereas the Senate bill would not make unlawful presence a crime. In fact, the Senate bill would establish procedures whereby some of the current unauthorized population could potentially acquire legal status, while neither the SAFE Act nor the other bills ordered to be reported by the House Judiciary Committee, to date, make similar provisions for legalization. Indeed, the SAFE Act's provisions much more closely resemble the last comprehensive immigration enforcement legislation passed by the House, H.R. 4437 , the Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005, though it differs from the earlier legislation on many specific matters. This report describes and analyzes the SAFE Act, as ordered reported out of the House Judiciary Committee. The report's discussion of SAFE Act is arranged by issue area, and considers how the bill modifies current laws concerning immigration-related sanctions; the consideration and review of immigration-related applications and petitions; the detention and removal of aliens; visa issuance and security; naturalization reform; federal immigration enforcement operations; and state and local involvement in immigration enforcement. It will be updated as events require. In addition to establishing a comprehensive set of rules governing the admission, continued presence, and departure of foreign nationals, the Immigration and Nationality Act (INA) currently provides for an enforcement regime to deter violations of these rules. Some violations may be subject to criminal fines and imprisonment; others are subject to civil monetary penalties; and still others, if committed by an alien, may be grounds for denying the alien admission into the country or removing the alien from the United States. The SAFE Act seeks to bolster this enforcement regime in various ways. It would expand the scope of many immigration-related criminal statutes, including by making unlawful presence a criminal offense. It would also expand the grounds for removability to cover additional types of criminal activity, and broaden the INA's definition of "aggravated felony" to include more criminal offenses. In addition, it would expand the immigration consequences of criminal activity and certain activities posing a danger to U.S. security (e.g., terrorist activity). Congress has established criminal penalties for a variety of activities that undermine immigration rules and requirements (and convictions for some of these offenses, in turn, may have implications upon aliens' ability to remain in the United States). Some criminal offenses concern conduct taken by aliens in contravention of immigration rules which govern their admission and presence in the United States, whereas others may be applicable to both aliens and U.S. citizens who facilitate violations of federal immigration law. Several provisions of federal law, found either in the INA or in the U.S. Criminal Code, impose criminal penalties for various activities that undermine immigration rules and requirements, including entering the country unlawfully, forging or using falsely made documents to satisfy immigration requirements, and bringing in and harboring certain aliens. The SAFE Act would make changes to several existing immigration-related criminal offenses, typically by widening their scope and by heightening the available penalties. Currently, under the INA, an alien who unlawfully enters the United States not only is subject to removal, but also potentially faces criminal sanctions. INA Section 275 makes unlawful entry a criminal offense punishable as a misdemeanor in the case of a first violation, and punishable as a felony in the case of a subsequent conviction. INA Section 276 similarly makes it a felony for an alien to unlawfully reenter the United States in violation of an outstanding order of removal. However, unlawful presence by an alien is not a criminal offense, absent certain aggravating factors. Section 315 of the SAFE Act would rewrite INA Section 275 and significantly expand its scope, making it a criminal offense for an alien to knowingly (1) violate the terms of admission or parole, or (2) be unlawfully present in the country. First time offenders would generally be subject to a fine and/or imprisonment for up to six months, but heightened penalties would be available if the alien had prior criminal convictions. A second or subsequent conviction for illegally entering or crossing the border of the United States would be subject to felony penalties, as would a second or subsequent offense for violating the terms of admission or parole into the country. However, a second or subsequent offense under the provision more generally criminalizing unlawful presence would remain a misdemeanor (absent prior criminal convictions). For purposes of the amended statute, "unlawful presence" would be defined with reference to INA Section 212(a)(9)(B), and would also incorporate that provision's exceptions. Accordingly, unlawful presence would not cover any unauthorized period while the alien was a minor. Criminal liability would also generally not attach to unauthorized aliens with bona fide pending asylum applications, battered women or children, or victims of severe forms of trafficking. Section 315 of the bill would also amend INA Section 275 to cover instances where an alien illegally "crosses the border." This provision responds to jurisprudence interpreting the current unlawful entry statute as not covering situations where an alien crosses the border while under the surveillance of law enforcement. Unlawful entry or presence would also be deemed to constitute continuing offenses until an alien was discovered by an immigration, customs, or agriculture officer, meaning that the statute of limitations for prosecuting such offenses would not begin until the alien had been detected by the designated federal authorities. Under current law, the crime of unlawful entry ends (and the statute of limitations for prosecution is triggered) once the entry is completed. The bill would also increase the criminal penalties associated with unlawful entry/border crossing offenses in certain situations. In revising INA Section 275, the SAFE Act also eliminates certain provisions that currently impose criminal penalties upon persons who engage in marriage-based immigration fraud or establish a commercial enterprise for the purposes of evading immigration laws. It is unclear whether this omission was the result of a drafting error or due to a belief that such conduct could be punished under other provisions of current law. Section 316 of the bill would amend INA Section 276, which generally makes it a felony for an alien who was previously removed from the United States to reenter the country while the order of removal remains in effect. The bill would expand the statute's scope to cover instances where a removed alien thereafter crossed the border without authorization, even if such conduct might not constitute "entry" into the country. It would also modify the available penalty enhancements for aliens convicted of a second or subsequent offense under INA Section 276, or who had been convicted of certain crimes prior to their removal. It would eliminate an existing provision in INA Section 276 which allows an alien charged with unlawful reentry, in limited circumstances, to challenge the validity of the removal order he is alleged to have violated. However, this provision may be in tension with the Supreme Court's ruling in United States v. Mendoza-Lopez , where the Court held that due process considerations required that "a collateral challenge to the use of a deportation proceeding as an element of a criminal offense must be permitted[,] where the deportation proceeding effectively eliminates the right of the alien to obtain judicial review." Given that an estimated 11.1 million aliens are residing in the United States without legal authorization, it is reasonable to presume that many of these unauthorized aliens are committing some type of immigration-related document fraud, particularly those who are employed. The SAFE Act would modify several existing criminal sanctions applicable to identify theft and immigration-related document fraud. Section 312 of the bill would amend the federal statutes concerning fraud involving identification documents and aggravated identity theft to cover instances where the offender uses a means of identification that is not his own, regardless of whether it belongs to another person. Section 317 of the bill would rewrite Chapter 75 of the U.S. Criminal Code, which addresses immigration document and passport fraud. Notable changes made by the bill include increasing the maximum penalties available for some offenses; lowering the degree of mental culpability required for criminal liability to attach for certain offenses; specifying that attempts or conspiracies to commit an offense under the Chapter are punishable to the same degree as a completed offense; and making it a crime to defraud any person on a matter that is authorized by or arises under immigration laws. Section 409 of the bill would also amend Chapter 75 to add specific penalties for fraud committed by the owner or personnel of an education institution with respect to the institution's participation in the Student and Exchange Visitor Program (SEVP, discussed later in "Student Visas"). Additionally, Section 318 of the bill would amend the federal civil forfeiture statute to permit the seizure and forfeiture of any property or proceeds traceable to a violation of Chapter 75 of the U.S. Criminal Code. INA Section 274, commonly referred to as the alien smuggling and harboring statute, currently proscribes various activities that facilitate aliens entering and living in the United States without lawful status. Section 314 of the SAFE Act would rewrite and reorganize INA Section 274. As amended, the statute would, among other things, cover additional extraterritorial conduct which assists aliens seeking to unlawfully enter the United States; grant federal courts extraterritorial jurisdiction over proscribed conduct; expand the scope of property that may be subject to forfeiture on account of its relationship to a violation of INA Section 274; and impose heightened penalties (including minimum sentencing requirements) for many smuggling offenses. In rewriting the smuggling statute, the bill eliminates the provision in current law imposing criminal penalties upon persons that hire 10 or more aliens known to have been smuggled into the country. Section 314 would also modify language in INA Section 274 concerning authority to make arrests for violations of the alien smuggling and harboring statute. Under current law, arrests may be made by designated immigration officers or any other officer "whose duty it is to enforce criminal laws"—a clause that has been interpreted to permit arrests by state and local police. As revised by Section 314, however, no person is authorized to arrest persons for violations of INA Section 274 except officers and employees designated by the Secretary of the Department of Homeland Security (DHS), or other "officers responsible for the enforcement of Federal criminal laws." It is possible that the amended language could be construed as barring state and local police from arresting persons suspected of violating INA Section 274, as the enforcement of federal criminal laws might not be considered the "responsibility" of sub-federal officers, notwithstanding their ability to make arrests for many federal criminal law violations as a matter of discretion. On the other hand, as discussed later, Section 102 of the SAFE Act generally authorizes state and local police to make arrests for violations of federal immigration law "to the same extent as Federal law enforcement personnel," and the amended Section 274 could potentially be construed in light of this provision. The bill would also make persons who use firearms during the commission of certain violations of INA Section 274 subject to additional criminal penalties under the U.S. Criminal Code. Section 304 of the bill would amend the criminal statute barring the possession of guns or sale of guns to certain categories of aliens, so as to more broadly cover any alien not admitted for lawful permanent residence (with limited exceptions). Section 305 would establish a uniform, 10-year statute of limitations for the prosecution of federal crimes concerning peonage, human trafficking, document fraud, and several other immigration-related offenses currently found in the INA and the U.S. Criminal Code (many of these offenses are currently subject to a five-year statute of limitations). Section 313 would amend the federal money laundering statute to cover laundering in connection with offenses under INA Section 274(a) (alien smuggling and harboring) and 18 U.S.C. Section 1590 (trafficking with respect to peonage, slavery, involuntary servitude, or forced labor), and it would also make a few non-immigration specific alterations to the money laundering statute. Section 323 of the bill would amend INA Section 243(a), which establishes criminal penalties for aliens who fail to comply with an order of removal, to cover aliens described in either the grounds for deportation or inadmissibility who fail to comply with a removal order. Current law only covers the grounds for deportability. Both criminal activity and involvement in conduct posing a threat to U.S. security (including terrorist activity) currently may potentially bar an alien from entering or remaining in the United States, obtaining relief from removal (e.g., asylum), qualifying for immigration benefits or naturalization, or re-entering the country following departure. With respect to criminal activity, several specific criminal offenses or general categories of crimes constitute grounds for inadmissibility and deportability. The most significant immigration consequences typically attach to aliens convicted of any offense defined as an "aggravated felony" by the INA. The SAFE Act would include additional offenses within the definition of "aggravated felony," and expand the criminal grounds for removability. It would also limit criminal or terrorist aliens' eligibility for relief from removal. INA Section 101(a)(43) currently provides a list of crimes deemed to be aggravated felonies for immigration purposes; a list which Congress has repeatedly expanded over the years to cover additional crimes. The list includes many specific offenses (e.g., violations of particular federal tax statutes), as well as several broad categories of crimes (e.g., crimes of violence). Moreover, the definition is not limited to offenses that are punishable as felonies (i.e., offenses punishable by at least a year and a day imprisonment); certain misdemeanors are also defined as aggravated felonies for INA purposes. This term can potentially cover designated crimes regardless of whether they are violations of federal, state, or foreign law. The SAFE Act would make several changes to the aggravated felony definition. Section 301 would add more crimes to the list of aggravated felonies (e.g., manslaughter, any offense of a sexual nature involving a person who is under 18 years of age); expand the scope of alien smuggling offenses and immigration-related document fraud offenses covered under the aggravated felony definition; and make a second conviction for driving while intoxicated an aggravated felony, regardless of whether such offense constituted a misdemeanor or felony under state law. Section 301 would also provide that offenses under INA Section 275 (which, as amended, addresses both unlawful entry and presence by an alien) or INA Section 276 (unlawful reentry by a removed alien) constitute aggravated felonies, so long as the length of imprisonment for the offense is at least a year . Although the SAFE Act would amend INA Section 275 to criminally sanction both unlawful entry and unlawful presence, neither offense would normally constitute an aggravated felony in the case of a first offense. However, unlawful entry or unlawful presence could constitute aggravated felonies in other circumstances, including when the offender had previously been convicted of certain crimes. In addition, although the existing definition of "aggravated felony" provides that attempts or conspiracies to commit listed offenses constitute aggravated felonies themselves, section 301 would expand this clause to cover the soliciting, aiding, abetting, counseling, commanding, inducing, or procuring of the commission of any offense listed as an aggravated felony. The bill would further specify that, in cases where length of imprisonment may determine whether or not an offense is an "aggravated felony," the term includes those offenses where the length of imprisonment was based on recidivism or other enhancements. The modifications made to the "aggravated felony" definition generally would be retroactive in effect, applying to conduct and convictions occurring before, on, or after the bill's enactment. A second or subsequent conviction for drunk driving, however, would only constitute an aggravated felony if it occurred on or after the bill's enactment. Currently, certain conduct by aliens may disqualify them from admission to the United States (grounds of inadmissibility) or, if they have been lawfully admitted, make them removable (grounds of deportability). There is considerable overlap between the grounds of inadmissibility and deportability, but they are not identical. Some grounds of inadmissibility and deportability are subject to waiver, whereas others are not. Aliens removable on certain grounds may also be statutorily barred from many forms of relief from removal, such as asylum. The SAFE Act includes several provisions that would expand or otherwise modify the grounds for inadmissibility and deportability, particularly as they relate to criminal activity. Specifically, Section 302 of the bill would: (1) make an aggravated felony conviction (which is already a ground for deportability) an express ground for inadmissibility; (2) modify the grounds of inadmissibility to cover crimes of domestic violence, child abuse, stalking, and violation of protection orders (all of which are already grounds for deportability); (3) provide that certain firearms offenses would make an alien inadmissible; and (4) amend both the grounds for inadmissibility and deportability to cover additional fraud-based offenses (e.g., Social Security fraud, identification document fraud). These changes would apply to any conduct which occurs either prior to or after the bill's enactment, and to removal proceedings filed, pending, or reopened on or after such date. Section 303 of the bill would also amend the ground of inadmissibility for aliens who seek to enter the United States with the intent to engage in specific activities threatening national security (e.g., espionage). The bill would amend the provision to expressly cover aliens who had previously engaged in proscribed conduct and thereafter seek admission, regardless of whether they also intend to engage in such conduct within the United States. Section 311 of the bill would establish new grounds of inadmissibility and deportability based on membership in a criminal street gang or participation in its activities. Aliens removable on the basis of involvement with criminal street gangs would also be subject to mandatory detention throughout removal proceedings, and would be made ineligible for various forms of relief from removal, including asylum. The bill would amend the INA to define "criminal gang" to cover, for immigration purposes, (1) entities of five or more persons which have a primary purpose of, and engage or have in the past five years engaged in, the commission of one or more enumerated offenses; and (2) entities that have been designated by the Secretary of DHS, in consultation with the Attorney General, as meeting these criteria. Other provisions in the SAFE Act would expand the grounds of inadmissibility and deportability to cover aliens who violate the federal requirements concerning the registration of sex offenders. These modifications would apply to acts or convictions occurring on, before, or after the bill's date of enactment. The bill would also bar U.S. citizens and lawful permanent residents (LPRs) convicted of sex-related offenses listed in the INA's definition of "aggravated felony" from sponsoring aliens for admission, unless the Secretary of DHS determines that the potential sponsor poses no risk to the alien being sponsored. Section 602 would re-state the grounds of inadmissibility for aliens previously removed, so that they refer to aliens who seek "admission not later than" (i.e., before) a certain number of years after removal, as opposed to "admission within" a certain number of years of removal. Judging from the caption of the section, this change is apparently intended to deter aliens ordered removed from remaining in the United States unlawfully, although it is unclear that the amended language would necessarily be construed in a significantly different way than the current language has been. The bill would also provide that, in cases where a conviction record does not conclusively establish whether the underlying conduct was a "crime of violence" (a category of crimes designated as aggravated felonies), immigration authorities may, in certain instances, consider evidence that is extrinsic to the conviction record that clearly establishes that the offense was a crime of violence. The bill would also permit the examination of evidence extrinsic to an alien's conviction record in certain instances to assess whether the conviction was based on conduct constituting a crime of moral turpitude or a domestic violence offense that would make the alien removable. These provisions appear to respond to certain federal courts' rejection of immigration authorities' consideration of evidence outside the record of conviction when assessing whether the alien's criminal conviction makes him or her removable. These modifications would apply to acts or convictions occurring on, before, or after the bill's enactment. The INA currently provides that aliens who engage in certain types of criminal or other proscribed conduct are ineligible to receive various forms of relief from removal that are available to other aliens. Moreover, criminal aliens are often subject to more streamlined removal proceedings than other categories of aliens. Title III of the SAFE Act would modify the immigration consequences for some types of criminal activity, and broaden the category of criminal aliens potentially subject to streamlined proceedings. Section 302 would amend INA Section 212(h), which authorizes the Secretary of DHS to waive many of the criminal grounds of inadmissibility if certain criteria are met. The bill would amend the provision to permit the exercise of waiver authority with respect to the newly added inadmissibility grounds concerning firearms, fraud, or domestic violence. It would also bar such waivers from being used with respect to any alien who had been convicted of an aggravated felony. Section 309 would bar refugees or asylees who had committed an aggravated felony from having their status adjusted under INA Section 209. , Although INA Section 209(c) allows immigration authorities to waive application of many grounds of inadmissibility that might otherwise prevent adjustment by asylees and refugees, the bill would make aggravated felons ineligible to receive such a waiver. Section 311 of the bill would make aliens who are described in the gang-related grounds for inadmissibility and deportability ineligible for asylum or withholding of removal. Alien members of criminal street gangs would also be ineligible to receive temporary protected status (TPS). Aliens who engage in specified activities that pose a threat to U.S. security, including terrorist activity, are generally barred from admission and subject to removal. Over the years, these grounds have been expanded to expressly include a broader range of activities in support of terrorism or entities involved in terrorism, and covered persons have been made ineligible for a range of immigration benefits and forms of relief from removal (e.g., asylum). The SAFE Act would further broaden the categories of aliens ineligible for specified forms of relief. Under current law, if aliens are described under specified terrorism-related grounds for inadmissibility or deportability, they are ineligible to receive asylum. Section 201 of the bill would expand the scope of this prohibition to cover aliens described in any of the terrorism-related grounds for inadmissibility. A limited waiver to this prohibition could be exercised with respect to persons described in the inadmissibility grounds covering members or representatives of terrorist organizations, or the spouses or children of persons who are inadmissible on terrorism-related grounds. The issuance of such a waiver would be contingent upon the Attorney General or Secretary of DHS determining "there are not reasonable grounds for regarding the alien as a danger to the security of the United States." Similar modifications would be made to the category of aliens who would be ineligible to receive withholding of removal under INA Section 241(b). The bill would also provide that aliens who are "described" in certain security-related grounds for inadmissibility or deportability are ineligible both for cancellation of removal and adjustment of status under Section 240A, and for the granting of voluntary departure in lieu of removal under INA Section 240B. Currently, both provisions provide that an alien is ineligible for relief if he or she "is inadmissible ... [or] deportable" under specific security-related grounds. The phrasing in current law has been construed by the Board of Immigration Appeals (BIA), the highest administrative body responsible for interpreting and applying immigration laws, to mean that the alien actually had to have been charged and found removable on the listed ground in order to be ineligible for relief. The bill would clearly establish that aliens who engage in conduct described in the security-related grounds for deportability and inadmissibility would be ineligible for relief, even if those aliens were not ordered removed pursuant to those grounds. Section 201 would also amend and reorganize INA Section 249 (which authorizes the granting of LPR status to certain long-term continuous alien residents), including by providing that aliens "described" in various criminal- and security-related grounds for inadmissibility are ineligible to have their status adjusted under INA Section 249. The SAFE Act contains a number of provisions concerning the consideration or review of petitions and applications for various rights, benefits, and statuses under the INA. All applicants for immigration benefits are subject to criminal and national security background checks, and U.S. Citizenship and Immigration Services (USCIS) requires applicants (other than children under 12) for most immigration benefits to submit fingerprints. In 2007, the USCIS Ombudsman observed that Federal Bureau of Investigation (FBI) name checks did not clear on a timely basis and that this represented a "pervasive and serious" problem for USCIS. In response to such criticisms, USCIS negotiated with the FBI to more expeditiously process the background checks and issued policy guidance in 2008 instructing USCIS adjudicators to approve certain benefits if the FBI name checks had been pending for more than 180 days. Section 206 would seek to overturn this guidance by generally barring the granting or adjudication of applications for specified immigration benefits and privileges (including naturalization applications and immigrant and non-immigrant petitions) until any background or security checks required by the Secretary of DHS have been completed or updated to the Secretary's satisfaction. Section 206 would also provide that immigration authorities are not required to grant or adjudicate applications for specified immigration benefits and privileges when fraudulent activity in relation to the application is suspected, until such time as the activity has been investigated and resolved to the Secretary's satisfaction (also see " Naturalization Reform "). Section 206 would also add a new provision to the INA which would state that nothing in federal law requires the granting of any application, petition, status, benefit, or relief under immigration laws to either (1) persons deemed by DHS to be described under the terrorism- and security-related grounds of inadmissibility or deportability; or (2) aliens for whom a criminal or other proceeding or investigation is open or pending, when the result of such proceeding or investigation is material to the alien's eligibility for the status or benefit sought. During such time as immigration authorities are investigating whether a person falls under either of these two categories, they would be permitted to deny or withhold adjudication of the person's request for a benefit, status, or other privilege under immigration law, and no court would have jurisdiction to review such denials or withholding of adjudication. Section 205 addresses the disclosure of information that was submitted by applicants for adjustment of status under the Immigration Reform and Control Act of 1986 (IRCA, P.L. 99-603 ). It would permit the Secretary of DHS to disclose, as a matter of discretion, information submitted by special agricultural workers for census or national security purposes, and information submitted by other applicants for legalization for national security purposes (disclosures for census purposes already being permitted). In addition, Section 604 would clarify that an alien's adjustment to LPR status constitutes "admission," even if it occurs while the alien is present in the United States. This amendment would effectively codify BIA decisions which have found that adjustment of status within the United States constitutes "admission" under the INA, and overturn certain federal court decisions which found that aliens who adjust to LPR status within the United States are not subject to certain requirements for waivers of inadmissibility under Section 212(h) of the INA. The SAFE Act includes provisions that seek to facilitate the removal of criminal aliens, and clarify or augment immigration officials' authority to detain aliens during removal proceedings or following a final order of removal. Currently, immigration officials are generally required to detain "arriving aliens," as well as certain other aliens who have not been admitted or paroled into the United States and are subject to expedited removal; those who are inadmissible or deportable on certain criminal or security grounds; and aliens engaged in terrorist activity or "any other activity" endangering U.S. security. They also have authority to detain other aliens, although the general policy is to use detention resources to support enforcement policies, which prioritize the removal of aliens who pose a danger to national security or a risk to public safety; are recent illegal entrants; or are fugitives or otherwise obstruct immigration controls. Section 310 of the SAFE Act would make a number of significant changes to INA provisions governing the detention of aliens in removal proceedings and aliens ordered removed who are awaiting transfer to another country. The changes made by Section 310 primarily seek to clarify or augment immigration authorities' ability to detain aliens identified for removal until their removal may be effectuated. Some provisions seek to ensure that certain categories of aliens—particularly those involved in criminal activity or deemed to pose a threat to the community—remain detained throughout the removal process and until removed. Other provisions are more generally applicable to any alien placed in removal proceedings or ordered removed. Many of these amendments appear intended to address and override court decisions that have construed existing detention authorities narrowly. Several courts have interpreted provisions of the INA requiring the mandatory detention of certain categories of aliens as having implicit temporal limitations. These interpretations have often been influenced by reviewing courts' desire to avoid definitively resolving constitutional questions that would be raised if the statutes were construed to permit the prolonged or indefinite detention of aliens, particularly as they involve weighing aliens' due process interests against Congress's sweeping authority over immigration matters. Section 310 includes a severability provision, specifying that if any of the section's provision or any amendment made by the section is held invalid for any reason, the application of the provisions and the amendments made by this section to any other person or circumstance shall not be affected. INA Section 241 generally provides that an alien subject to an administratively final order of removal shall be removed from the country within 90 days, with the alien usually required to remain in detention until removal is effectuated. However, in some cases, DHS is unable to effectuate the removal before this 90-day period elapses, and INA Section 241 authorizes the continued detention of certain categories of aliens beyond this 90-day period. In 2001, the Supreme Court concluded in Zadvydas v. Davis that, if the statute were construed to permit the indefinite detention of an LPR beyond the removal period, it would raise a "serious constitutional problem." Thus, the Court interpreted the statute as permitting the detention of aliens only so long as it is "reasonably necessary to bring about that alien's removal from the United States," and found that that the presumptively reasonable limit for detention following a final order of removal is six months. However, the Court also suggested that continued detention beyond the six-month period may be warranted when the policy is limited to especially dangerous individuals or the basis for the continued detention is based on terrorism or other special circumstances, and strong procedural protections are in place. Section 310 of the SAFE Act would make several modifications to INA Section 241, including by amending the statute to provide that, if an alien is not in DHS custody when an order of removal becomes administratively final, the 90-day period begins once the alien is taken into DHS custody. The bill would also expand the circumstances in which the 90-day removal period would potentially be suspended, during which time the Secretary could, as a matter of discretion, continue to detain the alien. During any such extended period, aliens who are subject to mandatory detention during removal proceedings under INA Section 236 would be required to remain in detention (see " Detention During Removal Proceedings "). Aliens contesting their extended detention would be permitted to seek habeas review in federal court, but would not have a right to seek release on bond. Section 310 would also authorize the continued detention of aliens ordered removed beyond the 90-day removal period when immigration authorities are unable to effectuate their removal. In general, the Secretary of DHS would be provided with discretionary authority to detain an alien ordered removed for an additional 90 days beyond the removal period. In some circumstances, the Secretary would be authorized to detain aliens beyond this period, including when such aliens are "expected to be removed in the reasonably foreseeable future." Aliens detained beyond the 90-day removal period would have no right to seek release on bond. However, the Secretary would be required to establish an administrative review process to determine whether aliens who are not subject to mandatory detention should continue to be detained pending removal or be released on conditions, provided that they have made reasonable efforts to comply with their removal orders and cooperate with DHS's efforts to facilitate their removal. In specific circumstances, the Secretary would also be authorized to continue to detain certain categories of aliens, including those believed to pose a security threat, beyond this additional 90-day period, if the Secretary certifies that the alien falls under a listed category. Such certifications could be renewed every six months, with the detained alien provided the opportunity to request reconsideration of the certification. This provision in many ways resembles existing DHS regulations promulgated in the aftermath of the Supreme Court's decision in Zadvydas , which were premised on the Court's recognition that it might be constitutionally permissible to detain aliens ordered removed for an extended period when special circumstances exist. However, reviewing courts have taken conflicting views as to whether these regulations are based on a permissible construction of INA Section 241. The bill would additionally provide the Secretary with discretionary authority to re-detain an alien subject to a final order of removal who had been released from custody if the alien's removal has become reasonably foreseeable, the alien has failed to comply with the conditions of his release, or the Secretary upon reconsideration determines that the alien can be detained pursuant to the certification process and related requirements described above. Other provisions would make clerical amendments to INA Section 241 to reflect the Secretary of DHS's responsibility for detaining aliens ordered removed, limit review of the Secretary's decisions by other agencies, and amend provisions concerning the supervised release of aliens ordered removed who cannot be removed during the 90-day removal period. Section 310 of the SAFE Act also addresses the detention of aliens during removal proceedings pursuant to INA Section 236. Under INA Section 236(a), individual aliens placed in removal proceedings are potentially subject to detention, but could also be released on conditional parole or bond. However, INA Section 236(c) generally requires the detention of aliens who are inadmissible or deportable on certain criminal or security-related grounds. Two years after the Supreme Court ruled in Zadvydas that "serious constitutional concerns" would be raised if lawfully admitted aliens were indefinitely detained after removal proceedings against them had been completed, the Court ruled in Demore v. Kim that the mandatory detention under INA Section 236(c) of certain aliens—including LPRs—was constitutionally permissible. The relationship between the Zadvydas and Demore rulings has been open to debate. Some have construed the rulings to mean that the standards for mandatory detention prior to a final order of removal differ from those after a final order is issued. However, several lower courts have suggested that mandatory detention pending a final order of removal may, if "prolonged," raise similar constitutional issues as those raised after a final order, and have construed the mandatory detention requirements of INA Section 236(c) as having implicit temporal limitations. Section 310 would make a number of changes to INA Section 236. It would add language that seems intended to ensure that the statute will be construed by reviewing courts to authorize the detention of an alien until removal proceedings are completed. It also would provide that the period of time that an alien is detained under INA Section 236 has no affect upon his ability to be detained under INA Section 241 following the completion of removal proceedings. In addition, Section 310 would add language to INA Section 236(c) concerning the Secretary of DHS's obligation to take certain criminal aliens into custody and detain them for the duration of removal proceedings. The new language would provide that this obligation applies at any time after the criminal alien has been released from law enforcement custody, and without regard to the reason why the alien was released from such custody. Section 310 of the bill also includes a provision addressing the scope of an immigration judge's review of DHS's custody determinations under INA Section 236. Such review would be limited to assessing whether the alien should be detained, released on bond, or release with no bond. The bill identifies three categories of aliens as being subject to this review: aliens who are subject to mandatory detention under INA Section 236(c), aliens in exclusion proceedings, and aliens inadmissible or deportable on security-related grounds. The purpose of this provision is unclear, and similarly worded provisions in prior legislative proposals expressly exempted these categories of aliens from such review. Section 310 would also specify that aliens who are not subject to mandatory detention may seek release on bond, and establish that no bond could be granted unless the alien established "by clear and convincing evidence that the alien is not a flight risk or a risk to another person or the community." In addition to the changes made by Section 310 to INA Section 236, other provisions of the bill would make unlawfully present aliens convicted one or more times for driving while under the influence subject to mandatory detention during removal, along with aliens inadmissible or deportable on account of participation in a criminal street gang. Section 610 would also require the Government Accountability Office (GAO) to issue a report on detainee deaths. The INA contains several provisions intended to facilitate the removal of aliens involved in criminal activity, including through the availability of streamlined removal procedures for aliens convicted of certain crimes. Notably, INA Section 238(b) authorizes DHS to "administratively" order the removal of certain non-LPRs who have committed aggravated felonies in lieu of placing such aliens in removal proceedings before an immigration judge. Section 319 of the SAFE Act would make several changes to INA Section 238(b) that would facilitate the expedited removal of a broader category of criminal aliens. Section 319 would provide the Secretary of DHS with discretionary authority to determine that an alien who has not been paroled or lawfully admitted into the United States is removable under the criminal grounds for inadmissibility, and order his removal pursuant to the procedures of INA Section 238(b). Such procedures could not be employed if the aliens have a credible fear of persecution if returned to their home country, or are eligible for a waiver of inadmissibility or relief from removal. Section 319 would also shorten the requisite period before an order of removal under INA Section 238(b) could be executed from 14 to 7 days. The changes made by Section 319 would take effect on the date of the bill's enactment, but would not apply to aliens who were in standard removal proceedings at the time of enactment. Section 601 of the SAFE Act would provide additional statutory limitations upon judicial review of agency actions regarding the granting of voluntary departure. Under INA Section 240B and implementing regulations, immigration authorities are permitted to allow certain aliens to voluntarily depart the United States at their own expense (as opposed to pursuant to an order of removal) either prior to being placed in removal proceedings, prior to the completion of removal proceedings, or at the completion of removal proceedings. Currently, the voluntary departure statute generally bars courts from hearing appeals from denials of an alien's request for voluntary departure at the conclusion of removal proceedings, or from staying an alien's removal pending consideration of any claim with respect to voluntary departure. However, Section 601 of the bill would expressly provide that no court shall have jurisdiction to toll or otherwise affect the period allowed for voluntary departure. It would also make other amendments to the voluntary departure statute, including shortening the periods within which aliens must depart in the case of voluntary departure granted prior to the completion of proceedings and at the completion of proceedings; generally requiring that aliens post bond in all cases of voluntary departure prior to the completion of proceedings; and imposing the same terrorism-related bars upon grants of voluntary departure prior to the commencement or completion of removal proceedings as are currently imposed upon grants of voluntary departure at the completion of removal proceedings. Like Section 601, Section 603 would also impose additional restrictions upon judicial review of reinstated removal orders against aliens who illegally reenter the United States after being removed (or departing under an order of removal). Currently, the INA provides that, when a removal order is reinstated against an alien who illegally re-entered, this order "is not subject to being reopened or reviewed." However, despite this language, courts have reviewed prior orders in certain cases. In particular, some courts have exercised jurisdiction pursuant to Section 242(a)(2)(D) of the INA, which provides that "[n]othing in [Sections 242(a)(2)(B) & (C) of the INA], or in any other provision of this chapter (other than this section) which limits or eliminates judicial review, shall be construed as precluding review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section." Section 603 would, among other things, effectively reverse these decisions by providing that the order is not subject to reopening "notwithstanding section 242(a)(2)(D)." Section 603 would also clarify that reinstatement applies regardless of the date of the original removal, effectively reversing court decisions holding that it does not apply to removals prior to April 1, 1997. Foreign nationals not already legally residing in the United States who wish to come to the country generally must obtain a visa to be admitted. Under current law, the Department of State (DOS) and the DHS each have roles in visa issuances. DOS's Bureau of Consular Affairs processes visa applications and issues visas. The Secretary of DHS promulgates regulations regarding visa policy. Although there was discussion of assigning all visa issuance responsibilities to DHS when the department was being created, the Homeland Security Act of 2002 (HSA, P.L. 107-296 ) opted not to do so. Rather, the HSA drew on compromise language stating that DHS issues regulations regarding visa issuances, and that DOS continues to issue visas. The SAFE Act reflects some Members' continuing interest in visa issuances and security, including whether governing laws need to be strengthened, whether funding should be increased, and which agency should take the lead. Specific provisions in Title IV of the bill concerning the tracking of foreign students after they arrive in the United States address a specific and perennial visa security concern. The visa issuance procedures delineated in the INA require applicants to submit their photographs, as well as their full name (and any other name used or by which they have been known), age, gender, and the date and place of birth. Depending on the visa category, certain documents must be certified by the proper government authorities (e.g., birth certificates, marriage licenses). All prospective LPRs must submit to physical and mental examinations, and prospective nonimmigrants may also be required to have physical and mental examinations. Consular officers use the Consular Consolidated Database (CCD) to store data on all visa applicants and screen them for admissibility. Records of all visa applications are now automated in the CCD, with some records dating back to the mid-1990s. Since February 2001, the CCD has stored photographs of all visa applicants in electronic form; since 2007, the CCD has stored 10-finger scans. Pursuant to INA Section 222(f), such data is deemed confidential and its dissemination or release (including to the visa applicant) is restricted. The provision specifies that collected data may be used for specific purposes regarding immigration law and other law enforcement purposes. The INA requires an in-person consular interview of most applicants for nonimmigrant visas who are between the ages of 14 and 79. In addition to indicating the outcome of any prior visa application of the alien in the CCD and comments by consular officers, the system links with other databases to flag issues that may have an impact on the issuance of the visa. These reviews are intended to ensure that aliens are not ineligible for visas or admission under the grounds for inadmissibility spelled out in the INA. Section 402 of the SAFE Act would amend current law restricting the sharing or release of certain data concerning visa applicants, so as to expressly cover information pertaining to the revocation of visas or entry permits. The bill would also broaden the exception to this confidentiality requirement relating to the sharing of information with foreign governments, including by allowing such sharing for purposes of "determining a person's deportability or eligibility for a visa, admission, or other immigration benefit,'' or any other instance when "the Secretary of State determines that it is in the national interest." Section 403 would narrow DOS's authority to waive personal interviews for purposes related to the "facilitation of travel of foreign nationals to the United States, reduction of visa application processing times, or the allocation of consular resources." Section 403 would also add national security and "high risk of degradation of visa program integrity" as reasons for requiring a personal interview. Section 404 of the legislation would also give consular officers the authority not to interview visa applicants if they are deemed to be ineligible for the visa they are seeking. Consular officers are currently required to conduct in-person interviews unless the interview is waived by the consular officer for certain classes of aliens (e.g., certain aliens seeking temporary admission as accredited diplomats, consular officers, or foreign government representatives to international organizations). Section 405 would generally grant the Secretary of DHS exclusive authority to issue regulations, establish policy, and administer and enforce the provisions of the INA and all other immigration or nationality laws relating to the functions of consular officers of the United States in connection with the granting or refusal of a visa. After a visa has been issued, the consular officer, as well as the Secretary of State, has discretion to revoke the visa at any time. Visa revocation is currently a ground for removal. The INA generally limits judicial review of visa revocations, except in the course of a removal proceeding where visa revocation constitutes the sole ground for removal. A recurring issue has been whether the Secretary of DHS should also have the authority to revoke visas and to immediately remove a foreign national whose visa has been revoked. Section 405 of the SAFE Act would also give DHS the authority to refuse or revoke any visa to any alien or class of aliens if the Secretary, or designee, determines that such refusal or revocation is necessary or advisable in the security interests of the United States. Revocation would purportedly "take effect immediately." The legislation would also provide that "notwithstanding any other provision of law," no court shall have jurisdiction to review a decision by the Secretary of DHS to refuse or revoke a visa, and "no court shall have jurisdiction to hear any claim arising from, or any challenge to, such a refusal or revocation." This language appears intended to afford DHS decisions concerning visa refusals and revocations a similar degree of judicial non-reviewability as is accorded to consular officials' visa denials, though it is unclear whether reviewing courts would interpret Section 405 to limit judicial review of visa refusals or revocations in all cases, including when such action implicates the constitutional rights of U.S. citizens. Amendments made by Section 405 would apply to all visa refusals and revocations occurring before, or, or after the bill's date of enactment. The Homeland Security Act (HSA) gave the Secretary of DHS the authority to assign DHS employees to diplomatic and consular posts. The duties of these DHS employees were described in HSA Section 428 as (1) providing expert advice and training to consular officers on specific security threats attending to the adjudication of individual visa applications or classes of applications; (2) reviewing such applications, either on the initiative of DHS or upon request by a consular officer or other person charged with adjudicating such applications; and (3) conducting investigations with respect to consular matters under the jurisdiction of the Secretary of DHS. This statutory language established what is currently known as the Visa Security Program (VSP). The absence of VSP at posts considered "high-risk" has been a matter of particular congressional concern. The SAFE Act seeks to expand the VSP by several means. Section 407 would require DHS to conduct an on-site review of all visa applications and supporting documentation before adjudication at the top thirty visa-issuing posts designated jointly by the Secretaries of State and Homeland Security as high-risk posts. It would require DHS to assign personnel to the high-risk posts within one year of enactment. It would also authorize $60 million in appropriations in each of FY2014 and FY2015 to expedite the implementation of these provisions. Section 408 would call for expedited clearance and placement of DHS personnel at overseas embassies and consular posts. Section 406 would modify existing authorizations of appropriations for consular services in support of enhanced border security, so as to expressly authorize crediting to the appropriated funding of the VSP a portion of the fees collected by DOS to process immigration visa applications, and make other changes. Congress first mandated a foreign student and exchange visitor tracking system in 1996, and it expanded the system's requirements for an electronic tracking system after the September 11, 2001, terrorist attacks. This monitoring system is known as the Student and Exchange Visitor Information System (SEVIS). SEVIS became operational in 2003, and is administered by Immigration and Custom Enforcement's (ICE's) Student and Exchange Visitor Program (SEVP). In addition, SEVP certifies schools so that they are eligible to accept foreign students. There have been reports of some lesser-known colleges and universities accepting foreign students, as a mechanism to circumvent U.S. immigration law, so that the foreign nationals can enter and work illegally in the United States rather than attend school. Such schools collect tuition from students but generally do not require them to attend classes, and continue to report to ICE that such students are enrolled in school. Several recent events have raised concerns about whether the oversight of SEVP approved schools is adequate to prevent student visa fraud. The SAFE Act has several provisions dealing with the SEVP. The bill would change accreditation requirements for schools accepting foreign students on F visas, and for flight schools accepting foreign students. The bill would require accrediting agencies or associations to notify DHS about the denial, withdrawal, suspension, or termination of accreditation so that the school could be immediately withdrawn from SEVP and prohibited from accessing SEVIS, and by extension, enrolling foreign students. Additionally, within 180 days of enactment, DHS would be required to implement GAO's recommendations regarding SEVP and SEVIS, and report to Congress on the risk assessment strategy to prevent malfeasance in the student visa issuance system. Within two years after enactment DHS would be required to deploy both phases of the second generation SEVIS II. Section 409 of the bill would also increase the criminal penalties for fraud and misuse of visa documents (18 U.S.C. §1546(a)) if the offense was committed by an owner, official, or employee of a SEVP certified school, and would allow the Secretary of DHS to impose fines on institutions that failed to comply with reporting requirements. The SAFE Act would also allow the Secretary of DHS to immediately withdraw an institution's SEVP certification if there is a reasonable suspicion that the owner or school official has committed fraud relating to any aspect of the SEVP. Any person convicted of such fraud would be ineligible to hold a position of authority or ownership interest at any institution that accepts F or M foreign students. The bill would also prohibit individuals from serving as a designated school official or being granted access to SEVIS unless the individual is a U.S. national or an LPR, and has undergone a background check during the past three years. The INA presently contains substantive requirements that an alien must typically satisfy in order to become a U.S. citizen, including being, for a requisite period prior to naturalization, "a person of good moral character, attached to the principles of the Constitution of the United States, and well disposed to the good order and happiness of the United States." Other generally applicable requirements for naturalization (some of which may be subject to limited waiver) include continuous residence for at least five years as an LPR; literacy in English; and knowledge of the history, principles, and government of the United States. Although the INA does not affirmatively define "good moral character," it lists certain activities as barring an alien from being found to possess good moral character if committed during the period for which good moral character is required to be established. The commission of other specified conduct, including subversive activity, may also make an alien ineligible for naturalization. Moreover, the INA authorizes the government to revoke U.S. citizenship for a limited category of naturalized persons, typically on the grounds that the person acquired citizenship through fraud, concealment, or willful misrepresentation of material facts. The SAFE Act includes provisions that would bar aliens involved in many terrorism or crime-related activities from acquiring U.S. citizenship (provisions in the SAFE Act concerning the immigration consequences of criminal or terrorist activity are discussed earlier in " Immigration Consequences of Criminal and Terrorist Activity "). Specifically, Section 202 would add further activities or crimes to the list of conduct that disqualifies an alien from being found to possess "good moral character." If an alien is determined by the Secretary of DHS or Attorney General to have been at any time described in the security-related grounds of inadmissibility or deportability, such alien could not be found to possess "good moral character" for immigration and naturalization purposes. The bill would also provide that an alien convicted of an aggravated felony at any time is disqualified from being found to possess good moral character, regardless of whether the crime was considered an aggravated felony under the INA at the time of conviction. The Attorney General or Secretary of DHS could waive this bar with respect to the commission of a single aggravated felony offense (other than murder, rape, manslaughter, homicide, rape, or any sex offense against a minor), if the alien's sentence was completed at least 10 years before the date when the alien applied for naturalization or some other status or benefit for which a good moral character finding is required. Section 202 would also clarify that the list of conduct identified in the INA as barring a finding of good moral character is not exhaustive, and that when considering whether an applicant possesses good moral character, immigration authorities may consider that applicant's conduct at any time. Section 203 would bar the naturalization of any alien determined by the Secretary of DHS to have been at any time described in the security-related grounds of deportability or inadmissibility (including those grounds concerning terrorist activities). Section 340 of the INA permits the denaturalization of persons whose acquisition of citizenship was either illegally procured or procured through the concealment of a material fact or misrepresentation. Section 204 of the SAFE Act would authorize the Attorney General to denaturalize persons who have engaged in specified conduct involving terrorism or support for terrorism; the receipt of military training from a terrorist organization; or activities committed with the purpose of overthrowing or opposing the U.S. government through violence or other unlawful means. The bill authorizes the Attorney General to find that the commission of any of these activities demonstrates that the naturalized person was "not attached to the principles of the Constitution of the United States and was not well disposed to the good order and happiness of the United States at the time of naturalization ... [and that the acquisition of citizenship had therefore] been obtained by concealment of a material fact or by willful misrepresentation." It seems likely that the denaturalization provision added by Section 204 of the bill, if exercised, could be subject to legal challenge. Whereas denaturalization has historically involved a judicial proceeding, Section 204 appears to authorize the Attorney General to revoke naturalization by way of an administrative determination. The Supreme Court has repeatedly emphasized that citizenship is "a most precious right," and to ensure that a person is not erroneously stripped of citizenship, it has required that the government's allegations that citizenship was improperly conferred be supported by "clear, unequivocal and convincing evidence which does not leave the issue in doubt." The Court has also suggested that it would be especially "sensitive to the citizen's rights where the proceeding is nonjudicial because of the difference in security of judicial over administrative action.... " Accordingly, it seems likely that any attempts to revoke citizenship via a non-judicial, administrative determination could be subject to legal challenge, including on grounds that administrative denaturalization would not provide constitutionally sufficient protections against the mistaken or otherwise erroneous deprivation of citizenship. Secondly, Section 204 appears to permit denaturalization based on conduct committed at any time, including after a person has obtained U.S. citizenship. While it is clear that the government has the power to revoke the citizenship of a person when it was wrongly procured (e.g., through fraud or willful concealment or misrepresentation of material facts), current jurisprudence "reject[s] the idea ... [that] Congress has any general power, express or implied, to take away an American citizen's citizenship without his assent." That is, a citizen's conduct can lead to loss of citizenship only if the citizen acts voluntarily with an intent to relinquish it. However, a limited exception to this general rule may exist when a naturalized person's subsequent conduct indicates that he had acquired citizenship through fraud or deceit. A century ago in Luria v. United States , the Supreme Court upheld a (since-rescinded) federal statute which provided that a naturalized person's establishment of a foreign residence within five years of naturalization provided rebuttable evidence that the person had not intended to continuously reside in the United States when he or she applied for citizenship, despite such intent being required for naturalization. The construction of Section 204 seems to be informed by the exception recognized in Luria . The denaturalization provision expressly characterizes the commission of proscribed conduct by a naturalized person as indicating that the person "was not attached to the principles of the Constitution of the United States and was not well disposed to the good order and happiness of the United States at the time of naturalization." However, the statute at issue in Luria may be distinguishable. The statute in question established that post-naturalization conduct could provide rebuttable evidence that citizenship was fraudulently obtained, and the Court indicated that the evidentiary presumption conferred by the denaturalization was permissible because the relevant conduct occurred shortly after naturalization. The denaturalization ground established by Section 204, however, does not directly afford a person with the ability to rebut the alleged connection between the person's post-naturalization conduct and his or her mental state at the time of the application for citizenship, regardless of the period of time between naturalization and the commission of proscribed acts. In addition to making certain aliens ineligible for citizenship, the SAFE Act would also effectuate more broadly applicable modifications to the naturalization process. Section 203 would provide that no petition for immigrant status or application for naturalization may be approved if there is any criminal or civil administrative or judicial proceeding pending that could result in the petitioner's denaturalization or loss of LPR status. It would also specify that an alien admitted as a conditional LPR (i.e., on account of being the spouse or child of an LPR) is only considered to be lawfully admitted to permanent residence, and to have the conditional period count for naturalization purposes, if the conditionality has been removed. Section 203 would also amend the INA provision concerning judicial review of failures to grant or deny naturalization applications, allowing an applicant to seek a federal district court hearing on the matter if, within 180 days of the completion of all examinations and interviews, a final administrative decision on the naturalization application has not been rendered, and would specify that the court only has jurisdiction to review the basis for the delay and remand the matter to DHS. Section 203 would also amend the INA provision concerning judicial review of the denial of a naturalization application after a hearing before an immigration officer, and establish a more deferential standard of review. It would delete the provision currently establishing a de novo standard of review, and require the petitioner to show that the Secretary of DHS's denial of the application was not supported by facially legitimate and bona fide reasons. It would also limit judicial review, except in a proceeding to revoke naturalization, of an administrative determination regarding aliens' good moral character; the alien's understanding of and attachment to the Constitution; or an alien's disposition to the good order and happiness of the United States for naturalization purposes. There are an estimated 11.1 million unauthorized aliens in the United States. In 2012, ICE estimated that there were 1.9 million removable criminal aliens in the United States. According to ICE, they have the capacity to remove 400,000 aliens a year, and accordingly, DHS has developed a system to prioritize certain aliens for removal. As a result, there has been ongoing debate about the amount of resources that should be allotted to removal activities, and how ICE should prioritize the removal of removable aliens. Title V of the SAFE Act would attempt to increase the government's capacity to remove aliens by increasing resources for removal, and authorizing a pilot program to reduce and expedite clerical tasks required by ICE during the removal process. In addition, the bill would modify immigration officers' authority to arrest aliens suspected of being removable, and mandate the creation of an Advisory Council whose purpose would be to advise Congress on needed resources and the effectiveness of enforcement priorities. Section 501 of the SAFE Act would potentially expand the categories of immigration officers permitted to engage in immigration enforcement activities, and also permit warrantless arrests of aliens suspected of being removable in a wider range of circumstances than under current law. Presently, the Secretary of DHS has discretion as to which officers and employees exercise certain enforcement powers conferred by Section 287(a) of the INA. The provision generally permits the interrogation of persons believed to be aliens about their right to be or remain in the United States and to carry firearms and execute and serve any order, warrant, subpoena, summons, or other process issued under the authority of the United States. Notable among the powers conferred by Section 287(a) is the power to make warrantless arrests under certain conditions. Section 501 would require the Secretary of DHS to authorize all immigration enforcement agents and deportation officers who have successfully completed "basic immigration law enforcement training" to (1) make warrantless arrests for offenses against the United States committed in their presence and certain felonies cognizable under the laws of the United States; (2) make arrests for bringing in, transporting or harboring certain aliens, or inducing them to enter; (3) execute warrants of arrest for administrative immigration violations (i.e., removable offenses), or warrants of criminal arrest issued under the authority of the United States; and (4) carry firearms, under certain conditions. Section 501 would also provide statutory authorization for immigration officers to make warrantless arrests of aliens found in the United States in a broader range of circumstances. Currently, warrantless arrests of aliens found in the United States and suspected of being removable are permitted when the alien "is likely to escape before a warrant can be obtained for his arrest." Section 501 would eliminate this language, and would apparently authorize warrantless arrests in situations where the arresting officer does not have reason to believe that the alien is likely to escape prior to the issuance of a warrant. Warrantless arrests in such circumstances might be subject to legal challenge, as constitutional jurisprudence generally recognizes the permissibility of warrantless arrests of persons in limited circumstances, such as when exigent circumstances exits. Section 501 of the SAFE Act would also provide that all immigration enforcement agents (IEAs) shall be paid on the same scale and receive the same benefits as deportation officers within DHS's Immigration and Customs Enforcement Agency (ICE). Section 502 would authorize the Secretary of DHS to hire 2,500 additional detention enforcement officers, and would specify their duties. Section 506 would similarly require the Secretary of DHS, subject to appropriations, to increase the number of deportation officers by 5,000 and the full-time support staff by 700 above FY2013 appropriated levels, while Section 507 would require the Secretary to increase by 60 the number of ICE trial attorneys (a requirement not subject to appropriations). Section 503 would also require DHS to issue all deportation officers and IEAs body armor and reliable and effective weapons. Section 504 would require the establishment of an ICE Advisory Council within three months of the bill's enactment. The council would be comprised of seven members, and would be tasked with advising the Congress and the Secretary of DHS on: the status of current immigration enforcement efforts; the effectiveness of cooperation between DHS and other law enforcement agencies; resources needed in the field; possible improvements to the organizational structure; and the effectiveness of specific enforcement policies and regulations and whether other enforcement priorities should be considered. The council would be required to provide quarterly reports to the Chairmen and Ranking Members of the House and Senate Judiciary Committees and the Secretary of DHS. Section 505 would require the Secretary of DHS to establish a pilot program in at least five of the ten field offices with the largest removal caseloads to allow deportation officers and IEAs, while in the field, to electronically process and serve charging documents (e.g., notices to appear) and process and place detainers. The pilot program would be designed to replace, to the extent possible, the current paperwork and data-entry process for issuing such documents. The pilot program would have to be initiated within six months of the enactment of the bill, and 18 months after enactment GAO would be required to submit a report to the House and Senate Judiciary Committees on the effectiveness of the program and offer recommendation for improvements. The ICE Advisory Council (created by Section 504) would also be required to include recommendations on how the pilot program should work in its first quarterly report, and include assessments of the program and recommendations for its improvement in each subsequent report. The Obama Administration has issued several documents which provide guidance regarding the exercise of prosecutorial discretion in immigration enforcement activities. In so doing, the Administration has emphasized that the exercise of discretion in individual cases helps "ensure that agency resources are focused on our enforcement priorities, including individuals who pose a threat to public safety, are recent border crossers, or repeatedly violate our immigration laws." The Administration has also claimed that the exercise of such discretion can promote humanitarian interests, as in the case of certain "young people who were brought to this country as children and know only this country as home." Others, however, have suggested that the Administration's prosecutorial discretion policies are tantamount to "amnesty," and that the Deferred Action for Childhood Arrivals (DACA) initiative, in particular, contravenes certain provisions of the INA. Certain provisions of Title VI would respond to the Obama Administration initiatives, apparently with the intent of foreclosing certain exercises of prosecutorial discretion and promoting more vigorous enforcement of federal immigration law. Specifically, Section 605 would require DHS and the Department of Justice (DOJ) to report annually on exercises of prosecutorial discretion (e.g., number of notices to appear cancelled), as well as to identify the individual aliens who received favorable exercises of discretion. Section 608 would similarly prohibit DHS from finalizing, implementing, administering, or enforcing recent guidance regarding prosecutorial discretion, including DACA. The SAFE Act contains provisions concerning immigration enforcement activities along the U.S. border. Section 606 of the bill addresses immigration enforcement activities on federal lands within 100 miles of the U.S. land border. It would bar the Secretary of the Interior or the Secretary of Agriculture from restricting U.S. Custom and Border Protection (CBP) access to such lands either for the purpose of search and rescue operations, or for the prevention of unlawful entries into the United States, including through the construction of barriers, roads, and infrastructure. To effectuate the expeditious installation of fencing and other barriers on these lands, the bill would waive application of several laws, including a number of environmental and land management statutes, which might otherwise delay construction. Section 607 of the bill would establish new requirements for the implementation of a biometric entry-exit system. In 1996, Congress required the development of an automated entry-exit system, which would collect information from arriving and departing aliens to identify whether aliens temporarily authorized to enter the United States had overstayed their authorized term of admittance. Over the years, Congress has revised and expanded this entry-exit requirement, including by requiring it to include a biometric component, but the system has not been fully implemented. Section 607 would require the establishment of a biometric entry-exit system within two years of the bill's enactment, separate and apart from any existing requirements contained in current law. It further specifies that the biometric entry-exit system to be implemented at all U.S. ports of entry must contain the biometric features required by the Intelligence Reform and Terrorism Prevention Act of 2004. The role that states and localities play in enforcing federal immigration law has been a topic of significant interest in recent years. Some states and localities, concerned about what they perceive as inadequate federal enforcement of immigration law, have sought to independently enforce federal law, as well as to penalize conduct that may facilitate the presence of unauthorized aliens within their jurisdiction. Other states and localities, in contrast, have proscribed activities (e.g., sharing information, honoring federal requests to hold aliens) that could assist in federal immigration enforcement because they believe the federal government has been too aggressive in removing aliens who are not criminals and have ties to the community. At least until 2012, there had been considerable legal debate concerning the power of state and local police to enforce federal immigration law without express federal statutory authorization, or to criminally sanction persons for activities that may facilitate unauthorized immigration. In Arizona v. United States , the Supreme Court found that existing federal law contemplates states and localities having a limited role in immigration enforcement. The Court held that states are generally preempted from arresting or detaining aliens on the basis of suspected removability under federal immigration law. Such action may be taken only when there is specific federal statutory authorization, or pursuant to "request, approval, or instruction from the Federal Government." The Arizona ruling also suggested that measures which impose criminal penalties under state law for violations of federal immigration law may be vulnerable to facial challenges on preemption grounds, even when these sanctions mirror those found in federal law. The Court did, however, find that state and local officers are not facially preempted from checking the immigration status of persons stopped for state and local offenses, at least so long as the inquiry does not unreasonably prolong the detention of the person in state or local custody. Title I of the SAFE Act includes several provisions which seem intended to override aspects of the Supreme Court's ruling in Arizona, and to provide states and localities with express statutory authorization to engage in immigration enforcement activities. The SAFE Act also includes other provisions which would more broadly encourage states and localities to play a greater role in immigration enforcement, deter state and local governments from adopting policies that limit cooperation with federal immigration enforcement efforts, and require DHS to exercise existing authorities to facilitate greater cooperation with states and localities in immigration enforcement matters. Section 102 of the SAFE Act would effectively supersede the Supreme Court's ruling in Arizona , and provide express federal authorization for a significantly greater degree of immigration enforcement activities by states and localities than is permitted under current law. The bill would amend the INA to expressly permit states and localities to enact and enforce measures that make it a separate state or local crime to violate the criminal provisions of the INA, so long as the penalties are not greater than those that may be imposed under the corresponding federal statute. Similar measures imposing civil penalties for civil violations of the INA would also generally be permissible. States and localities, would, however, continue to be barred from imposing separate criminal or civil sanctions (other than through licensing or similar requirements) upon entities that hire or employ unauthorized aliens. Section 102 also does not purport to permit state and local measures that would impose criminal or civil sanctions on conduct that is not already penalized by the INA. Section 102 would also generally permit state and local officers to enforce the INA (or state and local "immigration laws") by investigating, identifying, and apprehending aliens suspected of immigration violations, and thereafter transferring them to federal custody. Such enforcement would not necessarily be limited to inquiries into immigration status made in the course of enforcing state and local laws, as was the case with the immigration status checks upheld by the Supreme Court in Arizona v. United States . Rather, state and local officials would apparently be permitted to investigate, identify, apprehend, and transfer aliens separate and apart from their other duties. Other provisions of Title I would promote immigration enforcement by requiring greater information-sharing by federal, state, and local authorities for immigration-related purposes. Such sharing is generally not required under existing federal law, although federal, state, and local governments and officials are generally barred from restricting the sending or receipt of information regarding citizenship or immigration status. In addition, several forms of information sharing currently operate under cooperative arrangements entered pursuant to INA §287(g) of the INA, as well as through the ICE's Secure Communities and Criminal Alien Programs (see "Federal-State Partnerships to Identify Removable Aliens"). Section 103 would require that the "Immigration Violators File" of the National Crime Information Center (NCIC) contain "all available" information regarding aliens who are subject to final orders of removal, have entered into voluntary departure agreements, overstayed their visas, or had their visas revoked. Section 104 would similarly require that states be given access to federal programs and technology "directed broadly" at identifying removable aliens. Currently, states and localities must generally rely upon federal authorities to supply them with information regarding individuals' citizenship or immigration status. Section 105, on the other hand, requires states and localities to provide DHS with certain information about aliens apprehended within their jurisdiction who may be removable. Questions could be raised about whether a requirement to supply information impermissibly "commandeers" state and local resources, notwithstanding the fact that Section 105 would require DHS to reimburse "all reasonable costs" that states and localities incur. Related provisions of Title I, which would condition certain funding for states and localities upon their cooperation in enforcing federal immigration law, would arguably not raise similar concerns, because imposing conditions upon the use of federal funds has been widely recognized as within Congress's spending power. Specifically, Section 106 would permit funds for the procurement of certain items that facilitate and are "directly related" to immigration enforcement to be given only to jurisdictions whose law enforcement officers are permitted to engage in immigration enforcement activities in the course of their routine duties. Relatedly, Section 106 would prohibit such funding to jurisdictions whose policies or practices prevent inquiries into suspects' immigration status. Similarly, Section 114 would provide that jurisdictions whose statutes, policies, or practices prohibit state and local officers from assisting or cooperating with federal immigration law enforcement in the course of carrying out their routine duties would be ineligible for certain funds. It would also amend Section 642(b) of IIRIRA to prohibit states and localities from taking specified actions (in addition to restricting information-sharing with federal immigration authorities, which is currently prohibited) that may limit assistance with immigration enforcement efforts by the federal government. Among other things, states and localities would generally be barred from establishing restrictions on notifying the federal government of the presence of removable aliens and complying with immigration detainer requests from the federal government. In addition to authorizing or encouraging greater involvement by states and localities in immigration enforcement, the Title I of the SAFE Act also contains provisions that seem intended to ensure that the federal government has adequate resources and authorities to take into custody those aliens who are apprehended by state and local law enforcement. For more on DHS's authorities to detain aliens, see " Detention and Removal of Aliens ." Section 107 would require DHS to construct or acquire additional detention facilities for aliens in removal proceedings, with each facility required to have "a number of beds necessary to effectuate the purposes of ... Title [I]." Section 108, in turn, would require that DHS consider assuming custody of removable aliens in state or local custody if requested to do so. Specifically, when such a request was made, DHS would be required to (1) take the alien into custody no later than 48 hours after a detainer has been issued, following the conclusion of the state or local charging or dismissal process (or within 48 hours after the alien is apprehended, if no such charging or dismissal process is required); and (2) request that the state or locality temporarily hold the alien for transfer to federal custody. This provision appears intended to make it more likely that federal immigration authorities will respond to a state or local request to take into custody an alien suspected of being removable. Section 108 would also require that DOJ and DHS ensure that aliens arrested under Title I of the SAFE Act are held in custody, pending examination as to their removability, and would provide that a facility is adequate for such detention so long as it meets certain criteria, including satisfying the U.S. Marshals Service's standards for the housing, care, and security of detainees. Congress has created several avenues for states and localities to assist in the enforcement of federal immigration law. One of the broadest grants of authority for state and local immigration enforcement activity stems from INA Section 287(g), which authorizes the Secretary of DHS to enter written agreements (commonly referred to as "287(g) agreements") which enable specially trained state or local officers to perform specific functions relative to the investigation, apprehension, or detention of aliens, during a predetermined time frame and under federal supervision. In recent years, DHS has decreased its reliance on the 287(g) program to identify and apprehend aliens in state or local custody, while increasing its use of programs like Secure Communities, which do not involve the delegation of immigration enforcement authority to states or localities. Title I of the SAFE Act contains several provisions which seek to ensure the continuation and expansion of cooperative arrangements with states or localities on immigration enforcement matters. Section 112 seeks to expand the use of 287(g) agreements to assist in the identification and apprehension of removable aliens. Pursuant to the bill, DHS would generally be required to enter a 287(g) agreement whenever requested to do so by a state or local government agency. DHS would only be permitted to deny a request to enter a 287(g) agreement on the basis of "a compelling reason." DHS would also be required to accommodate requesting jurisdictions regarding the types of immigration enforcement functions that will be carried out pursuant to a 287(g) agreement. DHS would be prohibited from substituting a program or technology "directed broadly" at identifying removable aliens—apparently a references to the Secure Communities program—in lieu of entering or maintaining a 287(g) agreement. DHS would also be barred from terminating 287(g) agreements without compelling reason and without complying with certain procedures (e.g., providing written notice at least 180 days in advance). States and localities that believe their agreements have been improperly terminated would be entitled to administrative and judicial review. Currently, such agreements may be terminated "at any time;" the termination is effective "immediately upon receipt;" and states and localities appear to have no legal recourse. Section 111 would require that DHS continue to operate a program (akin to the Criminal Alien Program) that identifies removable aliens in correctional facilities and arranges for their removal at the completion of their sentences; and extend the program to all states. Also, in an exercise of Congress's spending power, Section 111 would require any state which receives funding for the incarceration of "criminal aliens" pursuant to the State Criminal Alien Assistance Program (SCAAP) to provide assistance in the identification of criminal aliens within its prisons or jails. Section 111 would further authorize states and localities to hold "criminal aliens" for up to 14 days after they have completed their sentences (or issue a detainer to hold such aliens) so that DHS can take custody of them. However, because such holds would arguably constitute warrantless seizures of the aliens' person, they could potentially be challenged on Fourth Amendment grounds. In addition, Section 113 would amend Section 241(i) of the INA—which underlies the SCAAP program. Under current law, states may request reimbursement from DHS for costs associated with incarcerating an "undocumented criminal alien"—a term defined to cover unlawfully present aliens who have been convicted of a felony or two or more misdemeanors. Section 113 would modify this definition to also cover unlawfully present aliens who are charged with such offenses. The bill would further authorize appropriations necessary to carry out the program for FY2014 and each subsequent fiscal year. Further, Section 115, captioned "Clarifying the Authority of ICE detainers," would generally require DHS to execute all lawful writs, processes, and orders issued under the authority of the United States, and command "all necessary assistance to execute the Secretary's duties." The purpose of this general statement is not immediately apparent. Arguably, it could be construed to mean that DHS is required to employ detainers, when necessary, in order to acquire custody of an alien believed to be removable who is in state or local custody. In keeping with Title I's encouragement of state and local involvement in immigration enforcement, Section 109 would require that DHS create materials to assist state and local officers in enforcing immigration law, although immigration-related training would not be a "requirement or prerequisite" for doing so, as it currently is for state and local officers acting pursuant to "287(g) agreements," discussed previously. Section 110 would further provide that state and local officers, acting within the scope of their official duties, are immune "to the same extent as ... Federal law enforcement officer[s]," from personal liability arising from the performance of any "duty" described in Title I, including investigating, arresting, and detaining aliens. This provision would apparently clarify that immigration enforcement is within the scope of state and local officers' duties for immunity purposes, and could potentially be construed to grant state and local officers protection under the Federal Tort Claims Act for intentional torts. Currently, the INA expressly provides for immunity only for state and local officers acting pursuant to a "287(g) agreement."

Reforming the nation's immigration laws has been the subject of significant legislative activity in the 113th Congress. In June, the Senate passed an omnibus immigration bill (S. 744) that addresses a broad array of issues, including immigration enforcement and border security, verification of aliens' employment eligibility, the temporary and permanent admission of foreign nationals into the country, and the creation of mechanisms for some unauthorized aliens to acquire legal status. The House, in contrast, has focused legislative activity on a number of stand-alone bills that would reform specific aspects of immigration law. The House Judiciary Committee has ordered several of these bills to be reported, including proposals that focus on strengthening immigration control and enforcement. H.R. 2278, the Strengthen and Fortify Enforcement Act (SAFE Act), is aimed at increasing immigration control and enforcement, particularly within the interior of the United States. Many of the bill's provisions appear intended to address and override court decisions that have narrowly construed existing statutory authorities. The bill would encourage states and localities to play a greater role in immigration enforcement; heighten penalties for violations of federal immigration laws; impose additional requirements concerning background checks and screening of aliens seeking admission, status (including naturalization), or benefits under immigration law; and clarify or establish rules to facilitate the detention and removal of aliens who lack authorization to remain in the United States, particularly when such aliens have been involved in criminal activity. During Judiciary Committee hearings, several significant amendments were made to the bill, including provisions which would generally make unlawful presence by an alien a criminal offense, require the establishment of a biometric entry/exit system within two years of the bill's enactment, and generally constrain the exercise of prosecutorial discretion in the removal process. On June 18, 2013, the committee completed its markup of the SAFE Act, and ordered it to be reported, as amended, by a vote of 20-15. While the SAFE Act contains a few provisions which resemble those found in S. 744, there are notable differences in both the breadth of the bills' enforcement provisions and their approach to the unauthorized alien population. The SAFE Act generally imposes more significant penalties for immigration-related violations and more stringent requirements relating to the detention and removal of aliens than the Senate-passed bill. Perhaps most significantly, the SAFE Act would make an alien's knowing unauthorized presence a criminal offense, whereas the Senate bill would not make unlawful presence a crime. In fact, the Senate bill would establish procedures whereby some of the current unauthorized population could potentially acquire legal status, while neither the SAFE Act nor the other bills ordered to be reported by the House Judiciary Committee, to date, make similar provisions for legalization. The SAFE Act more closely resembles the last comprehensive immigration enforcement legislation passed by the House, H.R. 4437, the Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005 (109th Congress), though it differs from the earlier legislation on many specific matters. This report discusses the SAFE Act, as reported out of the House Judiciary Committee. For discussion of other immigration reform proposals in the 113th Congress and prior Congresses, see CRS Report CRS Report R43097, Comprehensive Immigration Reform in the 113th Congress: Major Provisions in Senate-Passed S. 744, by [author name scrubbed] and [author name scrubbed], and CRS Report R42980, Brief History of Comprehensive Immigration Reform Efforts in the 109th and 110th Congresses to Inform Policy Discussions in the 113th Congress, by [author name scrubbed].

On average, child support constitutes 17% of family income for households who receive it. Among poor households that receive it, child support constitutes about 30% of family income. During the last several years, the importance of child support payments as an income source for single-parent families has garnered national attention. The 7 th annual report on the Temporary Assistance for Needy Families (TANF) block grant program indicates that 23% of adult TANF recipients have jobs. Although this is good news, relative to earlier years, welfare studies have found that many of these recipients and ex-recipients end up with low-wage jobs. Thus, child support is a critical factor in helping low-income families become self-supporting. In 2003, the average yearly child support payment received by custodial parents with payments was $4,647 for mothers, about 20% more than the average amount received by fathers ($3,906). These full or partial payments represented 17% of the custodial mothers' total yearly income and 8% of the custodial fathers'. In 2003, child support represented 19% of the income of the 3.3 million custodial parents who received all of the child support that they were owed. However, most child support received on behalf of families receiving TANF cash welfare is kept by the federal government and the states, rather than paid to families. This is because TANF families must assign ("turn over" legal rights to) child support paid by noncustodial parents on their behalf to the state to reimburse governments for welfare costs. The Deficit Reduction Act of 2005 (DRA, P.L. 109-171 , enacted February 8, 2006) provides incentives for states to allow more of the child support collected on behalf of TANF families to go to the family and most (if not all) of the child support collected on behalf of former TANF families to go to the family. This is referred to as a child support pass-through (see page 6 ). Adoption of this "family first" policy is intended to help former TANF families stay self-sufficient and to encourage cooperation with child support enforcement efforts by custodial and noncustodial parents, by allowing the family to keep more (or all) of the child support paid on its behalf. Under DRA, effective October 1, 2008, if a state passes through a child support payment and disregards it as countable income, the federal government will waive its share of the child support collections, up to $100 per month for one child or up to $200 per month for two or more children (see page 12 ). This is referred to as a disregard. This report illustrates "what if" scenarios if six states (California, Illinois, Maine, Maryland, Oklahoma, and West Virginia) were to adopt the DRA child support pass-through and disregard policies for TANF families. The states were selected because of their diversity of both current child support pass-through and disregard policies and TANF benefit amounts. It is not known whether any of these states are currently contemplating adopting the DRA rules. The analysis shows the financial impact on a mother with two children in specified earnings categories under current child support distribution rules and under the DRA rules. It also provides an analysis of the change in the distribution of child support among the state, federal government, and the family under current rules and under DRA rules. This report includes three appendices. Appendix A discusses and presents detailed tables showing the impact of pre-DRA and DRA policy on a mother with two children in each of the six states. Appendix B discusses and presents detailed tables showing the impact of pre-DRA and DRA policy on the distribution of child support collections among families, the state, and the federal government in each of the six states. Appendix C provides background information on the DRA provisions that affect former TANF families. This report examines the financial impact of adoption of the Deficit Reduction Act (DRA) provisions related to the child support pass-through and disregard policy on TANF families, state governments (particularly California, Illinois, Maine, Maryland, Oklahoma, and West Virginia), and the federal government. The major findings are described below. The DRA provides an incentive for states to have a pass-through and disregard policy by requiring the federal government to share in the cost, by foregoing the federal share of the child support collected from the noncustodial parent on behalf of a TANF family. The DRA requires the federal government to share in the cost of passing through and disregarding up to $200 per month for a TANF family with two or more children. If a state that currently has a pass-through and disregard policy continues with its existing disregard amounts, the state would financially benefit from the DRA provisions, for the state would no longer have to fund the policy at its own expense. If a state opts for the full $200 pass-through and disregard, in most cases, there would be a cost to the state. The cost would depend on whether the state had a pre-DRA pass-through and disregard policy, the amount of the disregard, whether the family becomes eligible for TANF because of the pass-through and disregard, the custodial parent's earnings and other income, TANF benefit rules regarding treatment of income, and the Federal Medical Assistance Percentage (FMAP), which determines the federal and state share of child support collections. The DRA provisions would reduce the "cost" of the pass-through and disregard policy more for poorer states than for higher-income states. Poorer states must currently send back to the federal government a greater share of child support collections than higher income states. For example, West Virginia sends back 72.82% of its child support collections (to the federal government) whereas Maryland sends back 50.00% of its collections. Under the DRA pass-through and disregard policy, the poorer state, West Virginia, would not have to send back the federal government's share (72.82%) of child support collections; instead the federal government would be required to forego its share of child support collections. The cost of a pass-through and disregard policy generally would be higher for the federal government than for the states. However, in the case in which a family becomes eligible for TANF payments because of the DRA child support pass-through and disregard, given the assumptions of this report, state governments would incur higher costs than the federal government. (This report considers TANF expenditures to be state expenditures.) In most cases individual families would benefit from the DRA provisions. The DRA pass-through and disregard provisions could increase the income of a TANF parent with two children by as much as $200 per month. A family ineligible for TANF because its counted earnings are higher than its state's income eligibility threshold would see no increase in income from implementing the DRA pass-through and disregard provisions. Under the policies in effect in January 2007 and under the new (fully phased-in) minimum wage of $7.25 per hour, families in many states are ineligible for TANF even at 20 hours of work per week. Among the six states closely examined in this report, only in California would a mother of two working 40 hours per week at $7.25 per hour be eligible for TANF based on January 2007 rules. The interests of the Child Support Enforcement (CSE) program and CSE families are not always compatible. The interests of a family are usually entirely financial. It is in the best interest of a family to get the highest amount of income available to it; thus, the higher the child support pass-through and disregard amount, the more a family would potentially benefit. However, from a CSE program perspective, the more dollars that the program has to invest in CSE activities (e.g., parent location, paternity establishment, support order establishment, collection of child support payments), the better the program can serve its entire clientele. Thus, for many states the ability to retain child support collections outweighs the value of a pass-through and disregard policy, particularly since the pass-through and disregard does not benefit persons who never received cash TANF benefits (such persons represented 39% of the CSE caseload in FY2006). The CSE program (Title IV-D of the Social Security Act) was enacted in 1975 as a federal/state/local partnership to help strengthen families by securing financial support from noncustodial parents. It also was enacted to lower the government costs of providing cash welfare to families with absent parents, by collecting child support from noncustodial parents that could help keep families off welfare or by using those collections to reimburse states and the federal government for the cost of making welfare payments. All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands operate CSE programs and are entitled to federal matching funds. In addition, Native American tribes can operate CSE programs with federal funding. All families with children who live apart from one of their parents are eligible for CSE services. Families receiving TANF benefits (Title IV-A of the Social Security Act), Title IV-E foster care payments, or Medicaid (Title XIX) coverage automatically qualify for CSE services free of charge. Other families must apply for CSE services, and states must charge an application fee that cannot exceed $25. The application fee may be paid by the state, the noncustodial parent, or the custodial parent. Child support collected through the CSE system on behalf of families who never received cash welfare goes to the family, usually through the state disbursement unit. However, most collections on behalf of families currently receiving cash welfare from TANF are used to reimburse state and federal governments for TANF payments made to the family. The fact that cash welfare families directly receive only a small fraction of child support paid to them has been an ongoing policy concern, as the program has increasingly emphasized its role in adding to the income of families with children and de-emphasized its welfare cost-recovery role. Reinforcing this shift in emphasis has been the large declines in the cash welfare rolls themselves. Cash welfare payments fell from $25 billion in FY1995 to about $10 billion in FY2005, meaning that there are far fewer costs to recoup. The number of families receiving cash welfare fell during this period from about 5 million to 2 million. Thus, the rules affecting those currently on the rolls reach fewer families and affect fewer dollars than they did in the mid-1990s. The decline in the cash welfare caseload is also reflected in the changing composition of the CSE caseload. The component of the caseload that is comprised of TANF families is shrinking. In FY2006, only 15% of the CSE caseload was comprised of TANF families (compared to 21% in FY1999 and 38% in FY1996). Even though overall child support collections increased by 51% over the seven-year period FY1999-FY2006, child support collections made on behalf of TANF families decreased by 33%. Thus, the policy shift—from using the CSE program to recover welfare costs to using it as a mechanism to consistently and reliably get child support income to families—is not surprising. In FY2006, only 4% of CSE collections ($985 million) was made on behalf of TANF families; about 14% of that amount went to the families (pursuant to state child support "pass through" provisions), and the rest was divided between the state and federal governments to reimburse them for TANF benefits paid to the families. In FY2006, 91% of CSE collections ($21.8 billion) went to the families on the CSE rolls. The comparable figure in FY1999 was 85% ($13.5 billion); and the comparable figure in FY1996 was 80% ($9.6 billion). In FY2006, the largest group of families who were participating in the CSE program were families who had left the TANF rolls (i.e., former TANF families, 46%). Families who had never been on TANF represented 39% of the CSE caseload, and families who were currently receiving TANF benefits comprised 15% of the CSE caseload. Thus, although the majority of the CSE caseload is composed of non-TANF families (85%), most of them at some point in their lives received TANF/AFDC (61%). This is consistent with the expanded mission of the CSE program. The expectation is that as child support becomes a more consistent and stable income source/support, these former TANF families will never have to return to the TANF rolls, and families that had not resorted to the TANF program will never have to do so. TANF cash welfare is available to families that meet a test of financial need, with the test determined by the states. A family's income, including child support, must be below a specified income threshold determined by the state to qualify for TANF cash welfare. If child support collections exceed the TANF benefit, the family may lose TANF eligibility, as its countable income would be too high to qualify for TANF, and instead it would receive the child support. A TANF cash welfare family is required to cooperate with the CSE system. TANF recipients must help in establishing the paternity of the family's children. Further, recipients must turn over rights to any child support paid on behalf of the children while the family is on welfare to the state. The state then decides whether to pay any received child support to the family. The rules governing division of child support collected on behalf of families comprise (1) assignment; (2) distribution; (3) pass-through; and (4) disregard rules. Special rules also apply in certain states, called "gap" states, based on their historical treatment of child support in determining cash welfare benefits. Note that some different rules apply for payment of support that is currently due, compared with past-due support (arrearages). The current child support pass-through and disregard rules are only applicable to TANF families and only pertain to current child support payments. If a TANF family receives child support payments that are considered arrearages, those arrearage payments are kept by the state and federal government. This report focuses on collections of current support. However, one purpose of the DRA is to increase the economic independence of former TANF families by giving states the option of providing such families with all of the child support collected on their behalf. Appendix C briefly discusses DRA provisions that affect former TANF families. As noted above, when a family applies for TANF cash welfare, the custodial parent must assign (that is, legally turn over) the right to the state for child support collected on her or his behalf. While the family receives TANF benefits, the state retains support collections up to the cumulative amount of TANF benefits which have been paid to the family . If child support collections are less than the TANF benefit, the collections remain legally with the state and are then subject to the distribution, pass-through, and disregard rules discussed below. As already discussed, when the CSE program was first enacted in 1975, one of its primary goals was to recover the costs of providing cash welfare to families with children. To accomplish this cost-recovery goal, child support collected on behalf of families receiving cash welfare was used to offset benefit costs and was shared between the federal and state governments. The sharing arrangement was based on how the federal government and states shared the cost of paying cash welfare benefits under the pre-1996 program of Aid to Families with Dependent Children (AFDC). Under old AFDC law, the rate at which states were reimbursed by the federal government for the costs of cash welfare was the "Medicaid matching rate" (which is now usually referred to as the Federal Medical Assistance Percentage—FMAP), which varies inversely with state per capita income (i.e., poor states have a higher federal matching rate, wealthy states have a lower federal matching rate). Consequently, the share of child support collections to be distributed to the federal government and states also was based on the Medicaid matching rate. The AFDC program required that the first $50 in child support collected had to be distributed to the family (passed-through, see below), and remaining collections be split between the federal and state governments according the Medicaid matching rate. If a state had a 50% matching rate, the federal government was reimbursed $50 for each $100 in remaining child support collections; if a state had a 70% federal matching rate, the federal government was reimbursed $70 for each $100 in remaining collections. In the first example, the state kept $50 and in the second example, the state kept $30. Thus, states with a larger FMAP kept a smaller portion of the child support collections. The match ranged from a minimum of 50% to a statutory maximum of 83%. Although AFDC was replaced by the TANF block grant under the welfare reform law of 1996, the same matching rate procedure for CSE collections is still used; however, the mandatory $50 pass-through was eliminated. Except for families in states that allow child support to fill the gap between the cash welfare benefit and "need" (discussed below), the full amount of current child support collected on behalf of cash welfare families is divided between the federal and state governments based on the Medicaid matching rate. The federal government, thus, is still reimbursed for its share of TANF welfare costs even though TANF is a block grant program rather than an open-ended entitlement program. Though states are required to pay to the federal government the federal share of child support collections, they have full discretion over the state share of collections made on behalf of welfare families. They decide whether to keep the collections or "pass-through" child support to families. If a state does not pass-through any child support collections and the child support collected is insufficient to lift the family's income above the state's TANF eligibility limit, the family receives its full TANF grant (i.e., not reduced by the child support payment). Passing through child support means that a family receives an identifiable amount (i.e., a separate check), separate from the welfare benefit, based upon child support collected from the noncustodial parent. Whether the welfare benefit is then reduced by the amount of the child support passed through depends on the state's disregard policy, discussed below. States decide whether to treat child support payments as income to the family in determining TANF eligibility and benefits. If a state does pass-through some child support, but does not disregard it when determining TANF eligibility and benefits, the family's TANF grant is reduced by $1 for each $1 in child support collections. Though the family receives some of the child support collected on its behalf, its total income is not increased. A "disregard" of child support income means that a family can keep a certain amount of child support without a reduction in its TANF benefits or potentially losing TANF eligibility. Therefore, a $50 disregard of child support means that up to $50 of child support collections does not affect a family's TANF eligibility or benefits. A $200 disregard of child support means that up to $200 of child support does not affect a family's TANF eligibility or benefits. Before the CSE program was enacted, child support was paid directly to the custodial parent. When child support was paid to a family receiving AFDC, the child support was counted as income in determining the family's AFDC eligibility and the amount of AFDC benefits paid to the family. In most states it resulted in a corresponding dollar-for-dollar decrease in the AFDC benefit paid to the family. However, some states used AFDC benefit calculation methods that did not result in a full dollar reduction for each dollar received as income. These states paid less money than their full "need standard", and some permitted AFDC recipients to use their own income to make up all or some of the difference between the AFDC payment and the standard of need. This additional income retained by the family increased the total amount of disposable income available to the family in a month. However, after enactment of the CSE program in 1975, all child support payments had to be paid to the CSE agency. In states that had allowed families to keep part of their child support payments (to fill the gap between the state's need and maximum payment standards) without a corresponding reduction in AFDC benefits, families had less disposable income after the enactment of the CSE program than before. Concerns were raised that the new law would cause a decrease in the total income (AFDC and child support income) of AFDC families in states referred to as "fill-the-gap" states. In essence, before the CSE program was implemented, in some states, AFDC families were permitted to fill all or part of the gap between the state's need standard and maximum benefit with child support payments/income. By bypassing the family and requiring that child support payments be paid to the state, the family no longer had access to this extra income and the fill-the-gap procedure was nullified. P.L. 94-88 (enacted August 9, 1975) addressed these concerns by requiring that monthly supplemental payments (often referred to as "gap" payments) be made to AFDC recipients who would receive less disposable income (because of the new rules) than they would have received prior to July 1975 when the new child support rules took effect (Section 402(a)(28) of the Social Security Act). The gap payment provision only applied to states that had a fill-the-gap policy in July 1975 and also in the month of the benefit calculation. In July 1975, 13 jurisdictions paid less than their full need standards and allowed custodial parents to use any nonwelfare income to fill all or part of the gap between the state's maximum benefit/payment and the state's standard of need. The five states of Delaware, Georgia, Maine, South Carolina, and Tennessee had a fill-the-gap policy in July 1975 and currently still have a fill-the-gap policy. The gap payment is paid for with cash welfare (i.e., TANF) funds. According to the provisions of Section 457(d) of the Social Security Act which references Section 402(a)(28) of the Social Security Act, these states still have the option of not applying federal child support distribution rules (Section 457 of the Social Security Act) to these gap payments. Under pre-DRA policies, and through September 30, 2008, a state that chooses to operate a pass-through policy bears the full cost of the pass-through and disregard. The state must repay the federal government its share of the collected child support whether or not any support is passed through to the custodial parent and disregarded in the custodial parent's TANF benefit calculation. If the state both passes through and disregards any child support paid to a TANF family, that amount is countable toward the state's TANF spending (maintenance of effort or MOE) requirement. Beyond the requirement that TANF cash welfare be restricted to families with children who meet a test of financial need, there are no federal rules governing TANF eligibility and benefit amounts. "Financial need" is wholly determined by the states. States determine the income amounts below which income must fall to make a family eligible for TANF. They also determine what types of income are counted—and whether any income is "disregarded" or subtracted from total income when determining TANF eligibility or benefits. Different states have devised different rules for how child support is treated when determining a family's financial need and benefits. Table 1 shows the child support pass-through and disregard policies in the TANF program as of April 2007. The second column of the table indicates the amount of child support income that states say they count in determining whether a family is eligible for the TANF program. The states had three answers: none of the child support received by the custodial parent in the TANF family was counted in determining the family's TANF eligibility; all of the family's child support income was counted; or all of the child support income was counted except for up to $50 per month. If after passing this first test the family is eligible for TANF, the state then applies its rules regarding passing through child support income to the family. The third column of the table shows the state's pass-through policy in terms of how much, if any, of the child support received by the family from the noncustodial parent is given to the family by the state. The fourth column of the table indicates how much, if any, of the pass-through amount is disregarded by the state in determining the family TANF cash payment. Table 1 shows that the most common policy among the states is no pass-through or disregard of child support collected on behalf of a TANF family. That is, all child support is retained to reimburse the federal government and the states for the cash welfare payment. However, some states allow some amount of child support collected on a TANF family's behalf to be passed through to the family without negatively impacting the family's TANF payment (i.e., with a concurrent disregard of the pass-through amount). Other states have child support pass-through policies but do not disregard the income when determining TANF eligibility or payment amounts. Thus, while the state may send all or a portion of current child support collections to TANF families, the state simultaneously reduces the family's TANF grant by the amount passed through. As of April 2007, 27 states have no pass through or disregard policy; 12 states pass through and disregard up to $50 per month; 7 states pass through a gap payment or supplement (3 of these states also pass-through an additional $50) and disregard the entire amount of the monthly gap payment/supplement (plus the $50 if passed-through); 2 states pass through and disregard an added amount to the TANF cash benefit, but the amount is not considered a child support pass-through; 1 state passes through all child support payments to custodial parents but does not disregard any of that income; 1 state passes through up to $50 monthly but does not disregard that income; and 1 state passes through and disregards all child support collected on the family's behalf. Among other things, the Deficit Reduction Act (DRA) of 2005 ( P.L. 109-171 , enacted February 8, 2006) seeks to provide a stable source of income for all single-parent families with a noncustodial parent. It simplifies CSE assignment and distribution rules, and strengthens the "family-first" policies started in the 1996 welfare reform law. The DRA provides incentives to states in the form of federal cost sharing, to direct more of the child support on behalf of TANF cash welfare families to the families themselves (often referred to as a "family first" policy), as opposed to using such collections to reimburse state and federal treasuries for welfare benefits paid to families or to finance their child support programs. P.L. 109-171 will allow states to pay up to $100 per month (or $200 per month for a family with two or more children) in child support collected on behalf of a TANF or foster care family to the family, and will not require the state to pay the federal government the federal share of those collections. In order for the federal government to forgo its share of these child support collections, the state is required to disregard (i.e. not count) the child support collection paid to the family in determining TANF cash welfare eligibility and benefits. The next two sections illustrate the effects of the DRA changes in child support pass-through and disregard policies on both family budgets and federal and state budgets. The impact is fairly complex, depending on a number of factors, including the state's current TANF policies regarding eligibility rules, benefit amounts, and current child support pass-through and disregard rules; and a family's circumstances, such as earned income and the amount of child support paid by the noncustodial parent. The impact of DRA policy is examined in six states (California, Illinois, Maine, Maryland, Oklahoma, and West Virginia) for a mother with two children. For this hypothetical family, the current TANF and child support policies were simulated using varying assumptions of child support receipt and earnings of family members. The states were chosen based on their child support pass-through and disregard policy, and their maximum TANF cash benefit amounts. California and Illinois both pass-through and disregard up to $50 monthly in child support payments. California is a relatively high TANF benefit state and Illinois is a relatively low TANF benefit state. Maryland (relatively high benefit state) and Oklahoma (relatively low benefit state) do not have a child support pass-through and disregard policy. West Virginia and Maine were chosen because they have special rules for treating families with child support. Maine is a "gap payment" (described above) state. West Virginia does not provide a child support pass-through and disregard, but gives a $25 "incentive payment" added to the TANF grant for those families with some (any amount) child support collected on their behalf. The next section examines the impact of the DRA provisions on family income. It is followed by a section on how the DRA provisions could affect government budgets through TANF, the federal share of child support collections, and the state's share of child support collections. The DRA policies aim to increase the incomes of TANF cash welfare families. This is a particular policy concern, since in all states the maximum TANF cash welfare benefit is only a fraction of poverty-level income. California's maximum benefit for a family of three in January 2007 was $723—the highest maximum benefit of the six states closely examined in this report, but a benefit that represents only about half of the 2007 federal poverty guideline for a family of three. Allowing a family to keep $200 per month in child support increases family income by 14% of the poverty threshold. The increase in family income that would result from a state implementing DRA's full pass-through and disregard provisions depends on a number of factors. For families eligible and receiving TANF welfare before DRA rules are implemented, the family can see an increase in income. For a family composed of a parent with two children the maximum increase in income would be $200. The increase in income would be less if the noncustodial parent paid less than $200 in child support and less in states that already paid some of the collected child support to a TANF cash welfare family. Implementing the DRA pass-through and disregard rules can make some families newly eligible for TANF cash welfare. Families with child support income greater than the TANF benefit are ineligible for TANF (they receive the collected child support instead). However, some such families might be made eligible for TANF if up to $200 in child support were disregarded when determining eligibility for TANF. If the family actually receives TANF (many eligible families do not), its income would increase by some amount. A family ineligible for TANF because its counted earnings are higher than its state's income eligibility threshold would see no increase in income from implementing DRA's pass-through and disregard. Under the policies in effect in January 2007 and under the new (fully phased-in) minimum wage of $7.25 per hour, families in many states are ineligible for TANF even at 20 hours of work per week. Among the six states closely examined in this report, only in California would a mother of two working 40 hours per week at $7.25 per hour be eligible for TANF based on January 2007 rules. The next four tables illustrate the effects of implementing the new DRA pass-through and disregard rules on family incomes. Table 2 presents the combined TANF and child support income a mother of two would receive under a state's current pass-through and disregard policies compared with the amount she would receive if the state implemented the maximum allowed under DRA. The table shows the combined income for a family with zero earnings, with child support paid by the noncustodial parent ranging from $0 per month to $500 per month (shown in $100 increments). The table's top panel shows the combined income under pre-DRA policies; the middle panel shows combined income under DRA policies; and the bottom panel displays the difference in combined TANF and child support income. Generally, Table 2 shows that DRA policies would increase this family's combined monthly income by as much as $200 in the two states that currently do not pass-through and disregard child support for TANF welfare families (Maryland and Oklahoma) and by up to $150 in states that currently pass-through and disregard the first $50 in child support (California and Illinois). The simulation assumes that West Virginia would end its $25 child support incentive payment and instead adopt DRA's maximum child support pass-through and disregard policies. This would result in a maximum increase in combined child support and TANF welfare income of as much as $175 for this family in West Virginia. The maximum increase in Maine is $150; it has a pass-through and disregard of $50 but is also a "gap" state, that results in an increase in the income of the hypothetical family by as much as $135 per month. The simulation assumes that Maine would continue to provide this "gap" payment. The amounts discussed above are the maximum increase in combined TANF payments and child support income resulting from the adoption of DRA policies. The increase would be less if the noncustodial parent paid less than $200 per month in child support. It also would be less in some cases in Maine, because up to $185 in child support is already paid to the family. It also would be less than $200 for some cases in other states; those families who would be newly eligible for TANF because of the greater disregard of child support when determining TANF eligibility. The mechanics of the increase in income for such newly-eligible TANF families is discussed when describing Table 3 . Table 3 provides more detail on the impact of DRA policies on the combined child support and TANF income of a hypothetical mother with zero earnings and two children. The table separately shows TANF and child support income under both pre-DRA and DRA policies, assuming that the noncustodial parent makes a child support payment of $300 per month on behalf of the family. It also shows the income as a percent of the FY2007 federal poverty guidelines. DRA policies would increase income for this family by the maximum $200 per month in Maryland and by $150 in California and Illinois. In FY2007, $200 per month represents 14% of the federal poverty threshold and $150 represents almost 11% of the poverty threshold. Thus, the additional child support passed-through and disregarded would significantly supplement the family's income. The largest TANF benefit in the table is California's $723 per month—representing about half the poverty level. Combined income for the hypothetical family in California, as shown in Table 3 , would rise to $923 per month, or 65% of the poverty threshold, under DRA policies. Other states pay lower benefits and thus income from TANF represents a smaller percentage of the poverty threshold, so that child support plays an even greater role in lifting family income relative to the poverty level. The hypothetical family of three in West Virginia would net that state's maximum increase of $175 (pass-through and disregard of $200 offset by elimination of the $25 child support incentive payment). The increase in income in Maine is only $115; the $200 disregard plus the gap payment would result in all $300 in child support going to the family in Maine, compared with $185 in child support going to the family under its pre-DRA $50 pass-through and disregard plus the gap payment. In Oklahoma, the increase in total income from adopting a $200 pass-through and disregard would be $192 per month for the hypothetical family of three with no earnings. This example illustrates how the interaction of the child support disregard and TANF eligibility thresholds can result in a reduced impact. Under pre-DRA policies, the hypothetical family of three, with $300 in child support income per month, would be ineligible for TANF cash welfare. The $300 in child support is higher than the maximum TANF grant of $292 per month in Oklahoma. Thus, under pre-DRA rules the family would receive $300 in child support but no TANF benefit. However, if Oklahoma adopted a $200 child support pass-through and disregard, the family would become eligible for TANF cash welfare. Its "countable" child support income would be $100 ($300 minus the $200 disregarded), so the family would receive the $292 TANF cash grant plus $200 in child support. The state and federal government would keep the other $100 in child support. The net gain to the family would be $192 ($292 TANF cash grant minus the $100 in child support kept by the state). The Oklahoma example also illustrates how an increased child support pass-through and disregard expands eligibility for cash welfare; that is, the hypothetical family of three with child support of $300 is ineligible for TANF if no child support is disregarded but becomes eligible if $200 of child support is disregarded. The increased disregard permits families to receive child support without losing eligibility for TANF cash. Table 4 and Table 5 illustrate the impact of the DRA child support policies for the hypothetical mother who has earnings and two children. She is assumed to earn the new fully phased-in federal minimum wage of $7.25 per hour. Table 4 shows her combined income if she works 20 hours per week; Table 5 shows her combined income if she works 40 hours per week. The tables illustrate that not all families with earnings would benefit from the new DRA child support policies. Whether a family with earnings benefits would depend on whether they would still qualify for TANF. Table 4 shows that a hypothetical family of two children and a mother working half-time at the minimum wage would receive the state's maximum increase in income ($150) in California and Maine. However, such a family would be ineligible for TANF under both pre-DRA and DRA policies in Oklahoma and West Virginia. In both states, countable earnings and child support would be too high for the family to qualify for a TANF benefit. In Illinois and Maryland, the hypothetical family of two children and a mother working half-time at the minimum wage is ineligible for TANF under pre-DRA rules. However, if up to $200 in child support was disregarded in those two states, such a family would become eligible for TANF. The net increase in income in Illinois would be $80—the family would receive a TANF benefit of $180 but the state would keep $100 of child support collections (to be split between itself and the federal government). For Maryland, the net increase in income would be $101—the family would receive a TANF benefit of $201 but the state would keep $100 in child support collections (to be split between itself and the federal government). Table 5 shows these simulations for the hypothetical family of two children and a mother working full-time at the minimum wage. Under current policies, $300 in child support would make such families ineligible for TANF in all six states. Only in the state with the highest TANF benefit of the six—California—would the DRA pass-through and disregard rules make a family eligible for TANF. The DRA rules would produce a net income gain of $86 for such a family in California; it would receive a TANF benefit of $186, but the state would keep $100 in collected child support (to be split between itself and the federal government). Increasing the child support pass-through and disregard could increase the income of some TANF welfare families, but at a cost to both federal and state governments. Under pre-DRA law, the cost of passing-through and disregarding child support collected for welfare families is borne by states. They finance child support paid to welfare families from the state share of child support collections and through TANF. The DRA provides a financial incentive to states to pass-through and disregard more child support collected on behalf of TANF cash welfare families, by reducing its cost to the state and shifting some of these costs to the federal government. However, the way costs are shifted is fairly complex. For many families, the cost to the state would be lowered by shifting it to the federal government, which would see a reduced federal share of child support collections flowing to the federal Treasury. For other families, however, the costs of switching to the DRA policies would actually be borne by the state through increasing TANF cash welfare expenditures. This would occur in cases when disregarding additional child support makes families newly eligible for TANF (and they actually receive the TANF cash for which they become eligible). Table 6 shows how the cost of increasing family income under DRA provisions through the child support pass-through and disregard would be borne by the federal government and the states for a family whose noncustodial parent pays $300 per month in child support. For many hypothetical families shown on the table, a greater share of the cost would be borne by the federal government through a reduced federal share of child support collections. However, there are examples in the table that show how the states—via the TANF program—sometimes bear the cost. In Oklahoma, a family with zero earnings is ineligible for TANF if the noncustodial parent pays $300 per month in child support. Under DRA policies, the family would be eligible for TANF since $200 of that child support would be passed-through and disregarded. The family would receive a $292 TANF benefit—a cost to the state from TANF. Under pre-DRA policies, the state would retain no child support since the family is ineligible for TANF. Under DRA policies, the state retains $100 of child support—sending $68 to the federal government, and keeping $32. The cost-sharing arrangements for the states vary, depending on their FMAP. Poorer states must send back to the federal government a greater share of child support collections than higher income states. For example, West Virginia sends back 72.82% of its child support collections; Maryland sends back 50.00% of its collections. Under pre-DRA policies, a poorer state has a relatively small share of child support collections to pass through to cash welfare families. For example, if a noncustodial parent pays $300 in child support collections, West Virginia only retains $82. A $200 pass-through cannot be paid for through West Virginia's share of child support collections. Under DRA policies, the federal government generally would bear a greater share of the higher pass-through and disregard in poorer states compared to better off states. For West Virginia, the federal government would pick up (i.e., forego) 72.82% of the $200 pass-through under DRA policies ($146) for a family with no earnings. On the other hand, for Maryland, the federal government would pick up 50.00% or $100 of the $200 pass-through for a family with zero earnings. However, the relationship between state income and cost-sharing of the DRA pass-through and disregard is different when TANF picks up the cost. The higher the TANF benefit, the higher the cost to the state of adopting the DRA pass-through and disregard. Also, the lower the state's per-capita income, the higher the FMAP—and the lower the state share is to offset higher welfare costs that might result from the DRA pass-through and disregard policy. Table 6 illustrates the complexity of how the states and federal government would share the cost of the DRA pass-through and disregard. With regard to the custodial parent with no earnings, for the first four states shown, the increased pass-through and disregard would be paid for by a reduction in the federal share of child support collections, a reduction in the state share of child support collections, or a reduction in both the federal and state shares of child support collections. However, in Oklahoma, the implementation of a DRA pass-through and disregard policy would result in the hypothetical family with no earnings and child support income of $300 per month gaining $192 in extra income each month through the TANF program. Before DRA, the family kept the entire $300 of child support and was ineligible for TANF. Pursuant to DRA, the family would keep $200 per month in child support income and become eligible for $292 in TANF payments, for a total monthly income of $492. This additional income to the family would be paid for by the state with TANF dollars. In this report TANF benefit expenditures are considered a state cost. The other $100 in child support from the noncustodial parent would be divided between the federal government and the state (in accordance with the state's FMAP). Thus, the federal government's share of the child support collection would be $68 and the state's share would be $32. One way of interpreting this information would be to say that DRA would result in the state paying $292 in added TANF expenditures, which could be partially offset with the state's share of child support collections for a total state cost $260. Given that TANF is considered a state cost in this analysis, the federal government would not incur any cost; instead it would keep its $68 share of the child support collection. Another anomaly occurs in West Virginia. In West Virginia, the table shows the state saving $25 in TANF expenditures because the analysis assumes that West Virginia would eliminate its $25 incentive payment (which currently is added to the TANF benefit payment if the noncustodial parent pays any amount of child support) once the DRA pass-through and disregard policy takes effect. At half-time minimum wage earnings, a mother with two children in California and Maine would both receive $150 per month in additional income after implementation of a DRA pass-through and disregard provisions. The federal share of child support collections would be higher in Maine than in California partly because Maine has a higher FMAP (63.27% versus 50.00%) and partly because Maine has a $135 "gap" payment. In Illinois and Maryland the $200 pass-through and disregard policy together with the states' earnings disregard rules would enable a mother with two children to remain on the TANF rolls (at half-time earnings), which means that the state via the TANF program would pay the cost of providing the families with the additional monthly income. (See Table 6 .) It is also noteworthy that Maine is the only state in which a family working at the half-time minimum wage level benefits more than the family with no earnings. This is more consistent with public policy that seeks to encourage both work among welfare recipients and their cooperation in attaining child support. Although this situation reflects effective use of CSE resources, it is also a result of Maine's fill-the-gap policy. As mentioned earlier, Maine is one of only five states that have a fill-the-gap policy. At full-time state minimum wage earnings ($7.50 per hour), a mother with two children in California would receive $86 per month in additional income after implementation of a DRA pass-through and disregard policy. In California the $200 pass-through and disregard policy together with the state's earnings disregard rules would enable a mother with two children to remain on the TANF rolls (at full-time earnings), which means that the state via the TANF program would pay the cost of providing the family with the additional monthly income. Again, one interpretation of this information is that DRA would result in the state paying $186 in added TANF expenditures which could be partially offset with the state's share of child support collections for a total state cost of $136. Given that TANF is considered a state cost in this analysis, the federal government would not incur any cost, and it would keep its $50 share of the child support collection.(See Table 6 .) With respect to the CSE program, it is noteworthy that the interests and perspective of an individual family and the interests and perspective of the state CSE program are not always in sync. The interests of a family are usually entirely financial. It is in the best interest of a family to get the highest amount of income available to it; thus, the higher the child support pass-through and disregard amount, the more a family will potentially benefit. However, from a CSE program perspective, the more dollars that the program has to invest in CSE activities (e.g., parent location, paternity establishment, support order establishment, collection of child support payments), the better the program can serve its entire clientele. Thus, for many states the ability to retain child support collections outweighs the value of a pass-through and disregard policy, particularly since the pass-through and disregard would not benefit persons who never received cash TANF benefits (such persons represented 39% of the CSE caseload in FY2006). The simulations described in the previous section of this report show the direct impacts that DRA policies would have on family income and government budgets, if they were adopted by states. They do not capture what would happen if the DRA policies evoke changes in behavior, however, particularly in the willingness of noncustodial parents to pay the child support they owe. The "costs" of implementing DRA policies, in the form of reduced child support collections retained by the federal and state governments and higher TANF benefits, could potentially be offset by greater child support collections and quicker exits from TANF. Since its inception, the rationale for the child support pass-through and disregard policy has been that it would encourage custodial parents to cooperate with the CSE program and further, that it would encourage noncustodial parents to comply with their child support orders if they know that some of the payment would increase the amount of financial support for their children. Several ethnographic/focus group studies indicate that once they start paying child support, noncustodial parents want to see that their money actually helps their children; explanations that welfare benefits are in effect child support paid by taxpayers have not satisfied them. Moreover, child support analysts contend that the noncustodial parent's compliance with his or her child support order may also lead to the noncustodial parent becoming more involved in his or her child's life (e.g., providing emotional support, parental guidance, etc.). On the other hand, during the late 1980s and early 1990s, the general perception regarding the pass-through and disregard policy was that it was administratively burdensome and that it failed to improve custodial parent cooperation or noncustodial parent compliance. These negative perceptions were thought to outweigh the financial benefits to the family and in part led to the elimination of the mandatory $50 pass-through and disregard policy in 1996. It was also recognized that eliminating the pass-through and disregard allowed states to "recover" a larger portion of cash welfare payments. There is some evidence that governments' retention of child support payments affects noncustodial parents' attitudes toward child support. In a study of a program to provide services to low-income noncustodial parents who were behind on their child support ( Parents ' Fair Share) , noncustodial parents were asked whether certain situations constituted "good reasons for not paying child support." Almost one-third of the parents said that "the child support money goes to welfare or the state, not the children" was a good reason not to pay child support. However, this situation ranked below others that respondents more frequently said provided good reasons not to pay support; for example, that the noncustodial parent is unemployed, the child support order is too high, and there are disagreements over how the money is spent. The effectiveness of various child support pass-through and disregard policies was examined as part of welfare reform experiments conducted in the 1990s. These studies, however, focused on custodial parents' receipt of child support income rather than the noncustodial parents' payment of child support. A number of these evaluations (for example, the evaluation of Connecticut's Job First program) reported increased receipt of child support income. This could result from the direct effects of the pass-through and disregard policies as illustrated in this report. Higher reported child support income could also result from other welfare reform features that could have shortened welfare spells and reduced the amount of child support assigned to and retained by governments. The Wisconsin Child Support Demonstration Evaluation, based on an experimental design, provides the most direct evidence of whether larger child support pass-through and disregards change parental behavior. Under the Wisconsin program, all child support was passed-through and disregarded as long as the custodial parent remained eligible for cash assistance (had income below 115% of poverty). The full pass-through and disregard was compared with a $50 child support pass-through and disregard. The evaluation found that the full pass-through and disregard was associated with increases in paternity establishment. It also found that for some groups in some years, the full pass-through and disregard increased noncustodial parents' payment of child support. However, that last effect was not observed over the longer-term (i.e., six years of observations) for groups studied in the evaluation. A 2002 national non-experimental study found that the child support disregard had a small but positive and statistically significant effect on paternity establishment and the proportion of cases with collections. However, a 2005 study found little or no significant impact of the child support pass-through and disregard on the percentage of TANF cases with child support collections. In 2003, the average amount of child support owed by noncustodial parents to custodial parents with incomes below the poverty level (who had a legal child support order) was $3,713 per year or about $300 per month. But, not all of the parents who had custody of their children while the other parent lived elsewhere had child support orders. If paternity for a child has not been established or a child support obligation has not been legally established, the custodial parent is not entitled to child support payments. Some research suggests that a child support pass-through and disregard policy can help increase the number of paternities and child support orders established by increasing the willingness of custodial parents to cooperate with the Child Support Enforcement (CSE) agencies and by increasing the willingness of noncustodial parents to comply with their child support obligations. There are both advantages and disadvantages associated with a child support pass-through and disregard policy. Some of the advantages include the following: An increase in income available to families who receive Temporary Assistance for Needy Families (TANF) cash benefit payments. As illustrated in this report, child support can be a significant contribution to family income for the families that receive TANF payments. When combined with earnings, child support may lift some families out of poverty. Preparation for life without the regularity of a monthly public assistance grant. Because the child support pass-through and disregard are applied only when the noncustodial parent pays current monthly child support payments, the family may experience some of the ups-and-downs of irregular or partial child support payments before they leave welfare and thereby be better able to adjust to these "real life" situations when they leave the cash welfare program. Recognition by the custodial parent that the noncustodial parent is contributing to the financial support of his or her children. This may help many families reduce conflict over child support obligations. A pass-through of child support makes the connection between the noncustodial parents' resources and the needs of the child more direct. This may also increase child support payment and paternity establishment. Improvement in parent-child relationships. Some research has shown that parents who pay child support tend to be more involved in the lives of their children and to participate in decisions that affect them. Greater interaction with both parents has been found to foster more positive outcomes for the child. States can claim Maintenance of Effort (MOE) credit for child support that is passed through to families receiving TANF cash assistance and disregarded in determining their eligibility and the amount of their benefit. This helps states meet their MOE requirements in their TANF programs. Administrative simplification. A pass-through and disregard policy could increase the transparency of the CSE system by making it easier for customers, child support personnel, and public officials to understand the CSE program. Some of the disadvantages of a child support pass-through and disregard policy include the following: The revenue a state would forego (i.e., state share of child support collections made on behalf of TANF families) that otherwise could be used to fund CSE activities. The costs of making changes to the state's automated system to reflect pass-through and disregard policy. There is some disagreement over the potential size of these costs. The revenue the federal government would forego by having to share with the states the costs of pass-through and disregard policies. The federal government would thereby receive a reduced federal share of child support collections in the federal Treasury. Additionally, some would say that child support disregard policies raise equity concerns. They contend that pass-through and disregard policies can result in different treatment of families with the same basic financial position in determining TANF eligibility and benefits. For example, consider a family with $200 in unearned income: one with $200 in child support of which all is disregarded, and another receiving social security survivor benefits of $200, none of which is disregarded. The family with disregarded child support would receive a higher total income, as it could keep the $200 of child support without a reduction in TANF benefits, while the full $200 in social security survivor benefits would (in most states) reduce TANF benefits dollar for dollar. Others contend that such concerns are not justified because child support is income that generally is earned by the noncustodial parent and that such income should be treated differently than income from public benefits. It also is argued that the premise of the pass-through and disregard policy—promoting cooperation by custodial parents—may not be as important today as it was in the past. Although cash welfare families have always been required to cooperate in establishing paternity or obtaining support payments in order to receive AFDC/TANF, the 1996 welfare reform law instituted a hefty penalty for noncooperation. If it is determined that a custodial parent is not cooperating and the individual does not qualify for any good cause or other exception, then the state must reduce the family's TANF benefit by at least 25% and may remove the family from the TANF program. Also some analysts say that the increasing co-location of CSE offices with welfare offices, together with outreach efforts directed at educating families on the benefits of paternity and child support order establishment, enhance cooperation policies. Thus, these analysts argue that the state no longer has to forego its share of child support collections to garner cooperation of custodial parents in CSE program functions. Other analysts point out that a pass-through and disregard policy may be more important as a tool for encouraging cooperation from the noncustodial parent, which could lead to lower enforcement costs. The analysis in this report of six selected states found that implementation of a Deficit Reduction Act (DRA) pass-through and disregard policy would financially benefit all 3-person families in which the mother had no earnings. For those with earnings, mothers in relatively high TANF benefit states would be more likely to experience an increase in monthly income than mothers in low TANF benefit states. Moreover, the analysis indicates that a mother with two children and no earnings would benefit more in a state that currently does not have a child support pass-through and disregard policy but that adopts such a policy under the new DRA rules. Many of the states currently without a pass-through and disregard policy are high FMAP states, which means that the money that they give back to the federal government as the federal share of child support payments is higher than in other states. Pursuant to DRA, the federal government would waive its share of child support collections. Thus, many analysts and family advocates argue that it may be to the states' advantage to pass these dollars to the TANF families instead of to the federal government. It has been suggested that states that currently have a child support pass-through and disregard policy could increase the amount of the pass-through and disregard to $200 per month and use what would have been paid out of state funds as the federal share of child support collections to help fund the higher disregard amount or to provide funding for more CSE activities. Under federal law, the federal government is required to give states a CSE incentive payment to reward the performance of effective state CSE programs. Federal law stipulates that the CSE incentive payment to states (in the aggregate) cannot exceed $471 million in FY2007. The incentive payment to an individual state is based on five performance measures related to the establishment of paternity and child support orders, collection of current and past-due child support payments, and the cost-effectiveness of the state's program; and its relative ranking compared to the other states. It has been suggested that for all states adoption of the new DRA pass-through and disregard policy would be a way to increase CSE funding via higher incentive payments. According to some advocacy groups: Adopting a generous pass-through and disregard policy also could increase the amount of federal child support performance incentive payments a state receives. These incentive payments are based on performance measures such as a state's paternity establishment and child support collection rates. If, as research has found, these rates improve as a result of expanded pass-through and disregard policies, the state could see its incentive funding increase. It also has been suggested that when all DRA rules are fully implemented, CSE federal funding will be significantly reduced. Some point out that the matching of incentive payments will end on September 30, 2007 and if a state gives its share of child support collections to the TANF family that source of funding (i.e., state share of child support collections) for the CSE program will also end. They remark that while TANF families may be adversely affected by a state not having a child support pass-through and disregard policy, a better funded CSE program is more likely to benefit the majority (85%) of the CSE caseload which consists of former TANF families and families who have never been on TANF. If some of the literature and research is true, a child support pass-through and disregard policy could potentially result in more child support payments. Such child support payments could reduce government spending by providing families with incomes sufficient to make them ineligible for programs such as TANF, food stamps, and Medicaid. This concept is called welfare "cost avoidance"—when noncustodial parents meet their financial obligations to their children, the U.S. taxpayer is relieved of that responsibility. Many child support advocates contend that the financial impact of welfare cost avoidance should not be ignored in discussions of the costs and benefits of CSE endeavors. The CSE FY2005-FY2009 Strategic Plan proclaims that "child support is no longer primarily a welfare reimbursement, revenue-producing device for the federal and state governments; it is a family-first program, intended to ensure families' self-sufficiency by making child support a more reliable source of income." It appears that a state's implementation of a child support pass-through and disregard policy may aid in that endeavor. According to a 2005 report: Recent policy proposals that provide for a more generous pass-through and disregard policy, and extend "family first" distribution rules to child support collections made through the FTRO [federal income tax refund offset program], would increase family income and self-sufficiency and reduce poverty, although government costs would increase. Most state CSE programs are currently in the position (or most likely will be in the near future) of having to compete with all other state interests in obtaining funds from the general state treasury or county treasuries. Thus, regardless of the advantages of adopting a child support pass-through and disregard policy, many states may be facing a situation in which CSE resources are very limited and thereby will be unable to pay the costs associated with adopting a pass-through and disregard policy. Appendix A. Impact of Child Support Pass-Through and Disregard Policy on Families with No Earnings or Specified Earnings, Analysis of Selected States There are significant differences among states in terms of their TANF cash benefit payments, and how they treat earnings, work expenses, and child support income. All of these factors must be taken into account in order to calculate a family's cash welfare benefit and total income. This appendix provides more detail on the impact of Deficit Reduction Act (DRA, P.L. 109-171 ) provisions on families, depending on their income status and the amount of child support paid on their behalf, in each of six states: California, Illinois, Maine, Maryland, Oklahoma, and West Virginia. The analysis is limited to the following income sources: TANF cash benefit payments, earnings, and child support payments from noncustodial parents. In each of the six states the situation of a mother with two children and no earnings, part-time minimum wage earnings, and full-time minimum wage earnings is examined. With regard to the minimum wage, this analysis uses the higher of $7.25 per hour (the new fully phased-in federal minimum wage) or the state minimum wage. Monthly earnings are calculated by multiplying the hourly wage rate by 8 hours per day multiplied by five days per week and multiplied by a factor of 4.33. For purposes of TANF eligibility and benefit computations, the 4.33 factor is not used in Maryland, which is required by its TANF manual to use a factor of 4.00 to determine the monthly amount or in West Virginia, which is required by its TANF manual to use a factor of 4.30 to determine the monthly amount. The analysis in this appendix compares the total monthly income of the mother with two children under the state's current policy regarding treatment of earnings and child support pass-through and disregard, with DRA policy. The analysis assumes that the state would opt to pass-through and disregard up to $200 per month of child support payments with the federal government sharing in the cost. Also, the analysis only examines child support payments between $0 and $500 per month (the tables show this range in $100 dollar increments). California California currently provides a $50 child support pass-through and disregard to TANF recipients who receive at least $50 per month in child support payments from noncustodial parents. The maximum monthly cash TANF benefit for a 3-person family in California is $723. In determining TANF benefits, $225 plus 50% of remaining gross monthly earnings is not counted (i.e., this amount is disregarded). Although this analysis assumes that California will adopt the new pass-through and disregard policy authorized under DRA, whether or not California will do so in reality is not known at this time. There have been initiatives in California to eliminate the existing $50 child support pass-through and disregard policy. Opponents of the current policy contend that it diverts county resources from basic CSE activities. Zero Earnings In California, a mother with two children and no earnings is eligible for the maximum TANF benefit of $723 per month until the child support paid by the noncustodial parent exceeds the monthly TANF maximum. If the noncustodial parent pays at least $50 per month in child support, the family receives a $50 child support pass-through and disregard payment. Thereby, total income to the family amounts to $773 per month. (See Table A -1 .) If the noncustodial parent pays child support in the amount of $773 or more per month, the family stops receiving TANF benefits and instead receives only the child support paid by the noncustodial parent. (This analysis only examines the impact of child support payments of up to $500 per month.) Assuming that California adopts the new federally matched pass-through and disregard policy (pursuant to the Deficit Reduction Act ), a mother with two and no earnings would receive total monthly income of $923 ($723 from TANF and $200 from the child support pass-through and disregard) if the noncustodial parent paid at least $200 per month in child support. Half-Time Earnings at State Minimum Wage Effective January 1, 2007, the minimum wage in California is $7.50 per hour. A person working for 20 hours per week earns $649.50 per month (i.e., $650—dollar figures are rounded in all of the tables in this report). As noted above, in California, $225 plus 50% of remaining earnings is not counted (i.e., disregarded from gross earnings) in determining a family's TANF benefit. Thus, a mother with two children who works half-time at the California state minimum wage level is still eligible for a TANF cash benefit payment of $511 per month. If the noncustodial parent pays at least $50 per month in child support, the family also receives a $50 child support pass-through and disregard payment. Thereby, total monthly income to the family amounts to $1,211 ($511 from TANF, $50 from the child support pass-through and disregard payment, and $650 from earnings). Assuming that California adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings would receive total monthly income of $1,361 ($511 from TANF, $200 from the child support pass-through and disregard if the noncustodial parent paid at least $200 per month in child support, and $650 from earnings). Full-Time Earnings at State Minimum Wage A person working for 40 hours per week at the California minimum wage of $7.50 per hour earns $1,299 per month. A mother with two children who works full-time at the California state minimum wage is eligible for a TANF cash benefit payment of $186 per month if the noncustodial parent pays less than $236 per month in child support. The total monthly income for this family is $1,535 ($186 from TANF, $50 from child support pass-through and disregard if the noncustodial parent pays at least $50 per month in child support, and $1,299 from earnings). If, however, the noncustodial parent pays $300 per month in child support, the family's total monthly income only consists of earnings and the child support income (i.e., $1,599—$300 from child support and $1,299 from earnings). Assuming that California adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would be eligible for a TANF cash benefit payment of $186 per month if the noncustodial parent paid less than $386 per month in child support. This mother with two children would receive a total monthly income of $1,685 ($186 from TANF, $200 from the child support pass-through and disregard if the noncustodial parent paid at least $200 per month in child support and less than $386, and $1,299 from earnings). If, however, the noncustodial parent paid $400 per month in child support, the family's total monthly income would only consist of earnings and the child support income (i.e., $1,699: $400 from child support and $1,299 from earnings). Illinois Illinois currently provides a $50 child support pass-through and disregard to TANF recipients who receive at least $50 per month in child support payments from noncustodial parents. The maximum monthly cash TANF benefit for a 3-person family in Illinois is $396 per month. In determining TANF benefits, 66.67% of gross monthly earnings is not counted (i.e., is disregarded). Zero Earnings In Illinois, a mother with two children and no earnings is eligible for the maximum TANF benefit of $396 per month until the countable child support paid by the noncustodial parent exceeds the TANF maximum. If the noncustodial parent pays at least $50 per month in child support, the family receives a $50 child support pass-through and disregard payment. Thereby, total income to the family amounts to $446 per month. (See Table A -2 .) If the noncustodial parent pays child support in the amount of $446 or more per month, the family stops receiving TANF benefits and instead receives only the child support paid by the noncustodial parent. This analysis only examines the impact of child support payments of up to $500 per month. At the $500 level, the family is not eligible for TANF payments in Illinois and its total monthly income consists of the $500 in child support payments. Assuming that Illinois adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive total monthly income of $596 ($396 from TANF and $200 from the child support pass-through and disregard) if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid child support in the amount of $596 or more per month, the family would not be eligible for TANF benefits and would instead receive only the child support payment. As shown in the table, if the noncustodial parent paid $500 in child support, the family would receive total monthly income of $596 ($396 from TANF and $200 from the child support pass-through and disregard). Half-Time Earnings at State Minimum Wage A person working for 20 hours per week at the Illinois state minimum wage ($7.50 per hour, effective July 1, 2007) earns $650 per month. In Illinois, two-thirds of gross earnings is not counted (i.e., disregarded from gross earnings) in determining a family's TANF benefit. Thus, a mother who works half-time at the state minimum wage and has two children is eligible for a TANF cash benefit payment of $180 per month until the noncustodial parent pays $230 per month or more in child support; at that point the family no longer receives a TANF cash benefit payment. If the noncustodial parent pays at least $50 but less than $230 per month in child support, the family also receives a $50 child support pass-through and disregard payment. Total monthly income to such a family amounts to $880 ($180 from TANF, $50 from the child support pass-through and disregard if the noncustodial parent pays at least $50 in child support, and $650 from earnings). If the family receives $300 in child support payments, the family has total monthly income amounting to $950 ($300 from child support and $650 from earnings). Assuming that Illinois adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings would receive total monthly income of $1,030 ($180 from TANF, $200 from the child support pass-through and disregard if the noncustodial parent paid at least $200 per month in child support but not more than $380 per month, and $650 from earnings). If the noncustodial parent paid more than $380 per month in child support, the family would not be eligible for TANF benefits and would instead receive only the mother's earnings and the child support paid. As shown in the table, if the family received $400 in child support payments they would have a total monthly income of $1,050 ($400 from child support and $650 from earnings). Full-Time Earnings at State Minimum Wage A person working for 40 hours per week at the Illinois state minimum wage of $7.50 per hour (effective July 1, 2007) earns $1,299 per month. A mother with two children who works full-time at the new state minimum wage is not be eligible for a TANF cash benefit payment in Illinois. Thus, the family's total monthly income consists of the child support payment from the noncustodial parent and the mother's wages. As shown in the table, if the family receives $400 per month in child support its total monthly income amounts to $1,699 ($400 from child support and $1,299 from earnings). Assuming that Illinois adopts the new federally matched pass-through and disregard policy, a mother with full-time earnings and two children would not be eligible for TANF benefits. The family's total monthly income would still consist of child support payments received from the noncustodial parent and the mother's earnings. For example, as seen in the table, a family who receives $400 in child support would have total monthly income of $1,699 ($400 from child support and $1,299 from earnings). Similarly, a family who receives $500 in child support would have total monthly income of $1,799 ($500 from child support and $1,299 from earnings). Thus, for a mother who works full-time and has two children, total income under all scenarios is exactly the same pre- and post-DRA in Illinois. Maine Maine currently provides a $50 child support pass-through and disregard and a "gap" payment to TANF recipients who receive at least $50 in monthly child support payments from noncustodial parents. The maximum monthly cash TANF benefit payment for a 3-person family in Maine is $535 per month. In determining TANF benefits, $108 plus 50% of remaining gross monthly earnings is not counted (i.e., is disregarded). In Maine, a family can use earnings or child support income to fill the gap between what the state says a family of a certain size needs to subsist in the state (the state's TANF "standard of need") and the maximum TANF payment for a family of the given size. Maine's standard of need for a 3-person family is $670 per month and the payment maximum for a 3-person family is $535. Thus, the "gap" is $135 ($670-$535). This means that up to $135 per month in earnings or child support income is disregarded in determining the family's TANF benefit (in addition to the $50 pass-through and disregard). Zero Earnings In Maine, a mother with two children and no earnings is eligible for the maximum TANF benefit of $535 per month until the countable child support paid by the noncustodial parent exceeds the monthly TANF maximum. If the noncustodial parent pays at least $50 per month in child support, the family receives a $50 child support pass-through and disregard payment. If the noncustodial parent pays $200 in child support, the family is able to take full advantage of the disregard and gap payment provision in that $185 would go to the family without affecting the family's TANF benefit (i.e., $50 from the pass-through and disregard and $135 from the fill-the-gap policy). Thereby, total income to the family amounts to $720 per month ($535 from TANF, $50 from the pass-through and disregard, and $135 from "gap" payment). (See Table A -3 .) If the custodial parent's countable income is greater than the state's TANF need standard, the family is no longer eligible for TANF benefits. For a Maine mother with two children, this point occurs if the noncustodial parent pays child support in the amount of $855 or more per month. At that point, the family's total monthly income consists entirely of the child support paid by the noncustodial parent. (This analysis only examines the impact of child support payments of up to $500 per month.) Assuming that Maine adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive total monthly income of $735 ($535 from TANF and $200 from the child support pass-through and disregard if the noncustodial parent paid at least $200 per month in child support). The family would be able to take full advantage of the pass-through and disregard and gap payment if the noncustodial parent paid at least $335 per month in child support. A family on whose behalf $400 in child support is paid would have a total monthly income of $870 ($535 from TANF, $200 from child support, and $135 from the gap payment). Half-Time Earnings at Federal Minimum Wage The Maine state minimum wage is lower than the new fully-phased in federal minimum wage; therefore, this analysis uses the new fully phased-in federal minimum wage ($7.25 per hour). A person working for 20 hours per week at the new federal minimum wage earns $628 per month. As noted above, in Maine, $108 plus 50% of remaining earnings is not counted (i.e., is disregarded from gross earnings) in determining a family's TANF benefit. Thus, a mother with two children who works half-time at the federal minimum wage is eligible for a TANF cash benefit payment of $410 per month until the noncustodial parent pays $460 per month or more in child support; at that point the family no longer receives a TANF cash benefit payment. In Maine, if the custodial parent has earnings, the "fill-the-gap" policy is achieved by subtracting countable income from the state's need standard rather the state's maximum payment amount. If the noncustodial parent pays at least $50 but less than $460 per month in child support, total monthly income to such a family amounts to $1,088 ($410 from TANF—which includes the embedded $135 gap payment, $50 from the child support pass-through and disregard, and $628 from earnings). If the family receives $500 in child support payments, the family's total monthly income amounts to $1,128 ($500 from child support and $628 from earnings). Assuming that Maine adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings at the federal minimum wage would be eligible for a TANF cash benefit payment of $410 per month until the noncustodial parent paid $610 per month or more in child support; at that point the family would no longer receive a TANF cash benefit payment. If the noncustodial parent paid at least $200 but less than $610 per month in child support, total monthly income to such a family would amount to $1,238 ($410 from TANF—including the embedded $135 gap payment, $200 from the child support pass-through and disregard, and $628 from earnings). Full-Time Earnings at Federal Minimum Wage A person working for 40 hours per week at the new fully-phased in federal minimum wage earns $1,256 per month. A mother with two children who works full-time at the new federal minimum wage is not eligible for a TANF cash benefit payment in Maine, under either current state rules or if the state adopts the DRA pass-through and disregard policy. Thus, the family's total monthly income consists of the child support payment from the noncustodial parent and the mother's wages. As shown in the table, if the family receives $400 per month in child support its total monthly income amounts to $1,656 ($400 from child support and $1,256 from earnings). The results pre- and post-DRA are the same in all scenarios for a mother with two children who works full-time in Maine. Maryland Maryland currently does not provide a child support pass-through and disregard. The maximum monthly TANF benefit for a 3-person family in Maryland is $549. In determining TANF benefits, 40% of gross earnings is not counted (i.e., is disregarded). Zero Earnings In Maryland, a mother with two children and no earnings is eligible for the maximum TANF benefit until the child support paid by the noncustodial parent exceeds the monthly TANF maximum. That point occurs at $549 per month. If the noncustodial parent pays child support in the amount of $549 a month or more, the family stops receiving TANF benefits and instead receives only the child support paid by the noncustodial parent. (The tables in this analysis only examine child support payments of up to $500 per month.) Assuming that Maryland adopts a pass-through and disregard policy when the provisions of the Deficit Reduction Act take effect, a mother with two children and no earnings would receive both child support paid by the noncustodial parent and maximum TANF benefits up to a monthly total of $749 ($549 from TANF and $200 from the child support pass-through and disregard) if the noncustodial parent paid at least $200 per month in child support. (See Table A -4 .) Half-Time Earnings at Federal Minimum Wage The Maryland state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new federal minimum wage ($7.25 per hour). A person working for 20 hours per week at the federal minimum wage earns $628 per month. In Maryland, 40% of gross earnings is not counted (i.e., is disregarded from gross earnings) in determining a family's TANF benefit. Thus, a mother with two children who works half-time at the federal minimum wage is eligible for a TANF cash benefit payment of $201 per month until the noncustodial parent pays $191 per month or more in child support; at that point the family no longer receives a TANF cash benefit payment. Table A -4 shows that total monthly income to a mother with two children and half-time earnings amounts to $829 if child support payments from the noncustodial parent are less than $191 per month ($201 from TANF and $628 from earnings). If child support income exceeds $191 per month, the family's total monthly income consists of the child support payment plus earnings. For instance, if the noncustodial parent pays $300 per month in child support, the family's total monthly income amounts to $928 ($300 from child support and $628 from earnings). Assuming that Maryland adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings at the federal minimum wage would be eligible for a TANF cash benefit payment of $201 per month until the noncustodial parent paid $391 per month or more in child support; at that point the family would no longer receive a TANF cash benefit payment. If the noncustodial parent paid at least $200 but less than $391 per month in child support, the family also would receive a $200 child support pass-through and disregard payment. The family's total monthly income would amount to $1,029 ($201 from TANF, $200 from child support, and $628 from earnings). Table A -4 shows that if the noncustodial parent pays $400 per month or more in child support, the family's monthly income would consist of the entire amount of the child support payment plus earnings. Full-Time Earnings at Federal Minimum Wage A Maryland mother with two children who works full-time at the new fully-phased in federal minimum wage ($7.25 per hour) is not eligible for a TANF cash benefit payment, under either current state policy or if the state adopted the new DRA pass-through and disregard policy. Instead, the family receives monthly earnings plus the child support payment. Oklahoma Oklahoma currently does not provide a child support pass-through and disregard. The maximum monthly TANF benefit for a 3-person family in Oklahoma is $292. In determining TANF benefits, $240 plus 50% of gross earnings is not counted (i.e., is disregarded) Zero Earnings In Oklahoma, a mother with two children and no earnings is eligible for the maximum cash TANF benefit of $292 per month until the child support paid by the noncustodial parent exceeds this maximum benefit level. If the noncustodial parent pays child support in the amount of $292 per month or more, the family stops receiving TANF cash benefits and instead receives the amount of child support paid by the noncustodial parent. Table A -5 shows that when the noncustodial parent pays $300 or more in child support, the family receives only the child support paid by the noncustodial parent. For a mother with two children and no earnings, this amount represents the total monthly income of the family. Assuming that Oklahoma adopts a pass-through and disregard policy when the provisions of the Deficit Reduction Act take effect, a mother with two children and no earnings would receive both child support paid by the noncustodial parent and maximum TANF benefits up to a monthly total of $492 ($292 from TANF and $200 from the child support pass-through and disregard if the noncustodial parent paid $200 in child support). Once the family reached the maximum child support disregard level of $200 per month, the family would stay at a monthly income of $492 until it was no longer eligible for TANF. In this example, the family would no longer be eligible for TANF benefits when the noncustodial parent paid $492 or more in monthly child support. At that point, the family's total income would consist entirely of child support payments. Half-Time Earnings at Federal Minimum Wage The Oklahoma state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new federal minimum wage ($7.25 per hour). A person working for 20 hours per week at the federal minimum wage earns $628 per month. In Oklahoma, $240 plus 50% of remaining earnings is not counted (i.e., is disregarded from gross earnings) in determining a family's TANF benefit. Thus, a mother with two children who works half-time at the federal minimum wage is eligible for a TANF cash benefit payment of $98 per month until the noncustodial parent pays $98 per month or more in child support; at that point the family no longer receives a TANF cash benefit payment. Table A -5 shows that total monthly income to a mother with two children and half-time earnings amounts to $726 if child support payments from the noncustodial parent are less than $98 per month ($98 from TANF and $628 from earnings). If the noncustodial parent pays $300 in child support, the family's total monthly income amounts to $928 ($300 from child support and $628 from earnings). If child support income exceeds $98 per month, the family's total monthly income consists of the child support payment plus earnings. Assuming that Oklahoma adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings at the federal minimum wage would be eligible for a TANF cash benefit payment of $98 per month until the noncustodial parent paid $298 per month or more in child support; at that point the family would no longer receive a TANF cash benefit payment. If the noncustodial parent paid at least $200 but less than $298 per month in child support, the family also would receive a $200 child support pass-through and disregard payment. The family's total monthly income would amount to $926 ($98 from TANF, $200 from child support, and $628 from earnings). Table A -5 shows that if the noncustodial parent pays $300 per month or more in child support, the family's monthly income would consist of the entire amount of the child support payment plus earnings. Full-Time Earnings at Federal Minimum Wage An Oklahoma mother with two children who works full-time at the new federal minimum wage is not eligible for a TANF cash benefit payment, under either current state rules or the new child support pass-through and disregard policy allowed by DRA. Instead, the family receives monthly earnings plus the child support payment. West Virginia West Virginia currently does not provide a child support pass-through and disregard. Instead, it provides a $25 incentive payment that is added to the TANF payment. The maximum monthly cash TANF benefit for a 3-person family in West Virginia is $340. In determining TANF benefits, 40% of gross earnings is not counted (i.e., is disregarded). Zero Earnings In West Virginia, a mother with two children and no earnings is eligible for the maximum TANF benefit equal to $340 per month plus a child support incentive payment of $25 per month, if the noncustodial parent pays some (any amount) child support. If the noncustodial parent pays $390 or more in child support, the family is not eligible for a TANF payment. Instead, monthly income for the family consists entirely of child support income paid by the noncustodial parent. Assuming that West Virginia adopts a pass-through and disregard policy when the provisions of the Deficit Reduction Act take effect, a mother with two children and no earnings would receive both child support income and maximum TANF benefits up to a monthly total of $540 ($340 from TANF and $200 from child support pass-through and disregard income if the noncustodial parent paid at least $200 in child support payments). Once the family received the maximum child support disregard income of $200 per month, they would stay at a monthly income level of $540 until they were no longer eligible for a cash TANF payment. At that point, the family's total monthly income would consist entirely of child support payments. (See Table A -6 .) Half-Time Earnings at Federal Minimum Wage The West Virginia state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new federal minimum wage ($7.25 per hour). A West Virginia mother with two children who works half-time at the federal minimum wage is not eligible for a TANF cash benefit payment , under either current state rules or the pass-through and disregard policy allowed by DRA. Instead, the family receives monthly earnings plus the child support payment. Full-Time Earnings at Federal Minimum Wage A West Virginia mother with two children who works full-time at the new fully-phased in federal minimum wage also is not eligible for a TANF cash benefit payment under either current or DRA policy. Instead, the family receives monthly earnings plus the child support payment. Appendix B. Impact of DRA Policy on Federal and State Share of Child Support Collections, Analysis of Selected States To determine the distribution of child support collections among families, the state, and the federal government, states must adhere to state and federal child support assignment and distribution rules and calculate the federal and state share of child support collections based on the state's federal medical assistance percentage (FMAP). This appendix discusses the impact of Deficit Reduction Act (DRA) policy on the distribution of child support collections among families, the state, and the federal government, based on family income status, in six states: California, Illinois, Maine, Maryland, Oklahoma, and West Virginia. The impact of DRA policy is based on the assumption that each of the states would opt to pass-through and disregard up to $200 per month of child support payments made by noncustodial parents with the federal government sharing in the cost. In each of the six states the situation of a mother with two children and no earnings, with part-time minimum wage earnings, and with full-time minimum wage earnings is examined. Also, the analysis only examines child support payments between $0 and $500 per month (the tables show this range in $100 dollar increments). Assignment and Distribution Rules for TANF Families Child support collections are either distributed to families or retained by the state and federal governments as reimbursement for welfare costs. Current child support payments collected on behalf of nonwelfare families go to the family (via the state Disbursement Unit). Current child support payments collected on behalf of Temporary Assistance for Needy Families (TANF) families are split between the federal and state governments, and at state option some, all, or none of the state's share of the child support collections can be paid to TANF families. Under P.L. 104-193 , the 1996 welfare reform law, the rules governing how child support collections are distributed changed substantially. Pursuant to P.L. 109-171 , effective October 1, 2008, at state option, the child support distribution rules will change again. Since the Child Support Enforcement (CSE) program's inception, the rules determining who actually gets the child support arrearage payments have been complex. It is helpful to think of the rules in two categories. First, there are rules in both federal and state law that stipulate who has a legal claim on the payments owed by the noncustodial parent. These are called assignment rules. Second, there are rules that determine the order in which child support collections are paid in accordance with the assignment rules. These are called distribution rules. The order of payment of the child support collection is very important because in many cases child support obligations are never fully paid. Current TANF Recipients As a condition of TANF eligibility, when a family applies for TANF, the custodial parent must assign to the state the right to collect both current child support payments and past-due child support obligations that accrue while the family is on the TANF rolls (these are called permanently-assigned arrearages). The assignment requirement for TANF applicants also includes arrearage payments that accumulated before the family enrolled in TANF (these are called pre-assistance arrearages). While the family receives TANF benefits, the state is permitted to retain any current support and any assigned arrearages it collects up to the cumulative amount of TANF benefits that have been paid to the family. P.L. 104-193 repealed the $50 required pass-through and gave states the choice to decide how much, if any, of the state share (some, all, none) of child support payments collected on behalf of TANF families to send the family. States also decide whether to treat child support payments as income to the family. P.L. 104-193 required states to pay the federal government the federal government's share of child support payments collected on behalf of TANF families. P.L. 109-171 stipulates that the assignment covers child support that accrues only during the period that the family receives TANF. Thus, child support owed before a family enrolls in TANF and after the family leaves TANF belongs to the family, and child support owed during the time the family is on TANF belongs to the state and federal governments. This provision takes effect on October 1, 2009, or October 1, 2008 at state option. For families who receive TANF cash benefit payments, P.L. 109-171 requires the federal government to waive its share of the child support collections passed through to TANF families by the state and disregarded by the state—up to an amount equal to $100 per month in the case of a family with one child, and up to $200 per month in the case of a family with two or more children. This provision takes effect on October 1, 2008. Federal Medical Assistance Percentage (FMAP) A key component in determining the federal and state share of child support collected on behalf of TANF families is the federal medical assistance percentage or FMAP. Under old AFDC law, the rate at which states reimbursed the federal government for child support payments collected on behalf of cash welfare recipients was the federal matching rate (i.e., the federal medical assistance percentage or FMAP or "Medicaid matching rate") for the AFDC program. The FMAP offered federal matching dollars for all AFDC benefits payments, no matter how high they were in the aggregate or per recipient. The federal share was determined by applying the FMAP to the total amount spent by a state for AFDC benefits. Under the FMAP, the federal funding share of AFDC payments was higher for states with low per capita incomes, and lower for states with high per capita incomes. In other words, the FMAP varied inversely with state per capita income (i.e., poor states have a high federal matching rate; wealthy states have a lower federal matching rate). In a state that had a 50% matching rate, the federal government was reimbursed $50 for each $100 collected in child support on behalf of an AFDC family, while in a state that had a 70% federal matching rate, the federal government was reimbursed $70 for each $100 collected. In the first example, the state kept $50, and in the second example, the state kept $30. Thus, states with a larger federal medical assistance matching rate kept a smaller portion of the child support collections. The match ranged from a minimum of 50% to a statutory maximum of 83%. (Although AFDC was replaced by the TANF block grant under the welfare reform law of 1996, the same matching rate procedure is still used.) The FMAP currently is used to determine the amount of federal matching for the Medicaid program, TANF Contingency Funds, the federal share of CSE collections, Child Care Mandatory funding and Matching Funds of the Child Care and Development Fund, Title IV-E Foster Care Maintenance payments, and Adoption Assistance payments. Sections 1905(b) and 1101(a)(8)(B) of the Social Security Act require the HHS Secretary to publish the Federal Medical Assistance Percentages each year. The Secretary is to calculate the percentages, using formulas in Sections 1905(b) and 1101(a)(8)(B) of the Social Security Act, from the Department of Commerce's statistics of average income per person in each state and for the nation as a whole. Note: This report focuses on current child support payments, thus the tables only show the federal and state share of child support collections for families who are still receiving TANF cash benefit payments. They do not show the federal and state share of child support arearages (past-due child support that is owed) collected on behalf of former TANF families. California California has a FMAP of 50%, which means that for every $1 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $0.50. Table B -1 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows this data for custodial parents with zero earnings, half-time earnings at the state minimum wage, and full-time earnings at the state minimum wage ($7.50 per hour). Zero Earnings In California, a mother with two children and no earnings is eligible for the maximum TANF cash benefit until the countable child support paid by the noncustodial parent exceeds the maximum cash benefit, which currently is $723 per month. As shown in Table B -1 , if the noncustodial parent pays $100 per month in child support, the California family receives a $50 child support pass-through and disregard payment. Moreover, the state is required to pay the federal government $50 (50% of $100), and there is nothing left for the state to keep. If the noncustodial parent pays $500 per month in child support, the California family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $250 (50% of $500) and the state keeps $200 ($500-$50-$250). Assuming that California adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the California family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $300 per month in child support, the California family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $500 per month in child support, the California family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $150 (50% of [$500-$200]) and the state would keep $150 ($500-$200-$150). Half-Time Earnings at State Minimum Wage A mother with two children who works half-time at the California state minimum wage level ($7.50 per hour) is still eligible for a TANF cash benefit payment of $510.75 per month. As long as the family remains eligible for TANF, the distribution of child support among the family, the federal government, and the state does not change because of earnings. Therefore, the distribution under current rules is the same as that for a family with zero earnings. Thereby, if the noncustodial parent pays $300 per month in child support, the California family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $150 (50% of $300) and the state keeps $100 ($300-$50-$150). If the noncustodial parent pays $500 per month in child support, the California family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $250 (50% of $500) and the state keeps $200 ($500-$50-$250). Assuming that California adopts the new federally matched pass-through and disregard policy, the distribution of child support among the family, the federal government, and the state would not change based on the earnings of the custodial parent as long as the family received TANF cash benefits. This means that if the noncustodial parent paid $300 per month in child support, the California family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $500 per month in child support, the California family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $150 (50% of [$500-$200]) and the state would keep $150 ($500-$200-$150). Full-Time Earnings at State Minimum Wage A California mother with two children who works full-time at the California state minimum wage is eligible for a TANF cash benefit payment of $186 per month if the noncustodial parent pays less than $236 per month in child support. As long as the family remains eligible for TANF, the distribution of child support among the family, the federal government, and the state does not change because of earnings. Therefore, the distribution under current rules is the same as that of a family with zero earnings or half-time earnings. Thereby, if the noncustodial parent pays $200 per month in child support, the California family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $100 (50% of $200) and the state keeps $50 ($200-$50-$100). If the noncustodial parent pays $300 per month in child support, the California family no longer receives a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire $300 child support payment with no reimbursement to the state or federal government. Assuming that California adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would receive TANF cash benefits only if child support from the noncustodial parent was less than or equal to $386 per month. The distribution of child support among the family, the federal government, and the state would not change based on the earnings of the custodial parent as long as the family received TANF cash benefits. This means that if the noncustodial parent paid $300 per month in child support, the California family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $400 per month in child support, the California family would no longer receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire $400 child support payment with no reimbursement to the state or federal government. Illinois Illinois has a FMAP of 50%, which means that for every $1 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $0.50. Table B -2 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows these data for custodial parents with zero earnings, half-time earnings at the minimum wage, and full-time earnings at the minimum wage. Effective July 1, 2007, the Illinois state minimum wage is higher than the new fully phased-in federal minimum wage; therefore, this analysis uses the state minimum wage of $7.50 per hour. Zero Earnings In Illinois, a mother with two children and no earnings is eligible for the maximum TANF benefit until the countable child support paid by the noncustodial parent exceeds the maximum cash benefit, which currently is $396 per month. As shown in the table, if the noncustodial parent pays $100 per month in child support, the Illinois family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $50 (50% of $100), and there is nothing left for the state to keep. If the noncustodial parent pays $400 per month in child support, the Illinois family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $200 (50% of $400) and the state keeps $150 ($400-$50-$200). Assuming that Illinois adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the Illinois family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $300 per month in child support, the Illinois family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $500 per month in child support, the Illinois family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $150 (50% of [$500-$200]) and the state would keep $150 ($500-$200-$150). Half-Time Earnings at State Minimum Wage A mother with two children who works half-time at the Illinois state minimum wage still is eligible for a TANF cash benefit payment of $180 per month if countable child support payments do not exceed $230 per month. As long as the family remains eligible for TANF, the distribution of child support among the family, the federal government, and the state does not change because of earnings. Therefore, the distribution under current rules is the same as that of a family with zero earnings. Thus, if the noncustodial parent pays $200 per month in child support, the Illinois family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $100 (50% of $200) and the state keeps $50 ($200-$50-$100). If the noncustodial parent pays $300 per month in child support, the Illinois family no longer receives a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire $300 child support payment with no reimbursement to the state or federal government. Assuming that Illinois adopts the new federally matched pass-through and disregard policy, the distribution of child support among the family, the federal government, and the state would not change based on the earnings of the custodial parent as long as the family received TANF cash benefits. An Illinois mother with two children and half-time earnings would still be eligible for a TANF cash benefit payment of $180 per month if countable child support payments did not exceed $380. This means that if the noncustodial parent paid $300 per month in child support, the Illinois family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $400 per month in child support, the Illinois family would no longer receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire $400 child support payment with no reimbursement to the state or federal government. Full-Time Earnings at State Minimum Wage An Illinois mother with two children who works full-time at the state minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Illinois adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Maine Maine has a FMAP of 63.27%, which means that for every $100 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $63.27. Maine currently provides a $50 child support pass-through and disregard payment and a "gap" payment to TANF recipients who receive at least $50 in child support payments from noncustodial parents. In Maine, a family can use earnings or child support income to fill the gap between what the state says a family of a certain size needs to subsist in the state (the "standard of need") and the maximum TANF payment for a family of the given size. In Maine, the standard of need for a 3-person family is $670 per month and the payment maximum for a 3-person family is $535. Thus, the "gap" is $135 ($670-$535), which means that up to $135 per month in earnings or child support income is disregarded in determining the family's TANF benefit and paid to the family (in addition to the $50 pass-through and disregard). Table B -3 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows this data for custodial parents with zero earnings, half-time earnings at the minimum wage, and full-time earnings at the minimum wage. The Maine state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new fully phased-in federal minimum wage ($7.25 per hour). Zero Earnings In Maine, a mother with two children and no earnings is eligible for the maximum TANF benefit until the countable child support paid by the noncustodial parent exceeds the maximum cash benefit, which currently is $535 per month. As shown in Table B -3 , if the noncustodial parent pays $200 per month in child support, the Maine family receives a $50 child support pass-through and disregard payment plus a $135 "gap" payment. The state is required to pay the federal government $41 (63.27% of [$200-$135] ), and the state loses $26 ($200-$185-$41). If the noncustodial parent pays $400 per month in child support, the Maine family receives a $50 child support pass-through and disregard payment plus a $135 "gap" payment. The state is required to pay the federal government $168 (63.27% of [$400-$135]), and the state keeps $47 ($400-$185-$168). If the noncustodial parent pays $500 per month in child support, the Maine family receives a $50 child support pass-through and disregard payment plus a $135 "gap" payment. The state is required to pay the federal government $231 (63.27% of [$500-$135]), and the state keeps $84 ($500-$185-$231). Assuming that Maine adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the Maine family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $300 per month in child support, the Maine family would receive a $200 child support pass-through and disregard payment plus $100 of the $135 "gap" payment. The state would be required to pay the federal government $127 (63.27% of [$300-$100]) and the state would lose $127 ($300-$300-$127). If the noncustodial parent paid $500 per month in child support, the Maine family would receive a $200 child support pass-through and disregard payment plus the $135 "gap" payment. The state would be required to pay the federal government $231 (63.27% of [$500-135]) and the state would lose $66 ($500-$335-$231). Half-Time Earnings at the Federal Minimum Wage A Maine mother with two children who works half-time at the new fully-phased in federal minimum wage level is still eligible for a TANF cash benefit payment of $410 per month if the noncustodial parent pays no more than $460 per month in child support payments. As shown in Table B -3 , if the noncustodial parent pays $100 per month in child support, the Maine family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $63 (63.27% of $100) and the state loses $13 [($100-$50)-$63)]. If the noncustodial parent pays $400 per month in child support, the Maine family receives a $50 child support pass-through and disregard payment. The state is required to pay the federal government $253 (63.27% of $400) and the state keeps $97 ($400-$50-$253). If the noncustodial parent pays $460 per month in child support or more, the Maine family no longer receives a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Maine adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings would continue to receive a TANF cash benefit payment until the noncustodial parent paid $610 or more in child support payments. Table B -3 shows that if a noncustodial parent paid $200 per month in child support payments, the Maine family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If a noncustodial parent paid $300 per month in child support payments, the family would receive a $200 per month child support pass-through and disregard payment. The state would be required to pay the federal government $63 (63.27% of ($300-$200]), and the state would keep $37 ($300-$200-$63). If a noncustodial parent paid $500 per month in child support payments, the family would receive a $200 per month child support pass-through and disregard payment. The state would be required to pay the federal government $190 [63.27% of ($500-$200)] and the state would keep $110 [($500-$200)-$190]. Full-Time Earnings at the Federal Minimum Wage A Maine mother with two children who works full-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Maine adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Maryland Maryland has a FMAP of 50%, which means that for every $1 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $.50. Maryland currently does not have a child support pass-through and disregard payment. Table B -4 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows this data for custodial parents with zero earnings, half-time earnings at the minimum wage, and full-time earnings at the minimum wage. The Maryland state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new fully phased-in federal minimum wage ($7.25 per hour). Zero Earnings In Maryland, a mother with two children and no earnings is eligible for the maximum TANF benefit until the child support paid by the noncustodial parent exceeds the maximum cash benefit, which currently is $549 per month. As shown in Table B -4 , if the noncustodial parent pays $100 per month in child support, the Maryland family does not receive any child support income. The state, however, is required to pay the federal government $50 (50% of $100), and the state keeps $50. If the noncustodial parent pays $500 per month in child support, the Maryland family receives no child support income, but the state is required to pay the federal government $250 (50% of $500) and the state keeps $250 ($500-$250). Assuming that Maryland adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the Maryland family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $300 per month in child support, the Maryland family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $500 per month in child support, the Maryland family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $150 (50% of [$500-$200]) and the state would keep $150 ($500-$200-$150). Half-Time Earnings at Federal Minimum Wage A Maryland mother with two children who works half-time at the new fully phased-in federal minimum wage ($7.25 per hour) is still eligible for a TANF cash benefit payment of $201 per month if the noncustodial parent does not pay more than $191 per month in child support. As long as the family remains eligible for TANF, the distribution of child support among the family, the federal government, and the state does not change because of earnings. Therefore, the distribution under current rules is the same as that of a family with zero earnings. Thereby, if the noncustodial parent pays $100 per month in child support, the Maryland family receives no child support income. But, the state is required to pay the federal government $50 (50% of $100) and the state keeps $50 ($100-$50). If the noncustodial parent pays $400 per month in child support, the Maryland family no longer receives a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire $400 child support payment with no reimbursement to the state or federal government. Assuming that Maryland adopts the new federally matched pass-through and disregard policy, the distribution of child support among the family, the federal government, and the state would not change based on the earnings of the custodial parent as long as the family received TANF cash benefits. This means that if the noncustodial parent paid $300 per month in child support, the Maryland family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $50 (50% of [$300-$200]) and the state would keep $50 ($300-$200-$50). If the noncustodial parent paid $500 per month in child support, the Maryland family would no longer receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire $500 child support payment with no reimbursement to the state or federal government. Full-Time Earnings at Federal Minimum Wage A Maryland mother with two children who works full-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Maryland adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Oklahoma Oklahoma has a FMAP of 68.14%, which means that for every $100 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $68.14. Oklahoma currently does not have a child support pass-through and disregard payment. Table B -5 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows this data for custodial parents with zero earnings, half-time earnings at the minimum wage, and full-time earnings at the minimum wage. The Oklahoma state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new fully phased-in federal minimum wage ($7.25 per hour). Zero Earnings In Oklahoma, a mother with two children and no earnings is eligible for the maximum TANF benefit until the child support paid by the noncustodial parent exceeds the monthly TANF maximum cash benefit, which currently is $292 per month. As shown in Table B -5 , if the noncustodial parent pays $100 per month in child support, the Oklahoma family does not receive any child support income. The state, however, is required to pay the federal government $68.14 (68.14% of $100), and the state keeps $31.86. If the noncustodial parent pays $200 per month in child support, the Oklahoma family receives no child support income. The state is required to pay the federal government $136.28 (68.14% of $200) and the state keeps $63.72 ($200-$136.28). If a noncustodial parent pays $300 or more in child support on behalf of an Oklahoma mother with two children and no earnings, the family receives the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Oklahoma adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the Oklahoma family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $400 per month in child support, the Oklahoma family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $136.28 (68.14% of [$400-$200]) and the state would keep $63.72 ($200-$136.28). If the noncustodial parent paid $492 per month in child support or more, the Oklahoma family would not receive a TANF benefit payment. Instead, the family would receive the entire amount of the child support payment with no reimbursement to the state or federal government. Half-Time Earnings at Federal Minimum Wage An Oklahoma mother with two children who works half-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment if child support payments exceed $98 per month. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Oklahoma adopts the new federally matched pass-through and disregard policy, a mother with two children and half-time earnings would not be eligible to receive a TANF cash benefit payment if child support payments exceeded $298 per month. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Full-Time Earnings at Federal Minimum Wage An Oklahoma mother with two children who works full-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that Oklahoma adopts the new federally matched pass-through and disregard policy, a mother with two children and full-time earnings would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. West Virginia West Virginia has a FMAP of 72.82%, which means that for every $100 collected in child support by the state on behalf of TANF families, the state reimburses the federal government $72.82. West Virginia currently does not have a child support pass-through and disregard payment. Table B -6 displays the amount of child support paid to the family, or retained by the state, or sent to the federal government based on the amount of child support paid by the noncustodial parent. The table shows this data for custodial parents with zero earnings, half-time earnings at the minimum wage, and full-time earnings at the minimum wage. The West Virginia state minimum wage is lower than the new fully phased-in federal minimum wage; therefore, this analysis uses the new fully phased-in federal minimum wage ($7.25 per hour). Zero Earnings In West Virginia, a mother with two children and no earnings is eligible for the maximum TANF benefit until the countable child support paid by the noncustodial parent exceeds the maximum cash benefit, which currently is $340 per month. As shown in Table B -6 , if the noncustodial parent pays $100 per month in child support, the West Virginia family does not receive any child support. The state, however, is required to pay the federal government $72.82 (72.82% of $100), and the state keeps $27.18. If the noncustodial parent pays $300 per month in child support, the West Virginia family receives no child support. But, the state is required to pay the federal government $218.46 (72.82% of $300) and the state keeps $81.54 ($300-$218.46). If a noncustodial parent pays $400 on behalf of a West Virginia mother with two children and no earnings, the family receives the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that West Virginia adopts the new federally matched pass-through and disregard policy, a mother with two children and no earnings would receive a $200 child support pass-through and disregard payment if the noncustodial parent paid at least $200 per month in child support. If the noncustodial parent paid $200 per month in child support, the West Virginia family would receive a $200 child support pass-through and disregard payment, the federal government would receive $0, and the state would receive $0. If the noncustodial parent paid $500 per month in child support, the West Virginia family would receive a $200 child support pass-through and disregard payment. The state would be required to pay the federal government $218.46 (72.82% of [$500-$200]) and the state would keep $81.54 ($300-$218.46). If the noncustodial parent paid $540 per month in child support or more, the West Virginia family would not receive a TANF benefit payment. Instead, the family would receive the entire amount of the child support payment with no reimbursement to the state or federal government. Half-Time Earnings at Federal Minimum Wage A West Virginia mother with two children who works half-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that West Virginia adopts the DRA federally matched pass-through and disregard policy, a mother with two children and half-time earnings would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Full-Time Earnings at Federal Minimum Wage A West Virginia mother with two children who works full-time at the new fully-phased in federal minimum wage is not eligible for a TANF cash benefit payment. Instead, the family receives monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Assuming that West Virginia adopts the DRA federally matched pass-through and disregard policy, a mother with full-time earnings and two children would still not be eligible to receive a TANF cash benefit payment. Instead, the family would receive monthly earnings plus the entire amount of the child support payment with no reimbursement to the state or federal government. Appendix C. DRA Provisions that Affect Former TANF Families Although this report focuses on current TANF families and current child support payments, one of the goals of the 1996 welfare reform law with regard to CSE distribution provisions was to create a distribution priority that favored families once they leave the TANF rolls. Once a family leaves the TANF rolls, arrearages (i.e., past-due child support that is owed to the family) become important. Under pre-DRA rules, the custodial parent that applies for TANF must assign to the state the right to collect both current child support payments and past-due child support obligations which accrue while the family is on the TANF rolls (these are called permanently-assigned arrearages). The child support assignment for TANF families also includes arrearage payments that accumulated before the family enrolled in TANF (these are called pre-assistance arrearages). These pre-assistance arrearages are temporarily assigned to the state while the family receives TANF assistance. After the family is no longer on the TANF program, it regains its claim on pre-assistance arrearages. The DRA stipulates that the child support assignment only covers child support that accrues while the family receives TANF benefits. This means that any child support arrearages that accrued before the family started receiving TANF benefits would no longer have to be assigned to the state (even temporarily). The DRA also gives states the option of distributing to former TANF families the full amount of child support collected on their behalf (i.e., both current support and all child support arrearages (including assigned arrearages that accrued while the family was on TANF)). P.L. 109-171 allows states to simplify the CSE distribution process by eliminating the special treatment of child support arrearages collected through the Federal Income Tax Refund Offset program. This option allows states to pay child support collected through the Federal Income Tax Refund Offset procedure to former TANF families before repaying the state its share of child support collections. If a state adopts the option to eliminate the special federal tax offset collection rules, the federal government will waive its share of child support arrearages collected via that method. Unlike the limits (i.e., up to $100 per month for one child and up to $200 per month for two or more children) imposed on support passed through to current TANF families, the full federal share of federal tax offset collections will be waived if the money is paid to former TANF families. According to one report, nearly all of the arrearage payments collected on behalf of former TANF families was via the Federal Income Tax Refund Offset program. In 2005, 56% ($1.148 billion) of the child support retained by the state (for state and federal reimbursement—$2.040 billion) was collected on behalf of former TANF families. In 2005, $1.5 billion in child support payment was collected via the Federal Income Tax Refund Offset program. The result of the 1996 welfare reform law ( P.L. 104-193 ) distribution provisions is that states are required to pay a higher fraction of child support collections on arrearages to families that have left welfare by making these payments to families first (before the state and the federal government). If adopted by the states, the result of the Deficit Reduction Act ( P.L. 109-171 ) will be to fully implement a "family first" policy for former TANF families under which most (if not all) child support received on their behalf will go to the families first (before the state and the federal government). This additional income is expected to reduce dependence on welfare by both promoting exit from TANF and preventing entry and re-entry to TANF. Custodial parents welcome this provision that requires the federal government to share with the states the costs of paying child support arrearages to former TANF families, if the state chooses to implement that option. Custodial parents have been frustrated because they have always viewed child support arrearages as belonging to them. They argue that they had to rely on family and friends for financial assistance during periods when the noncustodial parent failed to pay child support that occurred before they went on welfare. They contend that they (and not the state) are entitled to any pre-welfare arrearages that are collected on their behalf. Much of the complexity of the distribution rules stemmed from their gradual implementation and federal/state receipt of child support arrearage payments collected through the Federal Income Tax Refund Offset program. Thus, some of the complexity of the rules ended when the rules were completely implemented on October 1, 2000. Many observers contend that if states choose to implement the "family first" approach authorized by P.L. 109-171 , the distribution of child support will be much easier to explain, understand, and carry out. Former TANF Families Before 1996, once a family went off AFDC, child support arrearage payments generally were divided between the state and federal governments to reimburse them for AFDC; if any money remained, it was given to the family. In contrast, under P.L. 104-193 , payments to families that leave TANF are more generous. Under P.L. 104-193 , child support arrearages are to be paid to the family first, unless they are collected from the federal income tax refund (in which case, reimbursing the federal and state governments is to be given first priority). For Collections Made On or Since October 1, 2000 If a custodial parent assigns her or his child support rights to the state on or after October 1, 2000, the parent has to assign all support rights that accrue while the family is receiving TANF benefits. In addition, the TANF applicant must temporarily assign to the state all rights to support that accrued to the family before it began receiving TANF benefits. This temporary assignment lasts until the family stops receiving TANF benefits. This means that since October 1, 2000, states have been required to distribute to former TANF families the following child support collections first before the state and the federal government are reimbursed: (1) all current child support, (2) any child support arrearages that accrue after the family leaves TANF (these arrearages are called never-assigned arrearages), plus (3) any arrearages that accrued before the family began receiving TANF benefits (these are called temporarily assigned arrearages). As mentioned above, these rules do not apply to child support collections obtained by intercepting federal income tax refunds. If child support arrearages are collected via the federal income tax refund offset program, the 1996 law stipulates that the state and federal government are to retain such collections. Moreover, if, after satisfying the distribution rules specified above there are still child support funds left over (i.e., available), then states may retain them to satisfy arrearages they are owed. States are allowed to distribute any child support monies still available at this point in the process to the custodial parent. However, regardless of how states choose to distribute the money, they must pay the federal government its share. Finally, any remaining funds are distributed to the family. For Collections Made On or After October 1, 2009, or October 1, 2008, at State Option P.L. 109-171 simplifies child support distribution rules by giving states the option of providing families that have left TANF the full amount of the child support collected on their behalf (i.e., current child support payments, non-assigned child support arrearages, and child support arrearages collected via the Federal Income Tax Refund Offset program). With regard to former TANF families, P.L. 109-171 stipulates that the state must pay all current child support payments to the family. If the child support collection exceeds the amount of current support, the state must first pay to the family any non-assigned child support arrearages. It there is still some money left, the state has the option to retain the state's share of the money or pay it to the family. If the state decides to pay it to the family, the state does not have to pay the federal government the federal share of the "left-over" collection. If any of the child support collection still remains available, the state is required to pay it to the family. Under P.L. 109-171 , the state and federal government would be entitled to child support arrearages that accrued while the family was on the TANF program, these arrearages are assigned to the state as a condition of TANF eligibility. As noted above, the state has the option to retain such collected arrearages or to pay them to the former TANF family. The federal government is required to share with the states the costs of paying child support arrearages to the family first. This provision takes effect on October 1, 2009, or October 1, 2008, at state option.

The Child Support Enforcement (CSE) program was enacted in 1975 as a federal-state-local partnership to help strengthen families by securing financial support from noncustodial parents. Families receiving cash welfare from the Temporary Assistance for Needy Families (TANF) block grant must assign (turn over rights to) child support received from noncustodial parents to the state to reimburse it and the federal government for their welfare costs. States decide whether to pay any of the child support collected for TANF families to the family. The Deficit Reduction Act of 2005 (DRA, P.L. 109-171) provides incentives for states to allow more of the child support collected on behalf of TANF families to go to the family without a reduction in welfare benefits. Under DRA, beginning in October 2008, the federal government will share in the cost of passing through up to $100 per month for a family with one child, and up to $200 per month for a family of two or more children, of collected child support to TANF families. This report illustrates the potential impact of the DRA policy on families and governments in six states (CA, IL, ME, MD, OK, and WV) chosen because of their diversity in both TANF and pre-DRA child support pass-through policies. It shows the direct effects of "what if" the states fully adopted the DRA policy. The DRA policies can increase the incomes of a TANF cash welfare family consisting of a mother and two children by up to $200 per month. This can be a substantial supplement to TANF cash benefits. Actual income increases depend on how much child support is paid by the noncustodial parent, pre-DRA state policies, the amount of other income (including earnings) of the family, and TANF benefit rules. The DRA has its greatest impact on families with no income other than child support. It mainly affects families who receive TANF; it does not directly affect families with incomes too high to receive TANF. In some states, a family of three with a minimum wage earner (the new fully phased-in federal minimum wage of $7.25 per hour; P.L. 110-28) at 20 hours per week is ineligible for TANF; in most states, a family with a full-time minimum wage earner is ineligible for TANF. The increased pass-through and disregard of child support for TANF families also has its costs. Disregarding additional child support when determining TANF financial eligibility can make additional families eligible for TANF. The cost of increasing family income through DRA's enhanced pass-through and disregard is often borne by reductions in child support collections kept by the state and federal governments. However, sometimes the cost could be borne through increased TANF spending. The DRA rules reduce the "cost" of the pass-through and disregard more for poorer states than for higher-income states. This report provides a limited discussion of DRA's effect on former TANF families. The report addresses only the "direct" effects of adopting the DRA child support pass-through and disregard. Adoption of DRA child support policies might have other, indirect, behavioral effects. This report will not be updated.

Members of Congress and the Obama Administration are engaged in debate over short- and long-term efforts to reduce the federal deficit and stabilize the national debt. Within that debate, attention has focused on proposals to alter the overall size and composition of total federal spending. The bipartisan National Commission on Fiscal Responsibility and Reform issued recommendations for both spending reductions and revenue increases on December 1, 2010. On February 14, 2011, President Obama submitted his detailed FY2012 budget request to Congress, and two months later he released a set of deficit reduction policies intended to build on his February proposal. Unlike the February budget submission, the President's April Framework for Shared Prosperity and Shared Fiscal Responsibility does not include detailed proposals and has not been scored by the Congressional Budget Office (CBO). The House Budget Committee reported a concurrent resolution on the FY2012 budget ( H.Con.Res. 34 ) that was based on a document titled Path to Prosperity , released by Budget Committee Chairman Paul Ryan on April 5. The full House passed H.Con.Res. 34 on April 15 after defeating substitute versions offered by the Congressional Black Caucus ( H.Amdt. 256 ), the Congressional Progressive Caucus ( H.Amdt. 257 ), the Republican Study Committee ( H.Amdt. 258 ), and the Democratic Caucus ( H.Amdt. 259 ). The Senate has not yet acted on a budget resolution for FY2012. This CRS report highlights spending trends and key policy initiatives in the President's February budget and April F ramework , and in the House-passed budget resolution, for the six functional categories of the federal budget that comprise the human resources "superfunction." The six human resources functions (and their function codes) are education, training, employment, and social services (Function 500); health (primarily Medicaid) (Function 550); Medicare (Function 570); income security (Function 600); Social Security (Function 650); and veterans benefits and services (Function 700). As shown in Figure 1 , the human resources superfunction accounts for the majority of federal spending, with nearly 70% of federal outlays in FY2010. This report does not discuss the broad outlines of the FY2012 budget proposals, such as their projected levels of total spending, revenues, or deficits. Moreover, the report does not attempt to quantify the costs or savings associated with specific proposals. The purpose of the report is to give a very broad overview of the spending trends and policy recommendations proposed by the Administration and the House budget resolution—specifically, for the human resources budget functions—as background for the detailed budget and appropriations discussions that are taking place this year. For more information on the budget process itself and the status of the FY2012 budget, see CRS Report 98-721, Introduction to the Federal Budget Process , coordinated by [author name scrubbed]; CRS Report R40472, The Budget Resolution and Spending Legislation , by Megan Suzanne Lynch; and CRS Report R41685, The Federal Budget: Issues for FY2011, FY2012, and Beyond , by [author name scrubbed]. The federal budget is divided into 20 functional categories (e.g., national defense, health, energy, transportation), which are further divided into subfunctions. These functional categories provide a broad statement of budget priorities and facilitate the analysis of trends in related programs; they are used for informational purposes in the congressional budget process. For purposes of analysis, some budget functions are grouped together into budget "superfunctions" (e.g., national defense, human resources, physical resources). Congress begins formal consideration of the annual budget resolution after the President submits his detailed budget request for the coming fiscal year. (For example, as noted, President Obama submitted his FY2012 budget to Congress in February and the House passed a budget resolution in April.) The congressional budget resolution is not signed by the President and does not become public law. Rather, it is an internal blueprint for Congress to use in its consideration of legislation and spending for the coming fiscal year. The resolution establishes target levels for spending (budget authority and outlays) and revenues, along with an estimate of the deficit (or surplus) and the national debt. The resolution includes targets for the coming fiscal year and projected levels for subsequent years. Unlike the President's budget request submitted in February, the congressional budget resolution does not specify spending levels by program but instead establishes aggregate spending targets for each of the functional categories referred to above. These aggregate amounts are based on certain "assumptions" about spending for specific programs, but the assumptions are not typically specified in the resolution, nor are they binding on the appropriations committees or committees with jurisdiction over mandatory spending programs or tax provisions. Key assumptions are sometimes identified in the Budget Committee report that accompanies the concurrent resolution. The congressional budget process allows for several enforcement mechanisms to ensure compliance with overall targets established in the resolution. This report continues with a brief overview of the human resources superfunction as a whole, looking at long-term historical and future projected trends in spending under current law, in comparison with other major components of the federal budget. The section compares human resources spending under current law, as estimated by CBO, with the President's February budget request and amounts included in the House budget resolution. The next section identifies selected overarching policies included in the Administration and House budgets that are intended to reduce spending and/or stabilize the national debt; these policies could directly or indirectly result in lower spending across budget functions. The remainder of the report focuses on the six individual categories that comprise the human resources superfunction. Each section compares the CBO current law baseline for FY2011 through FY2021 with the President's February proposal (as re-estimated by CBO) and the House budget resolution, in constant FY2011 dollars. An Appendix to the report includes a table showing each of the human resources budget functions as a percentage of GDP, and two tables showing federal budget authority and outlays (in nominal dollars) for each of the six functions. Sources of information used in this report include the following: The Obama Administration's FY2012 budget documents: http://www.whitehouse.gov/omb/budget . White House fact sheet on The President's Framework for Shared Prosperity and Shared Fiscal Responsibility : http://www.whitehouse.gov/the-press-office/2011/04/13/fact-sheet-presidents-framework-shared-prosperity-and-shared-fiscal-resp . An Analysis of the President's Budgetary Proposals for Fiscal Year 2012 , by the Congressional Budget Office: http://www.cbo.gov/doc.cfm?index=12130 . The Path to Prosperity: Restoring America's Promise , House Budget Committee: http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf . H.Con.Res. 34 , as passed by the House, and the accompanying House Budget Committee report ( H.Rept. 112-58 ). Long-Term Analysis of a Budget Proposal by Chairman Ryan , by the Congressional Budget Office: http://www.cbo.gov/doc.cfm?index=12128 . Figure 2 shows the trend in federal outlays for major categories of the federal budget, as a share of the national economy, from FY1962 through FY2010. The figure also shows CBO's projections for these categories, assuming no change in current law, through FY2021. The figure illustrates the growth in spending for human resources over the last five decades, and shows the importance of this component of the budget, in relation to other government spending. Specifically, the figure shows that outlays for human resources, as a percentage of Gross Domestic Product (GDP), have grown substantially since 1962, when they accounted for 5.6% of GDP. CBO expects they will have peaked in FY2010, at 16.4%, and will fall to 14.8% in FY2014. This pattern reflects the assumed economic recovery, lower spending for programs that respond automatically to economic conditions such as Unemployment Insurance and the Supplemental Nutrition Assistance Program (SNAP), and the expiration of all stimulus funding. Beginning in FY2015, however, human resources spending would rise again as a share of GDP, according to CBO, reaching 15.7% by FY2021. While this is lower than the FY2010 level of 16.4% of GDP, it still exceeds the pre-recession (2007) level of 12.7%. Fueling this increased spending are several factors, including the continuing effects of the baby boom generation's retirement and increased enrollment in Medicare and Social Security, certain program design features such as wage indexing in Social Security (which allows initial monthly benefits to replace a constant proportion of pre-retirement earnings and keep pace with rising living standards), medical cost inflation in excess of general inflation, and new spending attributable to implementation of the health care reform law of 2010. The effect of these factors can be seen in Figure 3 , which shows the trend in outlays for each of the six human resources budget functions, as a share of GDP, from FY1962 through FY2010 and then projected through FY2021. The figure illustrates that spending in the human resources superfunction has been increasingly dominated by four categories: health (Function 500, which primarily consists of Medicaid), Medicare (Function 570), income security (Function 600), and Social Security (Function 650). With no change in current law, CBO projects that spending for income security as a share of GDP will contract over the next decade, as will spending for the two smallest functions—education, training, employment, and social services (Function 500), and veterans benefits and services (Function 700). On the other hand, CBO projects that spending for three functions—health (mostly Medicaid), Medicare, and Social Security—will increasingly consume more of the economy as the population ages and the cost of health care continues to rise. Most federal low-income programs are included in one of the human resources budget functions, most likely Function 500 (education, training, employment, and social services) or Function 600 (income security), in addition to Function 550, which includes Medicaid and the State Children's Health Insurance Program (CHIP). A review of these programs shows the same trend discussed above; that is, health care is growing as a share of the economy while spending for other services (other than Social Security) contracts. A CRS analysis of federal outlays for major federal low-income programs shows aggregate spending for these programs, as a share of GDP, will have peaked in FY2010 but will rise again starting in FY2013. However, all projected growth in spending for these low-income programs will be for health programs (specifically Medicaid, CHIP, and the refundable portion of a health insurance tax credit created under the 2010 health care reform law, which is scheduled to begin in 2014). With no change in current law, spending for non-health low-income programs will increasingly diminish as a share of the economy over the next decade. Figure 4 compares total estimated outlays for the human resources superfunction, as a share of GDP, under CBO's baseline, President Obama's February request, and the House budget resolution, from FY2011 through FY2021. The figure shows that the President's budget closely follows and slightly exceeds the CBO baseline, while the House budget resolution would result in significantly lower spending as a share of the national economy. All three budgets project an immediate drop in spending. Under the CBO baseline and Administration budget, spending would then be relatively flat for most of the period before gradually increasing in the final years of the decade. Under the House budget resolution, spending would continue a gradual decline throughout most of the period, but would also rise slightly at the end of the decade. As stated earlier, CBO projects that human resources spending will equal 15.7% of GDP in FY2021 with no change in policy. This compares with 15.9% under the Administration's budget and 13.5% under the House resolution. Later sections of this report discuss each of the human resources functional categories specifically, and show trends in projected outlays under the CBO baseline, the President's February request, and the House resolution. As discussed above, CBO expects continued growth in the two health-related functions as well as Social Security. While the House budget resolution assumes dramatically lower spending for the health function that includes Medicaid, it would result in no significant changes in spending for Medicare or Social Security over the next 10 years. Instead, H.Con.Res. 34 sets targets that would lower spending from the current law baseline in two additional functions: education, training, employment, and social services, and income security. As noted in the beginning of this report, policymakers are concerned about the current and projected future size of the federal deficit, or the gap between spending and revenues. Both the Administration and House budget proposals include overarching policies intended to constrain growth in federal spending, among other deficit-reduction proposals. These policies, summarized below, would affect spending in most of the functional categories that are the focus of this report. In its February budget submission, the Administration proposed to freeze non-security discretionary spending through FY2015 at FY2010 levels. This would not be an across-the-board reduction (affecting all programs equally) but rather an overall freeze with critical areas singled out for increased spending. Specific amounts are identified in the Administration's budget documents. In his April Framework , President Obama proposed additional reductions in non-security discretionary spending, beyond those included in the February budget. According to a White House fact sheet, these reductions would be consistent with the spending recommendations of the National Commission on Fiscal Responsibility and Reform over the next decade. Also in the April Framework , President Obama announced a "debt failsafe" that would trigger further reductions in spending (including mandatory spending and tax expenditures). This provision would establish that if, by 2014, the projected ratio of debt to GDP is not stabilized and shown to be declining during the second half of the decade, automatic across-the-board spending cuts would be triggered. The White House fact sheet notes that this trigger would not apply to Social Security, low-income programs, or benefits for Medicare enrollees. The House budget resolution establishes spending targets that assume a reduction in discretionary non-security spending to below FY2008 levels and a five-year freeze. As noted earlier, the congressional budget resolution does not establish spending levels for individual programs; these decisions are made through the appropriations process, within the overall spending targets set by the budget resolution. The House budget resolution also calls for a series of steps intended to enforce both the discretionary spending and the total spending caps included in the resolution. These mechanisms would trigger automatic across-the-board spending reductions unless Congress moves to avoid such across-the-board reductions through enactment of legislation under expedited procedures. Social Security would be exempt from these enforcement mechanisms. These overarching proposals are key components of both the Administration and House budget plans. They are reflected in the trend lines shown above in Figure 4 and in the following sections, which illustrate and discuss the trends in projected outlays for each of the six functions categorized as human resources. Function 500 includes funding for the Department of Education (ED), social services programs within the Department of Health and Human Services (HHS), and employment and training programs within the Department of Labor (DOL). It also contains funding for the Library of Congress and independent research and art agencies such as the Corporation for Public Broadcasting, the Smithsonian Institution, the National Gallery of Art, the John F. Kennedy Center for the Performing Arts, the National Endowment for the Arts, and the National Endowment for the Humanities. Most spending under Function 500 is discretionary. However, mandatory spending includes student financial assistance, some training and employment services, and Social Services Block Grants. Spending under this function is divided among the following six subfunctions: elementary, secondary, and vocational education; higher education; research and general education aids; training and employment; other labor services; and social services. Figure 5 shows estimated outlays for Function 500 programs, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. As illustrated, the Administration's February request exceeds the CBO baseline for most of the period by a relatively small and gradually diminishing amount, while the House resolution envisions spending at substantially lower levels than the CBO baseline. By FY2021, Function 500 spending under the Administration's February budget would be virtually identical to the CBO baseline (1% higher), while the House budget resolution assumes spending would be 36% below the baseline. (Note that the President's April Framework proposes additional reductions in discretionary spending that presumably would lower estimated spending under the Administration's budget for Function 500.) As a function dominated by discretionary spending, Function 500 would be affected by the Administration's proposals to reduce and freeze overall discretionary non-security spending through FY2015; however, Function 500 also includes several policy areas identified by the White House as critical investments for the future. These include education and workforce development, where the Administration has proposed a variety of reforms and program consolidations, as well as increased spending for certain programs, offset by termination of others. Certain savings would be achieved from changes to Pell grants and student loans, which would help offset the cost of maintaining the current maximum Pell grant award. The Administration also proposes to permanently extend and index the American Opportunity Credit, a partially refundable tax credit for the costs of higher education that was originally created by the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). As displayed in Figure 5 , spending for Function 500 under the House budget resolution would drop sharply in FY2013 and stay relatively constant for the rest of the decade. This trend reflects the deeper overall discretionary spending cuts and freeze assumed by the House resolution, including consolidation and termination of various job training, elementary and secondary education, and cultural programs. The House resolution also assumes certain changes to Pell grants and student loans, but would adopt a "sustainable" maximum Pell grant award rather than the current maximum level. Function 550 includes most direct health care services programs, most notably Medicaid. Other health programs in this function fund anti-bioterrorism activities, national biomedical research, activities to protect the health of the general population and workers in their places of employment, health services for under-served populations, and training for the health care workforce. Some of the HHS agencies funded in this function include the National Institutes of Health, Centers for Disease Control and Prevention, Health Resources and Services Administration, and the Food and Drug Administration. The major mandatory programs in this function are Medicaid, the State Children's Health Insurance Program (CHIP), federal and retirees' health benefits, and health care for Medicare-eligible military retirees. Spending under this function is divided among the following three subfunctions: health care services, health research and training, and consumer and occupational health and safety. Figure 6 shows estimated outlays for Function 550 programs, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. The difference in trends is stark. The Administration budget would track closely with CBO, which expects an initial drop in Medicaid spending in FY2012, due to the scheduled expiration of enhanced federal matching to states initially authorized by ARRA, and the effects of the economic recovery on the Medicaid caseload. However, spending would then climb sharply, starting in FY2013, under both the CBO baseline and the Administration's February budget. The House budget resolution, on the other hand, envisions a decrease in spending until FY2014, followed by a relatively flat line through FY2018, and a slight increase for the balance of the decade. In FY2021, the Administration's February budget would result in estimated outlays only slightly (2%) lower than the CBO baseline, while outlays would be 50% lower under the House budget resolution's spending targets. Medicaid is the primary driver of spending in Function 550. In its request for Medicaid and Medicare (discussed below), the Administration cites the major changes to both programs already enacted in the Patient Protection and Affordable Care Act of 2010 (PPACA, P.L. 111-148 , as amended by P.L. 111-152 ). The Administration's FY2012 budget includes additional Medicaid proposals intended to improve program integrity (reduce fraud, waste, and abuse), limit reimbursement rates for durable medical equipment, simplify the federal-state matching formulas under Medicaid and CHIP, and improve patient safety. The President's Framework also expresses support for proposals to reform service delivery to high-cost beneficiaries, including those eligible for both Medicaid and Medicare (dual eligibles), and calls on the National Governors Association to make additional recommendations for Medicaid reform. The House Budget Committee, in its accompanying report, notes that the budget resolution assumes a "fundamental reform" of Medicaid. The report lists a series of "potential approaches," including conversion of the federal share of Medicaid spending into an allotment (a block grant), which would be indexed for inflation and population growth. The committee advocates repealing the Medicaid expansions enacted in PPACA, which are scheduled to begin in 2014, and the PPACA provisions authorizing subsidies to help low-income individuals purchase health insurance through exchanges. The resolution also assumes elimination of the individual mandate to purchase insurance, established under PPACA. The House budget resolution further assumes savings would be achieved by repealing any unspent funds provided under ARRA and other associated provisions in PPACA. Function 570 includes only the Medicare program, which provides health insurance to individuals age 65 or older and certain persons with disabilities. Nearly 99% of spending in this function is mandatory, and almost all of the mandatory spending consists of payments for Medicare benefits. Congress provides an annual appropriation for the costs of administering and monitoring the Medicare program. Figure 7 shows estimated outlays for Medicare, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. The figure illustrates relatively little difference between the three, which all show significantly increasing spending for Medicare throughout the decade, caused by an aging population and rising health care costs. Estimated spending in FY2021 would exceed the CBO current law baseline by 5% under the President's February budget and would be 3% lower than CBO's projections under the House resolution. As noted above, the Administration's budget cites changes to Medicare already enacted in PPACA, and includes various proposals intended to build on these provisions. In addition, the February budget proposed a 10-year freeze on physician payment rates under Medicare at FY2011 levels (the so-called "doc fix"), which would otherwise decline under the sustainable growth rate formula in current law. The increased cost of this proposal would be offset by specified savings during the first two years. The April Framework assumes, but does not specify, additional aggregate savings that would fully pay for the "doc fix" provision over the 10-year budget window. The Framework says the Independent Payment Advisory Board (IPAB), created by PPACA, will set a lower target of Medicare growth per beneficiary and be given additional tools to promote quality care and reduce costs. The Administration's budget also includes proposals to cut prescription drug costs, and reduce Medicare waste, fraud, and abuse. One of the most widely reported provisions in the House budget resolution assumes enactment of legislation to convert Medicare into a "premium subsidy" program. However, as envisioned in the budget resolution, this change would not take effect until FY2022, which is beyond the resolution's 10-year budget window and is therefore not reflected in Figure 7 . The resolution assumes additional changes affecting Medicare, including enactment of a long-term solution to the physician payment rate formula. The resolution contains a "reserve fund" to accommodate the SGR fix; this provision would allow for consideration of legislation that would reform SGR, as long as the legislation did not increase the deficit for the period FY2012-FY2021. The resolution also assumes a requirement that any potential savings in Medicare be reinvested into the program; elimination of the IPAB; and enactment of changes to laws governing medical liability, including limits on noneconomic and punitive damages. Function 600 includes a range of income security programs that provide cash or near-cash assistance (e.g., housing, nutrition, and energy assistance) to low-income persons, and benefits to certain retirees, persons with disabilities, and the unemployed. Housing assistance programs account for the largest share of discretionary funding in this function. Major federal entitlement programs in this function include Unemployment Insurance, Trade Adjustment Assistance income support, the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Temporary Assistance for Needy Families (TANF), foster care, and Supplemental Security Income (SSI). The refundable portion of the Earned Income Tax Credit (EITC) and the refundable Additional Child Tax Credit (ACTC) are also included in this function. Federal and other retirement and disability programs comprise approximately one-third of funds in Function 600. Spending under this function is divided among the following six subfunctions: general retirement and disability insurance (excluding Social Security), federal employee retirement and disability, unemployment compensation, housing assistance, food and nutrition assistance, and other income security. Figure 8 shows estimated outlays for Function 600 programs, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. The figure shows the Administration's budget is identical to the CBO baseline until FY2013. Both lines then show decreased spending through FY2018, but outlays would decline at a slower rate under the Administration's February proposals. The CBO baseline assumes recession-related spending will decline, and also assumes expiration of certain temporary provisions, including expansions of the EITC, ACTC, and extended Unemployment Insurance. The House budget resolution shows a sharper drop in spending continuing through FY2015, with outlays leveling off and staying relatively constant through FY2021. The President's budget projects FY2021 outlays would be 6% higher than the CBO baseline, while they would be 11% lower than CBO under the House budget resolution. Like the CBO baseline, the Administration's budget assumes reduced recession-related spending for UI and SNAP as the economy recovers. The Administration's proposals to reduce discretionary spending also would apply to certain programs in this function, and include a relatively deep cut in the Low-Income Home Energy Assistance Program (LIHEAP). However, the Administration also proposes to permanently extend certain tax provisions, including expansions of the EITC and the ACTC, which were initially authorized under ARRA and are scheduled to expire under current law. The President's budget includes provisions intended to address the unfunded liabilities in the UI system and the Pension Benefit Guaranty Corporation. As shown in the figure, the House budget resolution assumes lower spending for Function 600 programs, at least partially due to deeper cuts in discretionary non-security spending. In its accompanying report, the House Budget Committee also cites conversion of SNAP (food stamps) into a block grant to states as a possible policy option in this category, with state allotments indexed for food inflation and eligibility, starting in FY2015. The report also refers to a welfare reform provision that is discussed more fully in Chairman Ryan's Path to Prosperity . The 1996 welfare reform law applied work requirements and time limits to recipients of cash aid under TANF; such requirements would also be applied to recipients of SNAP benefits and housing assistance, according to Chairman Ryan's description of the budget resolution. The resolution assumes enactment of a provision that would require federal employees to contribute a greater share toward their retirement; elimination of the Home Affordable Modification Program (HAMP), which was intended to help homeowners avoid foreclosure; and reform of the PBGC. Function 650 consists of the payroll tax-financed programs that are collectively known as Social Security: Old-Age and Survivors Insurance and Disability Insurance (OASDI). This function includes both Social Security benefit payments (mandatory) and funds to administer the program (discretionary). Figure 9 shows estimated outlays for Function 650, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. The figure shows virtually no difference between the three lines, as neither the Administration nor the House budget resolution assumes significant policy changes in Social Security within the 10-year budget window. Note that Figure 9 shows outlays for both the on-budget and off-budget portions of Social Security. Although the Administration's budget contains no specific Social Security proposals, President Obama expressed support for bipartisan efforts to strengthen Social Security for the long term and put forth a set of principles to govern these reform efforts. These principles were reiterated in the April Framework and include strengthening retirement security for low-income and vulnerable beneficiaries and maintaining "robust" disability and survivors' benefits; no "privatization" of Social Security; restoration of long-term solvency; and no reduction in basic benefits for current beneficiaries or "slashing" of benefits for future generations. In its report on the budget resolution, the House Budget Committee refers to the December 2010 recommendations of the President's Commission on Fiscal Responsibility and Reform as demonstration "that there is a bipartisan way forward" on Social Security reform. In the interim, the resolution would require the Social Security Board of Trustees to recommend statutory reforms to the President in any year when the Trustees find the 75-year actuarial balance and the annual balance in the 75 th year are in deficit. The President would be required to submit legislation to implement these recommendations by a certain deadline and congressional committees would be required to report legislation under expedited procedures. Function 700 covers the programs of the Department of Veterans Affairs (VA), including veterans' medical care, compensation and pensions, education and rehabilitation benefits, and housing programs. It also includes the Department of Labor's Veterans' Employment and Training Service, the United States Court of Appeals for Veterans Claims, and the American Battle Monuments Commission. This function includes both mandatory and discretionary spending accounts. Mandatory funding supports disability compensation, pension benefits, education, vocational rehabilitation, life insurance, and burial benefits, among other benefits and services. Discretionary funding supports a broad array of benefits and services; almost 90% of appropriated funding in Function 700 goes to veterans' health care. Spending under this function is divided among five subfunctions: income security for veterans; veterans education, training, and rehabilitation; hospital and medical care for veterans; veterans housing; and other veterans benefits and services. Figure 10 shows estimated outlays for Function 700 programs, from FY2011 through FY2021 in constant FY2011 dollars, under the CBO baseline, the Administration's February budget request, and the House budget resolution. The Administration and House budgets for veterans benefits and services are virtually identical, and both very slightly exceed the CBO baseline. Programs categorized as "human resources" comprise the majority of federal outlays and have grown over the last five decades as a share of the overall national economy. CBO expects that spending for these programs will have peaked in FY2010 and will fall through FY2014, although spending levels will remain higher than they were before the recent recession. CBO further expects that overall human resources spending will begin to climb again starting in FY2015; however, all of the projected growth will be in health care (Medicaid and Medicare) and Social Security. All other components of the human resources superfunction will diminish as a share of the economy over the coming decade, according to CBO's current law baseline. The Administration and Congress are engaged in a debate over reducing the federal deficit and stabilizing the national debt; proposals to reduce and change the composition of federal spending are a major part of this debate. In February, the Administration gave Congress a detailed budget request for FY2012, which includes proposals to reduce spending for certain programs and increase spending for others; the February budget request was followed in April with an additional set of deficit reduction principles. Based on an analysis of the February budget, the Administration proposes no overall reduction in outlays for the human resources superfunction, although some of the proposals included in the April Framework would further lower spending for this portion of the budget. The budget resolution passed in April by the House, on the other hand, sets spending targets that would reduce outlays in the human resources superfunction to a level that would be 14% below the CBO baseline by FY2021. Within the human resources category, the House resolution would reduce spending primarily in three functions. By FY2021, the resolution would result in spending for Function 500 (education, training, employment, and social services, or ETESS) that is 36% below the CBO baseline. The largest reduction from the CBO baseline, if all provisions in the House resolution were enacted, would occur in Function 550 (health, including Medicaid); the House spending target for this function in FY2021 would be 50% below the baseline. Finally, spending for Function 600 (income security) in FY2021 would be 11% below the baseline under the House resolution. As noted earlier in this report, most federal programs specifically directed to low-income populations are in the human resources superfunction and are most likely to be included in the three specific functions just mentioned. In comparing these proposals, it is important to note the significant difference in size among the functions. For example, while the House budget resolution envisions a relatively large reduction in spending for Function 500 (ETESS) than would otherwise occur under current law, this proposal would contribute relatively little toward deficit reduction because of the small size of the function overall. On the other hand, with no change in current law CBO expects the function that includes Medicaid will be more than six times larger than Function 500 in FY2021 and the income security function will be more than four times larger; thus, reductions from the baseline in these functions would yield greater savings. Although the House resolution assumes conversion of Medicare into a premium subsidy program, this would not take effect until FY2022, which is beyond the 10-year budget window and therefore not reflected in the spending trends displayed in this report. Likewise, neither the Administration's budget nor the House budget resolution includes specific changes to Social Security or veterans benefits and services. Social Security is currently the largest of the human resources functions under current law, and would remain so under both the Administration and House proposals, with projected spending in FY2021 that is 10 times that of Function 500 (ETESS) and more than twice that of Function 600 (income security). Projected Medicare spending would be more than seven times that of Function 500 in FY2021 and more than 50% larger than Function 600.

The 112th Congress is focusing attention on short- and long-term efforts to reduce the federal deficit and stabilize the national debt, including proposals to alter the overall size and composition of total federal spending. Components of the federal budget categorized as "human resources" account for the majority of federal outlays (70% in FY2010) and would be affected by these proposals. Six functional categories comprise the human resources "superfunction": education, training, employment, and social services; health (primarily Medicaid); Medicare; income security; Social Security; and veterans benefits and services. President Obama submitted a detailed FY2012 budget request to Congress on February 14, and in April, he released a set of deficit reduction policies intended to build on the February proposal called the President's Framework for Shared Prosperity and Shared Fiscal Responsibility. On April 15, the House passed a concurrent resolution on the FY2012 budget (H.Con.Res. 34) that was based on a document called Path to Prosperity, released by Budget Committee Chairman Paul Ryan on April 5. The Senate has not yet acted on a budget resolution for FY2012. As a share of the national economy, spending for human resources is expected to have peaked at 16.4% of Gross Domestic Product (GDP) in FY2010 and, according to the Congressional Budget Office (CBO), will fall to 14.8% in FY2014. This decline reflects the assumed economic recovery, lower spending for programs that respond automatically to economic conditions (e.g., Unemployment Insurance, Supplemental Nutrition Assistance Program), and expiration of stimulus funding under the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). However, CBO estimates that, with no changes in current law, human resources spending will rise again as a share of GDP and reach 15.7% by FY2021 due to the continuing effects of the baby boom generation's retirement and increased enrollment in Medicare and Social Security, real growth in initial Social Security benefits, medical cost inflation in excess of general inflation, and new spending related to the health care reform law of 2010. Reflecting these trends, all projected growth in the human resources budget will occur in three functional categories: health (primarily Medicaid), Medicare, and Social Security. CBO estimates that spending for income security will contract as a share of GDP over the next decade, as will spending for the two smallest human resources categories (i.e., education, training, employment, and social services; and veterans benefits and services). Both the President's budget and H.Con.Res. 34 include provisions intended to reduce spending overall. However, the President's February proposals would result in spending for human resources that would closely follow, and slightly exceed, the CBO current law baseline, while the House resolution sets spending targets that are significantly lower. Specifically, human resources spending would equal 15.9% of GDP in FY2021 under the Administration's February budget and 13.5% under the House resolution, compared to CBO's baseline estimate of 15.7%. The most significant reductions from the CBO baseline, if all provisions assumed in the House resolution were enacted, would occur in three categories: education, training, employment, and social services (the smallest human resources category); Medicaid; and income security. As widely reported, the House resolution assumes enactment of legislation to convert Medicare into a "premium subsidy" program; however, this change would not occur until FY2022, which is after the resolution's 10-year budget window. Thus, the House resolution sets spending targets for the next 10 years that are relatively close to CBO's baseline projections for Medicare, Social Security, and veterans benefits and services.

In recent years, Members of Congress have monitored the course of North Korea-Japanrelations because Japan plays a potentially critical role in addressing the military threat posed byNorth Korea, particularly its nuclear weapons program. (1) Most important, Japan has told North Koreait is prepared to offer a large-scale economic aid package -- on the order of $5 billion - $10 billion-- to compensate for the Japanese occupation of the Korean Peninsula from 1910-1945. During theAugust 2003 six-party talks in Beijing among North Korea, the United States, South Korea, China,Japan, and Russia, the Japanese delegation reportedly reiterated its position that significant aid wouldbe forthcoming if North Korea abandoned its nuclear program and cooperated on the issue ofJapanese citizens kidnapped by North Korean agents in the 1970s and 1980s. Japan also is important to the North Korean situation because it is a significant source of North Korea's foreign exchange. Not only is Japan North Korea's third-largest trading partner, but theJapanese market also is a major destination for the North Korean government's suspected drug-running operationsand of remittances from Korean permanent residents in Japan. Congress also has an interest in Japan-North Korea relations because Japan's bilateral issues with North Korea influence U.S. policy. The United States has long cited Pyongyang's harboringof Japanese Red Army terrorists -- who face charges in Japan of hijacking a plane in 1970 -- as areason for North Korea's inclusion on the U.S. terrorism list, which by law prohibits North Koreafrom receiving many forms of U.S. economic assistance and some trading rights. (2) At Japan's urging,the United States reportedly also has linked delisting to North Korea's cooperation with Japan onthe abduction issue. Finally, Japan arguably has been the strongest supporter in East Asia of the Bush Administration's policy of pressuring North Korea to abandon its nuclear program. Although Japanshares the objections of other regional states to the use of preemptive military force, it is morewilling than China, South Korea, and Russia to employ coercive diplomatic measures againstPyongyang. Japan's position thus is important to the U.S. effort to deal with the North Koreannuclear program multilaterally, rather than bilaterally (U.S.-North Korea exclusively), as NorthKorea had insisted. Indeed, since the late 1990s, the rising perception of the North Korean threat hasprompted and enabled Japanese leaders to broaden substantially the country's security posture. (3) On September 17, 2002, Japanese Prime Minister Junichiro Koizumi and North Korean leader Kim Jong-il held a one-day summit in Pyongyang that momentarily restarted normalization talksbetween the two countries, which had been stalled since November 2000. Koizumi and Kim signeda short document called the "Pyongyang Declaration." Kim pledged conditionally to unilaterallyextend his country's moratorium on missile testing beyond 2003 (when it was to expire), admittedthat North Korean agents had kidnapped 13 Japanese in the 1970s and 1980s, and issued a vaguepromise to comply with international agreements related to nuclear issues. Koizumi, in turn,apologized for Japan's colonization of the Korean Peninsula and offered to provide North Koreawith a large-scale economic aid package, much as it gave South Korea economic assistance whenTokyo and Seoul normalized relations in 1965. At the time, Koizumi's trip to Pyongyang was a significant departure from Tokyo's increasingly hard-line stance toward North Korea and had the potential to put Japan at odds with the BushAdministration's policy. For most of the late 1990s, Japanese policymakers sought to move slowlyand deliberately on normalizing relations with North Korea, due to the launch of a long-rangeTaepodong Missile over the Japanese Islands in August 1998, Pyongyang's development anddeployment of medium-range Nodong missiles capable of reaching Japan, new revelations about theabductions of Japanese citizens by North Korean agents, and incursions by North Korean espionageand drug-running ships into Japanese waters. This cautious approach often created tension betweenTokyo and the Clinton Administration, which, along with South Korea's Kim Dae Jung, pursued apolicy of engaging North Korea in the late 1990s. During this time, Japanese policymakers oftenappeared torn between a desire to avoid becoming isolated from U.S.-South Korea-North Koreadiplomacy and domestic pressure to proceed cautiously. (4) (5) This dilemma was relieved whentheBush Administration came into office in 2001 and pursued a policy of using public accusations andwarnings to pressure North Korea to allow international inspections of its nuclear facilities and agreeto verifiable curbs to its missile program, including missile exports. (6) The Japan-North Korea normalization talks and parallel security talks stalled due to two developments shortly after the Koizumi-Kim summit: North Korea's October 2002 admission toU.S. officials that it has a secret nuclear weapons program based on the process of uraniumenrichment; and popular outrage in Japan at Kim Jong-il's admission that North Korea hadkidnapped 13 Japanese, eight of whom the North Koreans said had died since their abductions. Prime Minister Koizumi has said normalization talks will not continue unless Pyongyang cooperateson the abduction issue and begins dismantling its nuclear program. Also, in October, the five knownsurviving kidnapees traveled to Japan for a one-to-two week visit, but were not permitted to bringtheir children -- some of whom do not know their parents are Japanese -- or spouses with them. The ensuing public outcry that these relatives were being held as "hostages" led Koizumi to refuseto send the five back to North Korea and to demand that family members be allowed to come toJapan. (7) (One complicating factor is that the husbandof one of the five is an American militarydeserter living in North Korea.) The five continue to live in Japan, and reportedly have taken steps,such as finding jobs and buying property, to reintegrate into Japanese society. On October 29, 2002, Japan and the DPRK held normalization talks in Kuala Lumpur, Malaysia. The Japanese delegation reportedly told the North Korean side that normalization -- andtherefore, discussion of economic assistance -- would not proceed until Pyongyang agrees to sendthe children of Japanese abductees to Japan and halt its nuclear weapons program. Japanesenegotiators also requested that the North dismantle its medium-range Nodong missiles. North Korea,accusing the Japanese side of breaking with the Pyongyang Declaration, made no concessions, andthe meetings ended with no joint statement. Subsequently, a North Korean Foreign Ministryspokesman warned that if bilateral talks stall over the nuclear issue, Pyongyang may reconsider itsmissile moratorium. Separate bilateral discussions of security issues, which were to have begun inNovember 2002, have yet to be held. Throughout 2003, the two countries have held several officialand unofficial discussions about resolving the kidnapping issue and restarting the normalizationtalks. In the Pyongyang Declaration, Japan and North Korea promised to "abide by all relevant international agreements in order to comprehensively resolve the nuclear issue on the Koreanpeninsula." Koizumi reportedly had insisted on including this in the declaration after being briefedon U.S. intelligence indicating that North Korea's clandestine uranium enrichment program wasmore advanced than had been thought previously. The international agreements presumably includethe 1992 North-South Korean Denuclearization Declaration, which prohibits the possession ofuranium enrichment facilities, the 1992 nuclear safeguards agreement with the International AtomicEnergy Agency (IAEA), and the 1994 U.S.-DPRK Agreed Framework, which committed NorthKorea to freezing its plutonium nuclear program. (8) Since the revelations about North Korea's uranium nuclear program were made public in October 2002, Japan has been the Northeast Asian country most supportive of the BushAdministration's policy of combining multilateral dialogue and pressure to convince North Koreato abandon its nuclear program. At President Bush's side later that same month, Prime MinisterKoizumi stated that full normalization could not take place until after the nuclear issue wasresolved. (9) In mid-November 2002, Japan voted withthe United States, South Korea, and theEuropean Union to suspend shipments of heavy fuel oil to North Korea. The oil was being providedunder the 1994 Agreed Framework, ostensibly to compensate Pyongyang for the energy it lost fromshutting down its plutonium nuclear reactors. Japanese policy hardened further in the aftermath of the April 2003 trilateral U.S.-North Korea-China meeting in Beijing. The following month, during a bilateral summit in Crawford, Texas,Koizumi agreed with Bush that a policy of "dialogue and pressure" should be used peacefully toinduce North Korea to give up its nuclear program. Koizumi also declared that Japan would "crackdown more vigorously" on illegal activities involving North Korea or ethnic Korean supporters inJapan and would take "tougher measures" if North Korea escalated the situation. Japan is one ofeleven countries participating in the U.S.-led Proliferation Security Initiative, announced byPresident Bush in May 2003, which is designed to interdict weapons of mass destruction shipmentsto and from countries of proliferation concern, such as North Korea. Concurrently, since early 2003, the Japanese government has toughened enforcement of its controls on the export of potential dual-use items to North Korea and has announced a newinterpretation of domestic foreign exchange laws that would make it easier for Tokyo to cut offbilateral trade and shut off the flow of remittances from ethnic Koreans to their relatives in NorthKorea. Specifically, Japan has moved away from its traditional position that sanctions against NorthKorea would require United Nations Security Council approval and is now taking the position thatJapan could impose sanctions in cooperation with the United States, even in the absence of specificUnited Nations approval. Remittances to North Korea are estimated to be in the tens of millions ofdollars annually. (10) Additionally, in June 2003, Japan ordered its customs, immigration, and coast guard to expand safety inspections and searches for illicit contraband on North Korean cargo and passenger ships,which made more than 1,300 calls at Japanese ports in 2002. (11) According to the Japanesegovernment, more than 70 percent of the 120 North Korean ships inspected in Japan from Januaryto August 2003 were ordered to halt operations or received safety warnings, compared with a generalaverage of 10 percent for all countries' shipping. (12) As discussed in the "Japan-North KoreaEconomic Relations" section below, these measures appear to have reduced bilateral tradesignificantly. Additionally, Tokyo reportedly has drawn up contingency plans that would bar banksfrom remitting funds to North Korea and deny landing rights to the crew and passengers (exceptKorean permanent residents of Japan) of Japan-North Korea ferries if North Korea tests a nucleardevice. (13) In late November 2003, the SecretaryGeneral of the ruling Liberal Democratic Party(LDP), Shinzo Abe, a prominent advocate of using pressure tactics against North Korea, said hewould try to convince the Japanese Diet to approve these measures in early 2004. (14) Japan's tightening of restrictions against exports to North Korea has been prompted in part byincreasing evidence that firms and organizations run by ethnic Korean residents in Japan haveprovided North Korea with key parts for its missile and nuclear programs. In May 2003, a NorthKorean defector who once worked as a scientist in Pyongyang's missile program testified to a SenateGovernmental Affairs Committee hearing that "over 90 percent" of the parts for North Korea'smissiles are smuggled aboard passenger ships by the Chosen Soren, the pro-North KoreanAssociation inside Japan. (15) In April 2003,Japanese authorities filed criminal charges againstMeishin, a trading company run by an ethnic Korean resident, that allegedly tried to ship to NorthKorea devices that could be used to build weapons of mass destruction. One shipment of electronicpower control devices from Meishin was seized by Hong Kong customs officials at Japan's request. The shipment reportedly was bound for Thailand, and from there was to be sent to North Korea. (16) Like most Japanese leaders, however, Koizumi has equivocated on the subject of taking more coercive measures against North Korea, such as economic sanctions, absent an escalation of thesituation by Pyongyang. Japan worries that an outbreak of military hostilities could lead NorthKorea to launch long or medium range missiles at Japan -- including U.S. bases. The prospect ofa collapse of the Kim Jong-il regime also worries Japanese leaders because of the potential creationof a massive outflow of refugees. In part for these reasons, some analysts believe that Tokyo'spolicy toward Pyongyang might soften if the two sides were able to reach an agreement on theabduction issue. Some Japanese leaders favor the idea of delinking the kidnapping issue from theother outstanding issues. (17) North Korea's response to Japan's toughened policy often has appeared contradictory. On the one hand, it periodically has increased the volume and intensity of its rhetorical attacks againstJapan, for a time it opposed Japan's inclusion in the second round of six-party talks that are expectedto be held in December 2003, and has insisted that the abduction issue not be included in the talks'agenda. On the other hand, diplomats from Pyongyang and Tokyo reportedly held several secrettalks in the summer of 2003, in which they focused on resolving the abduction issue. Both sets ofinitiatives are likely aimed at diminishing Japan's influence over the nuclear talks. For most Japanese, the most important issue in dealing with North Korea is the status of Japanese citizens kidnapped or thought to have been kidnapped by North Korean agents. Japanesepoliticians from all parties, and media outlets from across the ideological spectrum have warned theKoizumi government not to proceed with normalization without first making more progress on theabduction issue. Relatives of the alleged kidnapping victims have formed support groups that havesuccessfully attracted much attention in the Japanese media, and have secured audiences withinfluential Japanese and U.S. officials. For years, North Korea denied any involvement in thedisappearance of any Japanese, whom the North Koreans insisted on referring to as "missingpersons" rather than "abductees." It was only after North Korea indicated via back-channelnegotiations that it was willing to make concessions on this issue that Koizumi agreed in the summerof 2002 to travel to North Korea. Since the late 1990s, Japanese leaders have pressed the United States to support the Japanese position on the kidnapping issue, a goal they achieved in late 2000, when then-Secretary of StateMadeleine Albright raised the issue during her visit to Pyongyang. During Prime MinisterKoizumi's visit to Crawford in May 2003, President Bush pledged to continue pressing for aresolution of the abduction issue in the multilateral talks, a position reaffirmed by the StateDepartment in November 2003. (18) China andSouth Korea -- key participants in the six-party talks-- are believed to oppose discussion of the issue in the six-party talks. At the Koizumi-Kim summit, Kim admitted that North Korea's security service abducted 13 Japanese from Japan and Europe from 1977-1982. Kim apologized to Koizumi for the kidnappings,which he attributed to overzealous individuals in North Korea's security services, and pledgedverbally and in the two leaders' joint declaration that they would not occur again. Kim disavowedany prior knowledge of the kidnappings, and said the responsible individuals had been punished. Most of the 13 were teenagers or in their early 20s when they were abducted to North Korea. Somewere used in training espionage agents in Japanese language and customs. Only five of the thirteenare alive, according to the North Koreans, and during the summit Kim pledged that they could returnto Japan, if they wished. A Japanese delegation on a subsequent fact-finding visit to North Koreawas told that the remains of all but one of the dead were unavailable. If Kim Jong-il had hoped his admission and apology would put the kidnapping matter to rest, he was mistaken. Although a majority of Japanese supported the reopening of normalization talks,the Japanese public was shocked that so many of the kidnappees had died, and demands for a fullaccounting quickly arose, particularly among relatives of the kidnapped and conservative groups inthe LDP. Each subsequent revelation has only produced more questions, outrage, and politicalpressure to obtain more information from North Korea on the abductions, which Koizumi hasdescribed as "act[s] of terrorism." (19) Essentially, there are three difficulties to resolving the abduction issue. First, Japan has demanded that North Korea allow the nine immediate family members of the thirteen confirmedabductees -- particularly the five still alive who arrived in Japan -- to travel to Japan. Acomplicating factor is that Charles Jenkins, the husband of abductee Hitomi Soga, is a former U.S.Army sergeant who defected to North Korea in 1965 while being stationed along the demilitarizedzone separating the two Koreas. Interviewed in Pyongyang, where he lives with his and Soga's twodaughters, Jenkins has said that he fears being arrested by the United States if he travels to Japan. In December 2002, Japanese Foreign Minister Yoriko Kawaguchi Monday reportedly asked U.S.Secretary of State Colin Powell and Secretary of Defense Donald Rumsfeld not to prosecute Jenkinsif he comes to Japan. Reportedly, the U.S. government has declined to give any assurances toJapan. (20) Second, there are reports that some of the eight Japanese declared to be dead by North Korea are still alive. These suspicions were heightened when Japanese forensic specialists determined thatthe one set of remains given by North Korea were not those of the 43-year-old Kaoru Matsuki, asPyongyang claimed. Third, many family members and support groups have raised questions aboutNorth Korean agents' involvement in the cases of nearly 100 other missing Japanese whodisappeared under mysterious circumstances. During the August 2003 six-party talks in Beijing, theJapanese delegation reportedly asked North Korea to account for ten other individuals allegedlykidnapped by DPRK agents. Meanwhile, North Korea's state-run Korean Central News Agency has warned Japanese against making "a disproportionate furor" over the abductions. (21) In October 2003, Pak Ryong Yon, deputychief of the North Korean Foreign Ministry's Asian bureau, said that the kidnapping issue "has beensettled," and that the family members would not be allowed to travel to Japan any time soon. (22) Some U.S. observers have expressed surprise over Japan's apparent willingness to allow the fate of a relatively small number of its citizens to interfere with achieving a major foreign policygoal. Two points are noteworthy in that regard. First, the kidnappings have become an extremelysensitive political issue in Japan. Years of effort by the relatives of Japanese actually and allegedlykidnapped by North Korea have successfully focused the attention of the media on the circumstancesof the cases, and have won the support of Japanese from across the ideological spectrum. Second, Japan is not unique in altering its foreign policy due to concerns about the safety of its citizens held in captivity by foreigners. In the 1980s, for instance, Reagan Administration officialssold arms to Iran to secure the release of American hostages, going against both law and theAdministration's broad policy toward Iran. In 1996, Evan Hunziker, a mentally unstable 26-year-oldAmerican swam into North Korea, where he was charged with espionage. Hunziker's plight becamea major issue in US-DPRK relations, holding up sensitive policy initiatives until he was released. Neither of these cases involved the abduction of American citizens from U.S. soil by foreign agents. In their joint September 2002 statement, Koizumi and Kim agreed that Japan would provide North Korea with an "economic cooperation" package in recognition of the "tremendous damageand suffering" Japan inflicted during its colonial rule of Korea from 1910-1945. The size and formof the package were to have been negotiated as part of the two countries' normalization talks set tobegin in late October 2002. Using the 1965 Japan-South Korean normalization agreement as amodel, Koizumi agreed that the assistance package would consist of grants, low-interest long termloans, humanitarian assistance, and financing credit for private firms. In their joint statement,Koizumi expressed a "deep remorse and heartfelt apology" for Korea's colonization. Significantly,the agreement stipulates that the economic assistance will begin only after relations are normalized. Accepting this outline for an economic assistance package was a significant shift for North Korea. Previously, Pyongyang had demanded that the package be labeled as "reparations," or"compensation" and in November 2000 had flatly rejected Japan's formal offer of "economicassistance." At the summit, North Korea also dropped its insistence that Japan issue a more formal,legally binding apology from the Japanese emperor and/or prime minister. Finally, by agreeing tolink the aid package to the damage from the colonial era, North Korea also firmly backed away fromits periodic insistence that Japan provide compensation for harms allegedly inflicted since 1945. Should the larger issues of North Korea's nuclear program and the abductees be resolved, the size of Japan's economic package is likely to be the subject of considerable debate between the twosides. As detailed in the appendix of this report, estimates of the present value of the 1965 Japan-ROK settlementvary widely, from as low as $3.4 billion to as high as $20 billion. According toJapanese North Korea-watchers, no consensus has been reached in Tokyo on Japan's bottom line,but media outlets have speculated that the final sum will be at the upper end of the $5 billion - $10billion range. (23) Japanese officials have not deniedthese reports. It is possible that Japanesenegotiators will try to obtain restitution of the �80 billion or so (about $667 million at $1 = �120)that North Korean enterprises owe Japanese banks from deals carried out in the 1970s and 1980s. In private conversations, Japanese officials say it is more likely they will seek to settle these claimsthrough an internationally-mediated process. (24) A major concern associated with Japan's possible financial assistance package is fungibility. The massive size of Japanese aid relative to the North Korean economy -- $10 billion is roughly halfNorth Korea's estimated total output (gross domestic product) each year -- raises fears that it willhelp to sustain the Kim Jong-il regime without inducing any behavioral changes. (25) Thereareconcerns that Japanese financial assistance could directly or indirectly finance militarymodernization, for instance by raising North Korea's overall economic wealth, by freeing upbudgetary resources to be redirected toward the military, and/or by improving the country'sinfrastructure such as roads, railways and communications networks. (26) This issue now appears tohinge on the outcome of the six-party talks. Should these succeed in resolving the key securityissues, the concerns about fungibility could become less relevant. In 2001 and 2002, Tokyo became increasingly alarmed by incursions of espionage and drug-running ships thought to be of North Korean origin into Japanese waters. (27) According to oneestimate in the fall of 2002, such ships made the crossing from their base in North Korea betweenfive and twelve times a year, often releasing smaller boats that in turn launched rubber rafts to ferryagents to and from the Japanese coast. The agents' missions reportedly included gatheringinformation about the outside world, smuggling money and goods, swaying influential opinion-makers in Japanregarding North Korea, recruiting ethnic Korean residents in Japan to gatherinformation about South Korea, conducting surveillance on U.S. and Japanese military installations,and occasionally identifying solitary Japanese for kidnapping. The agents reportedly relied heavilyupon the roughly 200,000 Korean residents of Japan who identify themselves as North Koreancitizens, often using threats against family members in North Korea as a means of coercion. NorthKorea is thought to be a major supplier of methamphetamines on the Japanese market, which arebelieved to be sold to Japanese organized crime syndicates. (28) In December 2001, Japanese coast guard patrol boats chased and exchanged fire with one suspected North Korean spy ship, the first time since World War II Japanese vessels had fired morethan a warning shot upon an intruding vessel. The confrontation ended when the mystery boat sankinside China's exclusive economic zone. It is unclear whether the boat was sunk by Japanese fireor by a self-detonated charge. Following the incident, the Koizumi government suspended food aidshipments, which had been resumed only in October 2001 in hopes of obtaining progress on thekidnapping issue. In the summer of 2002, after protracted negotiations with Beijing, Japanesesalvage teams raised the ship, confirming that it was of North Korean origin, heavily armed, and wasa mother ship to three smaller craft that presumably were designed for beach landings and otherclose-to-shore activities. Coast guard personnel participating in the chase reported seeing NorthKorean agents throwing large bags overboard, raising suspicions that the ships were engaged in drug-smugglingactivities. (29) Until Koizumi's trip to Pyongyang, North Korea had denied any connection to the suspicious ships. At the summit, Koizumi said that Kim acknowledged that "certain military officers" had sentout ships into Japanese waters, and pledged that such actions would not occur again. (30) The Japanesedaily Asahi Shimbun has published a detailed report that the 1,500-person 727 Liaison Office, theNorth Korean agency thought to be responsible for dispatching spy ships to Japan, was disbandedin the summer of 2002. (31) If true, the move mayindicate a recognition by Pyongyang that its shipmovements are well-observed by U.S. reconnaissance satellites. This information is routinely sharedwith Japanese and South Korean defense officials. Aside from Kim Jong-il's admission on the abductees, the most tangible result of the Koizumi-Kim summit was Kim's pledge to extend North Korea's self-imposed moratorium on missilelaunches beyond its 2003, though some security specialists argue that the value of the moratoriumis severely limited because Iran and Pakistan are thought to act as North Korea's surrogates in testingmissiles. (32) While the U.S. concern about theDPRK's missile programs centers around proliferation,Japan is focused on the direct threat. North Korea's missile program has been high on Japan'sagenda ever since Pyongyang's August 1998 Taepodong launch, though for the moment Tokyoappears to believe that priority should be given to the nuclear issue. Japanese security officials aremost concerned about the North's cache of up to 100 medium-range (600-900 miles) Nodongmissiles that are capable of reaching all of Japan, including Okinawa. U.S. intelligence officialsreportedly believe that North Korea has developed or is developing new long-range and medium-range missiles,both of which would be capable of reaching all of Japan. (33) Japan has long been one of North Korea's largest economic partners, though trade and financialflows have declined in recent years. After the Soviet Union ended its support for Pyongyang, Japanemerged as North Korea's second-largest trading partner (after China), a position it held until it wasdisplaced by South Korea in 2002. (See Figure 1 .) Figure 1. Japan's Relative Share of North Korea's Trade, 2001-2002 Sources: KOTRA (Korea Trade Investment Promotion Agency) and South KoreanMinistry ofUnification. (34) Notes: North Korea's total trade was approximately $2.6 billion in 2001 and about $2.9billion in2002. The figures include foreign countries' assistance to North Korea, which is recorded asNorth Korean imports. North Korea's main export items to Japan are clams, men's suits, mushrooms, and coal. Japan's primary exports to North Korea are cars, electrical components, woolen fabrics, and generalmachinery. Many of the electronics components and clothing materials that are sent to North Koreaare assembled into finished products and re-exported to the big discount stores that have sprung upthroughout Japan over the past decade. (35) Additionally, North Korea is in default on over �80 billion(about $667 million at $1 = �120) in loans from Japanese banks, many of which have stoppedhandling transfers to North Korea. Below, Table 1 shows that bilateral trade has declined significantly since the 1980s, primarilydue to the severe deterioration of North Korea's economy that began with the withdrawal of Sovietand Chinese support in the late 1980s and early 1990s. By 2000, the real value of North Korea'sexports to Japan had fallen to one-third of 1985 levels, and Japanese exports to North Korea hadplummeted to one-sixth the level of 1980. That said, the shrinking of the North Korea economy maymean that trade with Japan -- particularly exports, which generate hard currency -- is relativelymore important to North Korea today than was true in the 1980s. Table 1. Japan-North Korea Trade, 1980-2002 (billions of yen) Source: Source: Japan Statistical Yearbook 2003; 2002 and 2003 figures from Japan Customs. a. Real figures, which adjust for price changes, are calculated using the Bank of Japan's export andimport indices. b. 2001 Japanese export figure does not include the 499,999 MT, worth over Y112 billion ($900million), of husked brown rice that Japan sent to North Korea as food aid. As shown by the bottom portion of Table 1, which compares trade figures for the first nine months of 2002 and 2003, trade in 2003 has declined by approximately one-third since 2002. Thedecline was particularly sharp during the second and third quarters, when Japan imposed its morerigorous inspection regime on North Korean shipping. From January through April 2003, trade fellby 17% compared with the same period in 2002. From May to September, year-on-year tradevolume dropped by 43%. What is particularly surprising about these figures is that trade has fallen,not increased, since North Korea resumed the Mangyongbong ferry service that had been suspendedfrom January to July 2003. The ferry normally makes one or two runs a month from North Koreato the port of Niigata, Japan. Much of Japan's trade with North Korea is said to be facilitated by the Chosen Soren ( Chochongryun in Korean), the organization of pro-Pyongyang ethnic Koreans who are permanentresidents of Japan. (36) Chosen Soren also is known to organize remittances to North Korea. Thoughseveral sources have estimated the flows to be on the order of hundreds or even billions of dollarsper year, more recent analysis has pointed out the implausibility of these estimates, instead placingthe actual amounts below $100 million per year. (37) Moreover, the remittances are believed to havedeclined to the $30 million level since the early 1990s, following the bursting of Japan's economic"bubble,"a development that not only presumably reduced the personal wealth of pro-PyongyangKoreans in Japan, but also sent many of Chosen Soren's credit unions into bankruptcy. (38) Several ofthese credit unions have been taken over by the Japanese government, a move that sparkedcontroversy in Japan as bilateral relations deteriorated, particularly when revelations surfaced thatsome credit unions had funneled money to the North Korean government. In 2001, North Koreahalted its investigations into the kidnapping issue after the Japanese government launched aninvestigation of the finances of Chosen Soren and its associated credit unions. (39) The takeovers marked a break from the Japanese political establishment's previously tolerance of Chosen Soren . Indeed, many leaders of Japan's ruling Liberal Democratic Party (LDP) had warmties with the organization, exempting it from paying local taxes, for instance. Some have argued that Chosen Soren members provided a link between the LDP and yakuza organized crimesyndicates. (40) Since the mid-1990s, Japan has sent 766,000 MT of food aid to North Korea to help alleviate the effects of severe food shortages. About two-thirds (500,000 MT) was donated in 2000, and theremainder was given in 1995 and 1996. Almost all of Japan's aid has been channeled through theUN World Food Program. Generally, Tokyo has linked food shipments to progress in Japan-DPRKrelations. Food shipments were suspended following North Korea's 1998 Taepodong launch,resumed in 2001 when progress on the kidnapping issue appeared possible, then were suspendedagain in December 2001 following the North Korean spy incident. Since 1995, the United Stateshas provided over 1.7 million MT of food assistance to North Korea. South Korea has sent about1.5 million MT. On June 22, 1965, Japan and South Korea signed a Treaty of Basic Relations, normalizingrelations between the two countries for the first time since Japan annexed the Korean peninsula in1910. As part of the final settlement, Japan agreed to provide South Korea with a total sum of $800million (41) , which consisted of: a) an outright grantof $300 million, to be distributed over a 10-yearperiod; b) a $200 million loan to be distributed over a 10-year period and repaid over 20 years at3.5% interest; c) $300 million in private credits over 10 years from Japanese banks and financialinstitutions. Prior to the 1965 agreement, the normalization negotiations between Tokyo and Seoul had dragged on for over fourteen years, and had triggered strong emotions in both countries. Throughoutthe 1950s, South Korean President Syngman Rhee adopted a confrontational approach toward Japan,and successive Japanese governments showed little enthusiasm for accepting Rhee's demands thatJapan apologize and compensate for its colonization of the Korean peninsula. Relations warmed dramatically following a military coup in 1961, led by general Park Chung-Hee, who established rapid industrialization -- following the Japanese model of export-leddevelopment -- as his country's paramount economic goal. To this end, Park was eager for Japaneseeconomic assistance, and adopted conciliatory postures on most outstanding issues. Theapproximate size and composition of the compensation package was one of the first issues to beresolved following Park's coup. The South Korean side, which at one point had asked for as muchas $2 billion, lowered its demands to $700 million in grant aid before agreeing to the $800 milliontotal package. Reportedly, until late 1962, Japan had offered only $70 million in total compensation,a figure the U.S. State Department at the time described as "unrealistically low." (42) Furthermore, theTreaty on Basic Relations did not contain any reference to a Japanese apology. Instead, Japan'sreparations payment was characterized as "economic assistance." The terms of the Treaty enraged many South Koreans. Charging that the agreement amounted to a "sellout," Korea's opposition parties boycotted the ratification process in the National Assembly.Violent anti-government protests erupted throughout the country, and the Park government imposedmartial law to suppress anti-government protests around the country, the second time in less than ayear troops were mobilized to curtail protests against the government's Japan policy. The agreementalso faced strong but eventually ineffectual opposition in Japan, where the Socialist Party -- whichhad friendly ties with North Korea -- argued that the Treaty would impede Korean unification andwas a prelude to an anti-communist alliance in Asia. (43) There are a wide range of estimates for the present value of the 1965 Japan-South Korea settlement. At the low end is a method that adjusts for inflation in the U.S. economy, yielding avalue of approximately $3.4 billion in 1999 dollars. (44) At the high end is a calculation that producesa value of $20 billion in today's dollars by adjusting for inflation in the Japanese economy,appreciation of the yen, accrued interest, and differences in population in North and South Korea. (45) One methodology that adjusts for Japanese inflation since 1965 and for inter-Korean populationdifferences yields a present value of �418 billion ($3.8 billion using an exchange rate of �110 = $1). If the same disbursement formula used in 1965 were applied today, the �418 billion would break outas �157 billion ($1.42 billion) in outright grants, �104 billion ($950 million) in concessionarygovernment loans, and �157 billion ($1.42 billion) in private credits. (46) The above figures should be interpreted as rough approximations. Computing the present value of a past sum is an inherently inexact task. When more than one country is involved, the calculationis made even less precise by long-term changes and short-term fluctuations in exchange rates. Additionally, a calculation might also take into account differences between Japan's occupation ofNorth Korea and South Korea, including the extent of the claims for damage by the occupationauthorities. Finally, the adjustments are made for the total figure of $800 million, even though theactual value of Japan's compensation package was lower: Over 60% ($500 million) of thesettlement was disbursed as government loans and private credits, which are less valuable to therecipient than outright grants. Thus, the calculations presented provide only a preliminarycomparative baseline, with many qualifications. On the other hand, the 1965 settlement occurred before the revelation that Japan had forcibly used tens of thousands of Korean "comfort women" to provide sexual services to Japanese soldiersduring World War II. North Korea periodically has insisted that Japan's compensation take intoaccount the comfort women's plight.

Japan and North Korea have not established official relations since the Korean Peninsula, which the Japanese Empire annexed in 1910, was liberated from Japanese rule and divided into twoseparate states following Japan's defeat in World War II. Attempts to establish normal relations inthe early 1990s and again in 2000 ended in failure, due to seemingly unresolvable obstacles. InSeptember 2002, a one-day summit was held in Pyongyang between Japanese Prime MinisterJunichiro Koizumi and North Korean leader Kim Jong-il, the first ever between the leaders of thetwo countries. Koizumi and Kim momentarily appeared to break longstanding stalemates on severalissues and agreed to restart bilateral normalization talks, but the talks subsequently stalled, due totwo developments: North Korea's apparent admission to U.S. officials in October 2002 that it hada secret nuclear weapons program based on the process of uranium enrichment; and popular outragein Japan at Kim Jong-il's admission that North Korea kidnapped 13 Japanese in the 1970s and 1980and brought them to North Korea to live. Subsequently, according to the North Korean government,eight of whom died. Japan's role is potentially critical in the current crisis over North Korea's nuclear weapons programs for a number of reasons. Most importantly, Japan has promised North Korea a large-scaleeconomic aid package to compensate for the Japanese occupation of the Korean Peninsula from1910-1945, much as it gave South Korea economic assistance when Tokyo and Seoul normalizedrelations in 1965. The assistance is to be provided after the countries agree to normalize relations,a process that Japan now links to a resolution of the nuclear issue. Reportedly, Japanese officialsare discussing a package on the order of $5-$10 billion, an enormous sum for the North Koreaneconomy, the total GDP of which is estimated to be in the $20 billion range. Currently, Japan is asignificant source of North Korea's foreign exchange, by virtue of the large Japanese market for theNorth Korean government's suspected drug-running operations, and of remittances from Koreanpermanent residents in Japan. Japan is North Korea's third-largest trading partner. Since the fall of 2002, Japan has been the Northeast Asian country most supportive of the Bush Administration's policy of pressuring North Korea to abandon its nuclear program, and has takena number of steps to curtail North Korea's ability to earn hard currency and to import dual-usetechnology. Since North Korea launched a long-range missile over Japan in 1998, relations withNorth Korea have been a highly politicized issue inside Japan, creating strong domestic support fortaking a hard line against Pyongyang. Prime Minister Koizumi, however, has equivocated on takingmore coercive measures against North Korea, such as economic sanctions, absent an escalation ofthe situation by Pyongyang. Japan fears such measures could provoke a military response by NorthKorea and/or trigger a surge in refugees. This report will be updated periodically to track developments in Japan-North Korea relations.

The September 11, 2001 terrorist attacks on the United States and the subsequent attacks on European countries such as the United Kingdom and Spain have prompted both sides of the Atlantic to reinvigorate their respective efforts to ensure homeland security and combat terrorism. However, U.S. and European approaches to these issues differ. While the United States has embarked on a wholesale reorganization of its domestic security and border protection institutions, European countries have largely preferred to work within their existing institutional architectures to combat terrorism and respond to other security challenges and disasters, both natural and man-made. This report examines homeland security and counterterrorist measures in six selected European countries: Belgium, France, Germany, Italy, Spain, and the United Kingdom. None of these European countries currently has a single ministry or department equivalent to the U.S. Department of Homeland Security. In most of these countries, responsibility for different aspects of homeland security and counterterrorism is scattered across several ministries, and inter-governmental cooperation plays a key role in addressing threats and challenges to domestic security. In some countries, such as the UK, Germany, and Belgium, responsibility for homeland security affairs is also split among federal and regional or state governments. The approaches of many European countries to protecting their publics and infrastructure have grown out of decades of experience in dealing with domestic terrorist groups, such as the IRA in the UK, the Basque terrorist movement ETA in Spain, or the anarchist Red Army Faction in Germany. Even after the terrorist attacks of the last few years, European countries have continued to view combating terrorism primarily as a task for law enforcement and intelligence authorities. Some critics suggest that many European countries have been slow to bolster domestic protection efforts, reduce societal vulnerabilities, strengthen border controls and transport security, and push the defense of European territory as far out as possible. Others contend that European governments have sought to integrate counterterrorism and preparedness programs into existing emergency management efforts, thereby providing greater flexibility to respond to a wide range of security challenges with often limited personnel and financial resources. European parliamentary systems influence government decisions regarding homeland security policy and budgetary priorities. In the UK, for example, the government has a parliamentary majority and as a result, the government's proposed budgetary levels are not usually contested in the same way as they often are in the United States. A strong executive in France largely directs homeland security efforts with minimal parliamentary oversight. Spending priorities in the different countries vary, but most have devoted increased funds over the last several years to intelligence and law enforcement efforts against terrorism. Funding for measures to strengthen transport security, improve emergency preparedness and response, counter chem-bio incidents, and protect critical national infrastructure are more difficult to determine and compare among the countries, given that responsibility for these various issues is often spread among the budgets of different government ministries. All of the countries discussed in this report are members of the European Union (EU), which in the years since September 11 has sought to boost police and judicial cooperation among its 25 member states, bolster external border controls, and harmonize immigration and asylum policies. Some analysts believe, however, that the EU should take a more active role in ensuring European homeland security, given the EU's largely open borders and the accession of central European countries that border less stable regions such as the Balkans. They also argue that more extensive EU efforts to coordinate homeland security affairs would help bring order and greater coherence to the myriad of government institutions engaged in protecting domestic security within each EU member state, and encourage common security and budgetary priorities among all members. Some have proposed that the EU should establish at a minimum a "homeland security czar" similar to its recently appointed counterterrorism coordinator. Other experts are skeptical that member states would be willing to cede greater sovereignty to the Union in the area of domestic security, which is central to national authority. Similar to the United States, European countries are also struggling to find the appropriate balance between measures to improve security and respect civil liberties. In the UK, there has been vigorous debate on such issues. Germany, Spain, and Italy have traditionally guarded civil liberties strongly in light of their histories with authoritarian regimes, but recent terrorist activity has prompted greater discussion of strengthening measures to ensure domestic security. While France has long championed civil liberties such as free speech and freedom of religion, French society also emphasizes the need for public order and has taken steps to enhance security since September 11. Some U.S. policymakers and Members of Congress are taking an increasing interest in how European countries are organizing and managing homeland security issues and emergency preparedness and response, in light of both recent terrorist activity and Hurricane Katrina, which devastated the U.S. Gulf Coast in August 2005. In seeking to protect U.S. interests at home and abroad, many U.S. officials recognize that the actions or inaction of the European allies can affect U.S. domestic security, especially given the U.S. Visa Waiver Program, which allows nationals of many European states to travel to the United States without a visa or other checks on their identities. Some experts suggest that greater U.S.-European cooperation in the field of homeland security is necessary in order to better guarantee security on both sides of the Atlantic. After the terrorist attacks of 9/11, an American official characterized Belgium's political will to cooperate in the global war on terrorism as "fairly strong," chiefly because it is linked to Belgium's self-interest: the Belgians do not want any terrorist activity to occur on their territory. Because the European Union (EU) and NATO are headquartered in their country, the Belgians are sensitized to the terrorist threat but they are said to be anxious over whether they have sufficient resources to protect personnel at the two institutions. Some analysts believe that the Belgians' ability to deliver on their promises is at times somewhat challenged, and that any type of domestic "coordination" is problematic in Belgium's federated system of government, in which policies must navigate the shoals of several levels of government and three official languages. In addition, Belgium's domestic political dynamics act as something of a constraint on cooperation; the ethnic mistrust between the Dutch-speaking Flemings and the French-speaking Walloons complicates matters. Finally, some observers believe that Brussels tends to place a great deal of emphasis on process, and, as a result, the government is slow and bureaucratic. Belgium showed early leadership in coordinating international counterterrorist activities. At the time of the September 11 attacks, Belgium held the revolving presidency of the European Union. Shortly thereafter, police and anti-terrorist officials from Germany, the Netherlands, and France met with their Belgian counterparts in Brussels to discuss efforts to share information and coordinate counterterrorist strategy. In addition, Belgium pushed within the Union for acceptance of EU-wide fast-track extradition procedures for serious crimes. Like other EU countries, however, Belgium has refused to deport suspected terrorists to countries where they might face the death penalty. In 1987, Belgium and the United States signed a bilateral extradition treaty. A mutual legal assistance treaty signed the following year expedites communications by permitting requests to bypass standard diplomatic channels and be made directly between the U.S. Department of Justice and the Belgian Ministry of Justice. Extraditions may now be sought using a "provisional arrest request pending extradition," and are conducted in accordance with a Mutual Legal Assistance Treaty signed in January 2004. In June 2002, the U.S. and Belgian governments initialed an agreement permitting U.S. Customs agents to be stationed in the seaport of Antwerp, where they work with Belgian officials to screen freight containers to be loaded on vessels bound for the United States. The accord is part of the Bush Administration's Container Security Initiative (CSI), under which foreign ports are checked to prevent shipment to the United States of weapons of mass destruction. However, Belgium's laws on security-related matters have proved controversial in the past. For example, the two suicide bombers who assassinated former Afghan Northern Alliance leader Ahmed Shah Massoud on September 9, 2001, were found to be carrying Belgian passports. Until 1998, Belgian passports were issued by municipal officials, and an estimated 3,500 passports were stolen annually from poorly-guarded city halls. After the United States applied pressure, even indicating that it might begin requiring visas for Belgians, the country centralized its passport issuance process. In 2004, Belgium became the first country to introduce biometric-based electronic passports; the new travel documents are compliant with both U.S. and EU requirements. In addition, in 2001, an article in the Wall Street Journal criticized Belgium for having "some of the weakest antiterrorism laws in the European Union[,] ... making it popular among terrorists as a place to hide out and plan attacks." Citing Belgian sources, the article maintained that, because Belgium had not suffered directly from terrorist acts in the recent past, Brussels had largely relegated the terrorism issue to a back burner in the 1980s. In an editorial, the newspaper singled out Belgium as "simply the only country whose elected officials have failed to ensure that the bureaucracy does not provide an obstruction to broader interests." Belgium has since taken steps to address some of these issues. In 2003, the legislature passed the Terrorist Offence Act, which amended the criminal code by introducing definitions relating to terrorism, and spelling out punishment for belonging to or aiding terrorist groups. In 2004, Belgium passed a law addressing the financing of terrorism, and the following year approved legislation creating the legal framework for special anti-terrorist investigations. Belgium's approach to homeland security is less unified than that which was adopted after 9/11 by the United States; it has no counterpart to the U.S. Department of Homeland Security. Individual components of homeland security, counter-terrorist, and emergency management responsibilities are spread throughout the government; different agencies look at various issues; for example, one group handles threat assessment, while another one is responsible for intelligence gathering, and border control and financial questions are handled by two other ministries. Belgium's prime minister has the main responsibility for the country's antiterrorism policy. The Council of Ministers handles the development of strategic policy toward counterterrorism; any differences of opinion are ironed out by the Ministerial Committee on Intelligence and Security; in which various ministries participate. The Committee is chaired by the Prime Minister. In all its law enforcement activities, Belgium places a strong emphasis on civil rights. Government ministers propose policy priorities for their own departments, subject to the final approval of the Council of Ministers. As noted earlier, the attacks of 9/11 made counterterrorism and emergency preparedness a priority in Belgium; the subsequent terrorist bombings in Madrid and London heightened Belgium's sense of vulnerability and reinforced the need for greater homeland security. Nonetheless, in terms of priorities, terrorism is placed on a par with drug and human trafficking and other criminal activities. Accordingly, actions to counter terrorism are regarded as the responsibility of the police. Most homeland security policy implementation is coordinated out of two ministries: the Ministry of the Interior, and, to a lesser extent, the Ministry of Justice. Investigations are conducted either by the police, or by a federal magistrate. Budgetary resources and funding policy priorities for various homeland security-related activities are determined by the relevant government ministries, in consultation with the parliament and the Finance and Budget Ministries. The Ministries' funding levels are also subject to the approval of the Council of Ministers. Like all government activities, funding for homeland security-related functions are negotiated among a four-party governing coalition of mixed ethnicity (French/Flemish) and ideology. In 2002, Belgium spent a total of 4,109 million euros—an estimated 1.6% of GDP—on public order and safety functions. Spending on counter-terrorism activities has expanded in recent years to cover funding for a new intelligence and policing agency (OCAM/CODA—see below) and the addition of seven magistrates who will conduct investigations related to counterterrorism. The lead Belgian agency for emergency response is the General Directorate of Civil Defense. It was created by royal decree in 1954 as an agency to manage emergencies in wartime. However, as the threat of war diminished, the directorate was modified and strengthened in subsequent legislation and decrees to account for specific activities in a number of areas, including disaster relief assistance, fire fighting, and protection against nuclear radiation. The Directorate is part of the federal Ministry of the Interior, and is headquartered in Brussels. The Directorate coordinates activities among federal ministries and among the various levels of government—down to the municipal level. It also develops plans for dealing with federal emergencies and sets training and operational standards. The Directorate of Civil Defense does not have direct responsibility for countering terrorism. In the event of a major act of terrorism, the Directorate, along with the Crisis Center (see below), would be responsible for emergency response and communications with the populace. In 1988, the Governmental Coordination and Crisis Center was created to gather and analyze information about and provide continuous monitoring of accidents and other emergencies. It is one of five divisions of the Interior Ministry. Its total staffing is 770, including 120 in Brussels and 650 spread among six operational units around the country; it can also draw from a pool of 1500 volunteers as needed. When either a man-made or natural disaster occurs, the Center coordinates the response of government agencies at all levels. Depending upon the scope of the disaster, the Center provides federal assistance to mayors (if it is a relatively minor event), and to governors (if the disaster is confined to a single province). The Crisis Center also is the Belgian government's main agency for responding to a terrorist event. Professional and volunteer civil defense staff receive training at the Royal School of Civil Defense in Grez-Doiceau, in the centrally-located province of Walloon Brabant. Training centers for firefighting are located in each of Belgium's ten provinces. Belgium's national police force is part of the Ministry of the Interior. One author has noted that, after World War II, many European countries deliberately chose not to strengthen their police forces, and that "[i]n Belgium, policing was divided between two types of law enforcement institutions, one Walloon in orientation and the other Flemish, with neither being considered especially capable, or able to exercise control over all parts of the country." In recent years—particularly since the terrorist attacks of 9/11—efforts have been made to consolidate and improve Belgium's federal police force. Today, Belgium has one integrated police force, but no gendarmerie. The force is divided into five sections, which are responsible for administrative, judicial, and operational support, as well as human resource and materiel matters. The administrative police handle border controls and transportation security. The judicial police cover economic and organized crime, forensics, and other activities. The office of the operational support police is the national contact point for international liaison (including Interpol) and special units (e.g., SWAT teams). There are approximately 15,000 officers serving in the federal force, and about 28,000 employed by nearly 200 police departments at the local level. In 1994, Belgium created a cadre of international liaison officers of the federal police. Stationed in more than a dozen foreign capitals (including Washington, D.C.), the liaison officers cooperate with foreign governments on both law enforcement and judicial matters. For example, they share information relating to cases of terrorism, and facilitate extradition procedures. Anti-terrorist and homeland security intelligence is handled by the civilian intelligence agency—the State Security and General Intelligence Service under the Ministry of Justice. The Ministry of Defense's intelligence service may only be called into play when there is a military aspect to a certain case. The two agencies have a protocol agreement on the exchange of information. Threat analysis is performed by a new agency, the OCAM/CODA ( Organe de coordination pour l ' analyse de la menace/Coördinatieorgaan voor de dreigingsanalyse ). This organization, which is expected to be fully operational in a year, is an umbrella group that coordinates intelligence and policing efforts from around the government. It replaces a similar agency, but has wider scope and a larger budget. It facilitates information sharing among all government agencies tasked with combating terrorism. It collects information from various organizations (including state security, intelligence and police services, customs, the transportation office, the treasury, and the Ministry of Foreign Affairs), and conducts threat analyses based on this information. Belgium has also demonstrated an interest in wider sharing of intelligence within Europe. After the March 2004 terrorist bombings in Madrid, Belgium joined Austria in proposing the establishment of a European intelligence agency, but other EU members opposed this initiative on national sovereignty grounds. A 2002 RAND study identified four agencies that work in the counterterrorism field: 1) the Department of Terrorism and Sects of the Federal Police, responsible mainly for coordinating activities relating to the Turkish Kurd issue, terrorism, and religious sects; 2) the mixed anti-terrorist group, a small group, supervised by the Justice and Interior Ministries, that collects and analyzes information for the development of policy and legislation (this group has since been replaced by the OCAM/CODA); 3) State Security, which handles intelligence and security matters in several areas, including terrorism, proliferation, and organized crime; and 4) the Terrorism and Public Order Service of the Federal Police, a deliberately low-profile group of about 40 field staff with wide-ranging responsibilities. In addition, the Customs and Excise Department is responsible for the prevention of arms trafficking. The Crisis Center, as mentioned above, is the principal agency for monitoring and responding to a terrorist event. Two organizations are responsible for investigating and preventing the financing of terrorism. The Financial Information Processing Unit, an independent agency supervised by the Finance and Justice Ministries, collects and analyzes financial data about possible terrorist linkages. The Treasury, part of the Federal Public Finance Department, is responsible for freezing assets belonging to terrorists. In addition, Belgium is a member of the international Financial Action Task Force on Money Laundering, a 31-country organization formed by the G-7 in 1989 to combat money laundering. The Federal Police and the Customs office (an agency of the Finance Department) are responsible for border security, while the Ministry of Transportation is tasked with handling the technical side of transportation security. Potential chemical, biological, radiological, and nuclear (CBRN) threats from abroad—by governments or non-state actors—are assessed by the Ministries of Defense and Foreign Affairs. OCAM/CODA, State Security, and the federal police are charged with CBRN threat analysis and prevention. Nuclear power plant security is split between the Interior Ministry and the Sub-directorate for Energy of the Ministry for Economics. France does not have a department of homeland security. Instead, France relies upon institutional practices in several ministries that have evolved over many years as a response to terrorist attacks. The French response to terrorism contrasts to that of the United States. While the United States has undertaken military action around the world to counter the terrorist threat, France, with other EU governments, has concentrated on a response grounded in law enforcement. In France, institutional flexibility and enhancement of judicial and police authority are the core of this effort. Long periods of political instability have also led to an emphasis on public order over civil liberties. Coupled with the emphasis on public order is a highly centralized governmental system, inherited from the monarchical and Napoleonic eras, in which authority lies primarily in the hands of the president and the prime minister. France lacks the resources to undertake homeland security efforts comparable to those of the United States. France also has competing budget priorities, such as social welfare, that traditionally receive more attention in France than in the United States. In part to compensate for this relative lack of resources, the French government increasingly coordinates its anti-terror efforts with its EU partners, especially in border control. Discernible funding levels marked for anti-terrorism are modest. France also has a budget system that largely lacks line items; instead, executive authority may move funding around to respond to needs, with minimal parliamentary oversight. For this reason, even general budget figures for the country's anti-terror effort cannot be described. Violent radical groups have been active in France for many decades, and strong state action has been used in response. The greatest challenge from terrorists came in the 1960s, when extremists carried out assassination attempts and bombings against institutional, governmental, and private targets. Many of these terrorists were of domestic origin; some were members of or had connections to the French armed services. They were seeking to maintain Algeria as a colony, and to overthrow the government of President de Gaulle, then in the process of dismantling France's colonial empire. Others were Algerian nationalists seeking to hasten the end of French rule and expunge French influence in northern Africa. Since the 1960s, terrorists have repeatedly struck French targets. Separatist Basque and Corsican terrorists have been active since that period. In 1994, French police thwarted a hijacking at the Marseille airport; terrorists had reportedly intended to crash the plane into the Eiffel Tower. In 1995, an Algerian terrorist organization, the Armed Islamic Group (GIA), carried out bombings in the Paris subway that killed a number of French citizens. Al Qaeda has carried out at least one successful attack against France. In 2002, Al Qaeda operatives exploded a car bomb in Karachi that killed 11 French naval personnel assisting with the transfer of French submarines to Pakistan. Today, France regards Al Qaeda and related radical Islamist groups as the country's greatest terrorist threat. The Ministry of Interior (MOI) and Ministry of Defense (MOD) play key roles in managing crises in France. France has also created intelligence agencies and specialized judicial entities and police forces to combat terrorism. As noted earlier, France does not have a governmental entity comparable to the U.S. Department of Homeland Security. The Ministry of Interior is responsible for civil protection, and in most instances would manage a response to a terrorist threat or attack. In the event of a threat or an attack, the Council for Internal Security ( Le Conseil de sécurité intérieure , or CSI), created in 2002, largely in response to the September 11, 2001 attacks in the United States, would define overall policy and determine a priority of measures. The CSI has a permanent staff, but the president would convene and lead it. Its permanent members are the prime minister, the Ministers of the Interior, Justice, Defense, Economy and Finance. Other officials may be added as needed. Its current leader is Philippe Massoni, a longtime public official and a former prefect. MOI's Directorate of Defense and Public Safety (DDSC) is charged with preparing a national response structure. That structure includes a domestic intelligence agency that answers to the MOI and to the president and prime minister; an inter-ministerial operations center (COGIC, discussed below) that coordinates different ministries' responses (such as the Ministry of Health in the event of a chemical or biological attack); and regional and local government structures that carry out orders from Paris. France has 90 départements , or administrative regions, each led by a prefect who is an official of the central government in Paris. France does not have governors or local assemblies that control regional affairs. Instead, the prefect, acting for the president and prime minister, coordinates such groups as firefighters, national police for riot control ( Les Compagnies Républicaines de la Sécurité , or CRS), local police, and the Gendarmerie , which is a police and investigative force. France has approximately 240,000 firefighters and rescue personnel, 130,000 local police, and 97,000 gendarmes. In addition, unlike the United States, France uses the military domestically in extreme emergencies, such as during major floods or in the event of a terrorist attack. The military would remain under the command of the MOD, and not the MOI, in such situations. In 1986, a French law created special judicial and police authorities to respond to terrorism. In France, a magistrate performs multiple roles: he is an investigator and a prosecutor. He may also issue warrants, a power that provides him broad authority. Under the 1986 law, if a magistrate finds evidence against an individual or a group, he may direct the police to gather further evidence and make arrests. He may also use the Directorate for the Surveillance of the Territory (DST), France's domestic intelligence service, to gather evidence. The DST may coordinate its work with the General Directorate for External Surveillance (DGSE), France's foreign intelligence service, and, for example, exchange information when there appears to be a link between citizens and foreigners involved in terrorism or other crimes. France has a special senior anti-terror magistrate, Jean-Louis Bruguière, who oversees the effort to find and arrest terrorists. His prosecutors have greater authority than other French prosecutors to order wiretaps and surveillance, and they may order preventive detention of suspects for up to six days without filing a charge. Under the 1986 anti-terror law, there are special judicial panels that try cases without juries. Today, France has "a pool of specialized judges and investigators adept at dismantling and prosecuting terrorist networks." France has a system, Vigipirate , used at moments of danger to the country. Instituted in 1978, Vigipirate has two levels, which can be activated by the president without legislative consent. The first level, "simple," is activated when a threat appears imminent. The government may call up reserve police and rescue personnel, and will deploy police to sensitive sites such as embassies, the subway, train stations and airports, and fuel infrastructure, including nuclear plants (approximately 50% of France's electricity is derived from nuclear power). The government activated this first level at the outset of the first Gulf War in 1991. It remained in effect until the day after the attacks on the United States on September 11, 2001, when France activated the second level, "reinforced." At this level, President Chirac exercised his authority to direct the armed forces to deploy internally to ensure security. He put an additional 5400 police, gendarmes , and soldiers on the streets of Paris at strategic points; four thousand police were initially assigned to the Paris subway system alone. The government also enhanced the country's air defense system. In all, 35,000 members of the police and military were called up. The system remained at this level until December 31, 2003. In 2003, as a result of a dramatic loss of life during a heat wave, the government developed a new plan to respond to disasters, whether natural or man-made. The plan ( Plan Canicule , "Heat Wave Plan") has four steps. In the first step, the government maintains vigilance by having technological systems in place that may signal a potential disaster, such as a heat wave or a radiological attack. For example, equipment for detection of radiation might be deployed in the event of a nuclear plant accident, or a radiological attack. In the second step, the government goes to an "alert" status. In this step, the Ministry of Health works with the Ministry of the Interior and directs the prefects to take specific measures to prepare for a disaster. Officials might alert hospitals, begin to mobilize regional health care professionals and rescue workers, and enhance their communications network. The third step is "intervention." In this step, the Ministries concentrate available information in fewer hands and direct the prefects to intensify their efforts in the départements . The prime minister decides that a body similar to a U.S. interagency group must be convened. This body, the Interministerial Committee for the Management of Crises (COGIC), has an ad hoc existence, and would be comprised of senior officials from the necessary agencies. The Gendarmerie might also be called upon to ensure public order and to assist in other ways, such as the movement of large numbers of people, supervision of traffic flow, and provision of transport. The fourth step is "requisition." In this step, the prime minister directs COGIC to use existing authority to seize all necessary transport (trains, planes, automobiles), and to direct the media to broadcast information to the population. The armed forces may be directed to engage in security operations. Through the prefects, the government can direct local officials, such as mayors, to provide needed information and resources. In 2003, the government took another step to build its capacity to combat threats to domestic security. It began to create a unit of 1,000-5,000 soldiers, directed by the Ministry of Defense, to respond in the event of a large-scale terrorist attack or a "natural or technological catastrophe," such as damage to a nuclear power plant. Protection of key infrastructure is an issue that has long attracted attention in France. As noted above, a special military unit is being prepared to aid in this effort. The government has installed radar near nuclear power installations to detect low-flying aircraft that may approach too closely. When radioactive materials that may pose a threat to the population are transported, it is the Ministry of Economy and Finance that moves them. Under the Vigipirate system, security forces deploy at key sites, such as bridges and tunnels. France has long placed air marshals on selected flights to counter an attempted hijacking. Security in French airports is often extremely tight; while passengers boarding aircraft in France have their baggage examined, many who arrive in France also have their baggage subjected to a careful search. France and the United States reached an agreement in 2002 over container security in ports. Under the agreement, U.S. Customs inspectors have joined French counterparts in Le Havre and Marseille to examine sea cargo containers for the possible presence of weapons of mass destruction and illicit smuggling or trafficking activity intended for shipment to U.S. ports. Some French officials express special concern about a possible terrorist attempt to spread biological agents among the population. In 2002, the government began to allocate funding for the purchase of stockpiles of antibiotics in the event of such an attack. The government also has a "biotox" plan to secure biological agents in laboratories; supervise the transport of such agents; intervene quickly in a crisis to reinforce care units with sufficient supplies and medical personnel; and develop vaccines and antidotes in anticipation of an attack. Since 2004, the government has also carried out a number of large-scale exercises to test its response to a chemical or biological attack. The European Union plays an important role in the effort to counter terrorism in Europe. From the 1950s France has placed the EU at the center of its efforts to build a stable society and strong economy. Increasingly, France and other EU members have shared elements of their sovereignty in a range of areas, including border control and general security. The EU members have taken a number of specific steps in police and judicial cooperation. In 2001, they established a common definition of terrorism, and agreed to common penalties for terrorist crimes. France and its EU partners maintain a common list of terrorists and terrorist organizations. One part of the list is directed against Al Qaeda and the Taliban. The EU has adopted U.N. Security Council sanctions against these groups. Another part of the list names terrorists and terrorist organizations in Europe and elsewhere. All EU members have agreed to freeze the assets of individuals and organizations on the list. In 2001 the EU agreed to eliminate extradition proceedings among member states for a range of crimes, including terrorism. EU members also agreed to strengthen EU police and judicial institutions. Since 1999, Europol has served as an information clearinghouse for cross-border crimes such as terrorism and money-laundering. There has also been an effort to share more intelligence on terrorists' activities among EU states, but France tends to have several bilateral intelligence sharing arrangements that are stronger than any general policy of sharing among all member states. France and other EU members are attempting to control illegal immigration. The effort has become enmeshed in a debate that sometimes links terrorism to illegal immigration from the Middle East, a point of view evident on the extreme right and in such anti-immigrant political organizations as Jean-Marie Le Pen's National Front party. While France is part of the Schengen plan, which allows EU citizens to cross borders of member states with minimal involvement with border officials, there is an increasing effort to discourage illegal immigration. France has established joint border controls with Spain and Italy to capture and expel illegal immigrants. France and several other EU countries are also establishing national DNA analysis files in order to track and identify terrorists and other criminals. France also supports the establishment of biometric information databases for purposes of identification. Strong central authority in France has traditionally meant that the government constrains civil liberties when there is a real or perceived threat. Under the Vigipirate system, the police frequently check individuals' identities and inspect carried items, particularly in large public places such as airports and train and subway stations. While there is no requirement for a national identity card in France, it is difficult to undertake a range of casual activities, such as cashing a check, obtaining a loan, or applying for employment without one. At times of a high alert, police will stop and question people who appear to fit a description. While France has long championed free speech and freedom of religion, there is also a prevailing requirement for public order. The current Minister of the Interior, Nicholas Sarkozy, for example, has reacted strongly to the imams in France's Muslim population who have criticized France and other western countries: The Republic is not a weak regime and does not have to accept speeches that, under the guise of being protected by being delivered in a place of worship, might call for hatred and murder. [Such imams] will be systematically expelled.... Those who make excessive and violent remarks foreign to the values of our Republic will be expelled.... [We] will surveil places of worship... as well as prisons..., and keep an eye on social and sporting or cultural organizations that serve as a screen for radical and terrorist ideologies and activities. Sarkozy is also at the forefront of an effort in the French government to place restraints on immigration. He has proposed a law to the French parliament that would allow entry primarily of more well-educated immigrants who speak or have French language abilities. The law would also make it more difficult for immigrants who cannot support themselves financially to bring family members into France. As noted above, only fragmentary information is available on French funding for homeland security. In 2002, parliament passed a bill that allocated $5.6 billion for the period 2003-2007 to hire 7,000 more gendarmes and 6,500 more police for localities. In 2003 the government allocated 52 million euros (approximately $65 million) through 2008 to programs to counter chemical, biological, radiological, and nuclear threats. By one estimate, France spends approximately one percent of its GDP on public order and safety, a figure that would have reached approximately $18 billion in 2001. Presumably, part of that figure would cover expenditures for military forces that might be called upon to act in Metropolitan France. The French governmental system is significantly different from the U.S. system, and funding for specific purposes is difficult to discern. The mixture of a presidential and a parliamentary system may explain the difficulty. The parliament is relatively weak, and its leaders are heavily reliant upon the government, led by a prime minister, and the president for guidance in writing laws and in examining issues. While some members of the French parliament have become more outspoken in the past two decades, a sense of oversight responsibility is not as well-developed as it is in the U.S. Congress. The parliament does pass a yearly budget, and sometimes budget programs for a series of years, but the government normally presents a general budget that parliament then largely embraces. The president and the government that he appoints have very strong executive authority. There is no agency comparable to the U.S. Office of Management and Budget, able to make decisions about expenditure of funds. There is also no department or agency comparable to the U.S. Department of Homeland Security or to FEMA that directs disaster relief or counterterrorist action. And there is no Government Accountability Office (GAO) that investigates such matters as appropriate funding of government action. Resources come, as needed, on an ad hoc basis, from a range of government ministries and agencies to respond to disasters or terrorist attacks. Key decisions about budget matters, such as reprogramming money, and about governmental authority and responsibility in a crisis, are made by the offices of the president and prime minister. A strong presidential system, backed by a prime minister and government, is well accepted by French citizens because of the country's repeated crises, such as two world wars and a virtual civil war over Algeria, that have troubled France over the past century. It is therefore much easier in France than in the United States to move funding around to respond to domestic or foreign developments. Germany has no department or ministry for "homeland security." The country's long established organization for protecting security and responding to emergencies within its borders is defined by the 1949 Basic Law (Constitution) and involves ministries and agencies at the federal, state, and local levels. There are no separate laws or organizations focused exclusively on fighting terrorism. However, Germany has devoted considerable attention since September 11, 2001 to preventing terrorist attacks on its territory, protecting the population and critical infrastructure, as well as assisting in the international fight against terrorism. Although the government structure has not been changed fundamentally since 9/11, Germany has adjusted the ways in which it protects its territory. A number of laws were amended and new laws passed to enable responsible agencies to better carry out their responsibilities. Also, new mechanisms were introduced to better coordinate planning and response at the local, state, and federal levels. In general, the German approach to dealing with incidents, whether natural disasters or terrorist acts, is bottom up, beginning at the local level, bringing in the state if necessary, and finally calling in federal agencies if they are needed. Since World War II, Germany's civil protection and emergency response mechanisms have been geared primarily to natural disasters. Germany does have decades of experience with domestic terrorism by the Red Army Faction (RAF), a German left-wing anarchist group that operated from the beginning of the 1970s to the late 1990s. Since 9/11, the government has viewed terrorism as the most immediate threat to German national security. German authorities rely on intelligence, law enforcement, and judicial prosecution to prevent terrorist acts and to identify and neutralize potential terrorists. At the federal level, ministries involved most directly in "homeland security" functions include Interior, Justice, Defense, and Foreign Affairs, and Finance. However, many other departments and agencies may play some role. The most important intelligence authorities in Germany are the Federal Intelligence Service (BND) under the Federal Chancellory, the Federal Bureau for the Protection of the Constitution (BfV) under the Ministry of the Interior, and the Military Counterintelligence Service (MAD) under the Ministry of Defense. The Federal Bureau for the Protection of the Constitution (BfV) is given authority to track any activities of extremist groups that seek to foment ideological or religious strife domestically. The most important law enforcement authorities are the Federal Bureau of Criminal Investigation (BKA) and the Federal Border Guard (BGS), both under the Ministry of the Interior, and the Federal Public Prosecutor General (GBA). Post-9/11, the BKA has the authority to lead its own investigations, replacing the former system which required a formal request from the BfV. Within the BKA, a Financial Intelligence Unit (FIU) serves as Germany's central office for tracking money laundering as well as a main contact point with foreign authorities concerning financial crime. German authorities have conducted computer-aided searches of the type that had proven successful in profiling and eventually dismantling the Red Army Faction in the 1990s. Reportedly, these searches uncovered a number of radical Islamist "sleepers in the country." Armed officers of the Federal Border Guard (BGS) are now deployed aboard German airplanes. Moreover, the BGS has been tasked to conduct more intensive screening of border traffic. The Federal Public Prosecutor General at the Federal Court of Justice is charged with prosecution of terrorist offenses. A Criminal Senate within the Federal Court of Justice deals with national security measures and is responsible for ruling on complaints of investigative abuse, under the Courts Constitution Act. In early July 2004, federal and state Ministers of the Interior implemented some key steps to improve coordination: (1) A central database was set up to collect and store all available information regarding Muslim radicals suspected of terrorism and information from several databases was made available to make computerized searches more effective; (2) a joint Coordination Center was established in Berlin under the Ministry of the Interior, consisting of the BKA, BND, BfV and MAD to prevent terrorist attacks; and (3) state and local level agencies were integrated into the Coordination Center. Despite the changes, critics point to what they assert are continuing problems hampering Germany's domestic efforts. German law enforcement and intelligence communities still face more bureaucratic hurdles, stricter constraints, and closer oversight than those in many other countries. They are required to operate with greater transparency. Privacy rights of individuals and the protection of personal data are given prominent attention. These protections are extended to non-citizens residing in Germany as well. Police are prohibited from collecting intelligence and can only begin an investigation when there is probable cause that a crime has been committed. Thus, no legal recourse exists against suspected terrorists, until a case can be made that a felony has taken place or been planned, either in Germany or abroad. Intelligence agencies cannot make arrests and information collected covertly cannot be used in court. While the establishment of the Coordination Center is thought to have facilitated cooperation among federal, state, and local authorities, no central agency or person is in charge of all "homeland security" efforts. The most important domestic security and intelligence authorities, the BKA and BfV, are still divided among one federal and 16 state bureaus each. The state bureaus work independently of each other and independently of the federal bureaus. Furthermore, German law requires a complete organizational separation between federal law enforcement agencies such as the BKA and state police agencies, and between federal and state intelligence authorities such as the BfV. An interagency group made up of the appropriate ministries, the heads of the BKA, BfV, BND, MAD, and the Attorney General conduct weekly briefings in the Federal Chancellery and provide strategic direction. Opinion differs in Germany on whether greater centralization would be beneficial or harmful. Some experts believe that there may be little support for further centralizing Germany's "homeland security" efforts in the absence of an attack on German soil. Former Minister of the Interior Otto Schily as well as Director of the BKA Joerg Zierke called for merging the 16 state bureaus with their federal analog BKA and BfV respectively. The 16 federal states oppose further centralization at the federal level, not wanting to cede authority. Yet, there have been reported indications of terrorist activities in individual states with important international traffic hubs (e.g., airports, harbors) and large Muslim populations. Considerable attention was given to security measures in advance of the June 2006 Soccer World Cup in Germany, which authorities worried was a potential target for terrorist acts. The German structure for civil protection and emergency response has been in place since 1949. Responsibility for protecting the population in peacetime is assigned to the 16 states of the Federal Republic and their local jurisdictions. The federal government only has primary responsibility in time of war or threat of war and even then implementation of federal orders is left largely to local authorities. The primacy of the states was reemphasized in the 1997 Civil Defense Law. Each state has its own structures and laws for emergency planning and operations in peace time. The federal government provides the states with equipment and resources for wartime that states can also have access to in peacetime (for example, vehicles outfitted to respond to nuclear, biological, or chemical incidents). Following 9/11 and the disastrous floods in Germany in 2002, a new civil defense strategy was agreed between the federal and state ministers of the interior. The new strategy called for a coordinated approach between the federal government and the states in managing "unusual and nationally significant disaster and damage situations." A new Federal Office for Civil Protection and Disaster Response (BBK) was created in 2004, under the Ministry of Interior, to support the states with coordination and information. Legal responsibility, however, was left with the states. Under the laws and regulations of most of the states, actual responsibility for crisis management is in the hands of local authorities (municipal, county, or rural district). Only when a disaster affects a larger geographic area or if local authorities are overwhelmed do state authorities take over coordination. The federal government can be asked to support local, regional, or state authorities with police, military forces, technical assistance units (Technisches Hilfswerk) of the federal Ministry of the Interior, and administrative assistance coordinated by the BBK. If a crisis is beyond a state's ability to cope or hits more than one state, the federal Ministry of the Interior, working with other federal ministries and state authorities, is charged with coordinating the response. In the event of a national military crisis, thirteen different federal ministries have responsibility for aspects of civil emergency planning and response, coordinated by the Ministry of the Interior. After the attacks in the United States of September 11, 2001, German authorities recognized the need to step up vigilance against the threat of radical Islamist terrorism. Terrorists used German territory to hatch the 9/11 plot. Three of the hijackers lived and plotted in Hamburg and other parts of Germany for several years, taking advantage of liberal asylum policies, low levels of surveillance by authorities, as well as strong privacy protections, and laws protecting freedom of religious expression that shielded activities within mosques from authorities. Germany now sees radical Islamist terrorism as its primary security threat and itself as a potential target of attack. Although German citizens have not been directly targeted by radical Islamist groups to date, they frequently have been victims abroad. Germany's response to terrorism has been influenced by its experiences of the Nazi era. That history has led the country to place strong emphasis on tolerance and civil liberties in its policies since World War II. Germany has sought to ensure that all of its domestic and international actions are consistent with its laws, values, and historical lessons. Germany has sought to protect rights and liberties of all those residing in Germany, including non-citizens. As elsewhere in Europe, a large Muslim immigrant population resides in Germany. The country has a strong record of protecting Muslim religious freedoms. Despite this focus on protection of civil liberties, the German government is determined to go after extremists. It has taken several domestic measures since 9/11, in the legal, law enforcement, financial, and security realms. Germany adopted two major sets of legal measures at the end of 2001, targeting loopholes in German law that permitted terrorists to live and raise money in Germany. The first: (1) revoked the immunity of religious groups and charities from investigation or surveillance by authorities, as well as their special privileges under right of assembly, allowing the government greater freedom to act against extremist groups; (2) made it possible to prosecute terrorists in Germany, even if they belonged to foreign terrorist organizations acting only abroad; (3) curtailed the ability of extremists to enter and reside in Germany; and (4) strengthened border and aviation security. The second law was aimed at improving the effectiveness and communication of intelligence and law enforcement agencies at the federal and state levels. Some $1.8 billion was made immediately available for new security measures. New legislation gave German intelligence and law enforcement agencies greater latitude to gather and evaluate information, as well as to communicate and share information with each other and with law enforcement authorities at the state level and local levels. The government launched a major effort to identify and eliminate terrorist cells. Profiling, which is permissible under German law, has been used extensively. Germany's annual "Report on the Protection of the Constitution, 2004" estimated that about 32,000 German residents were members of some 24 Islamist organizations with extremist ties. Shortly after the 9/11 attacks the government banned and moved against twenty religious groups and conducted hundreds of raids. Since February 2004, the German government has prosecuted members of a splinter group of the Iraqi Tawhid and Jihad (referred to as the Al Tawhid in Germany). This terrorist group is accused of having prepared attacks against Israeli facilities in Germany; some members were caught in April 2002. Reportedly, they had connections to Abu Musab Al-Zarqawi in Iraq and to Al Qaeda. In 2004, the German Justice Ministry was involved in prosecuting some 80 suspected terrorist cases. Using its new authority to lead its own investigations and with increased law enforcement capacity, the BKA reportedly has placed under surveillance some 300 suspects who are suspected of links to international terror networks. In the financial area, new measures against money laundering were announced in October 2001. A new office within the Ministry of the Interior was charged with collecting and analyzing information contained in financial disclosures. Procedures were set up to better enforce asset seizure and forfeiture laws. German authorities were given wider latitude in accessing financial data of terrorist groups. Steps were taken to curb international money laundering and improve bank customer screening procedures. The Federal Criminal Police Office set up an independent unit responsible for the surveillance of suspicious financial flows. Measures to prevent money laundering now include the checking of electronic databases to ensure that banks are properly screening their clients' business relationships and that they are meeting the requirement to set up internal monitoring systems. In seeking to dry up the sources of terrorist financing, recent regulations aim to strengthen Germany's own capabilities, as well as German cooperation with international efforts. Under the oversight of the German Federal Banking Supervisory Office, banks, financial service providers and others must monitor all financial flows for illegal activity. Germany was the first country to implement an EU guideline against money laundering as well as the recommendations of the Financial Action Task Force on Money Laundering (FATF). The FATF has characterized Germany's anti-money laundering regulations as comprehensive and effective. Additional security measures are being implemented by Germany. The new immigration law, which went into effect on January 1, 2005, makes it easier to deport suspected foreigners and makes naturalization more difficult. Under this law suspected foreigners can be expelled faster and with fewer hurdles. Before naturalization, applicants must be investigated and certified by the Federal Bureau of the Protection of the Constitution. In addition, the automatic right of relatives of applicants to remain in Germany has been revoked. Although the ease of entry of potential terrorists into Germany has been significantly reduced, critics argue that suspects already living in Germany are still able to take advantage of weaknesses in German law. Academic and job training programs, as well as the granting of asylum, may have allowed potential terrorists to obtain extended residency permits. Some extremists may have married into German citizenship. Second generation immigrants may serve as a potential recruitment pool. Germany's approach to terrorism and homeland security is influenced by its geographic position in the heart of Europe and its membership in the European Union (EU). Germany has two borders to defend, its own and the EU's. EU procedures and EU jurisdiction in certain areas affect the domestic affairs of its member states. A number of basic anti-terrorism measures—for instance EU definitions of terrorism and terrorist organizations, common penalties, border control, the EU-wide arrest warrant and the EU-wide asset freezing order—are governed by EU legislation. At the EU, Germany has sought to shorten the period between passage of new EU anti-terror legislation and its coming into effect. Germany is working with other countries to improve the Schengen-system (a system that allows passport-free travel between participating EU member states—travel into or out of the EU-wide system still requires traditional passports and visas). Moreover, Germany is pushing for wider use of biometric identifiers on passports, visas, and resident permits, and for international standardization of these systems. Funding for "homeland security" functions is spread throughout the federal and state governments. Although the German Ministry of Finance provides detailed breakdowns of spending by ministry and agency, there is not a spending category combining activities that would fall under the rubric of "homeland security." The annual Budget Act is the vehicle through which budgets are set for federal government agencies and revenues are allocated between the federal and state levels of government. The two chambers of the German parliament must pass the Budget Act and play a significant role in deciding how funds are allocated. Each federal ministry sets the budget and policy priorities for the areas within its jurisdiction. For example, the Ministry of the Interior, a key department in maintaining internal security, received a total budget of approximately 4.13 Euros (just over $5 billion). Of that amount, 214 million Euros ($261 million) was allocated for Civil Defense. Other federal ministries also had funds budgeted for civil protection and emergency response, although most of the spending was at the state level. Each of the 16 states sets its own budget priorities and allocations to individual state ministries and agencies and between state and local jurisdictions. Italy does not have one government department responsible for all aspects of homeland security and counterterrorism. Responsibility for these issues is fragmented among several government offices and ministries, and Italy's inter-governmental approach to promoting domestic security has largely grown out of decades of first-hand experience with terrorist groups. The Red Brigades, an anarchist group, carried out numerous acts of violence in the 1970s and early 1980s against Italian political leaders, judges, and businessmen. Foreign terrorist groups have also been active in Italy. Extremist Palestinian groups murdered U.S., European, and Israeli nationals in attacks on Italian airplanes and airports in the 1970s and 1980s. In response, the Italian government enacted new law enforcement measures, including special police and prosecutors dedicated to fighting terrorism, stiffer sentences, and prison isolation cells. The police were also granted authority to carry out emergency searches without warrants, and security programs were instituted for public buildings. Italy views prevention and strong law enforcement and intelligence efforts as key to ensuring domestic security, combating terrorism, and protecting the Italian public, infrastructure, and historical and cultural sites. Following the September 11, 2001 terrorist attacks on the United States, Italy stepped up efforts to disrupt Al Qaeda-affiliated networks on its territory. Italy, a major point of entry for illegal immigrants to Europe, also sought to tighten its immigration and border controls; some suggest that anti-immigrant politicians seized on the September 11 attacks, linking immigration to crime and terrorism risks, to push through stronger immigration controls. The March 2004 terrorist attacks on commuter systems in Madrid, Spain, and the July 2005 bombings of London's metro and bus lines have galvanized further Italian action to bolster its counterterrorism legislation, clamp down on Islamist extremists, and further strengthen border controls and transport security. At the same time, Italy is pursuing measures to promote Muslim integration to help prevent terrorist recruitment. As a member of the European Union (EU), Italy has also supported EU measures since September 11 to improve law enforcement and intelligence cooperation among its 25 member states and strengthen EU external border controls. Some critics, including some right-wing Italian politicians, claim that Italy is not doing enough to protect itself from the threat of international terrorism. They have pressed for even tougher legislative measures as well as an Italian "homeland security" ministry similar to the U.S. Department of Homeland Security. Many Italian officials, however, are cautious of the need to strike a balance between improving security measures and protecting personal freedoms. They also reject the need for a new "homeland security" ministry, arguing that the current inter-governmental approach is long-standing, and provides Italy with the flexibility to manage a wide range of challenges and disasters while ensuring civil liberties. As noted above, there is no single Italian-equivalent to the U.S. Department of Homeland Security. Various government leaders and ministries play a role in different aspects of Italian domestic security affairs and the fight against terrorism. The Italian Council of Ministers (or cabinet), headed by the President of the Council (the Prime Minister) is the supreme, collective decision-making body in the Italian government. Protecting domestic security and combating terrorism involves a coordinated effort by the main governmental ministries. The Ministry of the Interior is the lead government ministry on counterterrorist policy, public order and security, immigration and border controls, and civil protection. Within the Interior Ministry: the Public Security Department directs and manages the national police force and is responsible for implementing the public order and security policy; the Civil Liberty and Immigration Department sets immigration and asylum policy; and the Fire Brigade, Public Aid, and Civil Defense Department has the lead on setting emergency preparedness and response policy, including for terrorist incidents. Several other government ministries may also play a role in different aspects of combating terrorism and homeland security affairs; these include the Defense Ministry, the Health Ministry, and the Infrastructure and Transport Ministry. In addition, the Economics and Finance Ministry has the lead on stemming terrorist financing and customs policy. To coordinate the efforts of these ministries in the areas of homeland security and counterterrorism, the Italian government has established a number of inter-ministerial bodies that bring together department ministers, officials, and others in the police and intelligence services. The Public Order and Security Committee examines every issue relative to the protection of public order and security and to the organization of the police forces. It is chaired by the Interior Minister; two other key members are the Chief of Police/Director General of Public Security (who heads the Interior Ministry's Public Security Department), and a Council of Ministers' undersecretary with special responsibility for the intelligence services (this undersecretary is designated by the Prime Minister). The heads of Italy's other police forces also take part in the Public Order and Security Committee, and additional ministers may be involved depending on the particular issue to be discussed. The Inter-ministerial Committee for Intelligence and Security (CIIS) provides advice and makes proposals to the Prime Minister on the general direction and fundamental objectives for intelligence and security policy. The CIIS is chaired by the Prime Minister; other statutory members are the ministers for the Interior, Defense, Foreign Affairs, Justice, and Economy and Finance; the heads of the intelligence services and other ministers or government officials may be invited to participate as required. There is also an Inter-ministerial Committee for Civil Defense. Within the Prime Minister's office exists a Political-Military Unit that reports directly to the Prime Minister. The members of the Unit are the senior representatives of all government departments and agencies responsible for combating terrorism and protecting the population throughout Italy. Italian officials assert that the Political-Military Unit's role, powers, and responsibilities have been strengthened further post-September 11. Among other measures since then, the Unit has: updated the national emergency plan to deal with any chemical, biological, radiological, and nuclear (CBRN) incidents, coordinated action plans and operations relating to transport safety and bio-terrorism; and sought to enhance both civil and military preemptive measures against terrorism. Also within the Prime Minister's office is the Department of Civil Protection, which is responsible at the national level for prevention, preparedness, and coordination of responses to both natural and man-made disasters. This Department coordinates Italy's "National Service" for civil protection, which consists of central, regional, provincial, and local (or municipal) state administrations, public agencies, and voluntary organizations. This national service system operates on the principle of subsidiarity. In the event of an emergency, primary responsibility for managing the response falls on the local mayor. If the resources at the disposal of the mayor are insufficient, support may be drawn from provincial, regional, or national assets. Military assets can also be used to assist with a large-scale emergency, including those with a CBRN dimension. Any military forces deployed, however, would be under the command of the civil authorities. The Interior Ministry has ministerial responsibility for Italy's Polizia di Stato (State Police), or national police force. At the central government level, the Interior Ministry's Public Security Department coordinates the tasks and activities of the Polizia di Stato . At the provincial level, the top public security authorities are the prefect, who is appointed by and answerable to the central government, and the questore , or the senior provincial official of the Polizia di Stato . Each questore has operational control of the provincial police headquarters, which has jurisdiction in the field of public order, security, and criminal and intelligence matters. There are also Polizia di Stato officials at the local level in charge of detached police stations. The Polizia di Stato includes various specialist units that may play a role in combating terrorism and protecting different aspects of Italian homeland security. The anti-terrorism police, at both the central and provincial level, have primary responsibility for investigations aimed at preventing and fighting terrorism, including the collection and analysis of information related to terrorist offenses. Other relevant specialist police units are the traffic police, which patrol Italy's roads and highways; the railway police, which ensure the security of travelers and their belongings on Italy's railway system, the security of railway stations, and control of dangerous goods transported by rail; the immigration and border police, which are responsible for the entry and stay of foreign nationals and immigrants in Italy, as well as the prevention and control of illegal immigrants; and the postal and communications police, which seek to prevent and tackle the illegal use of communication technologies (for example, computer hackers and computer viruses). Additional specialist police units of the Polizia di Stato may be deployed throughout the national territory to perform high-risk interventions, in the case of a hostage incident for example, or to provide rescue services in areas affected by natural disasters. The police air service and the nautical squads perform services ranging from mountain or sea rescues to contributing to the fight against illegal immigration by patrolling the national coasts and other points of entry. Italy also has a military corps, or Carabinieri , that carries out police duties among its civilian population. The Italian Carabinieri is similar to France's Gendarmerie , or Spain's Guardia Civil . The Carabinieri has an elite counterterrorist unit with the authority to combat domestic and international terrrorism; it is empowered to gather intelligence, investigate terrorist organizations, and respond to high-risk situations or instances in which military installations are under threat. Institutionally, the Carabinieri are responsible primarily to the Ministry of Defense and the Ministry of Interior, although various specialist departments may also report to different government ministries, such as the Ministry of Foreign Affairs, on issues such as the protection of Italian diplomatic institutions abroad. Italy has two main intelligence and security services engaged in the fight against terrorism. The Military Intelligence and Security Service (SISMI) reports directly to the Minister of Defense and fulfills all intelligence and security tasks for the defense of the state's independence and integrity against any danger on the military front; it has both counterespionage and counterintelligence duties. The Democratic Intelligence and Security Service (SISDE) reports directly to the Minister of the Interior and has responsibility for intelligence and security tasks related to the defense of the democratic state and its institutions against all forms of subversion. The division of responsibilities between SISMI and SISDE is based on the interests to be protected (military and democratic security), rather than on a territorial basis (domestic and international security). The directors of SISMI and SISDE have operational control over their respective services. The main instrument for coordinating the work of the two services and for advising the Prime Minister and other government officials on intelligence priorities is the Executive Committee for the Intelligence and Security Services (CESIS). CESIS is strategic in nature; it analyzes the intelligence provided by the services as well as the police and presents coordinated assessments to the government. Some have likened CESIS to the U.S. National Intelligence Council, or the UK's Joint Intelligence Committee. Italy has also created a Committee for Strategic Anti-Terrorism Analysis (CASA) within the Interior Ministry to collate and evaluate intelligence about potential threats and provide early warning. CASA is composed of representatives of all law enforcement bodies and the secret services, and seeks to break down institutional barriers among these bodies; it appears to be similar to the U.S. National Counter Terrorism Center or the UK's Joint Intelligence Analysis Center. Italy's national budgeting system involves multiple ministries and departments. The Italian Council of Ministers collectively draws up Italy's yearly governing budget, which must then be approved by the Italian Parliament. The Ministry of the Economy and Finance, in coordination with the other ministries, sets overall departmental spending limits; each minister determines policy and budgetary priorities within his or her area of responsibility. Thus, the Interior Minister plays a key role in setting budgetary priorities in many areas of homeland security affairs. Italian spending on "public order and security" is roughly $34 billion per year. This broad category, as defined by the EU's research and statistics agency, Eurostat, includes police services, fire protection services, law courts, prisons, and research and development. The Interior Ministry appears to receive a large portion of this "public order and security" spending. In Italy's 2006 budget, the total amount allocated to the Interior Ministry was approximately $31 billion; of this amount, about $9 billion went to the Public Order and Security Department, over $2 billion to the Fire Brigade, Public Aid, and Civil Defense Department, and roughly $310 million to the Civil Liberty and Immigration Department. Some funding for Italian civil protection work and for first responders also comes from local taxes, as well as from the central government. Over the last several years, Italy has faced serious resource constraints. Italy's economy has been sluggish with little GDP growth and an unemployment rate of 7.5%. Italy is also under pressure from the EU to rein in its rising budget deficit to bring it back in line with EU rules governing the single currency. Despite these financial difficulties, Italian officials insist that combating international terrorism is a top priority and that the 2006 budget allocates adequate funding for security. In an interview, former Interior Minister Giuseppe Pisanu also stressed that new resources must be dedicated to improving the working and living conditions of law enforcement officers, who represent the first-line of defense and are at the core of Italy's security efforts. In recent years, Italy also devoted significant financial resources to ensuring the security of the February 2006 Winter Olympics held in Turin. Italy has sought to enhance its law enforcement and intelligence tools against terrorism since September 11. In December 2001, a new law took effect that applies the provisions of Italy's Anti-Mafia Act to crimes committed for the purpose of international terrorism; it extends the ability of law enforcement authorities to place suspected terrorists under surveillance, to investigate the financial assets of family members, to confiscate assets, and to facilitate wire-tapping and other searches. Following the July 2005 London bombings, the Italian Parliament passed additional anti-terrorist legislation that allows police to hold a terrorist suspect without charge for 24 hours, to question the suspect during that time without a lawyer present, and to take hair or saliva samples without consent to trace the suspect's DNA and establish his or her identity. Among other measures, this 2005 law also allows intelligence services to conduct wiretaps, increases law enforcement access to Internet and cell phone records, and introduces the ability to reward immigrants with residence permits if they cooperate with law enforcement terrorist investigations. Some experts suggest that Italy needs to improve further the coordination between and among its various law enforcement and intelligence agencies. Although Italy has arrested hundreds of terrorist suspects since September 11, Italian authorities have encountered some difficulties in securing convictions. While some analysts maintain that Italy's evidentiary bar remains set too high and that Italy's anti-terrorist laws still contain some weaknesses, others point to the lack of a central anti-terrorist prosecuting body as a key problem. Currently, anti-terrorist investigations around the country are led by 26 different regional prosecutors, who do not automatically share their findings with each other or with the intelligence services. In addition, there is no central database of terrorist suspects, as there is for the Mafia, that would enable more efficient and comprehensive information-sharing among Italy's various police and judicial entities. Italian officials have been considering establishing a national prosecuting office for terrorism offenses and a central terrorist suspect database, but disagreements appear to persist about its specific structure and functions. For several years, the Italian Interior Minister has also advocated unifying Italy's secret services, SISMI and SISDE, to improve cooperation. However, this proposal has foundered on bureaucratic resistance from the Defense Minister, to which SISMI reports. Other critics question whether Italy is devoting sufficient resources to enhancing its intelligence capabilities. According to press reports, sources within Italy's intelligence community have complained about understaffing and the need for more Arabic translators, Middle Eastern experts, and advanced technologies and equipment. As noted previously, the September 11 attacks gave added momentum to Italy's efforts to tighten its border controls and clamp down on illegal immigration. Among other measures, new immigration legislation passed in 2002 requires immigrants to have a job before entering Italy, imposes stricter deportation rules, makes family reunification more difficult, and mandates fingerprinting for all immigrants requesting a residence permit or renewing an existing stay permit. In addition, Italy has not been shy about deporting radical imams and other Islamist extremists; legislation passed after the July 2005 London bombings seeks to make this expulsion process faster and expands the right to expel to regional prefects. Over the last several years, Italy has also taken steps to improve aviation security. Following September 11, Italy reassessed its "National Security Program" for airports and air transport, which sets out regulations for all aspects of aviation security, including security checks of passengers, hand luggage, checked-in baggage, diplomatic officials, crew members, and airport personnel. The revised program also introduces the concept of "sensitive flights," or flights either from countries considered to pose terrorist risks, or going to countries considered terrorist targets. In 2004, the Italian Prime Minister issued a decree that in the event of a terrorist hijacking of an in-flight airplane, the military will be permitted to force the plane to land or to bring it down with a missile if necessary; the final decision will rest with senior political officials in the Defense Ministry. Furthermore, legislation passed in the summer of 2005 empowers the Interior Ministry to exclude private pilots with an international license from Italian airspace, and to make licensing and training of pilots subject to police authorization in certain cases that raise security concerns. In 2005 and 2006, the Italian civil aviation authority was also granted roughly $3 million in additional funding to improve security at selected airports. Italian officials assert that maritime and rail security has been enhanced, especially following the July 2005 bombings of London's metro and bus lines. Customs officials use targeted investigations and x-ray systems to check a wide variety of goods, and containers and large vehicles are scanned for radioactive and other dangerous materials. Several Italian ports also participate in the U.S. Container Security Initiative, which pre-screens U.S.-bound cargo, and Italy appears to be compliant with the International Maritime Organization's new security code that requires international ships and port facilities to implement tighter security regimes. Police presence has been increased on Italy's rail networks and around a number of sensitive railway stations and other rail transport systems, such as the Rome subway. Italy also places emphasis on cooperation with other EU member states, both within and outside the EU framework, as a way to better secure its borders and rationalize scarce financial resources. Italy participates in the EU's Schengen open border system, which allows EU citizens to cross into and out of Italy freely, and uses the common Schengen Information System (SIS) database to check non-EU nationals entering Italy. Over the last several years, Italy has been a key proponent of strengthening the EU's external borders; Italy has advocated greater consular cooperation and information-sharing among EU members, and called on the EU to include repatriation agreements in its cooperation treaties with African countries. Italy has also supported proposals to establish EU asylum centers outside EU territory to process refugee claims and to cut EU financial aid to countries of origin that fail to reduce the flow of illegal immigrants; other EU member states remain opposed to such initiatives, however, viewing them as too draconian and counterproductive. Bilaterally, Italy and France have established joint border controls to capture and expel illegal immigrants, and with Spain, are planning joint naval patrols in the Mediterranean to fight illegal immigration, drug-trafficking, and other criminal activity. In October 2005, Italy and France also agreed in principle to permit military flights over each other's territory if the need arises to intercept or escort a hijacked civil aircraft across common national borders. Since September 11, Italy has further developed a national emergency plan to deal with the consequences of a possible CBRN incident. This plan details the types of agents that may be used during an attack and appropriate responses, contains specific measures to be taken at the local level, and provides guidance on procedures for protecting first responders. The Italian government has also distributed information about treatment and containment to local health authorities and the public. Italy has a network of 1,200 radiation monitoring stations across the country to facilitate the early detection of a radiological or nuclear event, and CBRN training programs for firefighters, military personnel, and civilian medical personnel are long-standing. Italy has enhanced security around many sensitive targets, including government buildings, transport facilities, military barracks, public utilities, communication centers, and artistic and cultural sites. Since 2001, the number of such sites with increased security and surveillance has risen from about 1,900 to over 13,000. About 18,000 Italian security personnel are now involved in protecting these sites. Over the last several years, Italy has also sought to enhance its emergency preparedness and response capabilities, especially in relation to a possible terrorist incident. First responders in Italy consist primarily of emergency service personnel, firefighters, and police officers (including the Carabinieri ); Italy also has a large pool of civil protection volunteers. Following the July 2005 London bombings, Italian officials unveiled plans for anti-terrorism drills in all big cities throughout Italy to test how emergency services would cope with all aspects of an attack, including their abilities to provide aid, maintain public order, distribute correct information to the public quickly, and begin investigations promptly. According to press reports, intelligence assessments view Rome and Milan as the most likely cities to fall victim to a terrorist attack, with their respective subway systems as possible targets. Although Italian authorities appear to believe that a conventional attack is a more likely scenario than a CBRN event, they assert that plans are also in place for isolating a contaminated area, treating those contaminated, and evacuating adjoining areas. In addition, the Interior Ministry is reportedly working on establishing psychological units to provide assistance to survivors and relatives directly at the site of an attack. The March 11, 2004 terrorist attacks in Madrid threw into sharp relief the threat of Islamist terrorism in Spain. During the morning rush hour of March 11, 2004, bombs exploded on four trains on a Madrid commuter rail line, killing 192 persons and wounding over 1500. Spanish authorities later said that the Al-Qaeda-linked Moroccan Islamic Combatant Group was involved in the attacks. Many observers believe that the March 11 attacks helped determine the outcome of Spain's parliamentary election, held three days later. The Socialist Party won the election, although pre-election polls taken before the attack gave the then-ruling Popular Party a narrow majority. Prime Minister Zapatero has been careful to note that he does not see a military solution to the problem of terrorism, preferring to focus on law enforcement cooperation and by pursuing an "alliance of civilizations" with the Muslim world. Spain, unlike the United States, has rejected a wholesale reorganization of its homeland security institutions. This is due in large part to the decades-long struggle with the Basque terrorist movement Eta. Even before the 3/11 attacks, Spain had a substantial body of law and institutional capacity to fight terrorism, perhaps more than some European countries and the United States. For this reason, the parliamentary commission that investigated the 3/11 attacks and the Zapatero government focused instead on overcoming resource shortfalls in dealing with the specific threat posed by Islamist terrorism, and on better coordination within and among existing security and intelligence institutions. Another factor conditioning Spain's approach to the issue of homeland security is that the Socialists, and many other Spaniards, are leery of draconian security polices, due to the country's experience with Franco's authoritarian rule. On the other hand, civil liberty concerns have not been as prominent in post-3/11 discussions in Spain as they have been in the United States since 9/11. This is in part because these issues have already been long debated in the context of the conflict with Eta. The chief Spanish ministry in homeland security affairs is the Ministry of the Interior. The Interior Ministry controls the country's large national police forces, its emergency preparedness and response efforts (including CBRN threats), and guarding of critical infrastructure. Unlike the United States, Spain has a highly centralized police structure. Spain has two main national police forces, both under the control of the Minister of the Interior through a State Security Secretariat. The National Police Corps is responsible for security in urban areas and handles national investigations. A more heavily armed paramilitary organization, the Civil Guard, is stationed in rural areas and along highways. Border control is split between the National Police, which controls the entry of persons, and the Civil Guard, which conducts border patrolling, including at sea. (A Finance Ministry force also conducts anti-smuggling patrols.) The Civil Guard has primary responsibility for security at critical infrastructure sites such as ports and airports, as well as firearms and explosives control. Both the National Police Corps and the Civil Guard have special anti-terrorist units and intelligence bodies. Local police forces play a lesser role in counterterrorism efforts, with the exception of police in the semi-autonomous Basque and Catalan regions. The March 11 commission recommended that local police be given more training in counterterrorism, particularly involving Islamist groups. Homeland security budgetary and policy priorities are set by the Interior Minister, with the aid of his deputy, the State Security Secretary. (The Finance Ministry sets the overall amount for Interior Ministry spending.) Proposed 2006 Interior Ministry funding for all purposes is over 5.7 billion Euros ($6.8 billion). The National Police and Civil Guard, which each have their own chains of command, play a key role in setting their own budgetary priorities. The March 11 commission pointed out coordination problems between the National Police and the Civil Guard, such as a failure to share key intelligence from their informants with each other and overlapping and redundant expenditures. The Interior Ministry formed a Unified Command Executive Committee to coordinate the efforts of the two forces. However, the separate operational command structures of the two forces remain intact. The creation of the Unified Command is intended to lead to the establishment of joint units of officers dealing with terrorism and organized crime, as well as a joint database on these issues. The two forces would also pool resources in forensics, intelligence, and the disarming of explosives. It remains to be seen whether these efforts will result in real change or whether old bureaucratic rivalries may re-emerge. The Ministry of the Interior is also responsible for emergency preparedness and response in Spain. A General Directorate for Civil Protection within the Ministry is charged with developing and managing emergency preparedness programs. Spain has a federal system of government. Each local government and autonomous community (roughly equivalent to a U.S. state) develops its own emergency preparedness plans. However, in the case of a national emergency, the central government can take over relief operations immediately. The Interior Ministry has a few, small CBRN units. After the March 11 attacks, the Ministry of the Interior put together an anti-terrorism prevention and protection plan. The plan includes a system of three readiness levels. For example, after the July 2005 terrorist attacks in London, the Interior Minister issued a "level-three" alert, which mobilized the security forces (the police and Civil Guard) for surveillance and protection of areas of high population density, as well as sensitive sites. These include transportation infrastructure, shopping centers, stadiums, communications centers, and electricity, water and fuel plants. Although the Interior Ministry has the lead responsibility in homeland security, the Spanish military also has a role. The Defense Minister has prepared a rapid-response plan for CBRN threats. Over 250 soldiers are assigned to CBRN units in Valencia, Burgos, and Madrid. Spanish troops can also be called out for a "level-three" (the highest level) alert in order to guard sensitive and geographically-extensive sites such as high-speed railway lines. Spain's foreign intelligence efforts are undertaken by the National Intelligence Center (CNI), which is subordinated directly to the Prime Minister's office. The CNI's personnel are overwhelmingly drawn from Spain's Ministry of Defense. The CNI's proposed budget for 2006 is over 168 million Euros ($200 million). The 3/11 commission report bemoaned the lack of a true "intelligence community" in Spain. Concerns about the lack of coordination between the CNI and the Interior Ministry led to the establishment of a National Anti-Terrorism Coordination Center after the March 11 attacks, which meets regularly to exchange information on counterterrorism issues. The 3/11 commission called for the Center to have the role of operational coordination as well as information collection and exchange. As noted above, the 3/11 commission criticized Spanish authorities for not focusing enough on Islamist terrorism. For example, Spanish officials have admitted that police threw away wiretapping transcripts on March 11 terrorist suspects because they lacked sufficient numbers of Arabic translators. In response, the government has sharply increased resources for counterterrorism. In October 2005, Spanish Interior Minister Jose Antonio Alonso said that his ministry has 600 officers assigned to counterterrorism activities. In its 2006 budget, the government has called for that number to be increased to 900. Minister Alonso has said that by the end of 2008, Spain plans to increase this number to 1,000, which he claims will be the highest of any EU country. He added that the Ministry has hired 70 Arabic translators to remedy a "severe deficiency" in the country's intelligence efforts. In 2005, Spain spent 350 million Euros ($417 million) for counterterrorism efforts, and the government budget for 2006 proposes a 5% increase to 368 million Euros ($438 million). The government has tightened control on the sale of explosives. (The March 11 terrorists had stolen their explosives from a Spanish mine.) Spain has formed bilateral police investigative teams with France to fight terrorism, in part a legacy of the two countries' close cooperation in recent years in fighting the Basque terrorist threat. Spain has also pushed strongly for stronger law enforcement, intelligence, and border control cooperation within the European Union. The 3/11 commission also proposed improved monitoring of jihadist activity in Spanish prisons, which have proved to be recruitment centers for Islamist extremists, and the dispersal of such prisoners among Spanish prisons to prevent them from working together. The government has since taken steps to disperse jihadists among Spanish prisons. Spain's security policies have achieved some successes. In addition to 3/11 suspects, Spain is also holding suspects related to the 9/11 attacks in the United States and in a planned attack on several government buildings and public landmarks in Madrid that was aborted by Spanish police in October 2004. In September 2005, Spain's High Court convicted a group of Islamist extremists accused of assisting in the September 11 attacks on the United States. The group's leader, Imad Eddin Barakat Yarkas, was sentenced to 27 years in prison for conspiring with the 9/11 plotters, but was cleared of charges of murder of those killed in the attacks. Seventeen others were sentenced to lesser terms, mainly for membership in a terrorist group. Six defendants were acquitted. Suspects in the 3/11 attacks are expected to go on trial later this year. However, Spanish officials note that the Islamist threat to Spain continues. They are concerned about possible "sleeper cells" that may continue to operate in Spain. Moreover, figures reportedly associated with the 3/11 attacks remain at large. In January 2006, Spanish police arrested a militant and 20 associates involved in recruiting Muslims from Spain to fight in Iraq. As of January 2006, over 200 men were imprisoned in Spain for offenses related to Islamist terrorism. The United Kingdom does not have one department responsible for all aspects of homeland security and counterterrorism. Responsibility for these issues is scattered across several government departments, and the UK's approach is based on long-standing inter-governmental cooperation and collaboration, which grew out of the UK's decades of experience in dealing with Northern Ireland-related terrorism. UK policy toward terrorism and other security challenges is largely coordinated by inter-departmental committees of ministers and other government officials; specific UK ministries or departments have the lead on different issues (see below for detailed information on the UK's security institutions and structures). The September 11, 2001 terrorist attacks on the United States have focused greater UK attention on the threats posed by international terrorists and acted as a spur for UK authorities to enhance emergency planning and response capabilities. In April 2004, the British government unveiled a new comprehensive, cross-departmental Counterterrorism Strategy (known as CONTEST) centered on the "4Ps" of prevent, pursue, protect, and prepare. Prevention work seeks to address the underlying causes of terrorism both at home and abroad; pursuit efforts aim to disrupt terrorist organizations and their ability to operate; protection measures focus on protecting the public, critical national infrastructure, and key sites at particular risk; preparedness work aims to enable the UK to respond and recover from the consequences of a terrorist attack. The "4Ps" seek to give greater coherence to UK counterterrorism measures and take advantage of existing expertise and resources throughout the UK government. Some observers view the UK approach to ensuring domestic security, combating terrorism, and protecting the British public and infrastructure as emphasizing "dual-use measures" that seek to integrate counterterrorism and preparedness programs into existing emergency management and response efforts. They argue that an advantage of this approach is that departments, agencies, and first responders maintain their skills on a day-to-day basis, and society benefits from these resources daily, but many of these same skills and resources can also be used in response to a terrorist incident. As a result, they assert that such "dual-use" mechanisms are also cost-effective, avoiding excessive or exclusive focus on the challenges posed by unconventional weapons that could draw scarce resources away from the more basic but essential activities of law enforcement, intelligence, or border controls. The UK's emergency response system and capabilities were put to the test on July 7, 2005, when four young British Muslims attacked London's metro and bus lines, killing 52 people (plus the four bombers), and injuring over 700. Despite the fatalities and the damage to the London metro system, many assess that the government and emergency services responded competently and effectively in the immediate aftermath of the crisis. As a result, the impact of the attacks on the daily life of the city and general population was marginal. The British government believes that its inter-governmental/committee approach to homeland security provides it with maximum flexibility to respond to a wide range of challenges and disasters, both natural and man-made. Given that the UK's government bureaucracy is relatively small, at least in comparison to that of the United States, this inter-governmental approach also allows for a rationalization of people and resources. A former Cabinet minister, David Blunkett, has asserted that "We believe this arrangement of central coordination, accountable to ministers, coupled with department responsibility for delivery is the best resilience structure. It engages a wider pool of expertise, avoids the need for a huge new bureaucracy at the center, while at the same time has a clear chain of command." Other British experts and officials, however, criticize the UK's inter-departmental system, arguing that it is poorly coordinated, with too many overlapping lines of authority. Some, including the opposition Conservative (Tory) party, have proposed creating a UK ministry equivalent to the U.S. Department of Homeland Security. Although the Labour government of Prime Minister Tony Blair has previously rejected this idea, a number of commentators believe that the government may be reconsidering. In February 2006, UK Chancellor of the Exchequer (or Treasury Secretary) [author name scrubbed] pledged to examine the case for a single security budget in the UK's upcoming 2007 spending review. Some view this statement as an indication of the government's new "open-mindedness" toward the possibility of forming a new Homeland Security ministry. As noted above, there is currently no single UK-equivalent to the U.S. Department of Homeland Security. Various government leaders, ministries, and departments play a role in different aspects of UK domestic security efforts and countering terrorism. The UK Cabinet is the supreme, collective decision-making body in the UK government, chaired by the Prime Minister. Much of the work of the Cabinet is delegated to ministerial Cabinet committees and subcommittees. The Cabinet Office supports the UK ministerial committee system by coordinating policy and strategy across government departments, and as such, has a role in bringing together department ministers, officials, and others involved in homeland security affairs and counterterrorism. The Cabinet Secretariat, which sits in the Cabinet Office, largely manages the day-to-day business of the Cabinet committees and is divided into six individual secretariats that support the different Cabinet committees. The Defense and Overseas Policy (DOP) ministerial committee and two of its subcommittees—on international terrorism, and protective security and resilience—play key roles in forging long-term UK domestic security and counterterrorism policies. The Intelligence Services ministerial committee reviews policy on the security and intelligence services, including their counterterrorist efforts. In the event of an actual terrorist incident, a Cabinet-level emergency crisis management body—known as COBR (for the Cabinet Office briefing room in which it meets)—is convened to coordinate the government's immediate emergency response; COBR brings together the Prime Minister and other Cabinet ministers and officials. The Civil Contingencies Committee (CCC) is heavily involved in longer-term emergency preparedness and response; it coordinates and continually reviews the preparation of plans for ensuring the prompt and effective delivery of supplies and services during an emergency. In July 2001, the UK government established a new Civil Contingencies Secretariat (CCS) within the Cabinet Secretariat to support the CCC, review UK emergency planning arrangements, and improve UK preparedness for and response to emergencies. CCS was originally set up in response to several crises in 2000 (including fuel protests, the outbreak of foot and mouth disease, and severe flooding), but was given new impetus after the September 11 attacks. Specific aims of the CCS include spotting trouble; assessing its nature and providing warning; being ready to respond; building greater resilience for the future; and providing leadership to the first responder community. In June 2002, Prime Minister Blair also created a new Security and Intelligence Coordinator within the Cabinet Office that some have likened to a "homeland security chief," or the White House's now defunct Office of Homeland Security. The Security and Intelligence Coordinator is directly responsible to the Prime Minister and is tasked with coordinating and developing, across all government departments, work on counterterrorism and crisis management. Some suggest that this new position was created to give greater coherence to UK security efforts and emergency response capabilities. As the principal accounting officer for the Single Intelligence Account, which collectively funds the UK's security and intelligence services, the Security and Intelligence Coordinator plays a key role in setting priorities and budgets for the intelligence services. Among other duties, the Security and Intelligence Coordinator works to ensure the delivery of CONTEST, and is the deputy chair of the Civil Contingencies Committee. The current Security and Intelligence Coordinator is Sir Richard Mottram. The Home Office, or interior ministry, is the government department that has the lead on several aspects of homeland security affairs, including counterterrorism policy within the UK. The Home Office is therefore the focal point for the response to the terrorist threat, both through promulgation of legislative measures and counter-terrorist contingency planning. It is also responsible for domestic security policies, planning for chemical, biological, radiological, and nuclear (CBRN) incidents, and the national counter-terrorist exercise program. In addition, the Home Office has the lead on setting immigration and asylum policy, and ministerial responsibility for the UK immigration service, which controls entry and exit to the UK at air, sea, land, and rail ports and identifies, monitors, and removes immigration offenders. The Home Secretary is a member of the full Defense and Overseas Policy ministerial committee, deputy chair of the DOP's international terrorism subcommittee, and chair of the DOP's protective security and resilience subcommittee. The Home Secretary also chairs the Civil Contingencies Committee and sits on the Intelligence Services ministerial committee. Several other British government ministries and departments play a role in UK domestic security and the fight against terrorism. HM Revenue and Customs, a non-ministerial department that reports to the Chancellor of the Exchequer (or Treasury Secretary), has the lead responsibility for detecting prohibited and restricted goods at import and export, including those goods that may be used by terrorists. Customs officers also have the power to seize terrorist-linked cash anywhere in the UK, although the Treasury ministry has the lead in the fight against terrorist financing. The Department for Transport's Transport Security and Contingencies Directorate is responsible for the security of the traveling public and transport facilities through regulation of the aviation, maritime, and railway industries. The Health Protection Agency (HPA), a non-departmental body accountable to the Health Secretary, was established in 2003 to help provide a coordinated and consistent public health response to a range of national emergencies, from a disease outbreak to a terrorist attack. Policing in the UK is largely decentralized. The Home Office has ministerial responsibility for the police services in England and Wales. The Scottish Ministry of Justice has ministerial responsibility for policing in Scotland, while the Secretary of State for Northern Ireland sets policy for policing there. Operational control, however, of all of the police services in England, Wales, Scotland, and Northern Ireland rests with the chief constable of each force. Currently, there are 43 regional police forces in England and Wales, and eight in Scotland; the Police Service of Northern Ireland (PSNI) is responsible for policing in Northern Ireland. In England, Wales, and Scotland, these regional police forces have primary responsibility for the investigation of terrorist offenses; the PSNI has lead responsibility for terrorist investigations related to the affairs of Northern Ireland. Each police force also has its own Special Branch, which works in partnership with the Security Service (MI5), the UK's domestic security service, to acquire intelligence on those who may be involved in terrorism. The Metropolitan Police (Scotland Yard) has responsibility for London and also has various specialist units, such as those that deal with anti-terrorism, that may be called upon to fulfill a national role. In addition to the regional forces, there are a few other British police forces that may play a role in homeland security affairs. The British Transport Police (BTP) police the railway systems of England, Wales, and Scotland; the BTP is also responsible for policing some metro and commuter systems, including the London Underground. The Department of Transport has ministerial responsibility over the BTP. The Civil Nuclear Constabulary (CNC) is an armed police force that protects civil nuclear installations and nuclear materials in the UK; it operates under the strategic direction of the Department of Trade and Industry. The UK has three main intelligence and security services engaged in the fight against terrorism. The Security Service (MI5) is responsible for the protection of national security against threats from espionage, sabotage, and terrorism. MI5 operates under the statutory authority of the Home Secretary, although it is not part of the Home Office. The Secret Intelligence Service (SIS, or MI6), the UK's foreign intelligence service, gathers intelligence overseas. The Government Communications Headquarters (GCHQ) provides signals intelligence to counter a range of threats, including terrorism, and is also the national technical authority for information assurance, helping to keep data residing on government communication and information systems safe from theft, manipulation, and other threats. Both MI6 and GCHQ operate under the statutory authority of the Foreign Secretary, although neither is part of the Foreign and Commonwealth Office. The main instrument for advising the government on priorities for intelligence gathering and for assessing its results is the Joint Intelligence Committee (JIC). The JIC is part of the Cabinet Office, and currently chaired by Sir Richard Mottram, the Security and Intelligence Coordinator. The JIC, analogous to the U.S. National Intelligence Council, is responsible for providing ministers and other senior officials with coordinated, inter-departmental intelligence assessments. In June 2003, in an effort to improve intelligence-sharing and cooperation against terrorism further among the UK's different law enforcement and intelligence agencies, the UK created the Joint Intelligence Analysis Center (JTAC) to collate and evaluate intelligence about potential threats and provide early warning. JTAC seeks to break down institutional barriers between analysts of the different security and intelligence agencies by drawing together about 100 officials from 11 government departments and agencies, including MI5, MI6, GCHQ, the police, and the defense and transport ministries. JTAC provides both long-term studies of international terrorism and immediate assessments of current threats; it is analogous to the U.S. National Counter Terrorism Center. JTAC is responsible to the director-general of MI5. Although the police and security services have the primary role in domestic protection against terrorism, the armed forces may be called upon domestically in the event of a major terrorist incident requiring military units with specialized skills (such as the Special Forces hostage rescue commandos or those trained to deal with CBRN events). The UK armed forces may also be deployed to assist in the management of a natural disaster. The decision to deploy the military to assist the civil authorities in an emergency would be made by COBR, and the armed forces would have no jurisdiction outside of supporting the civil powers. The Ministry of Defense and the armed forces are also responsible for protecting 160 key UK sites, and for guarding UK nuclear weapons. The UK's parliamentary system influences government decisions regarding homeland security budgetary priorities. The Prime Minister and his Cabinet are drawn from the political party with a majority in the House of Commons, the elected chamber of Parliament. As such, there is no strict separation of the executive and legislative branches of government in the UK. The Prime Minister, the Chancellor of the Exchequer, and the Cabinet ministers prepare the government's budget and set overall departmental budget priorities and spending limits. Given that the UK government has a majority in Parliament, the government's proposed budgetary levels are not usually contested in the same way as they often are in the United States. UK spending on "public order and security" grew from roughly $40 billion in 2001 to $53 billion in 2005. This broad category includes police services, fire protection services, law courts, prisons, and research and development. More specifically, the British government announced in its 2004 Spending Review that total spending on counterterrorism and resilience across departments will be over $3.6 billion by 2007-2008; this is compared to $2.6 billion in 2004-2005, and less than $1.8 billion a year before September 11, 2001 (these figures for counterterrorism and resilience exclude core military and police spending). Budgetary priorities in these areas have largely flowed from the "4Ps" of prevent, pursue, protect, and prepare in the UK's 2004 cross-departmental counterterrorism strategy (CONTEST), which is driving investment decisions and will guide departments as they set their detailed budgets. The Home Secretary will agree with ministers across departments on what resources they will allocate from their 2004 Spending Review settlements to deliver CONTEST before they finalize their department budgets. As noted above, the Security and Intelligence Coordinator plays a key role in setting priorities and budgets for the intelligence services. Spending for UK civil protection work, including that for the police and fire services, comes from a combination of grants from the central government and local funding. In the immediate aftermath of September 11, 2001, the British government provided supplemental funding over previously budgeted 2001-2002 and 2002-2003 levels to enable departments, such as the military, the police, and the intelligence services to meet the increased need for heightened security measures and more counterterrorist activities. The 2004 Spending Review placed emphasis on intelligence, emergency planning, and a range of other counterterrorist and preparedness measures: In the area of intelligence, additional funding of approximately $214 million in 2006-2007 and $337 million in 2007-2008 will be provided for the further expansion of the three security and intelligence agencies (the current combined expenditure for the UK's three security and intelligence agencies is roughly $2.3 billion). The additional spending on emergency planning will double that currently received by local authorities from the central government's Civil Defense Grant per year (from $35 million to $70 million) to better enable local authorities to carry out emergency planning in light of the threat from international terrorism. This increase appears to respond to criticism that local authorities did not have the necessary resources to plan for terrorist incidents given that the Civil Defense Grant had significantly decreased between 1991 and 2001 as a result of the end of the Cold War. The Civil Contingencies Secretariat reportedly played a crucial role in securing this increase in resources for the civil protection work carried out by local authorities. Extra funding of about $543 million in 2006-2007 and $614 million in 2007-2008 will also be devoted to counterterrorist measures ranging from enhancing the Fire Service's search and rescue capabilities to improving police abilities to deal with CBRN incidents to boosting port security, UK embassy security, and border controls. In light of the July 2005 London bombings, the Chancellor of the Exchequer in December 2005 announced that a further $149 million will be provided to the security and intelligence services to aid their efforts in the fight against terrorism. In the years since the September 11, 2001 terrorist attacks, the UK government has introduced a raft of new legislation and pursued a variety of measures to combat terrorism and improve UK homeland security. Following the July 2005 London bombings, the Blair government has also placed increased emphasis on promoting Muslim integration and combating extremism; many UK officials view such efforts not only as necessary to address societal divisions, but also as key prevention strategies in the long-term fight against terrorism. Since September 11, British authorities have stepped up their law enforcement efforts against Al Qaeda and members of other radical groups. Hundreds of suspects have been questioned and arrested, and UK police and security services have increased their monitoring of mosques. UK authorities have disrupted several potential terrorist plots over the last few years, such as breaking up an Al Qaeda-affiliated cell in 2003 accused of producing ricin and other chemical weapons. Law enforcement and intelligence work against terrorism are viewed as a key part of the UK's prevention and pursuit efforts. However, the evidentiary bar for convictions in the UK remains set high given Britain's strong civil liberty traditions and democratic ideals. Although nearly 900 people have been arrested since the September 11 attacks under anti-terrorism laws, only 138 have been charged with terrorist-related offenses, and only 23 of those have been convicted. As noted above, the UK government has sought to provide extra resources to UK police and intelligence services to enable them to carry out these expanded counterterrorist duties and investigations. The increased funding for the security and intelligence agencies has been aimed largely at enhancing training and boosting recruitment, especially of individuals with Arabic and Asian language skills. Press reports indicate that MI5 has begun a recruitment campaign to increase its size by 50% (to 3,000 staff) by 2008. Nevertheless, some observers question whether the UK is devoting sufficient resources to improving its intelligence capabilities. For example, one recent study asserts that counterterrorism work has become GCHQ's single largest collection effort in the last few years, but as a result of this new priority and still limited resources, GCHQ has been forced to reduce its collection activities in many non-priority geographical areas and even on some aspects of counterproliferation. Others point out that even with expanded security budgets and increased recruitment efforts, training new security service recruits takes time and keeping track of suspects are jobs of high labour intensity that entail difficult choices for police and intelligence services. The September 11 terrorist attacks gave added momentum to UK efforts to tighten its immigration and asylum procedures to curtail illegal immigration and prevent terrorists or other criminals from abusing the UK's asylum system. Among other measures, the Nationality, Immigration, and Asylum Act 2002 introduces a new "right to carry" scheme requiring air and sea carriers to check a database to confirm that passengers pose no known immigration or security risks. Following the July 2005 London bombings, the UK government announced plans to: make it easier to deport or exclude foreign individuals from the UK who advocate violence and incite hatred; create a list of foreign clerics who will be denied entry to the UK; and refuse asylum to anyone with possible terrorist connections. The UK also has long-standing legislation and security programs focused on preventing acts of violence from being perpetrated against UK air, maritime, and rail transport systems as well as the Channel Tunnel, which connects France and the UK. Some of these security measures, especially in the aviation sector, were instituted after the bombing of Pan Am Flight 103 over Lockerbie, Scotland in 1988. But since September 11, the UK has further increased aviation security measures. The wide-ranging Anti-terrorism, Crime, and Security Act 2001 strengthened aviation security by making provision for the forcible removal of unauthorized persons from aircraft or airport restricted zones. The UK has introduced more screening and searching of passengers and baggage (especially those destined for the United States and Canada), an expanded list of prohibited articles that cannot be taken on board aircraft, and intrusion-resistant cockpit doors on UK aircraft. In addition, in 2002, the UK announced a program to train armed sky marshals for use on UK-registered aircraft; press reports suggest that they are now operating on some transatlantic flights. Other enhanced border control and transport security measures instituted since September 11 include increased stop-and search powers for police, immigration, and customs officials; new rules allowing law enforcement agencies to request information about passengers and goods from air and sea carriers; the installation of new technology at the Channel Tunnel to check for people concealed in lorries or trains; and the introduction of equipment at all UK ports and airports to screen for illicit importations of radioactive materials. Several UK ports also participate in the U.S. Container Security Initiative, which stations U.S. customs officers in foreign ports to help pre-screen U.S.-bound cargo containers to ensure that they do not contain dangerous items such as weapons of mass destruction. The British government asserts that most UK ports, including all major and high risk ports, are in compliance with a new International Maritime Organization (IMO) code that requires international ships and port facilities to implement tighter security regimes, train staff, and draw up plans for responding to a terrorist threat; London expects that all remaining UK ports will soon be in compliance also. As for rail security, in the wake of the March 2004 bombings of commuter trains in Madrid, Spain, the British government initiated a review of counterterrorist security on the UK's railway network in conjunction with the industry and police services. Although the London Underground system has long had a protective security regime in place, the review recommended that such security regimes be extended to other underground, light rail, and tram systems in the UK; work in this area is reportedly ongoing. Following the July 2005 London bombings, the UK will conduct trial screenings of passengers and baggage at a small number of national rail and London Underground stations during 2006. Despite these efforts, some analysts point to a lack of personnel resources to ensure that all UK border control and security measures are properly implemented. For example, they contend that the Department for Transport's Transport Security and Contingencies Directorate (TRANSEC) has insufficient personnel to carry out frequent and thorough inspections of port and airport security measures, and that the UK immigration service is also understaffed. Others note that the UK has been struggling to balance new transport security requirements with the costs to the transport industry and the traveling public. For instance, press reports suggest that the Home Office was forced to scale back its original plans to require air and sea carriers to obtain additional personal data from passengers following travel and tourism industry protests that it would be cost-prohibitive and inconvenience passengers given the extra processing time it would require. The British government has also put priority on countering the CBRN aspect of terrorism and improving the ability of emergency service providers to respond quickly and effectively to a CBRN incident. UK officials maintain that additional investments made to counter the affects of CBRN materials have also strengthened the emergency services' ability to respond to other types of disasters, such as those involving hazardous materials. In October 2001, the UK established a CBRN resilience program, led by the Home Office and run by a Strategic Board made up of senior representatives from all key delivery partners, such as the Departments of Health, and Environment, Food, and Rural Affairs. Under the program, the UK government points to significant improvements in the quantity and quality of personal protection and decontamination equipment for the police, fire, and ambulance services; also, by mid-2005, over 7,000 police officers had been trained and equipped to deal with a CBRN incident. In addition, the UK's CBRN work includes a science and technology program to detect, monitor, and respond better to CBRN materials and incidents; it seeks to target research and development spending at the most pressing areas where threat assessments indicate that the risks are the greatest. The UK has also devoted increased funding over the last several years to counter bio-terrorism and stockpile extra vaccines and antibiotics. The British government maintains that it is engaged in a program of hardening a number of critical infrastructure sites, but information available publicly is limited for security reasons. The UK categorizes its critical national infrastructure (CNI) into ten sectors (communications, emergency services, energy, finance, food, government and public services, health, public safety, transport, and water) and asserts that it has special physical and electronic protective security measures in place for these sectors. Press reports indicate that MI5 has identified nuclear power stations, oil depots, and high-profile London buildings as priority terrorist targets, and it is believed that significant protection measures are focused on such sites. In December 2004, the U.S. Department of Homeland Security and the UK Home Office signed an agreement on Cooperation in Science and Technology for Critical Infrastructure Protection and Other Homeland/Civil Security Matters to allow the two countries to work together on counter-terrorism research in these areas. UK officials hope this agreement will enable each side to expand their technology capabilities, especially as regards CNI protection, minimize unnecessary duplication of work, and produce more efficient and cost-effective results. As noted previously, the UK has sought to enhance its emergency planning, preparedness, and response capabilities. The UK carries out a wide range of emergency exercises to allow the government and the emergency services to regularly practice their responses to both natural and man-made disasters. According to the Home Office, improving the ability of the police, fire, and ambulance services to deal with terrorist attacks, including those involving CBRN materials, has been a top priority. In 2002, the UK established a cross-governmental Capabilities Program, coordinated by the Civil Contingencies Secretariat, to build the capabilities necessary to deal rapidly and effectively with the consequences of all forms of disasters. The Capabilities Program seeks to provide greater central direction to emergency preparedness and build resilience across all parts of the UK. The Program is divided into 17 different "workstreams," the focus of which ranges from maintaining essential services to dealing with CBRN incidents or infectious diseases to handling mass casualties, fatalities, or evacuations. The CCS has also established a national risk assessment process to identify risks over a five-year period and form the basis for decisions about emergency preparedness. In 2004, the UK Parliament passed the Civil Contingencies Act. This act represented the first wholesale revision of UK emergency legislation since the 1920s, and was intended to set out clear expectations and responsibilities of first responders, local and regional authorities, and the central government to improve civil protection, operational effectiveness, and financial efficiency. The Civil Contingencies Act also gives the government the power to declare a state of emergency without the approval of Parliament and to pass regulations deemed necessary for preventing or controlling a crisis, such as restricting public access to certain sites, evacuate affected areas, requisition property, or ban public gatherings. During its passage through Parliament, the act encountered some resistance from human rights and civil liberty groups concerned that its definition of an "emergency" was too broad and that it could lead to an unnecessary curtailment of freedoms. To secure parliamentary approval, the government tightened the definition of an "emergency" and included a "triple lock" guarantee to ensure that the emergency powers were only evoked in the event of a serious threat, that they were deemed necessary to cope with the situation, and were proportionate to the threat. Although analysts assess that the UK has made significant progress in enhancing its emergency preparedness and response abilities, they also point out that some challenges remain. Some experts remain concerned that the increase in funding from the central government to local authorities announced in the 2004 Spending Review is still not sufficient to carry out the additional emergency planning requirements mandated by the 2004 Civil Contingencies Act. They also point out that outside of London, which has been accorded the highest priority, there are varying levels of emergency preparedness. Many other UK regions face greater coordination hurdles, as well as equipment and training delays.

The September 11, 2001 terrorist attacks on the United States and the subsequent attacks on European countries such as the United Kingdom and Spain have prompted both sides of the Atlantic to reinvigorate their respective efforts to ensure homeland security and combat terrorism. However, U.S. and European approaches to these issues differ. While the United States has embarked on a wholesale reorganization of its domestic security and border protection institutions, European countries have largely preferred to work within their existing institutional architectures to combat terrorism and respond to other security challenges and disasters, both natural and man-made. This report examines homeland security and counterterrorist measures in six selected European countries: Belgium, France, Germany, Italy, Spain, and the United Kingdom. None of these European countries currently has a single ministry or department equivalent to the U.S. Department of Homeland Security. In most of these countries, responsibility for different aspects of homeland security and counterterrorism is scattered across several ministries or different levels of government. Different countries maintain different priorities in spending for homeland security, but most have devoted increased funds over the last several years to intelligence and law enforcement efforts against terrorism. Funding for measures to strengthen transport security, improve emergency preparedness and response, counter chem-bio incidents, and protect critical national infrastructure are more difficult to determine and compare among the countries, given that responsibility for these various issues is often spread among the budgets of different government ministries. Some critics suggest that the Europeans have been slow to bolster domestic protection efforts beyond the law enforcement angle. Others contend that European governments have sought to integrate counterterrorism and preparedness programs into existing emergency management efforts, thereby providing greater flexibility to respond to a wide range of security challenges with often limited personnel and financial resources. Some U.S. policymakers and Members of Congress are taking an increasing interest in how European countries are managing homeland security issues and emergency preparedness and response, in light of both recent terrorist activity and Hurricane Katrina, which devastated the U.S. Gulf Coast in August 2005. In seeking to protect U.S. interests at home and abroad, many U.S. officials recognize that the actions or inaction of the European allies can affect U.S. domestic security, especially given the U.S. Visa Waiver Program, which allows nationals of many European states to travel to the United States without a visa or other checks on their identities. Some experts suggest that greater U.S.-European cooperation in the field of homeland security is necessary in order to better guarantee security on both sides of the Atlantic. This report will not be updated. For more information, also see CRS Report RL31612, European Counterterrorist Efforts: Political Will and Diverse Responses in the First Year After September 11, by [author name scrubbed] (pdf).

The U.S. Agency for International Development (USAID) was established on November 3, 1961, following enactment of the Foreign Assistance Act of 1961 (FAA, P.L. 87-195) which formally established and authorized the assistance programs that USAID implements. Since then, USAID has been the leading international humanitarian and development arm of the U.S. government. In FY2015, the agency is responsible for more than $20 billion in appropriations, representing more than half of all traditional foreign aid appropriations and more than two-thirds of total U.S. humanitarian and development funding in that year. USAID is the workhorse of the U.S. foreign assistance program. The agency has played a role in multiple contexts and forms of assistance over many years so that no short account can fully characterize it. Focusing as much as possible on points likely to illuminate concerns of Congress, this report provides a profile of the agency, putting its operations into brief historical context, and explains how it implements its programs. Selected current issues are then discussed in more depth. Of the multiple agencies and departments of the U.S. government that engage in some form of international humanitarian and development work, USAID differs from the others in a variety of ways: Leading U.S. Development Agency . USAID is the largest provider of U.S. development aid. It employs thousands of development professionals with specializations in a wide range of sectors and geographic regions. It is the representative of the U.S. government on development issues throughout the world. Works in Numerous Countries . USAID funds activities in 125 countries (based on FY2013 obligations) and maintains an extensive field presence, with more than 60 standing bilateral country missions and regional offices that serve countries without mission representation. This physical presence allows the agency to formulate development strategies based on familiarity with local conditions, consult regularly with the local government and civil society, and closely monitor project progress. Works in Multiple Sectors . USAID works on a broad and varied range of humanitarian and development concerns, including microenterprise, health, agriculture, biodiversity, education, democracy and governance, economic infrastructure, energy, financial markets, trade capacity, trafficking in persons, women, disaster relief, and water. Activities in these fields are often supported by specific legislative authorities, and many of them are mandated annually by Congress in appropriations funding language. Works in the Poorest Countries . In order to meet the objectives of mitigating humanitarian disasters and addressing poverty, USAID works with the poorest of the poor countries. In FY2013, the most recent year for which data are available, USAID had programs in 31 of the 34 lowest-income countries, accounting for 44% of total country assistance. With corrupt and weak political and economic institutions, these countries are often challenging development partners. Works in Conflict Countries . USAID is obligated to work in conflict or post-conflict countries, such as Iraq, Afghanistan, Pakistan, and Somalia. USAID programs in such locations often focus as much on establishing stability and delivering basic services as on long-term development. In the past decade, Department of Defense secretaries under administrations of both parties have argued the importance of USAID development programs in combatting national security threats. Serves Political/Strategic and U.S. Commercial Purposes . In addition to humanitarian and development objectives, USAID supports the political and strategic foreign policy goals of the State Department by providing assistance to strategically important countries—for example, eastern Europe and the former Soviet Union after the fall of communism and Afghanistan today. USAID assists U.S. commercial interests by furthering the economic growth of developing countries and building these countries' capacity to participate in world trade. In most years, it has been the largest provider of trade capacity building assistance among U.S. aid agencies. Leads World in Humanitarian Aid . While most refugee aid is provided by the State Department through contributions to international organizations, USAID is the U.S. government's prime channel for disaster and food assistance and the most visible face of any U.S. humanitarian response. Works Directly with Civil Society/Private Sector as Well as Governments . In addition to providing funding and technical expertise to governments, USAID directly funds international and local non-governmental organizations (NGOs) as well as other private sector entities. It also participates with U.S. businesses in hundreds of public-private partnerships. Largest and Leading Bilateral Donor . USAID is the world's largest provider of bilateral donor grant assistance. It alone represented about 14% of all Official Development Assistance (ODA) from all international donors in 2013. Historically, USAID led other donors in offering innovative ways to address challenges in the health, agriculture, microcredit, democracy promotion, environment, and private sector development fields. USAID serves three key and overlapping roles in U.S. foreign policy. In addition to being the primary development agency of the U.S. government, USAID is a major implementer of humanitarian and political-strategic assistance. Development assistance programs are designed chiefly to foster sustainable broad-based economic growth, good governance, and social welfare in developing countries. Where once they served as a counterpoint to communism, these programs are generally viewed as instrumental in building trade partners and future allies, preventing breeding grounds for terrorists, addressing a range of common international concerns, and exercising U.S. leadership abroad. Unlike development assistance programs, which are often viewed as long-term efforts that may have the effect of preventing future crises, humanitarian aid programs are devoted largely to the immediate alleviation of natural and man-made emergencies, and reflect the traditional charitable impulse of the American people, while also attempting to stifle a cause of instability. While largely indistinguishable from development aid programs, the primary purpose of political-strategic aid is to address special U.S. economic, political or security interests, such as the reconstruction of Iraq and Afghanistan or alternative agriculture programs in centers of illicit narcotics production. These roles are wrapped up in USAID's mission statement, revised in January 2014: We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity . Mission statements change to reflect the times, and the new version, while more succinct than previous iterations, emphasizes several current aspects of USAID policy. "Partnering," "ending extreme poverty," and "promoting resilience" are current concerns in the development community. "Partnering" denotes the agency's growing effort to work with other bilateral and international donor agencies, the private sector, and foundations, as well as traditional recipient government and NGO entities. While the World Bank recently adopted the goal of "ending extreme poverty," it has arguably long been among USAID's purposes—the 1973 New Directions mandate (discussed below) made addressing basic human needs of the poor a key focus. "Resilience" refers to efforts to reduce a country's vulnerability to humanitarian and other crises. It is both a humanitarian and development assistance concern. The strategies that currently guide USAID policies can be found in five key documents. 1. The President's Policy Directive on Global Development (PPD-6) issued in September 2010, was the result of an interagency review led by the National Security Council. 2. The December 2010 Quadrennial Diplomacy and Development Review (QDDR) represents a parallel effort on the part of the State Department to address ways in which to make the two key diplomacy and development agencies more effective and, therefore, is more of an operational document. 3. The recently issued 2015 QDDR builds on its predecessor, with more modest initiatives. 4. The State/USAID joint Strategic Plan FY 2014-2017 focuses on five broad strategic goals of U.S. foreign policy and gives USAID a role in each. 5. The USAID Policy Framework 2011-2015 further actualizes the broader objectives of the previous documents. Together, the documents argue the importance of development in U.S. national security—equal to diplomacy and defense, according to PPD-6—with USAID as the lead development agency. The QDDR calls for reestablishing USAID as the world's premier development agency by focusing on six areas of perceived advantage—the promotion of food security, health, climate change, economic growth, democracy and governance, and humanitarian assistance—with the USAID Policy Framework adding a seventh, the prevention and response to conflict countries. Noting seven operational principles to be applied more systematically than in the past, the framework document states that USAID seeks to: promote gender equality and female empowerment; apply science, technology, and innovation strategically; apply selectivity and focus; measure and evaluate impact; build in sustainability from the start; apply integrated approaches to development; and leverage "solution holders" and partner strategically. Many of these principles are brought to life in an agency reform program called USAID Forward, discussed in more detail below. But they are also apparent in the range of policy directives and guidance documents issued by the agency in the years since they were enumerated. While Washington-based strategy and policy directives have an impact as they are dispersed to USAID field missions in countries around the world, it should be kept in mind that there can be a disconnect between policy and practice, especially as mission directors must work within the constraints and challenges of developing countries as well as the budget they are given. In its first dozen years, the Foreign Assistance Act called for development in general terms only, Congress declaring the necessity of U.S. support for both economic growth and political democracy. The act did not specify in which sectors USAID should work or what project activities would be useful to achieve these objectives, and it only broadly and incompletely proposed methodologies for achieving development ends. As the agency addressed the specific developmental needs of individual countries, USAID launched projects in multiple development areas. A change in emphasis by the agency to one type of aid or another or the adoption of a new operational approach during the past five decades has reflected specific country needs as well as a host of other intersecting factors. Periodic shifts in development theory and practice, the introduction of new technologies, and the evident success of an assistance initiative leading to its application elsewhere shape policy. Presidential initiatives and congressional mandates, often reflecting public interest, also shape policy. All of these elements inform current Administration and agency strategy. Evolving Development Theories . USAID's development professionals generally seek the most effective means to achieve development goals. Historically, the agency's choice of operational methodology and project emphasis has reflected aid theory of the moment. In its first decade, there was a particular emphasis in USAID programs on both the provision of economic infrastructure and the promotion of policy reform. Both followed from a top-down view of economic development current at the time—that development emanated from government actions and that national wealth would trickle down to the poor. Operationally, the Development Loan Fund, a 1950s effort inherited by the agency, was designed for infrastructure support and, until ceding this role to the World Bank, was one of the main spigots for infrastructure credit support available to many developing countries. Until the mid-1970s, infrastructure loans accounted for the highest proportion of USAID assistance . Promotion of economic policy reform—including policies fostering export promotion, realistic exchange rates, reform of public enterprises, the elimination of subsidies and price controls, tax reform, and private sector strengthening—was a new element in development introduced by USAID and most evident in the aid programs in South Korea and Taiwan. Support for both infrastructure and policy reform lost favor—at least for some years—when the focus on the government role in fostering a higher overall growth rate was rejected and a new bottom-up approach to development emphasizing "growth with equity and basic human needs" was adopted. The so-called New Directions strategy, embodied in the Foreign Assistance Act of 1973 ( P.L. 93-189 , which amends the 1961 FAA), made it the purpose of U.S. development assistance to help the poor majority satisfy their basic human needs. Although revisions have been made over the years, the New Directions focus in U.S. development aid remains to a large extent intact. The shift in emphasis signified by New Directions shaped the way USAID operates to this day. It led the agency to focus on projects benefitting the poor. It accelerated an ongoing transition from a loan to a grant agency, and from an agency building infrastructure to one providing technical expertise. Whereas assistance had been provided by Congress previously on a functional basis—as grants or loans—aid was now appropriated for specific sectors and emphasized sectors viewed as important to the rural poor, especially agriculture and nutrition, which went from an estimated 26% of aid in FY1973 to 54% in FY1975 and 61% in the proposed FY1976 budget. The inventory of USAID projects increased from about 1,550 projects in 1975 to over 2,000 in 1981 as a result of moving from capital-type projects to small, technical assistance projects. Some projects in higher-income developing countries (e.g., Uruguay, Brazil, Venezuela) were phased out to make room for more projects in lower-income countries (e.g., Bangladesh, Indonesia, Philippines). New programs were established in lower-income countries. The biggest change was in Africa, which went from 8 to 28 USAID missions from 1973 to 1980. Program planning practices still employed today, such as conducting social soundness and beneficiary analysis, were adopted to better focus on the poor majority, as was using a logical framework process to draw connections between project activities and objectives and the Country Development Strategy Statement, forerunner of the current Country Development Cooperation Strategy (discussed below). Perhaps the most important consequence for USAID of New Directions was its acceleration of an ongoing shift from an agency "having significant operational responsibilities to an agency which largely plans and finances projects which other groups implement, and the agency monitors and evaluates." This shift occurred because, in addition to new programs in lower-income countries, the new development approach required a different set of technical skills—social scientists and rural development specialists instead of infrastructure engineers—at the same time that budget cuts slashed the agency's U.S. direct hire workforce from 4,439, excluding Vietnam and Laos, to 3,672 between 1974 and 1977, a 17% reduction. The consequent difficulty in meeting technical requirements increased the need to turn to contractors and grantees. New Directions specifically called for increased use of Private Voluntary Organizations (PVOs) and other NGOs to carry out assistance programs. Science and Technology . Support for scientific research and its dissemination as practical solutions to development problems has long characterized USAID and is recognized in the on-going reform initiatives that seek to re-vitalize the agency as a center for scientific research and innovation (see "USAID Forward and Other Reform Efforts" section below). For decades, USAID has been a major source of funds for the International Agricultural Research Centers and the agricultural research activities of land grant universities. In 2011 alone, the agency spent more than $192 million in health research. The measurable success of innovative practices, particularly in the health field, has encouraged large-scale spending on dissemination of these advances. It is arguably one of the reasons why the health sector has in recent years been the recipient of the highest proportion of the assistance budget. USAID played a key role in disseminating the new grains that characterized the green revolution of the 1960s and 1970s. Its do-it-yourself rice kits, containing seed, fertilizer, pesticides, and information on how these were to be used, effectively introduced the new high-yield grains to farmers, and its development loans supported developing country fertilizer purchases. In the 1980s, USAID was an early user of satellite data to forecast crop failures and identify mineral deposits and groundwater resources. Other innovations during the past several decades, (e.g., more efficient cook stoves, drip irrigation technologies, a rinderpest vaccine for African cattle, oral rehydration therapies, a measles vaccine, improved contraception, anti-malarial nets, and anti-retrovirals) were developed and/or widely disseminated with USAID support. The agency currently continues its long-supported research on a malaria vaccine, new tuberculosis drugs, and vitamin A deficiency, among others. Presidential Priorities . Presidential initiatives have added new areas of emphasis. For instance, the Reagan Administration's Private Enterprise Initiative sought to shift the balance of USAID activities from a "predominantly public sector, or government-to-government, focus to one that emphasizes market forces and active private indigenous productive sectors." Figures at the time suggested that private sector program funding rose from 4% of key accounts in 1982 (Development Assistance and Economic Support Fund) to as much as 13% in 1988. The GAO noted a shift in three USAID country programs (e.g., Jamaica, Kenya, and Senegal) it examined from an emphasis on government capacity building in 1978 to one focused on the private sector as an engine of growth in 1986. Private sector programs and approaches continue to be deployed decades later. The George H.W. Bush Administration's President's Emergency Program for AIDS Relief (PEPFAR), supporting efforts to address the global AIDS epidemic, shifted significant funding into an already comparatively robust health sector. In addition to its existing agency-funded programs, USAID implements about three-fifths of the State Department-funded PEPFAR program. As a result, HIV/AIDS funding implemented by USAID leapt from $407 million in FY2003 to $3.8 billion in FY2010, representing roughly 17% of USAID's total budget in that year. Three major Obama Administration aid initiatives—on global health, food security, and climate change—have shaped USAID's program. In particular, the Food Security Initiative boosted agriculture aid funding. A major component of the USAID program in the 1970s, agriculture aid had dwindled to insignificance by the 1990s. Between 2008 and 2012, funding obligations in the sector doubled. At the country level, presidential initiatives may be decisive in determining the composition and budget of mission programs—in 2012, the three Obama initiatives reportedly represented an estimated 75% of Nepal's program funds. Congressional Priorities . As each Administration put its stamp on USAID's program, Congress made its own contribution, perhaps most importantly in the series of legislative authorizations of the 1960s and 1970s that led to and included the New Directions legislation noted above. In the absence of a broad aid authorization since 1985—thereby leaving it to appropriators to largely shape the aid program in its annual foreign operations appropriations legislation—Congress has continued to periodically authorize sector or regional programs representing a particular interest or concern. Among these are microfinance, water and sanitation, global health, and aid to Africa, eastern Europe, and the former Soviet Union. Although, in many cases, USAID's role in a sector preceded this interest, congressional support often has helped to solidify funding and shape strategy. A funding mandate or recommendation in appropriations legislation or committee report language is perhaps the most common expression of congressional program priorities. Over the years, Congress has directed funding levels for a range of sectors, to varying degrees of specificity. In the foreign aid portions of the FY2015 State, Foreign Operations appropriations legislation ( P.L. 113-235 , Division J), Congress required or suggested ("shall" or "should") funding levels for health, the American Schools and Hospitals Abroad program, cooperative development, democracy promotion, basic and higher education, environmental protection, food security and agricultural development, microenterprise, trafficking in persons, and water and sanitation. These FY2015 recommendations amounted to about $12.5 billion—most of which was expected to be implemented by USAID—and, therefore, likely account for more than two-thirds of its program budget for the fiscal year. Perhaps the most important role of Congress in determining the shape of USAID's programs is congressional control over the total USAID budget. The various elements of the budget are discussed below. The USAID annual budget is provided through multiple funding accounts. Each account has different rules and flexibilities established in authorization and appropriations language. Most USAID program and operational accounts are authorized specifically or broadly under the standing legislative authority of the Foreign Assistance Act of 1961. Authorization of funding levels, however, is time-limited and, in many cases, has not been renewed since the last comprehensive aid legislation in 1985, which provided funding levels for FY1986 and FY1987. A legislative requirement that foreign assistance program appropriations be authorized before the appropriation can be made is regularly waived, for example, as the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 , Division J, §7022) did in the case of FY2015 unauthorized foreign aid program appropriations. Almost all of USAID's funding is appropriated in the annual State, Foreign Operations appropriations legislation, except the P.L. 480 Title II food aid program, which is funded through the Agriculture appropriations. Some appropriations accounts that fund USAID programs are exclusive to sectors (e.g., health, democracy). Some accounts are exclusive to broad purposes (e.g., political/strategic, development, humanitarian). Some are exclusive to an aid methodology (e.g., development credit authority). And, in the past, some accounts have been exclusive to countries or regions (e.g., the Iraq Relief and Reconstruction Fund; Assistance to Europe, Eurasia and Central Asia; Development Fund for Africa). Up until 2006, a number of appropriations accounts whose funding went entirely to USAID—its "core" accounts—were solely under the jurisdiction of the agency, while others from which only a portion of the total went to USAID were co-managed with the Department of State. In the latter case, the State Department set policy and country allocations and USAID implemented the program funding allocated to it. Since 2006, with the creation of what is now the Office of U.S. Foreign Assistance Resources in the State Department, all these accounts—both "core" and shared—are perhaps best described as jointly managed by State and USAID at the policy and allocation level, with USAID implementing funds allocated to it. Because the shared account totals can only be estimated, total USAID budget figures in Table 1 are also only estimates. Further, each year some funds—contributions to a few international programs, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria and cash transfers to various governments—merely pass through USAID. Because these "transient" funds may be quite large—the Global Fund contribution, for instance, sometimes representing more than $1 billion—the total USAID budget figure somewhat distorts the profile of funding available to it for implementing its own programs. The agency's core program accounts include the following: The USAID Global Health Programs account, currently one of two components of a broader Global Health Programs account—the other owned by the Department of State—supports programs focused on combating infectious diseases such as immunization and oral rehydration; HIV/AIDS; malaria; tuberculosis; maternal and child health; vulnerable children; and family planning and reproductive health. The Development Assistance (DA) account funds programs in agriculture, private sector development, microcredit, water and sanitation, education, environment, democracy, and governance, among others. The International Disaster Assistance (IDA) account, managed by the USAID Office of Foreign Disaster Assistance, aids nations struck by natural and man-made disasters and emergencies. Funding is flexible and less constrained by requirements than other accounts in order to support a rapid response. The Transition Initiatives account supports the activities of USAID's Office of Transition Initiatives (OTI), a program launched in 1994 to bridge the gap between disaster and development aid. It supports flexible, short-term assistance projects in countries that are moving from war to peace, civil conflict to national reconciliation, or where political instability has not yet erupted into violence and where conflict mitigation might prevent the outbreak of such violence. The Complex Crises Fund (CCF) is a standing pot of non-allocated funds that allows USAID to rapidly respond to emerging or unforeseen crises with projects aimed at the root causes of conflict or instability. In 2010, for example, the CCF provided agricultural assistance in time for the planting season to newly resettled Sri Lankans previously displaced by the civil war, and in 2014 to address unanticipated governance challenges in Ukraine. The Development Credit Authority (DCA) specifies an amount that may be transferred from other accounts to subsidize U.S. loan guarantees that assume a portion of the risk taken by private banks financing water and sanitation systems, microcredit and small enterprise development programs, and other development activities. The provision also directly appropriates administrative costs to run the credit program. P.L. 480 Title II , although funded through the Agriculture appropriations, it is managed by USAID. Also known as the Food for Peace program, P.L. 480 Title II provides U.S. agricultural commodities to meet both emergency and non-emergency food needs. Humanitarian food programs represent about 60% of funding and target mostly vulnerable populations in response to malnutrition, famine, natural disaster, civil strife, and other relief requirements. It is provided through multilateral organizations, such as the World Food Program, and to private voluntary organizations (PVOs). Non-emergency, developmental-purposed food is provided to PVOs and often "monetized" (i.e., sold in the recipient country with proceeds used to support development projects). In recent years, Congress has allowed a portion of this account to be provided in cash form, rather than food, which can then be used to purchase food on local markets. USAID also receives a portion of the following accounts: The Global Health-State component of the broader Global Health Programs account, managed by the Office of the Global AIDS Coordinator (OGAC) in the Department of State, is the largest source of funding for the President's Emergency Plan for AIDS Relief (PEPFAR). Programs funded from this account are implemented by USAID, the Department of Defense, the Centers for Disease Control and Prevention, and the Peace Corps, among others. USAID's share averages over 60% of this account's funding, although the amount may vary widely from year to year. The U.S. contribution to the Global Fund to Fight AIDS, Tuberculosis, and Malaria passes through USAID. The Economic Support Fund (ESF) uses economic assistance to advance U.S. political and strategic goals in countries of special importance to U.S. foreign policy. Key recipients in recent years include Afghanistan, Iraq, South Sudan, Egypt, Colombia, and Jordan. In most years, USAID receives over 90% of the funding. The Democracy Fund supports democratization programs run by the State Department and USAID. Congress directs a specific dollar portion of the funds in this account—representing 46% in FY2014—to USAID's Bureau for Democracy, Conflict, and Humanitarian Assistance. In addition to these accounts, USAID has, on occasion, received funding transfers from other agencies, most commonly the Millennium Challenge Corporation to implement the MCC's threshold programs. Several accounts are exclusively for USAID administrative purposes, not programs, and remain solely under the agency's jurisdiction: The Operati ng Expenses (OE) account funds the operational costs of USAID, including salaries and benefits, overseas and Washington operations, staff training, security, and information technology maintenance and upgrades. As this account is often insufficient to cover administrative costs, in some cases Congress allows a portion of program costs to be used to support operations. The Capital Investment Fund, begun in FY2003, supports USAID modernization of information technology systems and the construction of facilities overseas. The Office of Inspector General account supports operational costs of the office, which conducts audits and investigations of USAID programs. Table 1 shows appropriated amounts under each of these accounts. Although appropriated numbers are useful, because they are more recent and clearly show congressional action, this report often relies on estimated FY2013 obligations (amounts committed) for USAID-implemented activities because of the level of detail by country and account that is available for that year. Based on an estimated appropriation total of $20.6 billion in FY2015, USAID activities make up more than half of total foreign assistance, traditionally defined as accounts under the foreign operations part of the State, Foreign Operations appropriations and international food aid appropriated under the Agriculture appropriations ( Figure 1 ). USAID manages more than one-third of the International Affairs 150 budget function in the federal budget. The agency's operations and programs represent about 0.7% of total federal budget authority. As might be expected, over five decades total agency funding has shifted variously, as have its individual account components. At discrete points, agency funding levels can be seen as a reflection of the general sentiment, both pro and con, toward all foreign—including military—aid, a reflection as well of Cold War strategy and the Global War on Terrorism, of humanitarian response, of the broader federal budget, and of specific congressional and Administration foreign policy aims. The inconsistent quality of data prior to 2001 makes it difficult to track USAID-specific funding through its history, but an approximate calculation using constant dollars suggests that only since FY2009 have levels reached the heights that they did in the first years of USAID's existence ( Figure 2 ). High assistance levels in the early to mid-1960s were fueled in part by the agency's prominent role in the Alliance for Progress in Latin America and the Vietnam War (at its peak, USAID employed as many as 10,000 staff in that country alone). In the past decade, USAID funding levels have risen again, in large part due to spending on the health sector, especially HIV/AIDS; in response to a range of humanitarian emergencies, such as the Haiti earthquake and Ebola; in support of activities in Iraq, Afghanistan, and Pakistan; and more broadly as development assistance has been viewed as a mitigating factor in the war on terrorism. From FY2001 to FY2009, USAID's implemented funding more than doubled in real terms. In between its first and most recent decades, the agency's funding levels fell dramatically in the late 1960s and early 1970s, as broad support for development aid dwindled and programs in southeast Asia were ended. Funding levels were reconstituted by the policy and management reforms of New Directions. A significant spike in USAID's budget occurred in the mid-1980s during the Reagan Administration in conjunction with increases in total foreign aid and in support of famine assistance programs in Africa and development aid in Central America, a region of intense foreign policy interest at the time. A chief rationale for foreign aid collapsed with the fall of communism in eastern Europe and the former Soviet Union (1989 through 1992), despite a rise in assistance to those very regions. Amid broader congressional budget cutting in the post-1994 period, USAID budgets were substantially slashed. By FY2000, they reached the lowest level (in real terms) in agency history. Although it is common to discuss aid to a specific country, only a small percentage of USAID assistance—4% in FY2014—actually goes directly to the governments of recipient countries. Most USAID funds go through U.S. partners—universities, NGOs, and contractors—although their efforts may directly assist a government's Ministry of Education or Health, for example, in providing educational and health programs to their public. U.S. assistance may also bypass government institutions and directly benefit farmers, civil society organizations, and other segments of the population. USAID provides assistance to a range of countries—125 in FY2013. However, of those, 23 received under $1 million, mostly small island nations or countries receiving one-time funds for humanitarian purposes. The agency's chief beneficiaries (listed in Table 2 ) are mainly countries of special interest for political/strategic reasons, Afghanistan and Pakistan most prominently. Four countries are in the Near East—Syria appearing for the first time on this list in FY2013, although funds allocated for Syria support refugees and displaced people rather than the Syrian government. Nine are sub-Saharan Africa countries of strategic importance and/or the subject of substantial HIV/AIDS assistance . One country absent from the list—Israel—which is regularly among the major recipients of total U.S. funding from all sources, now receives nearly all of its aid in the form of security assistance, which is not administered by USAID. As suggested by the country rankings, in FY2013, the lion's share—nearly 40%—of USAID funding attributable to countries or regions went to sub-Saharan Africa. Two countries in south Asia—Afghanistan and Pakistan—accounted for nearly one-fifth of total USAID country/regional assistance. Not counting those countries, the rest of Asia and the Pacific made up a little more than 8% of the USAID portfolio. Comparing regional USAID allocations with those of 10 years earlier ( Figure 3 ) illustrates the foreign policy drive behind the choice of aid beneficiaries. In FY2003, the Middle East/North Africa (MENA) region represented more than one-third of assistance, largely because of USAID's prominent role in Iraq reconstruction. By FY2013, the MENA's proportion has been cut nearly in half. In FY2003, Afghanistan and Pakistan's importance to U.S. strategic interests had only just begun, but even then accounted for about 6% of assistance. In FY2013, their share of total assistance had tripled and in dollar terms nearly quadrupled. By FY2003, at about 8%, the Europe/Eurasia program had begun to dramatically decline from its 1990s immediate post-communist levels; it represented 16% as recently as FY2001. In FY2013, it accounted for less than 3% of USAID programs. As an agency chiefly designed to support international development, USAID maintains programs in almost every low-income and lower-middle income country, with 44% going to low income and 41% to the lower-middle grouping in FY2013 ( Table 3 ). In contrast, in FY2012, the proportion to these two groups was 57% and 29%, respectively. About 15% of total USAID country funding is spread amongst a wide number of upper-middle income countries as well. Programs in high-income countries, although scanty, appear, as in the case of Ireland, to reflect specific U.S. political interests or are provided in response to natural disasters. The agency's focus on the most challenging political and social environments is further indicated by the proportion of country-specific assistance that goes to countries in crisis. The top 10 countries appearing in the 2014 Fragile States Index ranked by the Fund for Peace received 32% of total FY2013 USAID country-specific funding. In part because its objectives are broad and its recipients are many, USAID conducts programs in nearly every humanitarian and development sector. Figure 4 shows the proportion of funding going to USAID-implemented activities in major sectors. As noted earlier, an emphasis on one sector or another may reflect Administration or congressional priorities, current development strategies, or a mix of these and other factors. Health . Since the early 1990s, health programs have consistently been the largest USAID assistance sector. Even as total USAID levels rose rapidly in the past 10 years on account of aid efforts in Iraq and Afghanistan, health funding has kept pace as a result of billions of dollars in transfers from the Department of State's PEPFAR program. In FY2013, USAID obligated about $5.7 billion for health activities, including water and sanitation. This amount represents more than one-third of total USAID sector spending. In FY2013, about 42% of the agency's total health budget went to sub-Saharan Africa. Humanitarian Programs . Historically, USAID's humanitarian programs, including disaster and food assistance, have varied widely from year to year, in response to the emergence of significant crises such as the Sahelian drought in the 1980s and the 2010 Haiti earthquake (the State Department also administers other humanitarian accounts). Overall, however, support for humanitarian aid has grown over time. In particular, USAID's International Disaster Assistance account, on a gradual upward trajectory for several decades, has remained high since more than doubling in FY2005 (to $1.2 billion) in response to the 2004 Indian Ocean earthquake and tsunami. In FY2013, humanitarian support delivered by USAID represented 19% of agency sector funding, a proportion likely to increase significantly when the FY2015 Ebola crisis funding is taken into account. Agriculture . In FY2013, USAID obligated $1 billion, 6% of sector aid, for agriculture assistance. Agriculture was the largest single sector of USAID assistance until the 1990s, when it was supplanted by the health sector. In the late 1960s, agriculture spending represented about 24% of the agency's program, but rose to nearly half by the late 1970s, reflecting the agency's stress on rural development under the New Directions strategy. By FY2002, however, agriculture spending represented less than 3% of total sector aid. Support for agriculture aid has grown substantially in recent years with the Administration's Global Food Security Initiative. Agriculture programs include training of farmers, researching and introducing new technologies and materials to improve productivity, developing markets, and providing access to credit. The largest recipients were Afghanistan, Bangladesh, Colombia, Ethiopia, Ghana, Haiti, Mali, Pakistan, Tanzania, and Uganda, collectively about 54% of total agriculture aid. Democracy and Governance . In FY2013, USAID obligated nearly $2 billion, about 13% of total sector aid, for programs supporting democracy and governance, including assistance for rule of law, anti-corruption, development of civil society, and the elections process. The largest beneficiaries of this aid were Afghanistan, Egypt, Iraq, Jordan, Pakistan, and South Sudan, together representing 66% of the total employed in this sector in FY2013. The bulk of democracy funding, as for these countries, is derived from the agency's portion of the ESF account. Economic Growth and Private Sector Development . Programs designed to increase economic growth include assisting access to credit for micro and small business, organization of business associations, encouragement of policy reforms to build a favorable business climate, and facilitating development of market chains. For those countries with sufficiently large aid programs, such as Afghanistan and Pakistan, a significant element of USAID's economic growth strategy is the provision of infrastructure, including such costly items as roads, power plants, and communications. Four countries made up 67% of this sector's obligated funds in FY2013—Egypt, Afghanistan, Pakistan, and West Bank/Gaza. In FY2013, economic growth programs accounted for about 11% of USAID sector funding. If agriculture assistance, with its similar purpose, is included in this sector, economic growth efforts could also be said to represent roughly 17% of the USAID program. Education . In FY2013, assistance to education accounted for 4% of USAID's programs. Reflecting the agency's main goals of improving reading skills and addressing school access for children in crisis and conflict countries, 83% of total funds went toward basic education in FY2013. Most of the remaining funds went toward post-secondary education in efforts to address workforce development. Five countries—Afghanistan, Ethiopia, Lebanon, Liberia, and Pakistan—represented more than a third (36%) of all education obligations in FY2013. Environment . In FY2013, environment programs represented about 3% of USAID sector assistance. Chief beneficiaries of environment protection programs, making up more than a third of funding in FY2013, were Colombia, Ecuador, Indonesia, Mexico, Peru, the Philippines, Sudan, Ukraine, and Vietnam. Programs included land rights management, protection of biodiversity, climate change mitigation, and efforts to end deforestation, among others. The process in which USAID provides assistance encompasses thousands of individuals both within and outside the agency, undertaking a range of actions to ensure that funded activities—projects—are formulated, designed, implemented, monitored, and evaluated effectively. It is a complex process with multiple permutations; therefore, any brief description such as this one is greatly simplified. Organizationally, USAID is split into two pieces—field missions and headquarters' bureaus and other offices—each with their own key functions and personnel. In Washington, agency staff are composed of mostly U.S. direct-hire civil service; in the missions, staff are composed of U.S. direct-hire Foreign Service Officers (FSOs) and foreign national employees, most from the mission country. As of September 2014, USAID staff totaled 9,355, composed of 3,815 U.S. direct-hire staff—2,119 Foreign Service and 1,696 civil service—and the remainder mostly foreign national personal service contractors (PSCs). Role of Country and Regional Missions . The USAID missions are perhaps the agency's most unique feature and are often said to be the heart of agency functions. They are the focal point of the agency's development role, while its humanitarian and research functions are largely centered at headquarters. USAID's relatively large-scale personnel presence in aid recipient countries—about 70% of its current workforce—long differentiated the agency from other donors, although many have emulated this model in recent decades. The mission's role is to interface with the government and private sector, formulate a country development strategy, design projects, monitor those projects, and ensure both programmatic and financial accountability. A hands-on presence in each of these steps suggests a better understanding of local conditions, ready access to the host government and other aid recipients, and a greatly enhanced ability to follow project progress and make necessary amendments as priorities and circumstances change. A 1992 study of the mission presence, still relevant today, argues that the potential to influence the country program, to influence country policy reform, and to be accountable for the effectiveness of USAID financial resources are the fundamental justifications for the in-country presence. The same study pointed to possible negative sides of the mission presence—"heavy-handedness," excessive use of American expertise, physical insecurity, cost of maintaining a presence, and an inclination to "perpetuate rather than to work to phase down U.S. presence and the role of USDH [U.S. direct hire] employees." Currently, USAID supports more than 60 bilateral missions . Missions vary in size depending on factors such as the overall funding level of the country program, the range of programs and sectors addressed, the availability of educated foreign nationals, and the security situation. USAID programs in countries without missions are managed from regional missions, which also engage in an array of cross-border regional programs. At one time separately situated, most missions are now colocated with the U.S. embassy. Missions are largely staffed by U.S. FSOs and local nationals. USAID's FSOs are development professionals who mostly work abroad and function under similar administrative rules as State Department FSOs but modified by USAID. They usually specialize in a development sector or an administrative function, such as contracting or financial management. Depending on the country, FSOs generally spend two to four years in a country before rotating to the next posting. Other U.S. citizens serving at the mission level may be personal service contractors performing specific non-managerial duties. On occasion, USAID civil servants based in Washington will take up temporary duties at the missions as will, more rarely, U.S. government employees of other agencies detailed to USAID. In 2014, foreign nationals represented 69% of the USAID overseas workforce. Foreign nationals, most from the recipient country, work in both program professional and administrative support capacities. Missions depend heavily on the foreign national workforce to achieve their objectives. Foreign nationals bring to their jobs a deeper knowledge of the language, culture, local politics, and the development environment than U.S. direct hires. Often serving for decades, while FSOs move in and out, foreign nationals also bring an invaluable institutional memory to mission operations. Role of Central Bureaus and Independent Offices . While the majority of agency program activity is conducted in the field through its missions, the Washington-based central bureaus and offices also play significant program roles. Currently, there are 12 bureaus and a handful of independent offices in USAID's headquarters in the Ronald Reagan Building ( Figure 5 ). Of these, seven are functional bureaus, four of which focus on technical sector issues such as health and food security, and three that address concerns such as management, policy development and evaluations, and public affairs. The remaining five are regional bureaus. Independent offices address specific matters such as human resources, budget, and security. The assistance programs for Afghanistan and Pakistan are backstopped through an independent office rather than by the regional bureau. A major role of the bureaus and offices is to provide policy, technical, and administrative support for the missions and to coordinate the allocation of financial, human, and other resources to the missions. Broad policy guidance (e.g., approved measures for meeting presidential and agency initiatives; sector technical guidance, such as best practices in water and sanitation aid; and aid process guidance, such as how to design projects and carry out evaluations) is developed at headquarters and disseminated to the missions. Expertise on the whole range of development sectors is available to mission personnel through the technical bureaus. If a mission is formulating an agricultural project, for instance, it can draw on the knowledge of subject experts in the Bureau for Food Security. Technical bureaus also manage grants and contracts that provide additional expertise to the missions as required. In recent years, regional bureaus have established their own technical offices, which, in the view of some, may duplicate existing expertise. Bureaus (and some independent offices) to varying degrees also take leadership roles in designing and implementing projects. This is especially the case where projects cross sectoral or regional lines. In the 1980s and 1990s, for example, a Microenterprise Office supported more "cutting-edge" projects and research into best practices than would occur at the mission level. In particular, it channeled funds directly to a range of microcredit specific NGOs, such as ACCION and Finca, helping them establish their expertise and success in this sector. It also led the way in encouraging the adoption of microfinance by commercial banks. The most prominent example of headquarters-based project implementation is the Office of U.S. Foreign Disaster Assistance (OFDA) in the Bureau for Democracy, Conflict, and Humanitarian Assistance. It is the lead government agency for international disaster relief, providing direct assistance to address 52 emergencies in 40 countries in FY2013. It follows emerging disasters, pre-positions relief supplies, deploys response teams to evaluate needs and coordinate the U.S. government response, and helps local entities develop response capabilities for future disasters. Similarly, the bureau's Office of Transition Initiatives (OTI), working in post-conflict environments, conducts its own rapid assessment of country needs. Using a flexible contracting mechanism that permits it to call on a range of expertise from multiple firms as needed, its personnel work closely with contractors to quickly award small grants—averaging $30,000—to address specific concerns. The short-term implementation time frame of these grants—two to three months—allows OTI to maintain a rolling analysis of impact and change strategy as required. As of early 2014, OTI was working in about a dozen countries, including Syria, Afghanistan, Yemen, Burma, and Kenya. The Global Health Bureau also represents a large share of Washington-based program activity. The U.S. government's annual contributions to the Global Fund for AIDS, Tuberculosis, and Malaria and GAVI, go through the bureau and on to those multilateral programs; commodity purchases, such as for HIV anti-retroviral drugs, are procured through the bureau; and neglected tropical diseases and global health security programs are managed by the bureau, as they are both so narrowly focused that they require teams of specialists that mission public health specialists could not provide. Considerable research funding is supported through the Global Health Bureau; each year, USAID spends more than $200 million on health research activities. Most USAID development projects are formulated and conducted at the country level through the missions. Over the years, the individual steps leading from broad agency policy through individual country-level program strategy, project design and implementation, and evaluation and monitoring have changed to varying degrees in form and detail. This "program cycle" in its current form is briefly described below. Whether the end result of this cycle—the conglomeration of individual projects that make up a country program—is more the product of Washington or the mission is hard to say. One factor is the periodic phases of centralization or decentralization of decisionmaking between headquarters and the field. A more recent factor is the role of the Department of State. Between 2006 and 2009, USAID budget, strategy, and policymaking responsibilities were removed entirely from USAID headquarters and transferred to the Department of State's Office of the Director of Foreign Assistance, with significant consequences for mission plans and procedures. USAID has since gradually regained some of these responsibilities, but not all of them. Whatever institutional mechanisms are in place, mission programs have always faced an array of budget requirements and legislative mandates and must fit within the mold of Administration program initiatives and strategies, currently including the QDDR and the USAID Framework, as described above. But the perspective and contribution of the mission is also always a vital component in the mix. The country strategy that is a key element of current program development is the product of considerable give-and-take between mission and headquarters. Country Development Cooperation Strategy . At the country level, each USAID mission formulates a five-year country strategy that addresses a wide range of factors specific to the country but also takes into account the broader external parameters emanating from Washington. A requirement launched in 2010, the Country Development Cooperation Strategy (CDCS) is the latest variant of a form of long-term development planning that stretches back to the early years of the agency. As of March 2015, 51 country missions and six regional missions had completed and received approval of their strategies. Six more are anticipated in 2015. At least six countries have been exempted from the CDCS requirement due to instability and other reasons. The CDCS seeks to identify and prioritize development objectives and program areas where the agency can have the maximum impact. A product of extensive research and discussion with government, civil society, and the private sector, the CDCS is based on a reasoned analysis that takes into account the development context, U.S. foreign policy interests, and the host government's own development plans. In the CDCS, USAID missions employ a Results Framework (see "Results Framework: The Case of Ghana" text box below) to connect anticipated results for a given sector to the achievement of the overall Development Objectives and ultimately the CDCS goal . Missions are required to identify associated measurable indicators that would demonstrate the status of progress toward these goals and objectives. The CDCS goal is defined as the highest-level impact to be advanced or achieved by USAID, the host country, civil society, and other development partners during the strategy timeframe. Indicators associated with this goal may, therefore, be promoted by actions other than those of USAID. A more precise reflection of USAID's program is encompassed by the Development Objectives (DOs) that each mission may adopt (limited to no more than four). DOs are defined as the most ambitious results that a USAID mission can materially affect and for which it is willing to be held accountable . Likely going into the calculation of which DOs are selected is a consideration of what funding resources are available, what ministries are most amenable to appropriate reform and programs, and the status of sector-related civil society, among other factors. Associated with each of these objectives are intermediate and sub-intermediate results, which together should be sufficient to achieve the DOs. Progress in both DOs and results are measurable by sets of performance indicators. USAID projects are designed to bring about the results that make up the Development Objectives in the CDCS. In theory, the mission's evidence-based analysis is supposed to lead logically to adoption of a set of development objectives that "respond to country priorities" and will have "the greatest impact on a country's stability and prosperity." However, one USAID evaluation found frustration among mission staff that presidential initiatives and other funding priorities define the CDCS more than "evidence and consultation." A USAID Office of Inspector General (OIG) audit suggested that the budget "trumped local priorities"—some missions drafted their CDCS based on their expectation of available funding, whereas others were told by Washington to revise theirs to reflect budget realities. Even so, in the end, the audit found that mission development objectives were not always supported, because flexible funding—money not designated for presidential initiatives and congressional mandates—is often less than a quarter of available funds. Minimally, the CDCS is a methodology for thinking through the connections between desired ends—even if pre-determined—the steps to get there, and ways to gauge success. For the outside observer, the CDCS provides an initial basis for identifying what USAID intends to do in a country and how its intentions can be measured and eventually judged. One further objective of the CDCS process as well as USAID Forward, discussed below, was to focus agency efforts where the agency could do the most good. According to the agency, as a result of this reprioritization, between 2010 and 2014, USAID reduced the number of country program areas by 42%, phasing out food security and agriculture aid in 26 countries and health aid in 23. New projects—defined by USAID as "a set of executed interventions or activities, over an established timeframe and budget, identified through a design process that is intended to achieve a discrete development result by solving an associated problem"—are designed around the CDCS. They are formulated using a logical framework method where planned inputs produce outputs that lead clearly to outcomes, the project purpose corresponding to the CDCS "results," and all contributing to the project goal—the CDCS Development Objective. A project appraisal document (PAD) outlining these factors, as well as providing an implementation plan, budget, and monitoring and evaluation plan, forms the basis for a project. Over the time it takes to develop a project from broad concept paper to the more analytical project appraisal document to final approval with a project authorization and corresponding funding (roughly estimated by USAID at four to six months), project designers must take into account a range of factors and agency requirements. Among these is the relationship of the proposed project to other U.S. government programs and strategies, to other donor programs, and to partner country and local "stakeholder" priorities and concerns. In particular, the possible roles of partner country and local entities in the implementation of the project need to be identified. Plans to monitor and evaluate the project must be thought out to establish what data will be required over the life of the project and how data will be collected. The project design process requires an analysis of how the project can be made sustainable in the long term as well as analyses of gender and environmental impacts. USAID assistance takes multiple forms, most fundamentally as food, medical supplies, cash, expert advice, training, equipment such as computers, and economic infrastructure such as roads and power plants. Usually a USAID project will combine several of these inputs to best meet the desired end. For example, a basic education project might include production and distribution of student textbooks, training of teachers, and expert guidance to the Ministry of Education on curriculum design. This assistance may be delivered in multiple ways, each of which has advantages or disadvantages in terms of the management burden on the agency and the degree of control the agency has over outcomes, among other factors . During the process of project design, consideration is given to which of these so-called implementation instruments—in USAID parlance, acquisition referring to procurement contracts or assistance referring to grants—might be best employed to carry out the project. A decision is made once the project design is finalized. USAID management documents list at least 32 different types of implementing mechanisms; the most important and common are discussed here: Grants . A grant supports the grantees' own program, to do the kinds of things it normally does, but that coincide as well with USAID's purpose. Because the grantee does not implement the program as an agent of the U.S. government, a grant requires relatively little oversight or management from USAID and can be implemented in places where the agency has limited access, such as in disaster or civil crisis locations. A disadvantage is that it requires less accountability to the agency than contracts or cooperative agreements . Both grants and cooperative agreements are generally provided to nonprofit organizations or educational institutions, but grants are also provided to international organizations and multidonor funds. In recent years, grants and cooperative agreements have represented about two-thirds of all USAID award funding. Cooperative Agreements . A cooperative agreement is a type of grant that supports the recipient's own program, but, in this case, the agency seeks to be more involved in the implementation and direction of the program. The increased role and oversight make it more time consuming for the agency to administer. In FY2013, cooperative agreements represented 46% of all grant assistance. Contracts . A contract is an agreement to provide specified goods and services, meeting USAID purposes where it intends to exercise a high degree of operational control. USAID is heavily involved from start to finish, and the contractor owes the agency a high degree of accountability. Contracts are explicit about purposes, with specific benchmarks to be met. Most contracts are awarded to for-profit firms. Host Country Contracts allow local governments to compete and manage contracts for specific purposes, such as infrastructure construction, following U.S. government procurement rules. They require that the government has sufficient management capacity. Government to Government Assistance (G2G). Under this form of project assistance, USAID directly finances local governments to deliver mutually agreed upon results (e.g., increased immunizations at health clinics, teachers trained in early grade reading methodologies). Accountability is a potential problem, so this assistance requires in-depth financial and other risk assessments and risk mitigation measures tracked during implementation. Non-Project G2G Assistance, more common in the past than currently , consists of various forms of budget and balance of payments support to partner governments. Sometimes U.S. funds are matched by the recipient with local currencies that may be used for development purposes. Often non-project assistance includes policy benchmarks. USAID is revising its "non-project assistance" guidance to reflect the current focus on outcomes-based assistance. Types of non-project G2G assistance include the following: Cash Transfers are made directly to governments. Most economic assistance to Israel up to the 1990s was provided as cash transfer general budget support. Commodity Import Programs (CIPs) provide U.S. currency tied to the import of U.S. goods. CIPs were a feature of aid to Egypt in the 1980s and 1990s. Sector Program Assistance is conditioned on achieving a specific set of policy reforms in one development sector. It was frequently offered to African countries in the 1980s. Public-Private Partnerships , also known as public-private collaboration agreements. Since 2001, under USAID's Global Development Alliance (GDA), more than 1,500 partnerships with the private sector have been formed to support mutually agreed upon goals with resources contributed by both parties. Loan Guarantees . As noted earlier, Development Credit Authority loan guarantees (assuming up to half of the loan risk) have been used to leverage private sector bank funds for development purposes. Under a separate program, the United States has guaranteed the full value of sovereign loans to Ukraine and Tunisia. Project authorization sets into motion a sequence of activities that generally leads to a competitive selection process of project partners, project agreements with scopes of work, and ultimately obligation of funds, and launching of project implementation. There is a large universe of potential "development partners"—nonprofit private voluntary organizations (PVOs) and other NGOs, for-profit contractors, universities, foundations, other U.S. government agencies, international organizations, and similar entities in other countries ( Table 4 ). According to USAID, about 28% of FY2014 procurements went to U.S. nonprofits, not counting education institutions which represented 2%; 19% went to U.S. for-profits; and about 7% went to U.S. government agencies. Another 29% went to international public organizations (e.g., U.N. agencies), 4% went to other governments, and about 8% went to foreign nonprofit, educational, and for-profit entities. As these partners implement projects, the chief role of USAID is to maintain oversight, both of its financial resources and of project performance. A number of steps are taken throughout the project design and implementation process to monitor both. If a project is well-designed, it may already take into account potential risks and vulnerabilities that might derail effective performance or invite financial abuse. For instance, the project might include management training for local partners to improve their project management capacities or it might address sustainability concerns, thereby reducing a factor in project waste. Where higher risk is perceived, grants and contracts can be designed to provide payment in tranches only after specific actions are undertaken accompanied by appropriate documentation. In its procurement procedures, USAID follows its own AID Acquisition Regulations (AIDAR), based on the Federal Acquisition Regulations (FAR), which requires a determination of the qualifications of perspective contractors and grantees to ensure the likelihood of adequate performance and the preferred use of open competition to ensure the most qualified finalist at the most reasonable rate. Each project or activity within a project may have a manager and/or a contracting officer or, in the case of grants and cooperative agreements, an agreement officer, responsible for oversight. These officers can follow project progress through regular written reports, usually required quarterly, from contractors and grantees, and through site visits and other, more frequent, contacts. Managers and contract officers also receive regular financial reports and vouchers with which they can track expenditures. Annual financial audits of U.S. contractors are required and usually performed by the Defense Contract Audit Agency (DCAA). These focus on the overall financial status of the contractor rather than work being done in any one country. For U.S. nonprofits whose work exceeds certain federal funding levels, an annual financial audit is performed by public accounting firms approved by the Office of the USAID Inspector General (OIG). In 2011, the agency stood up an agency-wide unit, the Contractor Compliance Task Force, to oversee contractor compliance with primary responsibility for processing suspension and debarment actions, managing partner corrective actions, and tracking partner compliance. Enforcement actions have reportedly increased notably since creation of the new unit. Special measures have been devised to capture instances of fraud or mismanagement in countries with especially high risk. In Afghanistan, for example, special measures include the following: prime contractors are required to undertake a specific proportion of the work and limits are put on the number of layers of subcontracts to make it easier to follow where the funding is going; many awards are limited to one year and smaller amounts; non-U.S. companies and key personnel are vetted to ensure that "malign actors" are not involved; electronic funds transfers are used instead of cash payments; third-party monitors are employed; more local audits and reviews of claims are conducted; more field staff are deployed; and more staff trained as "on-site monitors." Where funds are being provided directly to governments and local entities, an additional set of procedures has been adopted to address added risk of poor financial or project performance. These procedures to ensure accountability are discussed in the "Selected USAID Issues" section below. The OIG conducts audits to ensure that regular mission procedures and requirements meant to ensure accountability are carried out and are adequate to that purpose. Financial audits examine contractor and grantee financial statements and agreements. Performance audits look at project outputs and whether, if achieved, they meet the results intended. Since it would be unreasonably costly to conduct audits of every USAID award, the USAID IG chooses its subjects based on assessments of country risk, the amount of funding involved, subject interest, and other factors. Oversight is not intended solely to catch malfeasance or incompetence. If problems are identified during project implementation, mid-course corrections can be made to put the project on the right track. If necessary, an errant project can be terminated. To fully understand what progress has been made in achieving a project's desired ends, a formal independent evaluation is conducted, possibly at project mid-point, but certainly at project completion. Although the frequency and requirements for these have changed over the years (see the "Evaluation" section below), current agency policy strongly supports evaluations meant both to judge the effectiveness of a project and to gather lessons that might be applicable to future projects. In 2010, USAID launched a series of reforms intended to reestablish the agency as a world leader in development, a reputation many observers believed had eroded from the late 1980s till then. During that period, USAID suffered what many saw as a number of setbacks that were interlinked and reinforced each other, including severe funding cutbacks and numerous mission closures in the mid-1990s; a long-term decline in both civil and foreign service staff; sharply reduced USAID independence by tying it more closely to the Department of State, both through legislative efforts and executive branch actions; increased reliance on contractors for program functions, establishment of rival U.S. aid agencies and funding accounts; consolidation of many administrative functions and locations with U.S. embassies; and loss of budget and policy planning functions. Although some steps were taken to address growing concerns regarding agency capacities by USAID Administrator Henrietta Holzman-Fore (under President George W. Bush), Administrator Rajiv Shah (President Barack Obama) put reform front and center with the USAID Forward agenda. Many of USAID's programmatic and institutional reforms derive from a gathering of views from USAID mission directors in the first days of the administrator's term. Both the 2010 Presidential Policy Directive-6 and Quadrennial Diplomacy and Development Review (QDDR) recommended and enumerated various elements encompassed by these reforms. In all, the reforms represent one of the more significant changes to the agency since the "basic human needs" reforms of the 1970s. Reforms encompassed under the USAID Forward umbrella and other significant related agency changes are discussed below. Due to a decrease in staff numbers between 1990 and 2008, it is widely believed that USAID lost much of its technical and professional expertise and, consequently, contracted out much work that previously had been performed in-house. Historical data on USAID staffing is weak and often contradictory, but figures suggest that the long-term slide in staff numbers that began in the early 1970s accelerated substantially in the 1990s, exacerbated by budget cuts in mid-decade that led to the closing of missions and a severe reduction in force (RIF). According to USAID, direct hire staff numbers fell from 3,262 in FY1990 to a low of 1,947 in FY2000. Reported impacts on the USAID program included a disruption of regular monitoring and evaluation practices, an increased reliance on large-scale contracting, fewer staff-intensive small projects, and a substitution for hands-on direct hire management by scores of personal service contractors increasingly undertaking what many believe are inherently government functions. Moreover, the agency's management capacity reportedly worsened in the 2000s as program responsibilities expanded exponentially in the health sector and in crisis countries, such as Afghanistan, Iraq, and Pakistan, with no comparable rise in operating expense funding. At the same time, a rise in retirements drained the agency of experienced personnel and institutional memory. As of September 2010, 27% of FSOs were projected to be eligible for retirement by September 2015, including more than 90% of FSO-1 and above, the most experienced levels of staff. To restore agency capabilities, the Bush Administration in 2008 launched its Development Leadership Initiative (DLI), with the objective of doubling the number of FSOs by 2012 (a 1,200 position increase); rebuilding a cadre of technical expertise in agriculture, education, engineering, and economics; and expanding language capabilities. By 2011, because of Operational Expense account funding cuts, hiring from the original projections of 300 new FSOs per year had slowed and delayed the DLI goal. Since then, the agency has put further growth on hold, not requesting additional FSO positions, but requesting funds that simply meet costs for the 820 DLI FSOs that were hired between 2008 and 2012. The annual USAID IG memo on management and performance challenges, issued in late 2014, notes that the agency continues to experience a shortage of experienced, highly skilled personnel, especially contracting staff. Among the consequences of the new hiring—as of 2013, about half of USAID FSOs had less than five years on the job—is an agency with new youthful energy but significantly increased training needs. An 8% decline in the FY2015 USAID Operational Expenses account from the FY2012 level may challenge the agency's ability to prepare its new staff and maintain the agency's capabilities. Over many decades, USAID followed an implementation model that chiefly utilized U.S. organizations to deliver assistance. In recent years, many observers criticized this model as failing to build the development capacities of local, recipient country governments and organizations. In the 2000s, the United States joined other donors in making commitments at international conferences to support more "country ownership" of assistance. Under its Implementation and Procurement Reform, USAID set a target of increasing funds provided directly through local systems (i.e., government, civil society and private sector)—channeling 30% of total mission program assistance directly through local entities by FY2015. Aspects of this effort—discussed in the "Selected USAID Issues" section below—drew criticism from U.S. contractors and some NGOs and the attention of Members of Congress. In spring 2013, USAID reframed the procurement reform in broader development terms. The Local Solutions reform focuses on all aspects of local systems, with sustainability as the driver of program thinking. The agency argues that its investments are best sustained in the long-term if development is locally owned, locally led, and locally resourced. Although the 30% quantitative target is now viewed as "aspirational," USAID continues to monitor the agency's movement toward its direct financing of local systems. Excluding Afghanistan and Pakistan, from an FY2010 baseline of 9.6%, the FY2012 level is 9.9%, the FY2013 level is 12.3%, and FY2014 level is 15.1%. In terms of actual funding levels, assistance going to partner governments (excluding Afghanistan and Pakistan) and local organizations has risen by 32%, from $860 million to $1.1 billion between FY2010 and FY2014. Amounts going through local organizations (i.e., excluding government to government aid) rose substantially in this period—from $383 million to $1.1 billion, a 176% increase. USAID has also sought reforms of its procurement processes to make them more efficient and cost-effective. An effort to increase competition and broaden the agency's partner base by increasing the number of awards to small business is discussed below. USAID has also taken steps to address the long-standing criticism of the amount of time it takes from the production of a contract statement of work to the time of an award. A goal was set of cutting the time by about 48%, from 513 days in FY2009 to 268 days. At the end of FY2013, the time had been cut by 17%. In 2013, the agency sponsored an extensive study of its procurement processes. Although the Award Cost Efficiency Study (ACES) focused on maternal and child health projects, resulting recommendations made by a management consulting firm had wide application to the whole range of USAID procurement activities. Consequently, USAID, starting with a "Framework for Action in 24 Countries" launched in January 2014, is applying the recommendations in the health sector, with the expectation of shifting a third to half of its existing awards to make them more cost-effective and therefore save more lives. In addition, the agency has adopted numerous steps that aim to better define what awards should achieve and improve the process of selecting the type of procurement, the evaluation of costs, and the assessment of partner performance. In 2006, then Secretary of State Condoleezza Rice initiated a reorganization and reform of foreign aid management that, in effect, more deeply integrated USAID's policy and budget processes into those of the Department of State. Under this "transformational development" effort, USAID lost the policy formulation capacity that had formerly resided in the Bureau for Policy and Program Coordination (PPC) and much of its budget responsibilities and capacities to State Department entities, including a new Foreign Aid "F" Bureau. The relationship of USAID to the State Department and the consequent impact on foreign aid is discussed in the "Selected USAID Issues" section below. Under USAID Forward reforms, the agency's policy and programming capacity has been rebuilt to some degree by the establishment of a new USAID Bureau of Policy, Planning and Learning (PPL). At the field level, the most visible sign of the renewed capacity is the reformed Program Cycle, including the Country Development Cooperation Strategies (instead of the integrated State-USAID Operational Plans required by Secretary Rice's reform). The PPL Bureau has also been instrumental in releasing a series of sector strategies and policies to guide agency operations. To rebuild its budget capacity, USAID reestablished an Office of Budget and Resource Management in the Office of the Administrator. In June 2011, the agency developed its first comprehensive budget proposal since 2005. According to the agency, in 2012, it moved funds to its bureaus three months earlier than previously, "allowing our missions to better manage and plan their programs." Some observers question whether the new budget office substantively restored fully autonomous budget decisions to USAID, noting that the "F" Bureau in State still must sign off on USAID's budget and USAID has not provided a comprehensive independent budget to Congress since FY2007. Many observers believe that, for more than a decade, USAID neglected its evaluation processes and capacities. In 1995, coinciding with an environment of severe budget and personnel cuts, USAID changed its evaluation policy. Hereafter, a decision to evaluate was not a requirement but was to be "driven primarily by management need." While the intention was to eliminate pro forma evaluations, it apparently did not have this effect. One analysis notes that evaluations entered into the agency's information system fell from 253 in 1995 to 104 in 1998. USAID itself reported 528 evaluations in 1994 with a drop to 79 in 2001. Whatever the number, the quality of the agency's evaluations, in the view of some, was suspect—often a brief "fly-in" focused more on the achievement of inputs and outputs rather than impact or lessons learned. Since the early 2000s, there has been an increased emphasis among international donors and aid partner organizations on improved evaluation practices. In January 2005, USAID introduced an Initiative to Revitalize Evaluation at USAID, which included stepped up staff training, new guidance, and new requirements, such as for an annual evaluation plan and a designated evaluation officer at the mission level, but this effort ended with the State Department's transformational development effort. The USAID Forward reform goes much further. The new PPL Bureau established an Office for Learning, Evaluation, and Research—the previous evaluation office having disappeared under transformational development. It issued a new evaluation policy in January 2011, establishing improved indicators of project progress, requiring more evaluations, and better measuring impacts. The agency is more regularly collecting baseline data that is expected to help it explain to what extent its aid interventions were responsible for any impact. It also committed 3% of major program funds to evaluation purposes. USAID now requires a performance evaluation for every major project, an evaluation that is to be conducted by independent third parties and released to the public. In FY2014, USAID completed 224 evaluations. Perhaps more important, according to USAID, evaluations are being put to intended use, not simply measuring success for accountability purposes, but as tools for learning and improvement. The agency claims that more than half of the 186 evaluations published between July 2011 and the end of 2012 led staff to make mid-course changes to programs and more than a third led to budgetary changes. As noted earlier, USAID has historically been a leader in applying science and technology (S&T) to development problems. Under the USAID Forward initiative, the agency has taken steps to invigorate its role in this area while adding a new emphasis on bringing S&T innovations "to scale"—disseminating and applying new development solutions and ensuring they are adopted more broadly. This scaling-up has often been a problem for the agency, which generally has supported pilot projects—testing and demonstrating a new technology or intervention at the mission level in perhaps one province—but not had sufficient funds and the institutional leadership to either spread such projects more widely within a country or among multiple countries. While some innovations are so broadly applicable and revolutionary that they are rapidly adopted, a possibly large number of ideas never go beyond the pilot stage. USAID is seeking to encourage new approaches to development and to foster dissemination of the most promising ones. In the past several years, it has established a range of programs to accomplish these ends and, in early 2014, combined many of them into a new U.S. Global Development Lab. At this time, it is too early to tell whether any innovations developed to date can be brought to scale and what might be the best methods for doing so, but the agency has made progress in identifying new technologies and approaches. Several of the Lab's programs establish collaborations within the scientific community to help it focus on specific development problems. The Partnerships for Enhanced Engagement in Research (PEER) supports developing country scientists working with counterparts in U.S. federal science agencies, including the National Science Foundation and National Institute of Health. The Global Research and Innovation Fellows Network sends U.S. scientists to developing countries to provide technical expertise in collaborative research. The Higher Education Solutions Network has established seven development "labs" in major U.S. universities, each addressing a problem, such as new technologies in health care delivery and prevention (at Duke University). Two programs use competitions to attract a range of ideas, the best of which are awarded grants to further their development. Grand Challenges for Development (GCD) has sponsored six competitions to date focusing on how to save lives at birth, how to get all children reading, how to power agriculture through clean energy, how to make all voices count in governance, how to improve water sustainability for food security, and how to provide better care for patients with Ebola and stop the spread of the virus. The Pratt Pouch, a technology that prevents transmission of HIV/AIDS from mother to child, is one innovation from the Saving Lives at Birth Challenge, which is being refined and prepared for integration into health delivery systems. Development Innovation Ventures (DIV) supports pilots, start-up and testing, and scale-up for innovative proposals submitted by the public that might ultimately assist millions of beneficiaries within 10 years. Since 2010, it has attracted more than 6,000 applications. Currently, for example, grant support is developing an inexpensive self-test for pre-eclampsia among pregnant women; evaluating effectiveness of a "quick count" photo method for reducing election fraud; and assisting in the deployment of a mobile platform for health organizations to disseminate health applications to the phones of community health workers. To date, the program has invested in more than 100 solutions in 17 sectors and 35 countries. Based on the understanding that public aid resources will never be sufficient in themselves to achieve desired development ends, the agency's reform effort has emphasized leveraging contributions from private sector sources of funding. Greater attention has been channeled in recent years toward two programs launched under earlier Administrations, progress in each of which is measured in annual reporting on agency reforms. The Development Credit Authority leverages significant private sector capital by guaranteeing a portion of the risk of bank loans in support of development activities. Total funding for the program is limited by a ceiling placed by Congress on the amounts that can be put at risk. In FY2014, USAID obligated $25.7 million in support of $769 million in possible private sector loans. In recent years, USAID has sought to expand the program by deploying teams of investment field officers well versed in business to USAID missions. The Global Development Alliance (GDA) program collaborates with companies and other private sector entities to plan, fund, and implement projects that support both development and business objectives. The agency's goal is to leverage private sector resources and expertise to achieve development objectives, as well as promote the long-term sustainability of programs. For example, USAID is working with several international coffee companies to fight coffee rust, which threatens to harm local economies and business supply chains. According to USAID, in FY2014, it provided about $95 million, while private sector organizations provided $250 million in support of public-private partnerships. Some points of possible interest in the broad description of USAID operations above warrant a more thorough discussion. Almost any current aspect of the agency contains a complex history—for more than 50 years the agency has been challenged by concerns regarding accountability, sustainability, project partners and the best way to do development, its place in the U.S. government, and the priorities of Congress. Each of these issues is highlighted below. Congress has long focused on executive branch accountability. In the case of USAID, some would say especially so, because its funds appear to flow to unfamiliar locations for not always well-understood purposes, and outcomes are at the mercy of unpredictable environments. However, while insufficient accountability can easily undermine congressional and public trust in the agency's mission, some steps to ensure accountability are viewed by many observers and development practitioners as preventing the agency from achieving its mission. Aspects of this dichotomy are discussed below. Public attention is occasionally drawn to examples of assistance failure—the contractor who falsely bills the U.S. government, or the malaria nets that sat in storage instead of being distributed to those in need. As noted earlier, USAID supports multiple layers of financial and performance oversight to ensure that taxpayer dollars are not misused. Nonetheless, there are losses due to fraud, waste due to poor planning and execution, and indeterminate accounting of funds and project outputs due to incomplete recordkeeping and irregular project monitoring. In FY2014, the USAID Inspector General found $92 million in questioned costs, $71 million in funds recommended for better use, and $23 million in recoveries from investigations. A question for policymakers is whether the $186 million total amount should be considered a lot or a little. Because USAID works in developing countries where there are inherent risks of corruption and instability conducive to abuse and misuse of funds, some critics assume that more waste occurs with foreign aid spending than with U.S. government domestic spending. Questioned, better use, and recovery amounts identified by the Inspector General do not all necessarily represent criminal or other misuse and fluctuate from year to year. In FY2014, $186 million represented 1.0% of USAID's appropriated funding in that year. By comparison, a similar calculation shows questioned costs and funds recommended for better use by all inspector generals across the federal government accounted for 1.5% of total U.S. budget authority in FY2013. Whether more or less risky than other U.S. government activities, the accountability risk in conducting USAID's business has to be weighed against assessments of how USAID's aid programs are meeting U.S. foreign policy objectives. Countries of special foreign policy interest—and therefore, recipients of generous portions of total aid—often represent the highest proportion of identifiable waste and fraud, possibly because of the agency's lack of adequate monitoring capacity in these so-called "non-permissive" environments, and, in the case of Afghanistan and Pakistan, Administration and congressional pressure on USAID to spend a large amount of funds quickly and in every sector. As noted earlier, USAID's history in Afghanistan and Iraq has led it to take extra precautions to track these programs, but the learning curve has been steep, and some observers have wondered what, if anything, aid projects can accomplish in such places and under the circumstances in which USAID is working, despite a number of success stories in discrete sectors. To other observers, however, it may seem harsh to judge overall agency performance on the basis of these particular programs, and perhaps it should be anticipated at the beginning of such efforts that development aid in such environments brings less in project outputs and even less in eventual stability or development. In more typical aid programs, the IG findings and other layers of monitoring and accountability give greater assurance that the correct number of dollars generally results in the correct quantity and quality of project outputs, whether they be schools or training programs. More problematic is ensuring broad development accountability—drawing a connection between a project and actual long-term development impact. Although for decades USAID staff have designed projects with careful thought given the likely results, development aid in one sector and one province is but a small part of a country's broader growth, and it is often hard to argue the impact of any one project or that U.S. assistance, given the multiple intervening variables, is chiefly responsible for macro-development outcomes. Facing criticism in the 1980s and 1990s, especially after the fall of communism removed an important rationale for the aid program, the agency began to look for ways to measure and demonstrate success to a skeptical Congress. "Managing for results," as it was called then, built on efforts begun by the Africa Bureau in the late 1980s that were adopted agency-wide after USAID offered itself as both a "reinvention laboratory" for Vice-President Gore's government reinvention initiative and a pilot in implementing the Government Performance and Results Act of 1993 (GPRA). Put succinctly, "managing for results" focused the aid program on the achievement of higher level strategic objectives and program outcomes rather than on the inputs and outputs of individual project activities. And it required the definition of strategic objectives and program outcomes in measurable terms—identifying quantifiable indicators and setting targets to help evaluate progress. USAID Forward prioritizes a "managing for results" approach through its Program Cycle, including the new results framework in the CDCS described earlier. But quantification of anticipated results has brought with it its own concerns, as noted in the section below. Some observers have argued that the various steps required to ensure financial and performance accountability may have had harmful effects on agency operations and program effectiveness. Former Administrator Andrew Natsios (George W. Bush Administration), in particular, has been an outspoken critic of management practices imposed by oversight bodies in the name of accountability. His views, echoed in the observations of USAID field staff and others, are a caution to policymakers. An over-emphasis on accountability, these aid practitioners and observers argue— Discourages risk taking. The response by USAID staff to the need to predict and measure results in the inherently risky environment of developing countries has arguably been an excess of caution and depressed innovation. Why take chances funding new partners and new approaches to development if you cannot be certain of achieving the desired, measurable results? While USAID Forward reforms seeking greater use of local systems, establishing an innovative development lab, and encouraging a "culture of learning" would indicate a greater acceptance of risk-taking in the agency, some argue that old habits and fear of failure and compliance police continue to trump risk. Determines where you invest assistance dollars. Health outcomes—mortality rates, disease reduction—are more easily quantifiable than those in other sectors and, so, may have benefitted accordingly. Projects whose development outcomes are not so easily measured—scholarships, funding of local think tanks, writing of constitutions, institution building, and policy reform—may have been neglected as a result. Favors short-term planning over long-term planning. Prior to the 1990s, according to Natsios, projects had a 10-year time frame. With the need to show immediate results, planners arguably think in terms of three to five years at most. Prevents local participation. Accountability regulations place a compliance burden on local entities, a problem which Local Solutions reform is seeking to change. Slows and makes more costly the project planning and implementation process. The need to measure progress can dominate the time of aid officers and add to project costs. Has been misinterpreted and misused by IGs. Natsios argues that, although measurable indicators are intended to help evaluate project progress and make improvements, they have been used by IGs to claim that programs are not working and should be shut down. He also notes that the project delays, missed deadlines, and inadequate paperwork, highlighted by many USAID IG and GAO reports in the past, were actually signs of poor institutions in developing countries, not of waste, fraud, and abuse. Is misplaced in war zones and other areas of high national security interest where the chief aims are political, aimed at winning hearts and minds, and not developmental. The same performance standards arguably should not be applied as the Defense and State Departments micro-manage the programs and USAID officers have little policy discretion in these circumstances. As noted in the above discussion of USAID Forward reforms, a key element of USAID's procurement reform effort has been to provide more funds directly to host countries and local organizations implementing aid programs in order to foster country ownership, develop local capacities, and better sustain project efforts in the long-run. This reform has raised multiple overlapping concerns—first, regarding possible impacts on U.S. contractors and grantees; second, regarding the methodology of achieving country ownership; and, third, regarding the ability of USAID to maintain appropriate standards of accountability. These concerns are discussed below. When first enunciated in 2010, one facet of the procurement reform in particular generated controversy and some opposition within the community of U.S. development contractors and grantees. That was the proposed effort to move 30% of contract and grant mission program funds through recipient country governments and private sector institutions by FY2015 (from the estimated 9.6% in FY2010). To the extent that U.S. assistance flows directly to foreign governments and local entities, it is less likely to go to U.S. development program implementers, so it could be argued that any opposition by U.S. implementers was based on self-interest. However, critics of the reform suggested that it underestimated the value of U.S. contractors and grantees to the achievement of U.S. aid objectives. Many of these development organizations have global expertise in their fields that allows them to learn from their experience in one part of the world and bring that knowledge to bear in other parts. They have a demonstrated track record in their fields of specialization. As U.S. institutions, they represent U.S. values and interests abroad. And they are long-practiced in meeting the accountability requirements of USAID. A further potential benefit of employing U.S. contractors and grantees is that U.S. entities and their supporters, especially in the community of charitable organizations, generate constituent and, hence, congressional backing for foreign aid and reduce the resistance of "buy America" advocates. InterAction, an organization representing the community of U.S. humanitarian and development NGOs, argued that if capacity building is the goal of this reform, USAID's 30% objective should include U.S. NGO programs that build local capacity, as many U.S. NGOs have established counterpart organizations abroad through which they work. Others argued that the objective also failed to include sub-contracts and sub-grants by U.S. entities to local ones. If current sub-contracting to local organizations were included—something USAID did not then track—they said the 30% objective might have already been met. Further, a consortium of more than 70 for-profit development companies argued against "the premise that more localization will necessarily result in better localization." The development community itself appeared divided on this issue. Some NGOs, such as Oxfam, fully supported the 30% objective and argued that aid providers should be working themselves out of a job sooner rather than later. Supporters provided many anecdotal accounts from aid implementers negatively contrasting U.S. contractor overhead with local costs and fly-in technical assistance with locally bred knowledge. Both supporters and opponents brought their concerns to Members of Congress. The controversies that arose when USAID announced the reform in 2010 appear to have diminished as USAID has become less insistent on meeting established targets by a specific date and more accommodating on the role of U.S. organizations. Some blame a poorly managed rollout of procurement reform, including a lack of consultation, for the negative reaction of some aid implementers. Whatever the arguments made by or on behalf of the roles of U.S. contractors and grantees, as USAID pointed out, even if the now-"aspirational" quantitative objective of the procurement reform is met, U.S. organizations would still be implementers of 70% of mission program funds. USAID's "local solutions" effort follows from its original mandate and a long history of working closely with recipient governments and civil society. From the beginning of USAID, it has been a guiding policy to "carry out programs of assistance ... to the extent practicable in conjunction with local private or governmental participation." During the past decade, at a series of international conferences on aid effectiveness, donors, including the United States, recognized the principle that developing countries should design and manage their own development, a principle known as "country ownership." USAID believes that a key objective of development assistance is to strengthen the capacity of government and private sector entities to meet this end. In its "local solutions" reform, USAID argues that funneling aid funds through the host government and private sector—in essence allowing them to run USAID programs—may help to build their capacity and, at the same time, facilitate long-term program sustainability by virtue of ensuring host government and local society engagement. The focus on local solutions is somewhat different from the historic role that USAID has played in building the institutional capacities of developing countries. From the 1960s, it placed U.S. technical experts in government ministries, trained bureaucrats in-place or through U.S. and other country degree programs, and supported the establishment of rural agricultural cooperatives, civil advocacy groups, business associations and other local organizations, among a wide range of related activities, many of which it continues today. Although disputing the original reform metric and time frame, most in the development community of contractors and NGOs do not question the ultimate objective of "country ownership." Rather, they disagree with the "hows" of achieving country ownership. Some reject the basic premise that localization of aid, in the sense of being part of a USAID project, will reduce a recipient government's dependence on U.S. implementers, increase local ownership, enhance sustainability, and increase capacity. They suggest that asking local organizations to do what USAID wants—rather than acting as partners by doing what the local organizations have found works in their country—is misguided. Capacity building in this sense is to help local organizations undertake USAID projects and meet USAID financial and other requirements. Giving local organizations a larger role in project aid may create dependence on donor agency funding and practices while doing little to develop local organization institutional capacities. A related concern is that local NGOs whose budgets increase dramatically with USAID assistance might find themselves requiring a new organizational structure or may risk losing touch with their own grassroots support. As noted in the previous section, some assert that many governments and local for-profit and nonprofit organizations are simply not ready to independently implement U.S. aid programs. If the chief objective is building capacity, these critics argue, then it should be recognized that the transfer of knowledge is as important as the transfer of funds, and how well development work is performed is more important than who does it. Fair and open competition, instead of limiting applicants to the host country, they argue, would ensure the best development outcome. U.S. contractors and grantees, with expertise and long experience, already conduct most of their work with local organizations and personnel. Under this line of thinking, if USAID wants to build capacity, it should dedicate more resources to developing the management capacity of local organizations, utilizing U.S. NGOs to accomplish this end. It is argued that the agency should also simplify its various application, management, and reporting requirements to better enable local organizations to implement programs successfully. But, in any case, many supporters of the concept of local ownership are concerned that funds not be greatly increased until these organizations are ready to use them effectively. However, others in the development community argue a completely contrary view. They assert that developing country organizations already have considerable capacities. A USAID-sponsored study found that over half the 325 organizations in nine countries examined could "hold their own" with any U.S. NGO or contractor. Oxfam has long argued the same. The study also suggests that fundamental USAID behavior may need to change for local ownership efforts to work. At USAID Missions, despite the call for reforms, staff are driven by old incentives and job descriptions. You get rewarded not for how many local organizations you have got to know but by how large a portfolio you manage. And getting out of the office to spend time getting to know local organizations at length and in depth is made hard by security concerns and by the pressure of paperwork, other duties and priorities. Thus the very behavioral traits that local organizations have told us they increasingly want – trusting relationships, regular communication, and longer term engagements, are not the behaviors that USAID is currently set up to encourage. USAID recognized this concern in part by attempting to incentivize its staff to work with local organizations. According to the agency, it has established local engagement as a work performance objective for about two-thirds of FSOs and foreign nationals. It remains to be seen whether factors such as restrictive security rules and scarce staff resources permit an enabling culture in USAID for localization. To ensure greater participation by local entities in USAID programs, the agency has sought to limit competition in favor of local organizations or to provide sole source awards. Likely due to U.S. NGO and contractor opposition, an element in the original reform plan that would have required missions to set aside $2 million for local NGOs was eliminated. Nonetheless, in the FY2012 State, Foreign Operations appropriations ( P.L. 112-74 , §7077), Congress supported an agency pilot effort to limit competition for awards under $5 million to local entities "if doing so would result in cost savings, develop local capacity, or enable the USAID Administrator to initiate a program or activity in appreciably less time than if competition were not so limited." While this effort suggests some congressional support for localization, language on the issue adopted in the FY2014 appropriations ( P.L. 113-76 , §7028) and maintained in FY2015 ( P.L. 113-235 , §7028) points to a possible constraint on USAID efforts. Although Congress continued the language permitting limited local procurement, it now allows limited competition for local entities only if a written documented assessment is made of the level of local capacity to "effectively implement, manage, and account" for programs, and if effective monitoring and evaluation systems are in place to ensure funds are used for their intended purpose and if fraud is unlikely. The issue of local accountability is discussed below. Perhaps the most challenging aspect of USAID's "local solutions" effort is the question of accountability. In an April 26, 2012, letter from the House Government Oversight and Reform Committee to USAID, Members particularly emphasized their concern over whether USAID is able to ensure that funds going to foreign governments and organizations are not subject to waste, fraud, or abuse. Such concerns were translated into Sections 7028, as noted above, and 7031 of the FY2015 State, Foreign Operations appropriations ( P.L. 113-235 , Division J), both requiring assessments of partner capacity to implement aid programs. The broader interest in preventing waste or misuse of USAID funds is long-standing, but the widely accepted characterization of developing countries as corrupt and deficient in management capacity can make the risk of funneling funds directly through local entities seem outsized. USAID has in place regular processes to monitor both project performance and financial accountability. These apply to foreign entities as they do to U.S. ones. Furthermore, many contractors and NGOs already currently use local personnel and organizations to implement their programs as sub-contractors or sub-grantees or direct employees of these U.S. entities. However, because of the perceived risk in providing aid through governments and local organizations, USAID has taken a number of steps to launch its "local solutions" reform to ensure that concerns regarding country performance and accountability are addressed. USAID has developed a method of appraising the capacity of partner governments to handle U.S. development funds—a Public Financial Management Risk Assessment Framework (PFMRAF). As of March 2015, 35 countries had completed the stage-one rapid risk appraisal which seeks to identify broad fiduciary risks at the country level. Of these, 27 had entered the second stage in which gaps in a specific governmental entity's capacity are identified and measures to address them proposed. Based on this, along with other relevant assessments, the project design is completed, inclusive of the decision to provide direct government-to-government assistance. PFMRAF can be applied only to those parts of the government relevant to a project—the Ministry of Health and the Ministry of Finance, for example, in the case of a health project. Therefore, the quantity of stage-2 risk assessments outnumbers the total of countries; as of March 2015, 147 assessments had been performed or were on-going. Assessments are supposed to be updated every three years. While 2013 and 2014 USAID IG studies found a variety of weaknesses in implementation of the Risk Assessment Framework, in part associated with the speed of its adoption by the agency and the inexperience of mission personnel with conducting the assessments, a June 2015 GAO report noted that fiduciary risk assessments were conducted and risk mitigation plans formulated as required; risk mitigation measures, however, were not always incorporated into project planning. For local non-government entities, USAID assesses local capacity to perform adequately and identifies potential risk using a Non-U.S. Organization Pre-Award Survey. Mission contracting and financial officers work more closely with local organizations to help them meet agency accountability standards. A June 2013 USAID IG examination of Pre-Award Survey implementation found no weaknesses in a sample of conducted surveys. To diminish risk when working with partner governments, USAID now appears to more frequently employ financing mechanisms that allow the agency greater control over its funds and program results. The Fixed Amount Reimbursement Agreement (FARA) requires that a partner government complete specific project elements prior to USAID payment—so, for instance, a school would be built to specifications, confirmed by USAID, and then reimbursed at the agreed fixed amount, regardless of actual cost to the host country. Similarly, with regard to local NGOs, a Fixed Obligation Grant (FOG) establishes milestones by which USAID can measure progress and provide funds. FOGs are particularly useful for local NGOs with limited experience working with USAID; they allow the agency to assist NGOs with compliance and help improve their internal procedures and policies to accommodate USAID requirements. A more flexible FOG mechanism has been established allowing more simplified eligibility and upfront payment or periodic advances to facilitate use of local NGOs. In special cases, such as Afghanistan, where corruption is widespread, but where a political and strategic impetus exists to direct assistance through the government—donors agreed at the 2010 London Conference to funnel 50% of aid through the government—USAID has followed different methods that still enable a degree of oversight. The Afghanistan Reconstruction Trust Fund moves assistance into government salaries or government-supported community development programs, and their uses are monitored by the World Bank, which administers the fund. USAID's own direct host country contracting in Afghanistan provides funds to USAID-vetted ministries—funds for the health program move through a separate unit of the Afghan Ministry of Health to designated international NGOs implementing agreed health clinic assistance in assigned parts of the country; funds for other ministries are provided on a reimbursable basis for specific projects using separate bank accounts. While the Special Inspector General for Afghanistan Reconstruction (SIGAR) has pointed to vulnerabilities in USAID's Afghanistan risk mitigation measures and calls its failure to require ministries to implement better internal controls "an unacceptable assumption of risk," nonetheless it says that USAID "has done a better job of protecting direct assistance funds than other U.S. agencies, particularly the Department of Defense." Risk assessment and identification procedures may mitigate potential fraud or poor performance, but they cannot eliminate them entirely, just as the use of U.S. entities is not free of these concerns. A disadvantage unique to directing funds through local entities is that, in case of financial misuse, there are fewer legal remedies and none through U.S. courts. Governments, however, can be threatened with loss of further aid, and private organizations can be threatened with disbarment. Reform supporters argue that aid provided directly and transparently to governments gives local watchdog organizations the opportunity to root out corruption and strengthen democratic institutions. The main implementers of USAID programs are U.S. for-profit and nonprofit non-governmental organizations, representing nearly 50% of assistance in FY2014. These two groups, respectively associated with the agency's contracting and grant/cooperative agreement award mechanisms, at times appear at odds with each other (and sometimes with themselves) and, making their concerns known to Congress, affect the way in which USAID conducts its business. Two issues illustrate this point—efforts to reduce the role of large contractors and grantees and the choice between contracts and grants. USAID's procurement reform efforts initially emphasized a goal to broaden the pool of aid implementers to include more U.S. small businesses and NGOs, and this move stirred opposition, particularly from the larger for-profit contractors who felt most affected. If the large contractors felt unduly targeted by the reform efforts, they may have been reacting to then-USAID Administrator Rajiv Shah's comment, "This agency is no longer satisfied with writing big checks to big contractors and calling it development. There will still be a role for these contractors, just different than what it was in the past." Subsequently, in its FY2014 guidance on procurement reform, Senate appropriators supported the agency's effort to reach "a wider range of partners and increase competition" and urged USAID to "reduce reliance on large, inflexible contracts." Initially, USAID's reform effort sought to reduce agency reliance on a form of contracting that, since the 1990s, has appeared to give larger contractors, and to a lesser extent larger grantees, preferable treatment. With the steep decline in USAID staff during the 1990s, including contract officers, the agency found it increasingly difficult to provide adequate oversight of numerous small contracts and grants. As a result, it moved to award larger contracts to fewer implementers. In particular, the number of indefinite quantity contracts (IQCs) grew. IQCs—recently renamed Indefinite Delivery/Indefinite Quantity (IDIQ) contracts—are "umbrella" contracts, either confined to one sector or bundling diverse activities, provided to a firm or consortium of firms whose expertise can be drawn upon when needed with separate "task orders." If a mission, for instance, required the services of an expert on microfinance, the agency-wide microfinance IQC was available to them. The advantages were speed, because the contracting mechanism was already in place, and practical efficiency, averting the necessity of having the limited number of USAID staff design and manage multiple individual contracts. Although IQCs often designated a dollar value share for sub-grants and sub-contracts to other providers, the increase in IQCs was viewed by the smaller contractors and the nonprofit NGO community as reducing their role in USAID programs and giving a narrow set of contractors too much power. The congressionally mandated HELP Commission criticized the growing role of contractors, noting that between 1996 and 2005, the amount of aid going through the five largest contractors had grown from $57 million to $1.25 billion (it reached $2.2 billion in FY2012), the proportion of total contracts represented by these five going from 33.1% in 1996 to 46.7% in 2005. The commission recommended that the size, range of activity, and number of umbrella awards be limited. The U.S. NGO community, represented on the USAID Advisory Committee on Voluntary Foreign Aid, were especially critical of the growth of IQCs. Their use, in the committee's view, "restricts the pool of expertise, resources, and ideas that USAID can draw upon for developmental solutions." In 2004, Congress inserted itself into one manifestation of this debate by requiring (in P.L. 108-484 ) that microenterprise assistance "shall emphasize the use of implementing partner organizations," (i.e., the nonprofit PVO/NGOs whose share of this sector funding had dropped from 53% in 2000 to about 37% in 2005). The original language of this legislation would have excluded for-profit contractors entirely from microenterprise activity. Some steps have been taken to decrease the number and dollar value of large contracts and increase awards to U.S. small business and NGOs. Large non-competed contracts over $25 million must be approved at higher levels in the agency than previously. The agency set up a Board for Acquisition and Assistance Reform to facilitate a move to smaller awards. According to USAID , between FY2010 and FY2014, the board reviewed 67 awards, valued at nearly $30 billion, restructuring 27 of them to increase the number of awards and the amount reserved for small business. Subsequently, amounts awarded for IQCs fell from $470 million in FY2012 to $64 million in FY2014. Amounts awarded to U.S. small business grew by 236% from $137 million in FY2010 to $461 million in FY2014. The board has since been discontinued and its activities integrated into the regular management review process. However, in a possible departure from the move to rein in IQCs, in March 2015, USAID awarded a $1 billion IQC to Tetra Tech Inc. to support USAID's water programs. The divide between the chief implementers of USAID projects—for-profits and nonprofits—is also mirrored in a debate over the use of the procurement instruments they tend to represent—contracts and grants/cooperative agreements. Under federal procurement regulations, a contract is supposed to be used to acquire services for the direct benefit or use of an agency, while a grant or cooperative agreement is to be used when the principal purpose of the relationship is to "transfer a thing of value" (i.e., fund) to the recipient to carry out a public purpose authorized by law. Overall, grants and cooperative agreements represented two-thirds of awards ($9 billion) and contracts one-third ($4.5 billion) in FY2013. This relationship is a turnaround from the period before about FY2007, when contracts predominated as a proportion of USAID awards. In the context of this change in the relative position of contractors, USAID's procurement reform agenda generated new heat. In 2011, stung by a perceived insinuation by the media and nonprofits that for-profit firms are less capable or committed to achieving development goals than nonprofits, the Professional Services Council—some of whose members formed a subsidiary Council of International Development Companies (CIDC) in the wake of USAID's procurement reform—called on USAID to support a "transparent and unbiased" process for determining the best implementing mechanism for a particular project. They argued that it is detrimental to the agency's effort to build a modern development enterprise if some are "hobbled by a presumption that one business model is superior to another" and when the public focus is on "reforms and accountability for contractors, without equal or greater attention to the performance, transparency and accountability of grantees." Taking the view in a April 26, 2012, letter to the USAID Administrator that contracts "are inherently more transparent and accountable," the Chairman and two colleagues on the House Committee on Oversight and Government Reform raised the concern that the agency's procurement reform meant an increased reliance on grant awards as a funding vehicle. They voiced a fear that grant oversight might increase the agency workload and result in more waste and fraud. Arguing that NGO grantees use taxpayer dollars more effectively than contractors by providing an already existing long-term in-country presence and institutional knowledge, as well as mobilizing private resources to support their efforts, InterAction, the consortium of NGOs, expressed a somewhat opposite view from that of its for-profit counterpart. It noted "USAID's apparently increasing preference of working through for-profit contractors rather than non-profit NGOs." These views highlight distinctions between grants and contracts that to some observers may not be as sharp as suggested by their proponents and detractors. For instance, a 2006 USAID study argued that the perception that contracts better tie funds to results depends on the type of contract used. Fixed-price contracts require specific defined outputs, but because USAID works in an environment where many external factors may affect what can be done, the agency often employed cost-reimbursement and time-and-materials contracts where the objective is "best effort." Most contracts, the report's USAID staff authors said, are no different than grants and cooperative agreements in ensuring achievement of results. InterAction, meanwhile, has argued that assistance awards for the nonprofits they represent have for more than 10 years become increasingly prescriptive (i.e., more like contracts). They suggest that NGOs are treated as implementers, not partners with their own expertise in design, implementation, and monitoring of programs. USAID data show that cooperative agreements, which are more prescriptive than grants, have grown as a proportion of total procurement awards, from 22% in FY2003 to 46% in FY2013. Contractors and grantees seem to agree on one thing. InterAction criticizes USAID guidelines on choosing implementing mechanisms, arguing that some grants should have been contracts and vice versa. They argue that USAID should clarify its guidance on implementing mechanisms and consistently follow it. In a series of letters to USAID in 2014, the CIDC similarly argued that federal regulations criteria for choosing between contract or grant has often not been met, asserting that USAID has chosen one or the other without clear rationales. More recently, in April 2015, the CIDC's parent body noted a Supreme Court decision not to review a decision by the U.S. Court of Appeals involving the Department of Housing and Urban Development that affirmed the need for agencies to adhere to federal procurement laws that draw sharp distinctions between grants and contracts. In 2014, a USAID-sponsored Award Cost Efficiency Study recommended ways to improve the efficiency of the procurement process. As part of its effort to implement those recommendations, a USAID team has been reviewing guidance on the different implementing mechanisms. By noting both in the 2010 Presidential Policy Directive and 2010 QDDR, its commitment to "rebuilding USAID as the U.S. government's lead development agency," the Obama Administration highlighted what many in the foreign aid community had long recognized—that USAID's role in the U.S. government had been severely challenged in the recent past. Not only had multiple aid providers emerged—nearly every U.S. government department had some foreign aid program of its own—but the State Department itself had moved, in the view of many observers, to increasingly take possession of USAID policy and functions. The agency's weakened status within the U.S. government was said by many to have negatively affected its ability to meet its development objectives, coordinate assistance from other providers, determine the direction of its own resources to best advance development, and function administratively as an independent entity. Through much of its history, USAID's autonomy and authority vis- à -vis both the Department of State and other agencies has been regularly challenged and changed. At some point during every Administration in the past 50 years, there has been some rethinking of aid policy, which has led to shifts in USAID's institutional position for better or for worse. In the beginning, the State Department was the lead agency on foreign aid policy, with the Foreign Assistance Act of 1961 clearly providing that "under the direction of the President, the Secretary of State shall be responsible for the continuous supervision and general direction of ... assistance programs." In 1961, the act, not mentioning an Agency for International Development, authorized the President to exercise its provisions through any agency he chose. President Kennedy issued Executive Order 10973 on November 3, 1961, delegating to the Secretary of State most functions conferred to the President under the FAA and directing the Secretary to establish "an agency in the Department of State to be known as the Agency for International Development," which was subsequently carried out under State Department Delegation of Authority No. 104, also issued on November 3, 1961. The Secretary delegated to the new agency most of the development and humanitarian program functions authorized in the FAA. The degree to which USAID felt the State Department's supervision and direction in its early years is not well documented. But USAID does appear to have functioned with considerable operational autonomy in its first 20 years. As a result of the 1973 New Directions legislation, USAID chaired a newly established Development Coordination Committee (DCC), an interagency organization to advise the President on assistance coordination issues, and chaired its subcommittee on bilateral aid as well, although it was thought at the time that these bodies had little impact on the agencies concerned. In September 1979, President Carter issued Executive Order 12163, to establish the International Development Cooperation Administration (IDCA), an independent agency within the executive branch that was given primary responsibility for establishing development assistance policy and the role of principal adviser to the President on these issues. According to the GAO, under the IDCA scheme, the State Department would now provide only broad policy advice and not specific recommendations on country programs. The IDCA Director was made chairman of the DCC, usurping the USAID Administrator. In the end, IDCA had little power or prestige. It was constituted without key players in development assistance: the State Department, Treasury, and even the Peace Corps. The Reagan Administration diminished the role of IDCA and, thwarting the plan's original concept of an independent arbiter for development policy, appointed the USAID Administrator as the IDCA Director. The most enduring end result of this phase, therefore, was that USAID was removed from the jurisdiction of the Department of State and became a more autonomous entity. In April 1997, in part to respond to congressional critics who wanted to radically restructure or abolish USAID, the Clinton Administration proposed a foreign affairs reorganization that included absorption of the functions of the Arms Control and Disarmament Agency and the U.S. Information Agency into the State Department. The agreement with Congress allowed USAID to remain a separate statutory agency with its own appropriation, but with the Administrator reporting to and under the direct authority and foreign policy guidance of the Secretary of State. Congress approved legislation authorizing this approach in the Foreign Affairs Reform and Restructuring Act of 1998, which was signed into law on October 21, 1998. As required by the act, the President abolished IDCA through an amendment made to Executive Order 12163 (March 16, 1999). Under the order, functions vested in the President as they pertained to economic assistance were delegated by the President to the Secretary of State. Under a subsequent State Department Delegation of Authority No. 145 (as revised on March 31, 1999), the Secretary then delegated to the Administrator of USAID functions and authorities necessary to carry out USAID's mission. In other words, whereas previously USAID's authorities were delegated by the President, now they were to be delegated by the Secretary of State. The Delegation of Authority clearly noted the Secretary's role vis - a - vis USAID as follows: (c) In keeping with the United States Agency for International Development's status as a distinct agency and recognizing that the Administrator is under the Secretary's direct authority and foreign policy guidance, the Secretary shall review the United States Agency for International Development's strategic plan and annual performance plan, annual budget submission and appeals, and allocations and significant (in terms of policy or money) reprogramming of development and other economic assistance. According to the Clinton Administration's Reorganization Plan and Report, submitted to Congress on December 30, 1998, the framework of relationships would be essentially the same as that which preceded the creation of IDCA. The Secretary would coordinate development and other economic assistance and would ensure coordination among U.S. agencies in carrying out foreign aid programs. In carrying out its functions, USAID would consult with State as appropriate. The reconfiguring and restating of USAID's position vis- à -vis the Department of State in 1998 set the stage for actions taken by the Bush Administration beginning in 2006. In that year, Secretary of State Rice sought to increase coordination and integration of foreign aid programs into the foreign policy process by creating a new State Department position, Director of Foreign Assistance (DFA). A key feature of this initiative was the decision to give the new DFA the concurrent positions of USAID Administrator and a State Department position equivalent to that of a Deputy Secretary, reporting directly to the Secretary of State. This step was a controversial one in the foreign assistance community, with some arguing that it diminished the status of USAID by enhancing the programming and budget allocation role of the Department of State, while others argued conversely that it strengthened USAID by elevating its access to foreign policy decisionmaking, though many in the NGO community made the former argument. On the side of elevating its position, USAID, for the first time, chaired the International Development Policy Coordination Committee, one of 17 National Security Council entities that develop and manage cross-agency concerns. Also, under the Bush Administration, USAID saw its program responsibilities rise substantially, largely due to activities in national security conflicts such as Afghanistan and Iraq, likely raising its stature as a foreign policy principal. On the other hand, USAID as an institution lost its budget and policy functions to this new DFA entity in the State Department. Its budget requests were made in conjunction with the State Department—the last independent USAID congressional budget justification was issued for the FY2007 budget year. The reform uprooted the mission-based decisionmaking model, adopting a more centralized planning process—the country assistance strategy (CAS)—focused on broad objectives but which, according to GAO, lacked "substantive content and details on how USAID is to achieve its objectives." Decisions on programming and any adjustments to those decisions in light of project experience were now made by a small staff in Washington. For several years during the transition from USAID's former country planning process, many noted that the reform added uncertainty to mission planning and implementation and made achieving any long-term agreements with host country governments difficult. These changes occurred on the heels of other setbacks to USAID's role earlier in the Bush Administration. When the Administration proposed the establishment of two new and well-funded assistance programs in 2003—PEPFAR and the MCC—it chose to bypass USAID and house the former in an Office of the Global AIDS Coordinator in the Department of State and the latter as an independent entity. Only congressional pressure ensured that USAID would get a seat on the MCC Board of Directors, which had not been proposed originally by the Administration. Despite its lack of policy responsibility, USAID implements nearly two-thirds of PEPFAR's program. On top of these new competitors in the development field, the non-traditional aid providers in other parts of the U.S. government have expanded their activities in the past decade, in particular the Department of Health and Human Services, on disease programs, and the Department of Defense, in development (Iraq and Afghanistan) and humanitarian efforts. The erosion of support for the agency that had nearly led to its demise in the mid-1990s, the preference given alternative aid institutions in the early 2000s, and the absorption by the State Department of its powers a few years later had resulted from a combination of reinforcing factors building over the previous two decades. These included, in the 1980s and early 1990s, the loss of the anti-communist rationale for aid, blame for perceived aid failures, general anti-foreign aid rhetoric in Congress, and instances of waste highlighted by an "antagonistic" USAID Inspector General. Funding cuts in the mid-1990s led to staff reductions and decreased morale, and persistent negative impressions of an agency, broadly thought of as being "multi-layered, bureaucratic, and slow to react," and "slow, cumbersome, and unimaginative." Arguably, by 2007, the agency had reached its institutional low point. Under the Obama Administration, the fortunes and standing of USAID appear to have shifted again, although it remains to be seen to what degree. As noted, the PPD and 2010 QDDR both endorsed efforts to make USAID the lead development agency, the QDDR making it the lead agency of the presidential Feed the Future Initiative and giving it the lead role in a new Interagency Policy Committee on Global Development. The QDDR also endorsed USAID Forward reforms, among which were the restoration of the agency's policy and budget functions. The State Department's role in USAID's business was made somewhat less expansive and, reportedly, more informal. The Director of Foreign Assistance became the Director of the Office of U.S. Foreign Assistance Resources, still charged with directing the transformation of the U.S. government approach to foreign assistance, but with a less elevated rank. The State Department's country assistance strategy has been replaced with the agency-generated and mission-focused country development cooperation strategy. However, although the 2010 QDDR called for the "ultimate transition of leadership of the Global Health Initiative to USAID" by end of FY2012 if USAID met 10 benchmarks, the Administration decided to leave Initiative leadership in the Department of State. In any case, the QDDR decision did not affect PEPFAR, which accounts for most of health funding. This was to be left with the Office of the Global AIDS Coordinator. Some question the extent to which USAID has regained its budget function—USAID and State continue to provide a joint congressional budget request and issue a joint strategic plan, the most recent for the period FY2014 through FY2018. Further, no rescission has been made of the delegation of authority that established the Office of Foreign Assistance and gave it final say on budget allocations and related decisions. Although current personal relationships may provide USAID with some autonomy, there are no institutional assurances that the agency's "independence" will not be further challenged in the future. A recurrent concern of many who have observed the historic relations of these two agencies is that the development point of view of USAID is often supplanted by the diplomatic imperatives of the Department of State. An oft-cited supposition is that, given access to USAID funds, the embassy would be more likely to use funds to construct a bridge, which would lead to a ribbon-cutting ceremony, than for a less visible investment in education. One manifestation of this tension between agencies is the International Cooperative Support Services (ICASS) program. Partly at the behest of the GAO, the State Department and USAID in 2005 launched a pilot project in four countries to cut overseas costs by consolidating administrative services at embassies and missions. ICASS has since been extended worldwide and includes other U.S. agencies stationed abroad. Duplicative systems such as warehouses, motor pools, housing, and procurement operations are targets. As ICASS has been instituted, control of these systems has largely devolved to the Department of State, and numerous complaints have ensued from USAID FSOs regarding the way in which ICASS has been managed and the excessive drain it has become on USAID's operating budget. The GAO noted, for example, that USAID officials cite the unavailability of ICASS motor pool vehicles for travel to distant project sites "as a major impediment to achieving their mission." Mission staff argue that State personnel tend to stay in the capital and do not understand the necessity to travel outside for project-monitoring purposes. Another issue arguably impinging on USAID's ability to operate effectively is the result of consolidation of staff salary systems. USAID foreign national staff are intensively used for program purposes and, but for restrictions on management duties, often take on roles indistinguishable from U.S. direct hire personnel. They are generally considered well educated and well qualified for their posts. State foreign nationals, in part for security reasons, are often not employed at higher levels. The consolidation of employment systems, however, has severely restricted the pay levels for USAID foreign nationals and is viewed by many as a force making it difficult for USAID to retain its foreign staff whose skills are most attractive to other donor agencies and the private sector. Since the 1998 Kenya embassy bombing, security concerns have increasingly intruded on customary USAID operations. While no one disputes the importance of ensuring the security of U.S. personnel, a number of USAID staff have suggested that the interpretation of the threat, in the hands of State Department security personnel, is perhaps more stringently and widely applied than would be the case if it were up to USAID. For the past decade, USAID missions and other offices have been gradually consolidated into the increasingly security-centered and less centrally located U.S. embassy compounds. The result according to USAID staff has been isolation from the agency's clients—local government and NGO personnel—who previously had easier access to mission offices and with whom regular interaction has been an essential part of USAID's culture . The 2015 QDDR addresses the concern that measures to prevent physical risk might also interfere with the accomplishment of State Department and USAID objectives. It promises a review that will "identify obstacles to our operations and programs, recommend ways to create additional policy flexibility where security is challenged, devise better options for operating in these environments, and maximize field input to inform high-level policy deliberations on complex crises." National Security Decision Directive 38, issued by President Reagan in 1982, gave the Chief of Mission, and ultimately the State Department, final say on the size and composition of agency staff at diplomatic missions abroad. To some observers, the State Department's ability to put caps on the number of USAID staff negatively affects agency operations. A recent example concerns the disposition of USAID staff in East Africa. State Department efforts to cut the number of U.S. staff in Kenya, ostensibly for security reasons, has led to a 40% reduction in USAID's East Africa regional mission office in Nairobi despite strong opposition by the agency. The regional office is responsible for programs that cross borders as well as in countries where there is no mission, including Burundi, Somalia, and Djibouti. USAID's localization efforts here as elsewhere entail more contracting officers and controllers to ensure that local organizations spend funds properly. The intensity of the interaction between these staff and local organizations requires that they be in close proximity. While the State Department wanted the regional staff to move outside the African continent entirely, USAID managed to get permission to disperse staff to various other African countries, including Ethiopia, South Africa, and Democratic Republic of Congo (DRC), as well as 13 destinations yet to be determined. As discussed earlier, Congress has several means to influence and direct the operations of USAID. It can authorize, appropriate, and provide oversight of USAID programs and funding. While it has not reauthorized funding since 1985 for many programs administered by USAID, it has on occasion added program language affecting USAID—recently authorizing assistance to Ukraine ( P.L. 113-95 , April 3, 2014), for example—and still standing is the cumulative detail of program authorizations, most in the Foreign Assistance Act of 1961 and approved more than three decades ago. This language is sufficiently broad to permit any likely USAID activity. The annual appropriations legislation, accompanied by committee report language, and annual oversight hearings held by both authorizing and appropriations committees offer more regular vehicles for congressional comment and guidance to the agency. The effect of this body of legislation has been to shape the agency's programs and operations, as is Congress' role; however, many development policy analysts and practitioners have noted some negative consequences. The most common critique raised is the impact of congressional directives, known more widely in the development community as earmarks, on USAID operations. Though arguably diminished from the period when Congress would specify not only the sector but the country, and even at times the favored grantee, the requirement that USAID meet certain funding mandates can reduce mission flexibility in determining the best way to achieve development objectives and alignment of U.S. programs with country priorities. One sign of this and a regular occurrence at the end of a fiscal year is the announcement to USAID missions that additional funding is available in a specific sector if a mission can quickly put together a viable project. As a result, missions shoe-horn projects into country programs that otherwise would not be there, despite unmet funding requirements in sectors of existing activity less favored by Congress. Some observers have remarked on Congress' focus on funding for health sector programs, such as HIV/AIDS prevention, which has dominated agency programs in some African countries and limited available funding for other possible activities. One Senate committee staff report quotes a U.S. official at the Tanzania embassy, for example, as saying "USAID is turning into the U.S. Agency for Health." Critics also argue that Congress has piled on too many legislative objectives. An effort to compile a list of goals and purposes in U.S. foreign assistance legislation found at least 85 that applied to USAID. In the run-up to New Directions, in 1972, USAID had envisioned a reformed program focus limited to several priority issues, with problems and projects in unrelated areas being phased down or eliminated, the purpose being to make USAID "less of a general purpose assistance organization and more of a specialized agency…where U.S. technical skill and experience can make a significant contribution." Although New Directions emphasized a handful of specific sectors, a narrowing of focus did not occur, as Congress continued to add objectives and sub-objectives. Later, periodic reform efforts, generated by Congress or outside groups, continued to criticize the layering of objectives and recommended they be cut back to provide greater flexibility to USAID. One aim of the USAID Forward reform effort has been to better focus efforts "where the needs and potential impact are greatest." According to USAID, between 2010 and 2013, USAID reduced the total number of country program areas by 22%. But the preference for funding mandates likely limits the extent of such an effort. Including funding mandates, Congress, over the years, has approved a range of prohibitions and restrictions, procurement rules, limitations on types of funding, requisite administrative practices, and reporting requirements that have come to be known as "barnacles." As early as 1970, a study group at USAID examined "barnacles" viewed as impeding agency operations and attempted to quantify the amount of time it took to implement them. Their conclusion: "It is probably not an overstatement to suggest that perhaps as much manpower talent and energy are spent in insuring compliance with specifically-imposed restrictions as is spent in the execution of programs and projects." Although it no longer estimates time consumed, USAID produces a "barnacles" checklist annually. One such legislative requirement—that most P.L. 480 Title II food aid be acquired from U.S. producers and shipped on U.S.-flag vessels—has been the subject of Administration-Congressional debate in recent years. Critics have long argued that this practice raises the cost and slows delivery of emergency relief. The 2014 farm bill ( P.L. 113-79 ) provided a measure of flexibility to USAID that allows it to provide some food in the form of cash-based assistance for local and regional commodity purchases nearer the site of a food crisis. Subsequent appropriations proposals have sought to further increase the agency's flexibility on how it delivers emergency aid, although Congress did not approve more ambitious food aid reforms proposed by the Administration. The limits on operational and program flexibility and the attention given by Congress to USAID operations at the project and country level have raised the question by some of whether Congress micro-manages USAID to a greater degree than other U.S. departments and agencies. That question is not easily answered, but one of the drivers of the Administration and Congress in creating the Millennium Challenge Corporation was to establish a program relatively free from such constraints. Congress is sometimes held responsible for other impacts on USAID behavior that are viewed critically by some development proponents. Historically, USAID has been under pressure from Congress to obligate and disburse its funds as rapidly as possible. Unobligated funds could be tempting targets for other congressional priorities, and a slow disbursement rate was at times used as a reason for Congress not to approve higher USAID budgets. However, a rapid disbursement rate can run counter to efforts to provide funds through local governments and organizations, which may not have the absorptive capacity to spend quickly or to ensure proper accountability in circumstances of internal conflict and political instability, where it is preferable to provide funds in gradual tranches as their appropriate use is certified. Further, observers believe that the lack of certainty regarding future funding—past suggestions that Congress appropriate multiyear funding have gone unheeded—prevents long-term planning. And some analysts suggest that the determination to demonstrate quickly to Congress results from aid funding has led to ever shorter project time frames when specialists argue sustainable development requires long-term engagement. Finally, some observers place much responsibility on Congress for the reduction in USAID's staff and consequent decline of its capacity to design, administer, and monitor its programs during the period from the late 1980s until 2008. As the rare agency whose operating expenses are mostly separated out from program costs in appropriations accounts, USAID has been especially vulnerable to cuts on personnel and other administrative costs disproportionate to its program requirements. This, some have argued, is what occurred after 2001 as Congress greatly increased program funds while allowing the ratio of OE to programs—a measure of the management burden imposed on personnel—to widen. Budget cuts since FY2012 may, arguably, again be affecting administrative accounts unequally. Ensuring sustainability—where local systems (i.e., government, civil society and private sector), can produce and maintain a given set of development outcomes (e.g., an increase in literacy, a decrease in child mortality) beyond the life of the project—has at times been more an aspiration than an achievement of USAID. The broad lack of capacity, technical and financial, that defines most developing countries is the greatest obstacle to sustainability, but so too, many argue, has been the failure to align agency projects with partner government interests and gain a shared commitment early on to project objectives. The USAID Inspector General has identified certain projects for which the prospect of sustainability appeared unpromising in recent years. Examples include a water and sanitation project in Lebanon that installed 33 water meters, which, at the time of an audit, were not working and the government had insufficient funds to repair or replace; a West Bank/Gaza project that constructed and renovated schools although the Palestinian Authority had had difficulty maintaining the already existing infrastructure; and a road construction project in South Sudan in which government representatives stopped attending meetings and did not take control of completed bridges. Many similar examples are to be found in Iraq (in the early 2000s) and Afghanistan, where USAID was directed by strategic foreign policy requirements to provide large amounts of infrastructure, among other assistance, in a short time frame regardless of recipient country capacity to maintain it. To address the issue in Afghanistan, the USAID Administrator issued "sustainability guidance" in June 2011, suggesting that USAID work should reflect Afghan government or civil society priorities, and, if recurrent costs were associated with the project, the USAID mission had to determine if the government or civil society had the interest and resources to maintain it. If a project was deemed not sustainable, a decision had to be made to modify, end, or postpone the project. In 2014 testimony, however, the SIGAR expressed the view that USAID may not have consistently adopted a realistic approach to the problem of sustainability in Afghanistan. Sustainability of U.S. assistance efforts was adopted in the 2010 QDDR as one of the main principles of an effective foreign assistance program. USAID issued new project design guidance in December 2011 requiring that sustainability objectives be incorporated into all project designs, and subsequent training programs and administrative directives have supported this policy. A now mandatory sustainability analysis, conducted as projects are developed, is intended to identify potential sustainability challenges a project might face, and perhaps lead agency staff to design interventions to mitigate them. Through its "local solutions" initiative, USAID anticipates fostering sustainability by engaging all local systems involved in project efforts and outcomes. The agency directly addresses the lack of financial capacity that undermines the ability of governments to maintain roads, schools, and other development outcomes through domestic resource mobilization projects. These efforts help governments expand their tax base, reduce tax evasion, and find ways to raise revenue that may support development. These actions may reduce, if not eliminate, future situations as those described in the USAID IG report. USAID, as with any public or private institution, faces multiple challenges in the process of fulfilling its mission. The peculiar environment in which it operates—with multiple lines of authority, shifting priorities, uncertain budgets, unpredictable partners, and unstable settings—has ensured a degree of difficulty in implementing its programs. Even as the agency addressed old challenges with the USAID Forward reforms, new ones have emerged. Among the current continuing and new challenges that observers have noted and that Congress may track closely are the following: Human Resources . Despite the increased numbers of USAID Foreign Service Officers in recent years, the agency may still face shortages of specific skill sets—e.g., contract officers to meet the needs generated by aid localization efforts or specialists to implement policy initiatives, such as agriculturalists to manage the Feed the Future initiative. Unlike the State Department and DOD, which have larger staff pools, USAID faces a challenge finding sufficient personnel to go to critical priority countries (Afghanistan, Sudan) and unanticipated crisis countries (Haiti earthquake) without leaving detrimental vacancies elsewhere. Providing sufficient training to new personnel in view of declining operational budgets is another concern. A related issue is whether the agency can retain the new staff it has recruited in the past few years amid concerns about lack of language and skill training, lack of travel funding to monitor projects, and an environment that, some argue, continues to constrain initiative. Retaining quality foreign national staff in view of relatively low salaries and limited promotion opportunities also poses a challenge given the important role such staff traditionally play in mission operations. Scaling- U p . USAID innovations in development practice and science and technology, such as those nourished by the Global Development Lab, are often introduced in one or two countries and, within those countries, one or two provinces. The history of USAID is replete with pilot programs that were never fully developed and adopted by a larger population. Will agency efforts to "scale-up" Lab innovations succeed? Some observers have suggested that one necessary element is creating a longer time horizon for USAID projects and making funding available for follow-up projects to see new ideas through to maturity. Another factor for success is the extent to which knowledge of innovations in one place can be disseminated throughout the agency. Evaluation . Under USAID Forward, the agency has given renewed attention to the number of independent evaluations it undertakes. A challenge for USAID is to improve the quality of evaluations—including conducting more long-term outcome analysis—and to ensure that evaluation results are used as "lessons learned" to make corrections for future programs. Local Solutions . As discussed earlier in this report, working with local governments and the private sector to implement development efforts requires a commitment of agency personnel and funds, the flexibility to use those funds in a way that reflects country priorities, and a long-term planning and implementation time frame aimed at developing local capacities, while at the same time ensuring that accountability standards are met. Sustainability . Building "country ownership" is one USAID response to the challenge of sustaining development efforts beyond the life of USAID's interventions. Another is more resource mobilization efforts to develop a government's capacity to collect revenue to support development. A clear path to sustainability, however, remains a work in progress. Security . Lack of security for agency personnel overseas poses significant obstacles to successful project implementation. How to get past the security-centered structure that many U.S. embassies have become to regularly meet with government and civil society representatives in order to formulate suitable projects, and how to gain safe access to project locales for appropriate monitoring, are major concerns. Security concerns in so-called non-permissive environments, such as South Sudan, Afghanistan, Pakistan, and Yemen, pose considerably greater problems, including periodic evacuation of personnel, complications in finding contractors and grantees willing to undertake the risks of work in the field, and difficulty employing foreign national employees willing to undertake work under U.S. auspices. Program Flexibility . USAID staff face multiple imperatives, including objectives listed in the Foreign Assistance Act, congressional mandates, presidential initiatives, direction from State department diplomats, priorities of partner governments, and the influence of the international community. USAID, as an agency, is challenged to reconcile these varied views, yet remain sufficiently flexible to fashion a coherent development program in priority countries.

This report provides background information on the institutional makeup and operations of the U.S. Agency for International Development (USAID), the leading international humanitarian and development arm of the U.S. government. The report then discusses in greater depth several aspects of the agency that might be of particular congressional interest. In FY2015, USAID is responsible for more than $20 billion in appropriations, representing more than one-third of the International Affairs 150 budget function and more than half of total foreign assistance encompassed by the State, Foreign Operations appropriations and international food aid appropriated under the Agriculture appropriations. USAID provides assistance to a range of countries—125 in FY2013; however, of those, 23 received under $1 million, mostly small island nations or countries receiving one-time funds for humanitarian purposes. In FY2013, nearly 40% of funds attributable to countries and regions went to sub-Saharan Africa and more than 19% went to Afghanistan and Pakistan. Of funds attributable to a specific sector, 36% were for health programs and 19% for humanitarian efforts. USAID maintains more than 60 country and regional missions that design and manage a wide range of development projects, most intended to meet specific development objectives as formulated in a Country Development Cooperation Strategy. Most projects are implemented through some form of grant, cooperative agreement, or contract by one of thousands of potential development partners—nonprofit private voluntary organizations and other non-governmental organizations, for-profit contractors, universities, international organizations, and foreign governments and civil society. Since 2010, under its USAID Forward agenda, the agency has undertaken numerous reforms to address challenges in budgeting, evaluation, human resources, use of the private sector, and the application of science and technology to development issues, among other concerns. Congress maintains broad interest in and authority over the budget, operations, and policies of the U.S. government's leading development agency, and over U.S. foreign policies generally. Issues of possible interest to Congress include the following, each of which is addressed more fully in the report: Accountability. Is the agency able to provide adequate accountability for taxpayers dollars and could efforts to increase accountability have negative implications for the agency? Local Solutions. What are the benefits and challenges of moving agency resources through local governments and organizations? Aid Implementers. What are some of the concerns regarding the largest cohort of aid implementers, U.S. contractors and grantees? Relationship to Department of State. What has been the historic relationship of USAID, technically an independent agency, and the Department of State, and what impact has this relationship had on USAID operations? What is the outlook for the USAID-State relationship? Role of Congress. In what ways can and does Congress affect the programs and operations of USAID? Sustainability. How can USAID ensure that project efforts are maintained by local governments and organizations after its financial and technical support ends? USAID faces multiple challenges in the course of fulfilling its mission, including: Local Solutions. Providing assistance to local entities incurs the risk of loss of taxpayer dollars. Efforts to mitigate risk generally require more personnel and consequent funding to monitor local entities and build their capacities. Sustainability. "Country ownership" and domestic resource mobilization efforts are two ways the agency has sought to address sustainability, but a clear path to sustainability remains a work in progress. Human Resources. The agency faces shortages of specific skill sets to meet the needs generated by efforts to work more closely with local government and private sector partners and to meet the needs of the Food Security Initiative. Program Flexibility. Congressional funding mandates and a host of presidential initiatives are viewed by many observers as restricting the ability of USAID mission personnel to program project activities in accordance with development professional and partner country priorities. Scaling-Up. Seeing successful ideas from pilot through to maturity and making them work at the country, region, and international level likely requires a long-term funding horizon, programming flexibility, and mechanisms to spread ideas throughout the agency—each a challenge in itself. Security. Security concerns in non-permissive environments, such as South Sudan and Afghanistan, raise numerous obstacles to successful project implementation.

Naturalization is the process by which an immigrant attains U.S. citizenship after he or she fulfills requirements established by Congress and outlined in the Immigration and Nationality Act (INA). U.S. immigration policy gives all lawful permanent residents who meet the naturalization requirements the opportunity to become citizens. Applying for citizenship is a voluntary act and represents an important milestone for immigrants. Naturalization and citizenship are generally viewed as a measure of immigrants' assimilation and socioeconomic integration to the United States. The policy manual of U.S. Citizenship and Immigration Services (USCIS) of the Department of Homeland Security (DHS) states: United States citizenship is a unique bond that unites people around civic ideals and a belief in the rights and freedoms guaranteed by the U.S. Constitution. The promise of citizenship is grounded in the fundamental value that all persons are created equal and serves as a unifying identity to allow persons of all backgrounds, whether native or foreign-born, to have an equal stake in the future of the United States. Naturalization requirements include U.S. residence (typically five years), the possession of good moral character, demonstrated English proficiency, and a basic knowledge of U.S. civics and history. (See " Naturalization Requirements " below.) Practically, naturalized immigrants gain important benefits, including the right to vote, security from deportation, access to certain public-sector jobs, and the ability to travel abroad on a U.S. passport. U.S. citizens are also advantaged over lawful permanent residents (LPRs) for sponsoring relatives to immigrate to the United States. Despite the benefits of U.S. citizenship status over lawful permanent residence status, substantial numbers of LPRs who are eligible to naturalize have not done so. Congress is currently considering extensive reforms to U.S. immigration laws which, if enacted in some form, could affect naturalization policy and the number of persons who naturalize each year. The Border Security, Economic Opportunity, and Immigration Modernization Act ( S. 744 ) passed by the Senate in June 27, 2013 included several naturalization-related provisions. The bill would grant legal status for many unauthorized aliens currently residing in the United States; increase the number of LPRs admitted under family- and employment-based provisions of the INA; and ease naturalization requirements for older and disabled LPRs. Such provisions would increase the number of immigrants eligible to naturalize. The House has reported four immigration bills, including H.R. 2278 , the Strengthen and Fortify Enforcement Act (SAFE Act), and H.R. 2131 , the Supplying Knowledge-based Immigrants and Lifting Levels of STEM Visas Act (SKILLS Visa Act). These two bills contain provisions that would alter current admission levels of family- and employment-based immigration, as well as naturalization criteria, which, in turn, would alter the number of immigrants eligible to naturalize. This report reviews the rights and obligations that come with naturalization. It examines the naturalization process, discusses recent trends regarding who, among the roughly 1 million immigrants entering the United States each year, ultimately becomes a U.S. citizen, and discusses recent naturalization-related policy issues. While the process of naturalization can be analyzed relative to different legal statuses, the emphasis of this report is limited to the naturalization of lawful permanent residents. The Constitution and laws of the United States give many of the same rights to both non-citizens and U.S. citizens living in the United States. However, only U.S. citizens may vote in federal, state, and most local elections; receive U.S. citizenship for their minor children born abroad; travel with a U.S. passport and receive diplomatic protection from the U.S. government while abroad; receive full protection from deportation and loss of residence rights; meet the citizenship requirement for federal and many state and local civil service employment, including jobs with law enforcement agencies and Defense Department contractors; receive the full range of federal public benefits and certain state benefits; participate in a jury; and run for elective office where citizenship is required. U.S. citizens may also sponsor family members living abroad for legal permanent residence to a greater extent than LPRs (i.e., married minor and adult children, and siblings). U.S. citizens may sponsor certain relatives for legal permanent residence—spouses, minor unmarried children, and parents—outside of numerical limits established in the INA. As such, their sponsored relatives may immigrate to the United States immediately without having to wait for a visa. In contrast, LPRs must sponsor relatives for LPR status within numerically limited family preference categories that require waiting for a visa to become available. Other benefits from naturalization include access to public benefits which may either be restricted to only U.S. citizens or may require five to seven years of LPR status. Access to state and local public benefits according to legal status varies by state. Citizenship is permanent and relieves one of the continuous residency requirements LPRs must meet to maintain their legal status as well as to preserve their option to naturalize (see " Continuous Residence " below). Except for acts that bear on the integrity of the naturalization process itself, citizenship through naturalization is as secure as citizenship acquired at birth (see " Dual Citizenship " below). The United States benefits from having eligible foreign-born persons naturalize and acquire U.S. citizenship. By naturalizing, the foreign born are able to vote in public elections, participate in jury duty, and run for elective office where citizenship is required. Symbolically and legally, naturalization represents an individual's commitment to his or her new country, sufficiently so that Congress has sometimes introduced legislation to facilitate naturalization and discourage dual citizenship (see " Dual Citizenship " below). In addition to greater civic participation and commitment, empirical research offers evidence of economic benefits to the foreign born who naturalize, including a number of studies showing significant wage gains after controlling for personal characteristics such as education and work experience. Such impacts can be considerable when aggregated to the national level. To qualify for U.S. citizenship, LPRs must meet four major requirements. They must be at least 18 years of age; reside continuously in the United States for five years (three years for spouses of U.S. citizens); be of good moral character; demonstrate the ability to read, write, speak, and understand English; pass an examination on U.S. government and history; and be willing and able to take the naturalization Oath of Allegiance. USCIS is responsible for reviewing all naturalization petitions to ensure applicants meet U.S. citizenship eligibility requirements. This assessment includes security and criminal background checks, a review of the applicant's entire immigration history, an in-person interview; an English test, and a civics knowledge exam. Petitioners bear the burden of proof to demonstrate that they entered the United States lawfully. Upon approval, they must take an oath of allegiance to the United States and renounce allegiance to any foreign state. Persons whose naturalization applications have been denied may request a hearing before an immigration officer. To be naturalized, a person admitted as an LPR must have resided continuously for at least five years within the United States prior to the date he or she filed a naturalization application. For periods totaling at least half of that time, the individual must have been physically present in the United States. The individual also must have lived for at least three months within the State or district in which he or she filed the application. The period of continuous residence required for naturalization is broken by an absence of over a year unless the alien is employed abroad by the government, an international organization, a research institute, or an American company engaged in foreign trade. An absence of between six months and one year presumptively breaks continuous residence unless the petitioner can establish that he or she did not abandon U.S. residence during that period. Certain classes of LPRs either are exempt from the residency requirement or are subject to shorter residency periods. Unmarried children under age 18 living with a citizen parent are exempt from any residency requirement. The residency requirement for spouses of American citizens is three years instead of five years, and the physical presence requirement is one and a half years. Residency requirements also are modified for other special classes. To be eligible for naturalization, petitioners must demonstrate that they have been persons of good moral character during the applicable statutory period (five years in most cases) preceding their petition. The definition of good moral character can be found not in the INA but in case law interpretation. However, the INA bars a finding of good moral character if a naturalization applicant, over the course of the applicable statutory period, commits certain crimes or engages in certain illegal or what are widely considered immoral acts and behaviors. Anyone convicted of an aggravated felony at any time is statutorily barred from naturalization. Aggravated felonies according to the INA include murder, rape, and sexual abuse of a minor; illegal trafficking in firearms; supervising a prostitution business; receiving stolen property; and, fraud or deceit in which the victims' losses exceed $10,000, among other offenses. The USCIS naturalization examiner may go beyond what is specified in the INA to assess good moral character. For example, failure to pay child support may be a significant factor. Although adultery was removed as a statutory bar to naturalization in 1981, it may still be a basis for denying a petition under certain conditions. The INA prohibits naturalization of persons opposed to government law, persons who favor totalitarian forms of governance, and deserters from the Armed Forces. Persons wishing to be naturalized must demonstrate an understanding of English, specifically an ability to read, write, and speak words in ordinary usage in the English language. The language requirement is waived for those who are at least 50 years old and have lived in the United States at least 20 years, or who are at least 55 years old and have lived in the United States at least 15 years. For individuals for whom the language requirement is waived, the civics test is given in their native language. Special consideration on the civics requirement is to be given to aliens who are over 65 years and have lived in the United States for at least 20 years. Both the language and civics requirements are waived for those unable to comply because of physical or developmental disabilities or mental impairment. LPRs who serve in the U.S. military are eligible for expedited processing and waivers of certain requirements (see " Military Naturalizations " below). Naturalization applicants file the USCIS Form N-400 naturalization application with USCIS along with a $680 fee. Following formal acknowledgement of receipt of the application, USCIS instructs applicants regarding a mandatory appointment to have their fingerprints recorded. USCIS then schedules interviews with the applicants. During the interview, applicants are tested on their English ability and civics knowledge. They have the option of taking a standardized civics test or of having the INS examiner quiz them about civics during the naturalization interview. Interview and exam results are provided to applicants at the end of the interview. Those who pass their interviews and exams become American citizens upon taking the Oath of Allegiance to the United States in a naturalization ceremony that can occur either the same day or in a ceremony at a later date. At the time of the naturalization ceremony, LPRs are expected to bring several USCIS documents, including their Permanent Resident Card ("green card") which they will no longer need. Lost cards may warrant further investigation and the demand for a police report. After an LPR has taken the Oath, USCIS issues a naturalization certificate (Form N-550) to document the individual's new status as a U.S. Citizen. The INA specifies three general ways for a child to obtain citizenship through his or her parents, depending on whether or not the child was born in the United States, and for children born overseas, whether or not they reside in the United States. These sets of regulations are summarized as follows: A child born in the United States automatically acquires U.S. citizenship regardless of the legal status of his or her parents, based on the principle of jus soli and codified in the Citizenship Clause of the Fourteenth Amendment of the U.S. Constitution and Section 301(a) of the INA. A child born outside the United States who resides in the United States automatically acquires U.S. citizenship at birth if: (1) at least one parent, including an adoptive parent, is a U.S. citizen by birth or naturalization; (2) the child is under 18 years of age; (3) the child is an LPR; and (4) the child is residing in the United States in the legal and physical custody of the citizen parent. A child born outside the United States who reside s outside of the United States does not automatically acquire U.S. citizenship. That child may become a U.S. citizen if a U.S. citizen parent applies for it on their behalf. The following conditions must be met: (1) at least one parent, including an adoptive parent, is a U.S. citizen by birth or naturalization; (2) the U.S. citizen parent must have resided at least five years in the United States, of which at least two years were after his or her 14 th birthday; (3) the child is under 18 years of age; (4) the child is residing outside of the United States in the legal and physical custody of the citizen parent; (5) the child has been lawfully admitted temporarily to the United States and remains in lawful status. The INA contains several provisions facilitating the application and naturalization process for foreign-born military personnel of most branches of the U.S. armed forces and recently discharged members. Requirements and qualifications (see " Naturalization Requirements ") are similar, but military personnel are exempt from residence and physical presence requirements. The INA distinguishes between peacetime and wartime service. For current or past peacetime military service, naturalization applicants are not required to meet the naturalization residency requirements if they apply while still in the service or within six months of discharge. Service must be for periods aggregating at least one year, and separation must not occur under anything except honorable conditions. Applicants must also be lawful permanent residents. For current or past wartime military service, naturalization applicants are also not required to meet the naturalization residency requirements, but there are no conditions regarding the timing of the applicability of this exemption. Service of any length of time during a period of military hostilities, even one day, qualifies the applicant for naturalization. Separation must not occur under anything except honorable conditions. Wartime applicants need not be lawful permanent residents, as long as they are present in the United States at the time of their enlistment or reenlistment. Since 2002, noncitizens serving honorably in the U.S. armed forces on or after September 11, 2001 may file immediately for citizenship. Military naturalization applicants are exempt from USCIS naturalization fees. Spouses of U.S. armed forces personnel stationed overseas who apply for naturalization may have their time abroad counted as residence and physical presence in the United States and may complete the naturalization process abroad. Similar provisions apply to children of U.S. armed forces personnel. Since August 2009, the Naturalization at Basic Training Program has offered enlistees the option to naturalize upon graduation from basic training. Citizenship obtained through military service may be revoked if the individual obtaining it separates from the military under "other than honorable conditions" before completing five years of honorable service. In FY2012, USCIS naturalized 8,693 military service members. Between FY2002-FY2012, USCIS naturalized 83,532 members, mostly in the United States. Following the June 2013 Supreme Court decision holding that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional, President Obama directed federal departments to implement the decision for federal benefits for same-sex legally married couples. USCIS was directed to review immigration visa petitions filed on behalf of same-sex spouses in the same manner as those filed on behalf of opposite-sex spouses. For purposes of naturalization, time spent in marital union with a same-sex spouse is now being treated exactly the same as opposite-sex marriages for fulfilling the required residence period. An alien seeking to become a naturalized citizen must take the Naturalization Oath of Allegiance to the United States of America before citizenship can be granted: I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or which I have heretofore been a subject or citizen; that I will support and defend the Constitution and laws of the United States of America against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will bear arms on behalf of the United States when required by law; that I will perform noncombatant service in the Armed Forces of the United States when required by law; that I will perform work of national importance under civilian direction when required by the law; and that I take this obligation freely, without any mental reservation or purpose of evasion; so help me God. In addition, naturalization applicants must renounce any hereditary titles or orders of nobility in a foreign state. The oath of allegiance may be modified for conscientious objectors to military service or for individuals preferring to affirm (instead of swear to) the substance of the oath. Applicants for naturalization may choose to have the oath administered either by USCIS (Department of Homeland Security) or an immigration judge (Department of Justice). They must appear in person in a public ceremony which must be held as frequently as necessary to ensure timely naturalization. Anyone absent for more than one scheduled oath ceremony without good cause will be presumed to have abandoned his or her intent to be naturalized. Dual citizenship refers to an individual's possession of citizenship for two countries at the same time. Each country has its own citizenship laws that define the nationality status of its own citizens. Because such laws generally do not coincide, persons may have dual nationality by automatic operation of different laws rather than by choice. For example, a child born in a foreign country to U.S. citizen parents may be both a U.S. citizen and a citizen of the country of birth. Likewise, a child born in the United States to foreign-born parents not only acquires U.S. citizenship at birth but may also acquire the citizenship of his or her parents. U.S. citizens who marry alien nationals may acquire the citizenship of their spouses' countries. Most countries disfavor dual citizenship because of questions raised over the national's loyalties and the singularity of commitment that characterizes citizenship and allegiance. Within the past two decades, and for a variety of reasons, a number of countries such as Mexico, Columbia, and Brazil have facilitated dual citizenship by passing laws permitting their expatriates the right to naturalize in other countries without losing citizenship from their countries of origin. The United States has no authority to prohibit another country from continuing to treat an individual as its citizen. However, the United States considers that person, upon naturalization, to have renounced other citizenships and to be only a U.S. citizen. Because some individuals continue to exercise rights in other countries, some have expressed concerns that those countries may not know that these individuals have renounced such citizenship upon naturalizing in the United States. Such concerns about divided national loyalties have motivated legislative proposals to alert foreign countries about the naturalization of their former citizens. U.S. citizens may lose their citizenship in two ways: voluntarily, through expatriation, or involuntarily, through denaturalization. All U.S. citizens may lose citizenship through expatriating acts, including voluntary naturalization in a foreign country after age 18; making a formal declaration of allegiance to a foreign country after age 18; serving in the armed forces of a foreign country engaged in hostilities against the United States; serving in the armed forces of a foreign country as an officer; holding an office under the government of a foreign country if foreign nationality is acquired or if a declaration of allegiance is required; renunciation of citizenship before a U.S. diplomatic or consular officer abroad; formal written renunciation of citizenship during a state of war if the Attorney General approves the renunciation as not contrary to the national defense; and conviction of treason, seditious conspiracy, or advocating violent overthrow of the government. The Supreme Court has held that expatriating acts alone are not sufficient for expatriation unless undertaken with intent to relinquish U.S. citizenship. This restriction also has been enacted in statute. The requisite intent to relinquish need not be express but may be inferred from the circumstances. Unlike citizenship revocation (see " Revocation " below), expatriation or loss of nationality does not have a retrospective effect. Hence, loss of citizenship through expatriation does not affect that of "derivative" citizens—spouses and children—who acquired their citizenship by virtue of their relationship with a "principal" citizen. A naturalized citizen may be "denaturalized" (i.e., have his or her citizenship revoked) on the basis that the citizenship was procured illegally, by concealment of material fact, or by willful misrepresentation. Various acts occurring after naturalization are considered evidence of misrepresentation or suppression at the time of naturalization. For example, if a naturalized citizen joins a subversive organization within five years of becoming a citizen, and membership in that group would have precluded eligibility for naturalization under the INA, then the joining of the organization is held to be prima facie evidence raising a rebuttable presumption that naturalization was obtained by concealing or misrepresenting how attached to the United States the citizen was when naturalized. Citizenship may also be revoked because of less than honorable discharge from the U.S. armed services. Citizenship revocation must be initiated by a U.S. district attorney and must occur in the district where the naturalized citizen resides. If a naturalized citizen is convicted of knowingly procuring naturalization in violation of law, the court in which that conviction is obtained has jurisdiction to revoke that person's citizenship. In both cases, the court in which the revocation occurs must cancel the certificate of naturalization and notify the Attorney General of that action. The holder of the certificate of naturalization must return it to the Attorney General. The effect of denaturalization is to divest a person of their status as a U.S. citizen and to return them to their former status of alienage. Once final, the denaturalization is effective as of the original date of the certificate of naturalization. Derivative citizens also lose their citizenship under these circumstances. If citizenship is revoked based on "procurement by concealment of a material fact or by willful misrepresentation," derivative citizens also lose their citizenship regardless of where they are living . If citizenship is revoked because of membership in a subversive organization or less than honorable discharge from the Armed Forces, derivative citizens lose their citizenship o nly if they are living abroad . The number of persons petitioning to naturalize has increased over the past two decades, from just over 200,000 in FY1991 to just under 900,000 in FY2012 ( Figure 1 and Appendix A ). Naturalization petition volume peaked in FY1997 and FY2007. These increases have been attributed to legislation and demographic factors. Legislatively, the Immigration Reform and Control Act of 1986 (IRCA) legalized about 2.8 million LPRs between 1986 and 1989 who then became eligible to naturalize in the mid-1990s. Four years later, the Immigration Act of 1990 increased the limits on legal immigration to the United States, among other provisions, which also resulted in increased numbers of persons petitioning for naturalization by the mid-1990s. USCIS has also attributed the 2007 surge in naturalization petition volume to several factors including a "green card" replacement program, a broad-based increase in USCIS fees that took effect in July 2007, and grassroots campaigns to increase naturalizations prior to the 2008 elections. Demographically, the number of legal permanent residents admitted to the United States or adjusting status averaged roughly 418,000 each year between 1966-1980; 654,000 between 1981-1995; and 957,000 between 1996-2010, substantially enlarging the pool of people eligible to naturalize. With such increases, processing lags occurred. USCIS expended efforts to reduce the backlog during the mid-2000s which eliminated the processing backlog for N-400 naturalization petitions by 2006. Although the number of petitions denied has always been considerably less than the number of naturalizations, the trends for naturalizations and naturalization petition denials exhibited a similar pattern until 2003. Since then, the number of petitions denied has declined from roughly 103,000 in 2004 to 66,000 in 2012. During the same period, the number of naturalizations increased from 537,000 to 757,000 ( Appendix A ). Despite increasing numbers of naturalization petitions filed in recent years, the number of naturalizations has not kept pace with the overall growth of the foreign-born population. The naturalized percentage of the foreign born peaked in 1950 (74.5 %), reflecting high naturalization rates among refugees after World War II. After 1950, it declined, reaching its lowest point of 40.3% in 2000 before increasing to 43.7% in 2010. In 2010, the percentage of foreign born who were naturalized was near its lowest level since the Census Bureau began asking census respondents about their citizenship in 1920 ( Figure 2 ). In 2012, an estimated 40.8 million foreign-born persons resided in the United States, roughly 13.0% of the total U.S. population. Of these, 18.7 million self-reported their legal status as naturalized citizens. The remaining 22.1 million noncitizens included an estimated 8.8 million who were eligible to naturalize but had not done so. Foreign born who are eligible to naturalize may not do so for a variety of reasons. Other foreign born are not eligible to naturalize, either because they are LPRs with insufficient years of U.S. residency, or because they are nonimmigrants or unauthorized aliens, neither of whom are permitted to naturalize. Despite relatively low naturalized proportions among all foreign born ( Figure 2 ) the naturalized proportion of LPRs has increased in recent decades, from 38% in 1990 to 56% by 2011. Many factors affect who naturalizes as well as how many naturalization petitions are filed each year. Country of origin significantly affects who naturalizes ( Table 1 ). Foreign born from Mexico and several other Latin American countries have among the lowest naturalized percentages. These low proportions have several explanations, including geographic proximity, which can increase the likelihood that individuals maintain strong ties to their countries of origin; large numbers of recent legal immigrants, which reduces the proportion of all foreign born with at least five years of U.S. residence; and sizable numbers of unauthorized aliens who are ineligible to naturalize. In contrast, foreign born from countries such as Vietnam, Iran, and Taiwan all have rates exceeding 70%. Countries whose immigrants show relatively high naturalization proportions are often characterized by large geographic distance from the United States, less democratic or more oppressive political systems, and/or geopolitical factors and calamities that initiate flows of refugees and asylees. In addition, immigrants from countries with low proportions of naturalized citizens spend more years as LPRs before they naturalize. For example, in 2012, African and Asian immigrants, whose naturalized proportions are relatively high, spent a median of five and six years as LPRs, respectively, prior to naturalizing. By contrast, immigrants from North America (including Canada, Mexico, and Central America) spent a median of 10 years as LPRs prior to naturalizing. Apart from country-level characteristics, individual characteristics also influence the propensity to naturalize. Younger immigrants, who generally possess weaker attachments to their countries of origin and more years to benefit from citizenship, are more likely to naturalize than older immigrants. Immigrants from Asian, European, and English-speaking countries are more likely to naturalize than immigrants from elsewhere. Immigrants in professional, managerial, and other occupations correlated with higher education levels appear more likely to naturalize than less educated immigrants. In recent years, N-400 naturalization petitions have accounted for almost 15% of all petitions received and processed by USCIS, making it the second most popular immigration petition handled by the agency (after I-765 Employment Authorization petitions). Concerns regarding USCIS' total petition processing capability sometimes receive attention when events transpire to cause large numbers of foreign nationals to petition for immigration benefits. If Congress does pass major reforms to U.S. immigration laws, such changes could substantially alter the number of legal immigrants admitted each year as well as the legal status of sizeable numbers of foreign-born who reside in the United States. Changes to both of these populations, in turn, could increase considerably the number of USCIS N-400 naturalization petitions filed. USCIS has made substantial efforts in recent years to modernize its business processes. Currently, the agency reports that N-400 naturalization petition processing times average 4.5 months, well within its goal of no more than six months. Recent evidence of the agency's ability to process sudden large influxes of immigration petitions occurred with the Deferred Action for Childhood Arrivals (DACA) initiative that was announced on June 15, 2012. Two months later, USCIS began accepting DACA petitions. As of August 31, 2013, one year later, USCIS had received and processed 588,725 petitions. At the same time, the number of pending USCIS petitions since August 2012 has steadily increased, which suggests that resources devoted to processing DACA petitions may have slowed processing for other USCIS petitions. USCIS currently charges naturalization applicants $680 which includes a $595 application fee and an $85 fee for recording biometric information. The amount of the naturalization fee raises several issues for Congress, including whether it discourages persons from naturalizing due to the expense, and whether it accurately reflects USCIS's cost to process naturalization applications. Empirical studies suggest that the volume of naturalization petitions filed may be inversely related to the naturalization fee amount. Graphing the volume of N-400 naturalization petitions filed each fiscal year against the amount of the naturalization fee in that year ( Figure 3 ) suggests that fee increases in 1998, 2002, 2004, and 2007 were preceded by greater petition volume followed in the subsequent year by declining petition volume. Nevertheless, other factors described in " Naturalization Petition " above also explain application volume increases apart from fee increases. Naturalization fee increases are usually subsumed within across-the-board USCIS fee increases for many types of petitions based upon audits of the costs of providing immigration services/benefits. Proponents of fee increases maintain that immigration benefits such as naturalization should be self-financing and that the beneficiaries should bear the full cost of processing a naturalization petition. Yet some question whether fee increases discourage eligible LPRs from naturalizing. Others contend that naturalization fees in the United States are substantially higher than comparable citizenship fees in other OECD countries. Since the beginning of Operation Iraqi Freedom in March 2003, Congress has expressed interest in streamlining and expediting naturalizations for military personnel and in providing immigration benefits for their immediate relatives. The reported deaths in action of noncitizen soldiers drew attention to the immigration laws that grant posthumous citizenship and to the advantages of further expediting naturalization for noncitizens serving in the U.S. military. Legislation has focused on further streamlining procedures or extending immigration benefits to immediate relatives of U.S. service members. In the 113 th Congress, a legislative proposal would make eligible for naturalization any person who serves or has served under honorable conditions as a member of the U.S. Armed Forces in support of contingency operations in the same way as if the person had served during a period of presidentially-designated military hostilities, among other related provisions. A current legislative proposal would treat noncitizen U.S. service members who have received combat awards as having satisfied certain naturalization requirements, including good moral character, English/civics knowledge, and honorable service/discharge. In addition, the proposal would eliminate the INA provision that currently allows a U.S. citizen to renounce citizenship during a time of war if the Attorney General approves the renunciation as not contrary to the interest of national defense. Some in Congress have expressed interest in facilitating language and civics instruction as a means to promote naturalization. Several federal agencies currently support these objectives. Among these, the USCIS Office of Citizenship provides English and citizenship training directly and through public/private partnerships. It also funds citizenship preparation services through its Citizenship and Integration Grant Program. The U.S. Department of Education offers grants to states to improve English skills among adults who are not enrolled in school. Several bills have been introduced that would promote English literacy and civics education for immigrants preparing to naturalize. A current legislative proposal contains provisions waiving the English and history and civics naturalization requirements for older and disabled individuals. Despite these and other federal adult education programs, as well as programs run by nonprofit organizations, demand for adult English language and civics education services remains high. Findings from the 2003 National Assessment of Adult Literacy and U.S. Census data on English language proficiency among the foreign born suggest that more immigrant adults could benefit from English literacy education. USCIS has called for more innovative approaches to increase immigrants' access to quality English learning opportunities as well as adult educators' access to pertinent civics education training. Some have advocated for a White House committee on immigrant integration or the establishment of a foundation affiliated with the USCIS that would accept private donations to support programs that help immigrants integrate. Others have also called for a public private partnership to facilitate a more stable stream of private funding for efforts to promote naturalization. A current legislative proposal would address several of these recommendations. Those opposing such expenditures argue that English language proficiency as well as civics education is the responsibility of immigrant s and not U.S. taxpayer s . They contend that the acquisition of citizenship is a choice that is not imposed upon LPRs who enjoy many of the same benefits of living in the United States as citizens. Many LPRs eligible to naturalize, particularly persons age 65 and older, have not done so because of concerns over passing the English and civics naturalization examinations. In 2008, USCIS revised the naturalization civics exam to make it more conceptual as well as consistent across its 86 district offices, and in 2012, the pass rate stood at 92%. Nevertheless, USCIS application data show increasing numbers of persons submitting USCIS Form N-648 Medical Certification for Disability Exceptions petitions for exam waivers on the basis of medical conditions. A current legislative proposal contains provisions that would expand current exemptions from the English and civics exam requirement based on age, physical/mental disability, and years of U.S. residency. Legislative proposals regarding the naturalization oath of allegiance have centered on incorporating into the oath greater emphasis on allegiance to the United States and greater civic responsibility; emphasizing more publicly visible and patriotically symbolic ceremonies; and permitting members of Congress to administer the oath of allegiance at naturalization ceremonies. Some have proposed that all naturalization ceremonies be conducted solely in English, and that as a requirement for naturalization, a uniform language testing standard require all citizens to read and understand the English language text of the Declaration of Independence, the U.S. Constitution, and the laws of the United States. Concerns about illegal immigration have led some legislators to reexamine the long-established tenet of U.S. citizenship that a person who is born in the United States and subject to its jurisdiction is a citizen of the United States regardless of parental legal status. This concept of birthright citizenship is codified in the Citizenship Clause of the Fourteenth Amendment of the U.S. Constitution and Section 301(a) of the INA. While a thorough discussion of birthright citizenship is beyond the scope of this report, recent Congresses have seen legislation introduced that would revise or reinterpret the Citizenship Clause and related citizenship statute. Those favoring a more accessible naturalization process have criticized the existing process on several grounds, notably its current cost (see " Naturalization Fees "). Some advocates, supporting their arguments with evidence about immigrants' price sensitivity to the cost of naturalization, have proposed reforms centering on making information about fee waivers more widely known and providing more payment options for naturalization fees. Many also characterize the naturalization application forms and instructions as excessively complex and unclear, with potential legal consequences for incorrect responses. They contend that prospective naturalization petitioners may be deterred from applying, and that simplifying the language in the N-400 application and instructions would make the naturalization process more accessible. Others raise concerns over the naturalization residency requirements (see " Continuous Residence " above) which disadvantages LPRs based overseas for employment. Such individuals must wait until they physically reside in the United States to fulfill the naturalization requirements, prolonging their time required to naturalize. Appendix A. Appendix B. Selected Links to Naturalization Information and Application Materials NATURALIZATION INFORMATION Guide to Naturalization http://www.uscis.gov/files/article/M-476.pdf 10 Steps to Naturalization http://www.uscis.gov/USCIS/files/M-1051.pdf I am a Permanent Resident — How Do I Apply for U.S. Citizenship? http://www.uscis.gov/USCIS/Resources/B3en.pdf Naturalization Information for Military Personnel http://www.uscis.gov/files/form/m-599.pdf USCIS Policy Manual: Citizenship and Naturalization http://www.uscis.gov/policymanual/HTML/PolicyManual-Volume12.html NATURALIZATION APPLICATION MATERIALS N-400 Application and Instructions for Naturalization http://www.uscis.gov/files/form/n-400.pdf Instructions for N-400 Application for Naturalization http://www.uscis.gov/files/form/n-400instr.pdf Document Checklist http://www.uscis.gov/files/article/attachments.pdf Citizenship Resource Center http://www.uscis.gov/portal/site/uscis/citizenship

Naturalization is the process that grants U.S. citizenship to lawful permanent residents (LPRs) who fulfill requirements established by Congress in the Immigration and Nationality Act (INA). In general, U.S. immigration policy gives all LPRs the opportunity to naturalize, and doing so is a voluntary act. LPRs in most cases must have resided continuously in the United States for five years, show they possess good moral character, demonstrate English competency, and pass a U.S. government and history examination as part of their naturalization interview. The INA waives some of these requirements for applicants over age 50 with 20 years of U.S. residency, those with mental or physical disabilities, and those who have served in the U.S. military. Naturalization is often viewed as a milestone for immigrants and a measure of their assimilation and socioeconomic integration to the United States. Practically, naturalized immigrants gain important benefits, including the right to vote, security from deportation in most cases, access to certain public-sector jobs, and the ability to travel with a U.S. passport. U.S. citizens are also advantaged over LPRs for sponsoring relatives to immigrate to the United States. Despite the clear benefits of U.S. citizenship status over LPR status, millions of LPRs who are eligible to naturalize do not do so. In the past two decades, the number of LPRs who submitted petitions to naturalize has increased more than four-fold, from about 207,000 in FY1991 to 899,000 in FY2012. Since 2003, the number of denied petitions has declined. Naturalization petition volume spiked to roughly 1.4 million in FY1997 and FY2007 due primarily to passage of the Immigration Reform and Control Act of 1986, which legalized many unauthorized foreign born, and the Immigration Act of 1990, which increased statutory limits on the numbers of legal immigrants admitted. Research on determinants of naturalization suggests that the propensity to naturalize is positively associated with youth and educational attainment. Those who immigrate as refugees and asylees are more likely to naturalize than those who immigrate as relatives of U.S. residents. Immigrants from countries with less democratic or more oppressive political systems are more likely to naturalize than those from more democratic nations. Immigrants from Mexico or other nearby countries in Central America have among the lowest percentages of naturalized foreign born. Congress is currently considering extensive reforms to U.S. immigration laws, which could affect naturalization policy and the number of persons who naturalize each year. Although concerns regarding U.S. Citizenship and Immigration Services (USCIS) petition processing capabilities sometimes arise when large numbers of foreign nationals petition for immigration benefits, the agency's capacity and recent modernization efforts have minimized excessive processing delays. Several issues for Congress center on facilitating naturalization. Immigrant advocacy organizations contend that the current level of naturalization fees discourages immigrants from seeking U.S. citizenship. Other immigration policy observers argue that current fees recover the full cost of a process that is intended to be self-financing. Some in Congress have repeatedly expressed interest in facilitating language and civics instruction as a means to promote naturalization. Others argue that English language proficiency as well as civics education is the responsibility of immigrants and not the federal government. Recent efforts have focused on further streamlining and expediting naturalizations for military personnel and in providing immigration benefits for their relatives. Proposals have also been introduced that would revise the naturalization oath to place greater emphasis on allegiance to the United States.

The 1,153-square mile estuary at the confluence of the San Francisco Bay and the Sacramento and San Joaquin Rivers Delta—the Bay-Delta—is also the hub of California's extensive water supply system. As such, the Bay-Delta has endured decades of competing water demands. During this time, the Bay-Delta ecosystem has experienced environmental degradation, increasing regional water demands, and a decrease in reliable water supplies for urban, agricultural, and natural areas. For example, by the late 1980's and early 1990''s fish species declines and water quality problems had become so severe that continued operation of the state and federal water supply projects were coming into conflict with state and federal environmental laws. To counter this trend and to avoid shutdown or severe operational changes to pumps at the heart of the State Water Project (SWP) and the federal Central Valley Project (CVP), the State of California and several federal agencies entered into a partnership to resolve resource conflicts. This partnership resulted in an agreement known as the Bay-Delta Accord, which ultimately led to the development of the CALFED Bay-Delta Program (CALFED) and the Record of Decision (ROD) for the CALFED Bay-Delta Final Programmatic Environmental Impact Statement and Report (EIS/EIR). The objectives of CALFED were to restore ecological health, improve water quality, fortify infrastructure for managing water (e.g. improving Delta levees), and increase water supply reliability in the Bay-Delta area. The authorization of an annual federal appropriation of $143 million from FY1998 to FY2000 for the CALFED program—to develop and implement specific portions of an ecosystem protection plan and long-term restoration projects for the Bay-Delta—expired September 30, 2000. Between 1998 and 2000, $220 million in federal funds was appropriated for the CALFED program; however, absent an explicit authorization from the authorizing committees, congressional appropriators have been reluctant to directly fund the program since. Three bills were introduced in the 108 th Congress to authorize appropriations for federal participation in the CALFED program; H.R. 2828 (introduced July 23, 2003, by Ken Calvert), H.R. 2641 (introduced June 26, 2003, by George Miller), and S. 1097 (introduced May 21, 2003, by Dianne Feinstein and Barbara Boxer). All three bills would have authorized implementation of various CALFED program components, action items, and activities identified in the ROD; however, none of the bills would have authorized the implementation of the ROD in its entirety. The reauthorization of federal participation in the CALFED program was quite controversial. The controversy stems, in part, from the complex nature of water allocation from the Bay-Delta itself. For decades, two massive water supply projects—the State Water Project (SWP) and the federal Central Valley Project (CVP)—have moved water from northern California, through the Bay-Delta to water users in southern California. Decisions on who gets how much water and when they receive it are generally made annually and are based on a myriad of state and federal laws, historic water rights, contracts, and negotiated agreements. Any proposed change to this complex water allocation system is met with concern from water users who fear they may lose water, receive reduced priority for water supplies, or receive water of a degraded quality. On the other hand, many attribute the Bay-Delta's deterioration to unnaturally low water supplies resulting from the management of the state and federal projects and have called for changes in project operations. In particular, the decline of certain fish species (e.g., winter run chinook salmon) led to operational changes affecting when and how much water can be pumped from the Bay-Delta to supply water users south of the Delta. Additionally, environmental groups have advocated increased water supplies for environmental purposes to stave off the decline of fish and wildlife species, improve water quality for other uses, and restore the health and vitality of the Bay-Delta ecosystem. While the CALFED program is an attempt to balance competing interests and develop a plan for managing Bay-Delta water resources to meet competing demands, all parties have not been 100% satisfied in the final goals, programmatic actions, and water management regimes called for the in the ROD. Specifically, some agricultural stakeholders have expressed concerns over how much water they will receive and have asked for assurances that they will receive a certain percentage of their contracted supplies; however, other agricultural and urban contractors fear their water supplies may be threatened by such assurances. Some of the same groups, and others, are concerned that the methods of distributing water will disadvantage them, that the program is not balanced (e.g. between ecosystem restoration and water storage facilities), and that funding levels and authorization for surface water storage facilities are inadequate. Further, some question the legitimacy of scientific findings regarding environmental water needs and believe the level of water allocated for recovering threatened and endangered species in the Bay-Delta may not be justified. Others are concerned that legislative efforts to resolve some of these issues could undermine the ability of the CALFED program to restore fisheries and other resources associated with the Bay-Delta ecosystem. Some environmental groups argue for greater flows of water to natural areas to support the recovery of endangered and threatened plant and animal species. Some also advocate investing in water conservation and new pricing strategies to lower demand for Bay-Delta water, and using new technologies (e.g. desalination and water recycling) to stretch existing water supplies. In general, environmental groups oppose development of new surface storage projects preferring instead to manage existing supplies more efficiently. Where there was once general agreement, perhaps tenuous, among the stakeholders who participated in development of the ROD, this agreement was based on a delicate balance of many interests and nearly a decade of fairly intense negotiations. Consequently, any attempt to authorize a program departing from the ROD has met with resistance from parties who fear their interests may not be well served. This report presents the historical progression of conflicts and agreements that led to the creation of CALFED, and discusses governance, ecosystem restoration, and water use issues related to the reauthorization of CALFED in the 108 th Congress ( P.L. 108-361 ). For more information on CALFED oversight in the 109 th Congress, see CRS Issue Brief IB10019, Western Water Resource Issues , by Betsy Cody and Pervaze Sheikh. The Bay-Delta is a 1,153 square-mile area located where the Sacramento and San Joaquin Rivers converge and flow into San Francisco Bay. These rivers along with other tributaries form a mosaic of sloughs and waterways that surround 57 man-made islands within the Bay-Delta (see Figure 1 ). The Bay-Delta is considered the largest estuary on the West Coast and its combination of fresh and salt water ecosystems provide habitat for a diverse array of plant and animal life. An estimated 750 species of plants and animals, including over 130 species of fish are found in the Bay-Delta. The Bay-Delta also contains over 700,000 acres of farmland, and is used by approximately 12 million recreationists per year who among other activities, boat, fish, hike, and sightsee in the Bay-Delta. The water regime of the Bay-Delta was significantly altered in the 1930s when the federal government at the behest of California, began a massive project to divert water from the Sacramento Valley and Delta to farmland in California's vast Central Valley. The state, some 20 years later, followed with its own State Water Project (SWP) which in large part parallels the federal Central Valley Project (CVP), diverting much of the natural inflow into the San Francisco Bay to agricultural, industrial, and urban consumers mostly in the San Joaquin Valley and Southern California. The Bay-Delta now supplies water to 22 million people and millions of acres of farmland in California. Two networks of pumps, dams, canals, and reservoirs take an estimated 5.9 million acre-feet (maf) of water from the San Joaquin and Sacramento Rivers and their tributaries, and distribute it to agricultural and urban water users in the California Central Valley via the CVP, and to Southern California via the SWP. The combined annual amount of water taken by the CVP and SWP ranges between 20% and 70% of the total annual inflow in the Bay-Delta region. Construction and operation of the CVP and SWP projects over many decades fundamentally altered the physical environment of the Central Valley as well as the Bay-Delta. Hundreds of wetland areas were lost or altered, and by the late 1980s, water quality and Endangered Species Act (ESA) issues threatened the operation of the CVP and the SWP. Today, the Bay-Delta ecosystem is still generally considered to be unhealthy and unable to provide reliable amounts of water for water users. Some also believe that the Bay-Delta is unable to sustain viable habitats for all of its plant and animal life. Water quality has deteriorated in the Bay-Delta partially due to drainage of freshwater and influx of highly saline water. Further, pollutants originating from agricultural runoff, cities, and ranches have lowered water quality in the Bay-Delta. The Bay-Delta has also suffered from fragmentation and loss of native habitat. Of the nearly 350,000 acres of original tidal marshland in the Bay-Delta, only 8,000 acres remain. Several plant and animal species are on state and federal endangered and threatened lists, including the steelhead trout and the winter-run chinook salmon. Problems in the Bay-Delta related to water quality and fish and wildlife have raised compliance issues with the Clean Water Act (CWA) (P.L. 92-500, as amended), the Endangered Species Act (ESA; P.L. 93-205 , as amended), as well as comparable state laws. These issues are discussed in more detail below. The limited supply of water in California has been the subject of conflicts among competing interests for decades. The fundamental controversy over water supplies more recently has centered on the distribution of water supplies to urban areas and agriculture, and their effect on the environment. In 1986, California and federal government entered into a Coordinated Operation Agreement (COA) to coordinate operations between the CVP and SWP, and to allow equitable sharing of surplus water. Afterwards, controversy peaked when California was experiencing a six-year drought (1987 - 1992). Limited water supplies during the drought led to water rationing in urban and agricultural areas, a reduction in crop productivity and cultivation, and environmental deterioration in river and marshland habitats. The distribution of water was further complicated by the implementation of the federal CWA and ESA in the Bay-Delta. Concerns that annual operations of the CVP and SWP may have been violating federal and state water quality and endangered species statutes resulted in new efforts to provide baseline water supplies for environmental purposes. In 1992, the Central Valley Project Improvement Act (Title 34 of P.L. 102-575 ; CVPIA) for the first time allocated specific water supplies for natural areas and for fish and wildlife. The development of subsequent regulations affected water allocation, decision making, and infrastructure operation in the Bay-Delta and surrounding areas, and created new controversies among farmers, urban users, and environmentalists over water supply distribution. Several fish species in the Bay-Delta have been listed as either endangered or threatened under the federal ESA. The ESA generally prohibits actions that involve "taking" (including harming) a listed species except under certain specified circumstances. It also directs federal agencies to avoid adverse modification of a listed species'critical habitat. Further, the ESA requires the designation of critical habitat areas where a species is currently found or which might provide additional habitat for species recovery. Actions implemented under the ESA have resulted in changes to dam operations, water flow, and pumping facilities in the Bay-Delta. For example, exports of water out of the Bay-Delta were limited to protect salmon runs of the winter-run chinook salmon ( Onchorhyncus tshawtscha ), which was listed as endangered in 1989. As other fish species, such as the delta smelt ( Hypomesus transpacificus ) and spring-run chinook salmon ( Onchorhyncus tshawytscha) , have been listed as threatened, further restrictions on water exports and project modifications have been implemented in the Bay-Delta. Controversy over water allocated to the environment for recovering fish was exemplified when efforts to protect the then federally listed threatened Sacramento splittail ( Pogonichthys macrolepidotus ) resulted in a lawsuit against the U.S. Fish and Wildlife Service (FWS) by state water contractors. A federal judge, in 2000, invalidated the decision to list the species, citing the failure of the FWS to consider the opinions of state game scientists, explain high stocking rates in 1998, and explain why the splittail was threatened. In September 2003, the FWS withdrew the splittail from the threatened species list after analyzing the population and determining that it would not become threatened or endangered in the foreseeable future. Water allocation for endangered species and the environment in general was to be enhanced with the enactment of the CVPIA in 1992. The legislation was enacted largely in response to the decline of fish and wildlife species in the Bay-Delta and the Sacramento and San Joaquin Rivers system. The CVPIA changed the priorities for water supply for the CVP by ranking fish and wildlife water needs on par with irrigation and domestic water uses. Refuges are granted the same high priority given to agriculture; and water reductions to refuges may not exceed 25% during drought years. CVPIA also reallocates CVP water back to natural areas to benefit salmon, steelhead trout, and other fish and wildlife. Some argue that limited funds appropriated for the restoration fund, litigation over providing 800,000 acre-feet of water for the environment each year, and controversy over contract renewal provisions has led to the CVPIA not fully meeting environmental expectations. At the same time, many farmers and others have called the CVPIA a disaster, claiming that the priority for allocating water supplies to the environment is too high. Beginning in the late 1980's, the implementation of the CWA by the U.S. Environmental Protection Agency (EPA) generated controversy between the State Water Board and the federal government. The CWA regulates both surface water and groundwater quality and is enforced by the EPA. In 1987, the EPA notified the State of California that state surface water quality standards were not in compliance with the CWA. The state responded with new water standards that were again rejected by the EPA. In 1993, after a lawsuit brought by environmentalists, the EPA issued a set of federal water quality guidelines for implementation in California. These were later rejected by the state. This ongoing struggle to address CWA requirements further threatened continued operation of the CVP and SWP, particularly operations of Delta pumping facilities. In order to forestall cutbacks in water project operations, state and federal authorities jointly adopted mutually acceptable water quality standards and agreed to regulate the CVP and SWP operations to meet these standards, as well as to develop target flows for ESA listed species. This agreement, known as the Bay-Delta Accord, included the following elements: provisions to regulate springtime flow and export limits to benefit fish species; operational flexibility to comply with provisions of the ESA that address water supply and species monitoring issues among others; and measures to improve environmental conditions in the Bay-Delta Estuary (e.g., waste discharge control and habitat restoration). The Accord was in effect until 2000 and then was incorporated in part by the ROD. Controversies surrounding implementation of the federal statutes outlined above fueled the creation of the Bay-Delta Framework Agreement (a refinement of the Accord), which was signed in 1995 by state and federal agencies with regulatory responsibilities in the Bay-Delta. This agreement marked the beginning of the CALFED process and defined three issues that were deemed important for federal-state coordination and cooperation: the formulation of water quality standards; coordination of federal and state project operations with regulatory requirements (i.e., coordination of CVP and SWP operations to maintain compliance with the ESA, CVPIA, and state and federal water quality provisions); and development of a joint federal-state process to develop long-term solutions to environmental, water supply, and water quality problems in the Bay-Delta. The CALFED Program was created from the Framework Agreement to address these issues. The initial authorization of federal funding for the CALFED Program came in 1996 with the enactment of P.L. 104-208 (Division E, Title I). This legislation authorized nearly $430 million for FY1998 to FY2000. Funds appropriated for CALFED under this authorization were $85 million for FY1998, $75 million for FY1999, and $60 million for FY2000. The funding authorization expired September 30, 2000; however, some activities that support CALFED program goals continued to receive federal funding. The CALFED process brought state, federal, and other stakeholders together to develop a programmatic response to restoration and water supply issues in the Bay-Delta. First, definitions of the problems to be addressed in the Bay-Delta were listed, and a set of alternative solutions was developed. Second, to comply with the California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA), an environmental impact statement (EIS) and an environmental impact report (EIR) were prepared to identify the impacts associated with the individual solutions being considered. Then, from a set of four alternatives, a "Preferred Program Alternative" was selected as the long-term plan for improving water quality, stabilizing Bay-Delta levees, restoring the Bay-Delta ecosystem, and improving water supply reliability. This plan was announced August 28, 2000, in the Record of Decision for the CALFED Bay-Delta Final Programmatic Environmental Impact Statement and Report (ROD). The key components of the plan outlined in the ROD include specific activities in 12 program areas, among them, the development of an Environmental Water Account and the authority for a CALFED Policy Group. The CALFED Policy Group, as proposed in the ROD, would have consisted of representatives from 23 federal and state agencies and would have been responsible for overseeing the implementation of CALFED, assessing its progress (including reports to federal and state legislatures), and reviewing and coordinating CALFED and related programs. However, before federal legislation was enacted approving the ROD as a framework for implementing the CALFED program, the California legislature adopted its own governance structure for the CALFED program. The State of California established the California Bay-Delta Authority (CALFED Authority) in September 2002. This state agency is housed in the California Resources Agency and is responsible for overseeing the implementation of the CALFED program. Specifically, the CALFED Authority is expected to oversee the state implementation of the CALFED Program according to the ROD, develop policies and track timelines associated with CALFED projects, report annually to state and federal legislatures, manage the science element of CALFED and establish an independent science board, review and approve program plans and budgets, and administer the CALFED Program (e.g., hiring staff and approving policies). The agency is expected to consist of representatives from six California State agencies, six federal agencies, and the Bay Delta Public Advisory Committee, as well as five members of the public (each representing a program region ), two at-large members appointed by the State Senate and Assembly, and four non-voting members of the State Legislature. The state law establishing the CALFED Authority explicitly states that nothing should extend the application of federal law to actions by state agencies or extend state law to actions by federal agencies. Further, the CALFED Authority will dismantle in 2006 unless federal legislation authorizing the participation of appropriate federal agencies in the CALFED Authority is enacted. P.L. 108-361 authorized the Secretary of the Interior and federal agency heads to participate as non-voting members of the CALFED Authority. It has not yet been determined if this provision will nullify the sunset clause for the CALFED Authority. The state law requires that the Secretary of the California Resources Agency make a determination and written notification that "federal legislation has been enacted authorizing the participation of appropriate federal agencies in the Authority" for the sunset clause to be removed. This notification has not yet been issued. The debate over the reauthorization of CALFED in the 108 th Congress largely centered on specific issues such as the authorization for water storage projects, cost allocation, balance among project and program activities, and water supplies for the environment, as well as broader issues such as governance and the degree to which the ROD is implemented. Oversight issues during the 109 th Congress are expected to include project financing, water storage project programs, and implementation of the Operations Criteria and Plan and South Delta Improvements Plan. Three bills were introduced in the 108 th Congress to authorize appropriations for federal participation in CALFED: H.R. 2641 , H.R. 2828 , and S. 1097 . S. 1097 and H.R. 2828 were approved by respective full committees in the House and Senate (House Resources and Senate Energy and Natural Resources). H.R. 2828 passed the House, as amended, July 9, 2004. The Senate subsequently took up the House bill, amended it, and passed H.R. 2828 on September 15, 2004. After several weeks of tense negotiations, the House passed the Senate version under suspension of the rules and without amendment on October 6, 2004. The bill was signed into law October 25, 2004 ( P.L. 108-361 ). P.L. 108-361 approves the ROD as a framework for addressing the CALFED Bay-Delta Program and authorizes under existing and new authorizations, several activities and projects related to the components of CALFED. S. 1097 , as introduced, would have authorized federal agencies to conduct projects and activities included under 14 components similar to the 12 components defined in the ROD. These activities range from the specific, such as the construction of floodway improvements in the Lower Mokelumne River, to broad categories such as water conservation projects to enhance water supply reliability, water quality, and ecosystem benefits. S. 1097 , as amended on May 20, 2004, would have authorized $389 million in funding for these activities from FY2005 to FY2010. As passed by the House in July, H.R. 2828 was similar to S. 1097 in that it would have authorized federal agencies to conduct projects and activities included under components defined in the ROD and provided an authorization of $389 million for those activities. H.R. 2828, however, differed from S. 1097 in some ways. The July version of H.R. 2828 would have (1) approved the ROD as a general framework ; (2) included a provision potentially pre-authorizing the construction of federal water projects; (3) contained additional requirements for land acquisition and ecosystem restoration projects; and (4) authorized appropriations from FY2005 to FY2008. Thematically, the major areas of bill differences include the degree to which the existing ROD would have been implemented, the entity in charge of managing program activities, the process for project approval (e.g., feasibility study and project authorization), cost allocation schemes, and requirements for land acquisition. Congress is expected to face other CALFED issues in the next few years, including funding levels, water storage, water supplies for the environment, land acquisition, and science. A summary of each of these issues is presented below. The implementation of CALFED is expected to cost an estimated $10 billion dollars over 30 years; however, during the first seven years (referred to as Stage 1), implementation costs are estimated to be $8.7 billion. The CALFED program identified in the ROD envisions a three-way split in responsibility for funding between the federal government, state government, and local users (e.g., through user fees). However, each program element in the plan may have its own cost-sharing formula. Federal appropriations for the CALFED Program are expected in the annual Energy and Water Development Appropriations bills; however, other federal funding may be provided via appropriations for other federal programs. State funding is expected to come from a combination of state bond measures, restoration fees paid under the authority of the CVPIA, state and federal appropriations, and local user fees (e.g., fees for water use). A draft finance plan was released on December 4, 2004. This plan specifies how funding for the CALFED Program is expected to be distributed among the federal and state government, water users, and local grant matching. A final version of this plan is expected in 2005. In the past few years, Congress funded discrete projects within the CALFED program, but, lacking an authorizing statute, provided no appropriations for the overall program from FY2001 to FY2005. For example, in the joint explanatory statement to P.L. 108-137 (Energy and Water Development Appropriations for FY2004), conference managers stated that it would be difficult for Congress to support the CALFED program without program authorization by Congress. To date, federal funding has been appropriated to provide fish screens for existing water diversions; implement pollution control measures; manage fish, riparian, and estuarine habitat; and study water storage projects. The funding has been in addition to funds already authorized for projects and programs under the CVPIA and other previously authorized projects and programs. Although, no federal funds were appropriated for the CALFED Program from FY2001-FY2005, appropriations were provided for projects that support the goals of CALFED, such as the continued study of four water supply projects. No federal funds were appropriated for FY2001 for CALFED or any of its projects. For FY2002, FY2003, FY2004 and FY2005 Congress included $30 million, $23 million,$9.0 million, and $8.5 million, respectively, in the Water and Related Resources account of the Bureau of Reclamation (BOR) for projects supporting the goals of CALFED; however, again, it did not fund the CALFED program per se. As enacted, P.L. 108-361 authorizes $389 million for the CALFED program for FY2005 - FY2010. Many argue that an increase in water supplies for California is needed due to population growth in the state and lower supplies from the Colorado River, among other things. One mechanism to increase the availability of additional water supplies is to increase the capacity for surface water storage. Several stakeholders, including some Members of Congress, have argued for an increase in investments for building additional surface water storage capacity in California. Others contend existing developed water supplies can be stretched through conservation, water reuse and recycling, conjunctive use (storing water in groundwater basins), water transfers, and changes in water management policy (e.g.,water pricing). During a House Resources committee hearing on a CALFED crosscut budget in May of 2003, several Members of Congress expressed concerns that more money has been spent on environmental activities than on storage. Program officials countered by explaining that the authorization for feasibility studies for water storage expansion projects were delayed until early in 2003, when they were authorized in the FY2003 Omnibus Appropriations ( P.L. 108-7 ) and that over time, funding for water storage will increase relative to future ecosystem spending. Thus, they contend, the CALFED program is designed to be implemented in a "balanced" manner over the life of the program. Some supporters of ecosystem restoration spending note that the federal government has already invested $1.3 billion in the CVP and that this water supply investment is in part responsible for the critical state of species and water quality in the Bay-Delta. Both S. 1097 and H.R. 2828 included several provisions designed to provide balance among program components. H.R. 2828 as originally passed the House, further included a provision to possibly streamline project approval. The provision would have allowed the Secretary of Interior to proceed with water storage construction upon completion of a feasibility study, unless Congress passed a disapproval resolution within 120 legislative days (§103(b)(5)(A)(i)(III)). This provision was very controversial and was one of the major differences in the House and Senate bills upon which there was strong disagreement. Ultimately, the provision was dropped from the bill and replaced with a provision requiring a rebalancing of program elements and re-submission of options for water storage if Congress does not authorize construction of water storage facilities within a certain time frame. To increase water supply reliability, while not adversely affecting the Bay-Delta ecosystem, the ROD included an Environmental Water Account (EWA), which was established by CALFED agencies in 2000. The account is seen as a way to add flexibility to the regulatory system to ensure that fish are protected from water project operations while allowing for greater water supply reliability for agricultural and urban users. CALFED agencies are to use the EWA to annually acquire, bank, and transfer approximately 380,000 acre-feet of water and arrange for its conveyance. The account may use transfers, options, and acquisitions to obtain water to compensate water users when pumps are shut down to mitigate "fish take." In addition, water may be obtained through financing conservation or recycling projects. Five CALFED agencies are partners in the EWA: U.S. Fish and Wildlife Service (FWS), National Oceanic and Atmospheric Association Fisheries (NOAA Fisheries), BOR, California Department of Fish and Game, and California Department of Water Resources. These agencies authorize exports from the account to provide additional water for species protection. The use of the EWA and the amount of water that is needed or desirable in the EWA has generated controversy. Prior CALFED bills would have directed that the EWA provide assurances that actions taken to protect species listed as threatened or endangered under the federal ESA avoid water delivery impacts and costs to project water users. This language would have significantly narrow the scope and priorities of the EWA, as compared with the ROD. For example, the ROD does not limit the scope of the EWA to only species listed under the ESA, nor does the ROD contain provisions that protect water users from costs associated with the function of the EWA. While many stakeholders support the EWA, they are divided as to how it should work. Some participants have expressed concern that the water level prescribed for fisheries is too low, that baseline water needs are not adequately defined, and that operating rules for the EWA are unclear. Others believe that too much water is already allocated for the environment and want assurances that certain quantities of water for farming will be available. Both H.R. 2828 and S. 1097 included several provisions addressing the EWA, yet they differ in some respects. For example, the definitions of the EWA under S. 1097 and H.R. 2828 were largely tied to the ROD; however, S. 1097 noted that the EWA is to provide water in addition to the regulatory baseline quantity of water to protect and restore Delta fisheries, while H.R. 2828 , as reported and enacted, defined the EWA as the cooperative management program established under the ROD. As enacted, P.L. 108-361 , also authorizes the use of the existing Central Valley Project Restoration Fund for EWA purposes (not to exceed $10 million). Ecosystem restoration is generally undertaken with uncertainties in the restoration process (e.g., scientific uncertainty in the ability of some restoration projects to succeed). Specifically, restoration efforts may require the application of untested technologies, and may uncover unforeseen circumstances that may indicate a change in the initial restoration strategy. Indeed, some argue that identifying and eliminating all uncertainties involved with restoration is probably impossible. Some stakeholders question the level of scientific uncertainty in some restoration activities and regulations of CALFED. For example, some question the validity of provisions that specify the level of water needed for the Bay-Delta ecosystem to restore endangered fish species. They have called for an independent scientific review of the validity of the quantitative allocations of water to habitats of endangered and threatened fish species. Independent scientific review and the implementation of adaptive management was addressed under various versions of H.R. 2828 and S. 1097 ; P.L. 108-361 contains provisions that call for the establishment of an independent science board and other panels to provide oversight and peer review of the program; creation of monitoring and research programs and performance measures; and development and implementation of adaptive management. Federal and state land acquisition is expected to be necessary to implement several components of the CALFED Program according to the ROD. For example, the ROD estimates that nearly 260,000 acres of agricultural land will need to be used for ecosystem restoration, water quality, water storage and conveyance, and levee system integrity projects and activities. Because land acquisition may cause conflicts among stakeholders and affect surrounding landowners and local governments, as recognized by the ROD, land acquisition in the Bay-Delta is controversial. Some argue that land acquisition is essential for restoring ecosystems and should not be subjected to extended delays and restrictions; others argue that guidelines and assurances must be established to minimize potential economic impacts of land acquisition. S. 1097 and H.R. 2828 would have authorized federal funds to acquire fee title to land only where consistent with the ROD in implementing the CALFED Program (§4(f) of S. 1097 and §104(e) of H.R. 2828 ). This provision would have applied to all components under each bill. H.R. 2828 , as passed by the House in July, included additional requirements for land to be acquired for ecosystem restoration. For example, it would have directed that potential impacts of acquiring land be reported and mitigated; preliminary management plans be created to report existing conditions, expected ecological benefits, cost estimates, and implementation schedules; and federal land acquisitions be identified. Some fear such language would constrain ecosystem restoration activities, while others argue that such language is needed to reduce pressure on acquiring private property and to ensure success in ecological restoration. P.L. 108-361 incorporates much of the language in H.R. 2828 , including a provision that requires federal funds for the implementation of CALFED be used to acquire fee title to land only where consistent with the ROD. Other provisions require the Secretary of the Interior to identify parcels of land to be acquired, and provide notice of land acquisitions, 150 days before the project is approved, to appropriate authorizing committees of the House and Senate and Senators and Representatives whose districts will be affected. P.L. 108-361 also contains a set of reporting provisions from H.R. 2828 that are to describe the process and timing of notifying public and local governments of land acquisitions; describe the measures taken to reduce impacts of land acquisition on agricultural lands, pursuant to the ROD; and include preliminary management plans for all lands acquired, including the expected ecological benefits, cost estimates, and implementation schedules. A decade-long attempt to address water quality, water supply, and ESA issues in the California Bay-Delta via the CALFED process ultimately resulted in development of an estimated 30-year, $10 billion plan to manage water and related resources throughout most of the state. A formal Record of Decision for the plan and associated program activities was released in August 2000, shortly before authorization of federal funding for the CALFED process expired. Several attempts were made to reauthorize federal funding for the program during the 107 th Congress; however, no authorizing legislation was enacted. Failure to reauthorize federal funding and participation in the CALFED program resulted in piecemeal appropriations for specific projects and activities that support the goals of the CALFED program for FY2001 - FY2005. Appropriators repeatedly indicated a reluctance to provide more general program funding until the program was reauthorized. The debate to reauthorize CALFED continued in the 108 th Congress, ultimately resulting in the passage of H.R. 2828 , as amended in the Senate, and passed by the House, October 6, 2004 ( P.L. 108-361 ). Several issues were debated, including streamlined water supply project approval, balance among program activities (e.g. water supply and ecosystem restoration), the level of federal and state funding for the program, and the quality of science used to support policy decisions. An emphasis on increasing water supply through surface and ground water storage projects associated with CALFED has become a priority for California due to population growth, increasingly limited water supplies, and insecurity of water supplies from the Colorado River. With diminished water supplies from the Colorado River, added pressure for water could be placed on the Bay-Delta, which in turn might affect the viability of the CALFED Program. Oversight issues before the 109 th Congress are likely to include program budgeting and financing, status of storage projects, and overall program balance. 1978 —State Board adopts Water Rights Decision 1485 and a water quality control plan for the Bay-Delta. Decision 1485 set forth conditions for the SWP and CVP operations in the Delta that included water quality standards, export limitations, and minimum flow rates. 1986 —Several lawsuits challenged Decision 1485. In 1986, the "Racanelli ruling" (named after Judge Racanelli who wrote the opinion) determines 1978 plan inadequate because it only assessed the effects of the CVP and SWP. Ruling stipulates that the State Board should consider all beneficial uses, instream and consumptive, when setting water quality standards. 1987 —EPA officials notify State Board that the 1978 water quality plan is inadequate under federal Clean Water Act (CWA). 1989 —Winter-run chinook salmon ( Onchorhyncus tshawtscha ) listed as endangered. 1991 —State Board adopts water quality control plan for the Bay-Delta and begins work on a separate water rights decision. EPA disapproves the plan under the CWA. 1992 —State Board releases and later withdraws interim Delta standards, Decision 1630. Congress passes the Central Valley Project Improvement Act (CVPIA, Title 34 of P.L. 102-575 ), which included several fish and wildlife protection and restoration goals, including dedicating 800,000 acre-feet of water to fish and wildlife purposes. 1993 —The EPA released draft federal water quality standards after being sued by environmentalists. 1994 —The Bay-Delta Accord is signed, marking an agreement between state and federal officials on water quality standards, and creating the CALFED Bay-Delta Program. In addition, state and federal officials announce a framework agreement that will coordinate CVP and SWP operations to meet water quality standards and protect endangered species; adopt state water quality standards; and develop a long-term strategy to resolve Delta fish and wildlife, water supply reliability, levee stability and water quality problems. 1995 —State Board adopts water quality plan with objectives similar to those in the accord. EPA approves plan and withdraws federal standards. 1996 —Congress authorizes development of a CALFED plan (program) with $143 million in annual funding for FY1996 to FY2000 ( P.L. 104-208 , Division E). CALFED Bay-Delta Program releases phase I report outlining core programs and three potential solutions. 1998 —CALFED Bay-Delta Program releases phase II draft EIS/EIR with three alternatives. 1999 —CALFED releases a draft programmatic EIS/EIR. 2000 —The Record of Decision (ROD) is signed and CALFED Program begins its implementation. 2001 —CALFED Program enters the first year of a seven-year phase III—implementation of the preferred alternative. 2002 —The CALFED Bay-Delta Authority is established by the state to oversee the implementation of the CALFED Program according to the principles outlined in the ROD. 2003 —The Sacramento splittail is delisted from the threatened species list by the U.S. Fish and Wildlife Service. 2004 —The Water Supply, Reliability, and Environmental Improvement Act is signed into law on October 25, 2004 ( P.L. 108-361 ) reauthorizing the CALFED Program and authorizing $389 million in federal funds for FY2005 - FY2010.

The California Bay-Delta Program (CALFED) was initiated in 1995 to resolve water resources conflicts in the Sacramento/San Joaquin Rivers Delta and San Francisco Bay (Bay-Delta) in California. The program planning effort focused on developing a plan to address three main problem areas in the Bay-Delta: ecosystem health, water quality, and water supply reliability. CALFED was initially authorized to receive federal funding from FY1998 to FY2000; and since that time only certain projects supporting CALFED goals received appropriations. The program was finally reauthorized October 25, 2004. The Bay-Delta is formed by the confluence of the north-flowing San Joaquin River, the south-flowing Sacramento River, and the San Francisco Bay, to which the delta of the two rivers is linked. This 738,000-acre area contains a vast network of marshes, wetlands, and open water that supplies water to two-thirds of California's population and nearly seven million acres of farmland through a series of pumps, canals, and dams operated by the federal and state governments. The competing demands for Bay-Delta water have stretched the resource's capacity to provide reliable amounts of water to users (e.g., farmers) and the ecosystem. The Bay-Delta ecosystem is being altered by habitat conversion and water quality degradation, including salt water intrusion. For example, several fish populations have declined, and some species are on federal threatened and endangered species lists. Many attribute the deterioration to unnaturally low levels of water in the Bay-Delta. Listing of these species has affected the timing and use of water pumped from the Bay-Delta and has created uncertainty in water supplies for water users in southern California. Allocating water from the Bay-Delta has been the subject of conflicts and disputes among stakeholders such as farmers, urban water contractors, and environmentalists for years. CALFED was developed as a response to these conflicts through a series of agreements and revisions that have involved federal and state legislation, and stakeholder accords. A Record of Decision (ROD) for the current CALFED Program was issued by a consortium of state and federal agencies in August 2000; however, legislation to implement the CALFED Program as outlined in the ROD had not been enacted until recently. CALFED, as described in the ROD, has 12 program components that range from water quality and supply to ecosystem restoration and governance. CALFED was planned to be implemented in three phases, of which two are already completed. The third phase is the implementation of the CALFED program as outlined in the ROD. Stage I (of three stages in phase III) of CALFED is currently underway and is expected to take seven years to complete and cost nearly $8.7 billion. The reauthorization of CALFED funding has been controversial. Specific issues such as authorization for water storage projects, balance among project and program activities, and water supplies for the environment, as well as broader issues such as governance and the degree to which the ROD is implemented, were resolved to varying degrees with the passage of P.L. 108-361, which reauthorized the CALFED Program. This report will be updated as events warrant.

Agency whistleblowers operate within a system of mixed messages. On the one hand, theCode of Ethics adopted by Congress in 1958 directs all government employees to "expose corruptionwherever discovered." (1) Over the years, agency employees have received credit for revealing problems of defense costoverruns, unsafe nuclear power plant conditions, questionable drugs approved for marketing,contract illegalities and improprieties, and regulatory corruption. (2) On the other hand, exposingcorruption can result in their being fired, transferred, reprimanded, denied promotion, or harassed. In 1978, a Senate panel found that the fear of reprisal "renders intra-agency communications a sham,and compromises not only the employee, management, and the Code of Ethics, but also theConstitutional function of congressional oversight itself." (3) Enacting statutory rights for whistleblowers and establishing new executive agencies toprotect those rights has not produced the protections that some expected. As explained in this report,the Office of Special Counsel, the Merit Systems Protection Board, and the Federal Circuit -- theagencies created by Congress to safeguard the rights of whistle blowers -- have not in many casesprovided the anticipated protections to federal employees. National security whistleblowers wereexempted from the Civil Service Reform Act of 1978 and the Whistleblower Protection Act of 1989. Some protections are available in statutes passed in recent years, including the IntelligenceCommunity Whistleblower Protection Act of 1998. Individual Members and congressionalcommittees have attempted to provide long-term protections to whistleblowers, enabling them toprovide the kinds of agency information that Congress wants without costs and injuries to theirgovernment careers. The purpose of this report is to explore the statutory and political protections available tonational security whistleblowers. First, an examination of the Civil Service Reform Act and theWhistleblower Protection Act will explain why national security whistleblowers were excluded fromthe protections provided in those statutes. Second, to the extent that those statutes are consideredmodels to protect national security whistleblowers, the experience of the Office of Special Counsel,the Merit Systems Protection Board, and the Federal Circuit is relevant in evaluating protections fornational security whistleblowers. Whistleblower activity is often viewed as a struggle between the executive and legislativebranches. Presidents may decide to centralize control of agency information by requiring the agencyhead to approve the release of any information. Members of Congress regularly express a need toobtain information from employees within the agency, without seeking the approval of the agencyhead. This conflict between the branches is seen in the issuance of executive orders by PresidentsTheodore Roosevelt and William Howard Taft in 1902 and 1909 and the resulting legislation -- theLloyd-LaFollette Act of 1912 -- adopted by Congress to maintain access to agency information. Theconstitutionality of the Lloyd-LaFollette Act continues to be challenged today by the JusticeDepartment. Both Presidents Theodore Roosevelt and William Howard Taft threatened to fire agencyemployees who attempted to contact Congress. Employees were ordered to communicate onlythrough the head of their agency. Congress responded by passing legislation intended to nullify thatpolicy and allow employees to contact lawmakers, committees, and legislative staff. President Theodore Roosevelt issued an order in 1902 to prohibit employees of executivedepartments from seeking to influence legislation "individually or through associations" exceptthrough the heads of the departments. Failure to abide by this presidential order could result indismissal from federal service. The order read: All officers and employees of the United States of everydescription, serving in or under any of the executive departments or independent Governmentestablishments, and whether so serving in or out of Washington, are hereby forbidden, either directlyor indirectly, individually or through associations, to solicit an increase of pay or to influence orattempt to influence in their own interest any other legislation whatever, either before Congress orits committees, or in any way save through the heads of the departments or independent Governmentestablishments in or under which they serve, on penalty of dismissal from the Governmentservice. (4) In 1909, President William Howard Taft prepared a similar order, this one forbidding anybureau chief or any subordinate in an agency from going directly to Congress concerning legislation,appropriations, or congressional action of any kind without the consent and knowledge of thedepartment head. Here is the language: It is hereby ordered that no bureau, office, or divisionchief, or subordinate in any department of the Government, and no officer of the Army or Navy orMarine Corps stationed in Washington, shall apply to either House of Congress, or to any committeeof either House of Congress, or to any Member of Congress, for legislation, or for appropriations,or for congressional action of any kind, except with the consent and knowledge of the head of thedepartment; nor shall any such person respond to any request for information from either House ofCongress, or any committee of either House of Congress, or any Member of Congress, exceptthrough, or as authorized by, the head of his department. (5) Through language added to an appropriations bill in 1912, Congress rejected thesepresidential orders. Congressional debate emphasized the concerns of lawmakers that the orders,left unchecked, would put congressional committees in the position of hearing "only one side of acase": the views of Cabinet officials. Lawmakers wanted to hear from the rank-and-file membersof a department, who could disclose what departments did not want communicated. Some Membersof Congress argued that they would not place the welfare of citizens "in the hands and at the mercyof the whims of any single individual, whether he is a Cabinet officer or anyone else." (6) They insisted on access toagency employees and their complaints and observations about the conduct of their supervisors. (7) Legislative language wasdrafted to ensure that agency employees could exercise their constitutional rights to free speech, topeaceable assembly, and to petition the government for redress of grievances. (8) During House debate, some legislators objected to the presidential orders as an effort byPresidents to prevent Congress "from learning the actual conditions that surrounded the employeesof the service." (9) If agencyemployees were required to speak only through the heads of the departments, "there is no possibleway of obtaining information excepting through the Cabinet officers, and if these officials desire towithhold information and suppress the truth or to conceal their official acts it is within their powerto do so." (10) If noagency employee was allowed to speak directly to Congress and could communicate only throughthe department and eventually the Cabinet officer, "then this is an aristocratic Government,dominated completely by the official family of the President." (11) Another legislatorremarked: "The vast army of Government employees have signed no agreement upon entering theservice of the Government to give up the boasted liberty of the American citizens." (12) Those themes also emerged during Senate debate. One Senator said "it will not do forCongress to permit the executive branch of this Government to deny to it the sources of informationwhich ought to be free and open to it, and such an order as this, it seems to me, belongs in someother country than the United States." (13) The language used to counter the presidential orders was addedas Section 6 to the Postal Service Appropriations Act of 1912. (14) Section 6, known as theLloyd-LaFollette Act, provides for procedural safeguards to protect agency officials from arbitrarydismissals when they attempt to communicate with Congress. The final sentence of Section 6 reads:"The right of persons employed in the civil service of the United States, either individually orcollectively, to petition Congress, or any Member thereof, or to furnish information to either Houseof Congress, or to any committee or member thereof, shall not be denied or interfered with." Section 6 was later carried forward and supplemented by the Civil Service Reform Act of1978 and is codified as permanent law. (15) The conference report on the 1978 statute explained whyCongress depends on agency employees to disclose information directly to the legislative branch. The Civil Service Reform Act placed limitations on the kinds of information an employee maypublicly disclose without suffering reprisal, but the conference report stated that there was "no intentto limit the information an employee may provide to Congress or to authorize reprisal against anemployee for providing information to Congress." Nothing in the statute was to be construed "aslimiting in any way the rights of employees to communicate with or testify before Congress." (16) As codified in 1978, the "right of employees, individually or collectively," to petitionCongress becomes an enforceable right, and other prohibited personnel practices are identified. (17) The U.S. Code nowprovides that various qualifications to the provision on prohibited personnel practices "shall not beconstrued to authorize the withholding of information from the Congress or the taking of anypersonnel action against an employee who discloses information to the Congress." (18) Congress passed legislation in 1978 to abolish the Civil Service Commission and create suchnew institutions as the Office of Personnel Management (OPM), the Merits Systems ProtectionBoard (MSPB), and the Office of Special Counsel (OSC). The statute was the first to establishprocedural protections for whistleblowers, but also recognized an exception for the national securityarea. Because of conflicting values in the legislation, however, whistleblowers never received theanticipated protections, and Congress took note of that a decade later when it passed theWhistleblower Protection Act of 1989. (19) This record is examined in subsequent sections on"Whistleblower Protections in Practice" and "Congressional Action, 1986-88." As explained in thisreport, the statutory safeguards in the Whistleblower Protection Act did not meet the expectationsof some lawmakers, agency employees, and private organizations. The Civil Service Reform Act included the following as one of nine merit systems principles:"Employees should be protected against reprisal for the lawful disclosure of information which theemployees reasonably believe evidences (A) a violation of any law, rule, or regulation, or (B)mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific dangerto public health or safety." (20) The Senate Committee on Governmental Affairs, in reporting the bill, remarked that "Often,the whistle blower's reward for dedication to the highest moral principles is harassment and abuse. Whistle blowers frequently encounter severe damage to their careers and substantial economic loss." Protecting these employees who disclose government illegality, waste, and corruption "is a majorstep toward a more effective civil service.... What is needed is a means to assure them that they willnot suffer if they help uncover and correct administrative abuses." (21) The House Committee onPost Office and Civil Service, in its report, said that the bill "prohibits reprisals against employeeswho divulge information to the press or the public (generally known as "whistleblowers") regardingviolations of law, agency mismanagement, or dangers to the public's health and safety." (22) The House committeetherefore anticipated that the whistleblower could report on wrongdoing not only through agencychannels but also to the press and the public. In supplemental views in this committee report,Representative Pat Schroeder linked whistleblower protection to the needs of legislative oversight:"If we in Congress are going to act as effective checks on excesses in the executive branch, we haveto hear about such matters." (23) During floor debate, Senator Jim Sasser stated that "patriotic employees who bring examplesof official wrongdoing to the public's attention have, in the past, enjoyed no meaningful protectionagainst reprisals by their supervisors." He referred to "too many" examples of federal employeesfinding themselves "fired, transferred, or deprived of meaningful work simply because they werebrave enough to place the public interest ahead of their own personal career interest." He saw noreason why an employee "should have to risk his career and his family's financial stability forperforming a public service." (24) In recommending the Civil Service Reform Act, President Jimmy Carter proposed an Officeof Special Counsel "to investigate merit violations and to protect the so-called whistleblowers whoexpose gross management errors and abuses." (25) At a news conference, he looked to the Special Counsel to protect"those who are legitimate whistleblowers and who do point out violations of ethics, or those whothrough serious error hurt our country." (26) The House Committee on Post Office and Civil Service, inreporting the bill, said that the Special Counsel "will have broad authority to investigate, particularly'whistleblower' cases." (27) The statute looked to the Special Counsel to protect the interests of whistleblowers. TheSpecial Counsel, appointed to a term of five years with the advice and consent of the Senate, wasdirected to "investigate allegations involving prohibited personnel practices and reprisals againstFederal employees for the lawful disclosure of certain information and may file complaints againstagency officials and employees who engage in such conduct." (28) As the Senate Committee on Governmental Affairs explained in reporting the Civil ServiceReform Act, it was not intended to protect whistleblowers "who disclose information which isclassified or prohibited by statute from disclosure." (29) It was the committee's understanding that "section 102(d)(3) ofthe National Security Act of 1947, which authorizes protection of national intelligence sources andmethods, has been held to be such a statute." (30) The section on prohibited personnel practices in the Civil Service Reform Act covered allexecutive agencies but did not include "the Federal Bureau of Investigation [FBI], the CentralIntelligence Agency [CIA], the Defense Intelligence Agency [DIA], the National Security Agency[NSA], and, as determined by the President, any Executive agency or unit thereof the principalfunction of which is the conduct of foreign intelligence or counterintelligence activities." (31) Prohibited personnel practices in the FBI were treated in another section of the statute. (32) During House debate,Representative Pat Schroeder argued that the FBI whistleblower protections were "necessitated, inpart, by the woeful history of this agency in terms of eliminating internal wrongdoing." She statedthat an FBI employee "is guaranteed protection if he or she follows the procedures set out." If theemployee decided to make public disclosures of the wrongdoing, "this statute does not serve asauthorization for the Bureau to take reprisals. The general policy of protecting whistleblowers runsto all Government instrumentalities." (33) Such intelligence agencies as the CIA and the DIA were not specifically covered by the CivilService Reform Act. Moreover, a subsection on actions to be taken by authorized supervisoryemployees referred to the special category of confidential or secret information. Supervisors wereprohibited from taking or failing to take a personnel action with respect to any employee or applicantfor employment as a reprisal for a disclosure of information by an employee or applicant which they reasonably believed evidences (1) a violation of any law, rule, or regulation, or (2) mismanagement,a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health orsafety "if such disclosure is not specifically prohibited by law and if such information is notspecifically required by Executive order to be kept secret in the interest of national defense or theconduct of foreign affairs." (34) The language recognized the President's authority to designatecertain information as confidential or secret, excluding national security whistleblowers fromautomatic protection. However, Representative Schroeder argued that the Civil Service Reform Act"applies the merit system principles to all units of the Federal Government," and that "while specificenforcement provisions are not mandated for agencies like CIA and GAO, the legislation makes itclear that whistleblowers should be protected in these agencies." (35) In the event the Special Counsel received from an agency employee foreign intelligence orcounterintelligence information, "the disclosure of which is specifically prohibited by law or byExecutive order," the statute directed the Special Counsel to transmit that information to the HousePermanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. (36) The Special Counsel wasdirected to make available to the public a list of noncriminal matters referred to agency heads, but"shall take steps to ensure that any such public list does not contain any information the disclosureof which is prohibited by law or by Executive order requiring that information be kept secret in theinterest of national defense or the conduct of foreign affairs." (37) The Senate Committee on Governmental Affairs added to the bill a provision to ensure thatnothing in the section on prohibited personnel practices "will authorize the withholding of anyinformation from Congress, or will sanction any personnel action against an employee who disclosesany information to a Member of Congress or its staff, either in public session or through privatecommunications." Moreover, nothing in the bill was to be construed "as limiting in any way therights of employees to communicate with or testify before Congress, such as is provided in 5 U.S.C.7102 (right to furnish information protected), or in 18 U.S.C. 1505 (right to testify protected)." (38) The conference report, in adopting the Senate provision, explained that it "is intended tomake clear that by placing limitations on the kinds of information any employee may publiclydisclose without suffering reprisal, there is no intent to limit the information an employee mayprovide to Congress or to authorize reprisal against an employee for providing information toCongress." As further explanation: For example, 18 U.S.C. 1905 prohibits public disclosureof information involving trade secrets. That statute does not apply to transmittal of such informationby an agency to Congress. Section 2302(b)(8) of this act would not protect an employee againstreprisal for public disclosure of such statutorily protected information, but it is not to be inferred thatan employee is similarly unprotected if such disclosure is made to the appropriate unit of theCongress. Neither title I nor any other provision of the act should be construed as limiting in anyway the rights of employees to communicate with or testify before Congress. (39) As enacted, the subsection of prohibited personnel practices states that it "shall not beconstrued to authorize the withholding of information from the Congress or the taking of anypersonnel action against an employee who discloses information to the Congress." (40) In the same year that Congress passed the Civil Service Reform Act, it completed action onlegislation to establish offices of inspectors general in twelve executive agencies. More inspectorsgeneral would be created in subsequent statutes. The purpose was to create independent offices "toconduct and supervise audits and investigations relating to programs and operations" in theseagencies. (41) Theseoffices were expected "to prevent and detect fraud and abuse in, such programs and operations." (42) Inspectors general were authorized to receive and investigate complaints or informationreceived from agency employees concerning the "possible existence of an activity constituting aviolation of law, rules, or regulations, or mismanagement, gross waste of funds, abuse of authorityor a substantial and specific danger to the public health and safety." (43) Supervisors wereprohibited from taking or threatening to take "any action against any employee as a reprisal formaking a complaint or disclosing information to an inspector general, unless the complaint was madeor the information disclosed with the knowledge that it was false or with willful disregard for itstruth or falsity." (44) In reporting the section on employee complaints, the Senate Committee on GovernmentalAffairs remarked: "Because of the employee's position within the agency, employee complaints carrywith them a high likelihood of reliability." Given the difficulty of "blowing the whistle" on one'ssupervisors or colleagues, "the situation may often be serious." The committee believed that "mostemployees would much prefer an effective channel inside the agency to pursue complaints ratherthan seeking recourse or publicity outside the agency. This preference should be encouraged." (45) The legislative history of the Civil Service Reform Act anticipated that federal agencywhistleblowers would report wrongdoing not only to their supervisors but to Congress, the public,and the press. In contrast, the inspectors general statute of 1978 authorized a set of procedures thatwere entirely in-house. The IGs were directed to keep Congress "fully and currently informed aboutproblems and deficiencies relating to the administration of such programs and operations and thenecessity for and progress of corrective action." (46) Inspectors general would furnish semiannual reports to agencyheads, who would transmit the reports without change to appropriate committees and subcommitteesof Congress. (47) In 1982, Congress created an inspector general in the Defense Department, authorized todirect audits and investigations that require access to information concerning (1) sensitiveoperational plans, (2) intelligence matters, (3) counterintelligence matters, (4) ongoing criminalinvestigations by other administrative units of the Defense Department related to national security,and (5) "other matters the disclosure of which would constitute a serious threat to nationalsecurity." (48) The IGwould serve as the principal adviser to the Secretary of Defense "for matters relating to theprevention and detection of fraud, waste, and abuse in the programs and operations of theDepartment." (49) The IG statute provided that nothing in the section "shall be construed to authorize the publicdisclosure of information which is (A) specifically prohibited from disclosure by any other provisionof law; (B) specifically required by Executive order to be protected from disclosure in the interestof national defense or national security or in the conduct of foreign affairs; or (C) a part of anongoing criminal investigation." However, nothing in that section or in any other provision of thestatute "shall be construed to authorize or permit the withholding of information from the Congress,or from any committee or subcommittee thereof." (50) The Central Intelligence Agency had an Office of Inspector General, but it was not statutory. Beginning in 1952, the CIA administratively established the position of IG. (51) The limitations of thatoffice were underscored by the Iran-Contra affair, which became public in November 1986 andhighlighted the extent to which the CIA and other executive agencies had failed to comply withstatutory restrictions and had not testified fully and accurately to congressional committees aboutcovert operations. (52) One of the recommendations by the House and Senate Iran-Contra Committees in November 1987was the creation of an independent statutory IG confirmed by the Senate. The committees concludedthat the existing Office of Inspector General in the CIA "appears not to have had the manpower,resources or tenacity to acquire key facts uncovered by other investigations." (53) During hearings on March 1, 1988, by the Senate Intelligence Committee, Senator ArlenSpecter reviewed some of the misleading testimony that Congress had received about the Iran-Contraaffair, including testimony from the CIA. (54) The next year, Congress established an inspector general for theCIA, "appropriately accountable to Congress" and designed to "promote economy, efficiency, andeffectiveness in the administration of such programs and operations, and detect fraud and abuse insuch programs and operations." (55) The IG would provide a means of keeping the Director of theCIA "fully and currently informed about problems and deficiencies relating to the administration ofsuch programs and operations, and the necessity for and the progress of corrective action," and wouldensure that the House and Senate Intelligence Committees "are kept similarly informed of significantproblems and deficiencies as well as the necessity for and the progress of corrective actions." (56) The IG reports directly to and is under the general supervision of the director, who mayprohibit the IG "from initiating, carrying out, or completing any audit, inspection, or investigationif the Director determines that such prohibition is necessary to protect vital national security interestsof the United States." In exercising that power, the director shall submit "an appropriately classifiedstatement of the reasons for the exercise of such power within seven days to the intelligencecommittees." (57) The creation of the IG also included a whistleblower provision. The IG would receive andinvestigate "complaints or information from an employee of the Agency concerning the existenceof an activity constituting a violation of laws, rules, or regulations, or mismanagement, gross wasteof funds, abuse of authority, or a substantial and specific danger to the public health and safety." Noaction constituting a reprisal, or threat of reprisal, for making such complaint may be taken by anyAgency employee in a position to take such actions, "unless the complaint was made or theinformation was disclosed with the knowledge that it was false or with willful disregard for its truthor falsity." (58) Additional procedures for CIA whistleblowing would be enacted in 1998, discussed later in thereport. Under the Civil Service Reform Act, any employee or applicant for employment adverselyaffected or aggrieved by a final order or decision of the MSPB could obtain judicial review in anyof the federal appellate courts. (59) In 1982, Congress created a new appellate court by consolidatingthe existing U.S. Court of Customs and Patent Appeals with the appellate division of the existingU.S. Court of Claims. Congress gave the new U.S. Court of Appeals for the Federal Circuitexclusive jurisdiction over any final order or final decision of the MSPB. (60) For a number of reasons, the whistleblower protections promised in the Civil Service ReformAct failed to materialize. In signing the bill, President Carter said that "it prevents discouraging orpunishing [federal employees] for the wrong reasons, for whistleblowing or for personal whim inviolation of basic employee rights." (61) At the signing ceremony, Representative Morris Udall, whomanaged the bill on the House side, cautioned that "reform has consequences that you don't likesometimes, but the best reforms aren't going to work unless people make them work." (62) Part of the gap between promise and practice with regard to whistleblower protectionsresulted from the complex and in some ways conflicting values placed in the statute. Although itexpressly stated its intention to protect whistleblowers, a dominant purpose behind the statute wasto make it easier to hold federal employees accountable for their performance. In announcing theAdministration's civil service reform proposals, President Carter noted "a widespread criticism ofFederal Government performance. The public suspects that there are too many Government workers,that they are underworked, overpaid, and insulated from the consequences of incompetence." (63) Although he immediatelydismissed such "sweeping criticisms" as "unfair," much of the impetus behind civil service reformwas driven by the belief that managers needed greater discretion in demoting and removingunder-performing employees. In this same address, President Carter referred to the "sad fact" thatit is "easier to promote and to transfer incompetent employees than it is to get rid of them." (64) In reporting the bill, the Senate Committee on Governmental Affairs referred to conditionsin federal agencies that made them "too often ... the refuge of the incompetent employee." (65) An employee "has no rightto be incompetent." (66) One of the "central tasks" of the bill was "simple to express but difficult to achieve: Allow civilservants to be able to be hired and fired more easily, but for the right reasons." (67) Senator Abraham Ribicoff, chairman of the committee that reported the bill, listed twopurposes of the legislation without indicating any tension between them. The bill provided "newprotection for whistleblowers who disclose illegal or improper Government conduct" while at thesame time it "streamline[d] the processes for dismissing and disciplining Federal employees." (68) He explained that the bill"lowered the standard of evidence needed to uphold the dismissal of an employee who has been firedfor poor performance." Instead of a supervisor proving by a "preponderance of evidence" that anemployee's performance had not been "up to par," the conferees adopted the "substantial evidence"test to give supervisors greater deference in assessing the work of an employee. (69) Ironically, if a supervisorfound a whistleblower's charges to reflect on poor management within the agency, or if awhistleblower threatened to release information embarrassing to the supervisor, it might now beeasier to sanction or remove the whistleblower. One of the early statements by President Ronald Reagan urged whistleblowers to comeforward: "Federal employees or private citizens who wish to report incidents of illegal or wastefulactivities are not only encouraged to do so but will be guaranteed confidentiality and protectedagainst reprisals." The "vital element" in fighting fraud and waste "is the willingness of employeesto come forward when they see this sort of activity." Employees "must be assured that when they'blow the whistle' they will be protected and their information properly investigated." He wanted tomake it clear that "this administration is providing that assurance to every potential whistleblowerin the Federal Government." (70) As presiding officer of House hearings on June 26, 1985, Representative Pat Schroeder heardcontrary testimony from a variety of government officials, federal employees, and privateorganizations on the implementation of the whistleblower provisions in the Civil Service ReformAct. She concluded: "There is no dispute -- whistleblowers have no protection. We urge them tocome forward, we hail them as the salvation of our budget trauma, and we promise them their placein heaven. But we let them be eaten alive." (71) Much of the focus of the hearings fell on the performance of theSpecial Counsel. K. William O'Connor, Special Counsel of the MSPB, testified that his office "has only oneclient; it is the enforcement of the merit systems and the laws that carry it into effect." (72) The commitment toprotect "bona fide whistleblowers" would be done by "protection of the merit systems, the meansdesigned by Congress to that end and the end that the OSC is charged with effecting." (73) Federal employees whobring charges of agency wrongdoing "are not the clients of this office; the system is." (74) Although some witnessesfrom the Schroeder subcommittee argued that the OSC was principally established to "protectwhistleblowers," O'Connor testified that "protection of whistle blowers -- even the word whistleblower -- does not appear in the code at all. What is required by the statute is the protection of theMerit System...." (75) Elsewhere O'Connor recognized the duties of his office with whistleblowers. In identifyingthe three primary statutory functions of the OSC, he listed this one first: "To provide a securechannel through which disclosures of waste, fraud, inefficiency or hazards to public health or safetymay be received and referred while providing anonymity to the discloser." (76) He also described anumber of recent improvements in the operations of OSC, including "[a]n effective outreachprogram . . . developed and maintained to apprise whistleblowers of the responsibilities of andprotection afforded by this office." (77) He pledged to "continue to use the statutory powers of this officeto protect bona fide whistleblowers from prohibited retaliation for their protected disclosures byenforcing the law. That is, by prosecuting anyone who takes reprisal against them because of theirprotected disclosures, and by invoking appropriate agency corrective actions." (78) O'Connor described how he would handle an employee who had been sanctioned by anagency, even though the employee had been involved in protected whistleblower activities: If an agency sanction was proper because of anemployee's incompetence or misconduct, even though the motivation of the deciding or proposingofficial was contaminated by a de minimus vindictiveness or desire for retaliation and reprisal forprotected conduct, the sanction against the employee will probably stand. The reprisal orientedofficial, however, may be prosecuted by my office and may be disciplined by the Board if theimproper motivation of the conduct is not de minimus. This, it seems to me, is a proper and worthyresult. It is not in the public interest to employ, retain or cossetdrones, incompetents, disruptors of the workplace, malefactors, or those whose conduct is in otherunlawful ways inappropriate to the execution of the mission of the organization, even though theperson is also an individual who has engaged in specifically protected conduct like whistleblowing. The public interest is, after all, the execution of the public business; it is not a maintenance programfor the incompetent, nor is it in the public interest to foster internal dissidence, vituperation,backbiting and disaffection. (79) Representative Schroeder referred to some 11,000 federal employees who had contacted theOffice of Special Counsel for relief. O'Connor acknowledged that these individuals had a complaintand thought they had a case, but added: "there are many people who feel that they have complaints,and some of them are carrying bags and walking up and down Constitution Avenue right now, I haveno doubt." (80) WhenRepresentative Schroeder pointed out that the women carrying bags up and down the avenue are noton the federal payroll, O'Connor agreed. The point he wanted to make, he said, was that few of the11,000 complaints were within the scope of responsibilities handled by his office. (81) Earlier O'Connor had offered his "firm belief" that most federal managers follow the law andhave integrity, whereas "most whistleblowers are malcontents." (82) In a newspaper articlepublished on July 17, 1984, O'Connor was asked what advice he would give, as a private attorney,to a potential whistleblower. His reply: "I'd say that unless you're in a position to retire or areindependently wealthy, don't do it. Don't put your head up, because it will get blown off." (83) On February 20 and 21, 1986, a subcommittee of the House Post Office and Civil ServiceCommittee held additional hearings on whistleblower protections. The testimony showed a widegap between the perceptions of lawmakers and executive officials. As chair of the subcommittee,Representative Schroeder spoke of a "general consensus" that the whistleblower protections in theCivil Service Reform Act "must be changed if we are to treat Federal employees fairly and providerelief for victims of prohibited personnel practices." (84) Special Counsel O'Connor testified against the need to pass abill, introduced in the House, designed to strengthen whistleblower protections: "The bill is flawedconceptually, as well, from inception, for it proceeds upon the false premise that proper lawenforcement systems now in effect do not work to protect bona fide whistleblowers. The fact is that, now , the statutory protection works. I oppose the bill." (85) Stuart E. Schiffer, Deputy Assistant Attorney General, alsotestified against the bill. When asked whether he believed the existing statutory system wasadequate, he replied: "Yes; I do." Asked again whether there was adequate protection forwhistleblowers, he again answered: "Yes; I do." (86) The House Post Office and Civil Service Committee reported a whistleblower protection acton September 22, 1986. The purpose was to "strengthen and improve protections for the rights ofFederal employees by clarifying the role of the Office of Special Counsel (OSC) and emphasizingthat its primary responsibility is to represent individuals who are victims of prohibited personnelpractices; by providing Federal employees with a private right of action as an alternative to pursuingcases through the OSC; by permitting the Special Counsel to seek judicial review of MSPB decisionsto which the Special Counsel was a party; by protecting the identity of Federal employees who makedisclosures; by lessening the standard of proof needed to prove reprisal in the case of whistleblowerdisclosures"; and other objectives. (87) The House Subcommittee on Civil Service had been "unable tofind a single individual who has gone to the Office of Special Counsel since 1981 who has beensatisfied with the investigation of his or her case." (88) Congress did not act on the 1986 legislation, but the House Committee on Post Office andCivil Service reported the bill again in the 100th Congress. The report referred to the results of astudy by Dr. Donald R. Soeken who concluded that "most whistleblowers were not protected, andin fact, they suffered cruel and disastrous retaliation for their efforts.... It seems to me that theprotection has also been a cruel hoax. We ask people to act out of conscience and then we ignoretheir cries for protection. We allow their careers to be destroyed and watch as the lives of thewhistleblowers and their families suffer under the strain." (89) Mary Lawton, Special Counsel in 1987, testified that "to theextent that there may have been a lack of emphasis on the corrective action authority of the [OSC]office, I have called for an emphasis." (90) The Senate Committee on Governmental Affairs reported whistleblower protectionlegislation on July 6, 1988. (91) The committee described the results of a 1984 report preparedby the MSPB, "Blowing the Whistle in the Federal Government." It estimated that a largepercentage of federal employees (69%-70%) knew of fraud, waste and abuse but chose not to reportit. Moreover, the percentage of employees who did not report government wrongdoing because offear of reprisal rose from an estimated 20% in 1980 to 37% in 1983. (92) In reviewing the board's report, the committee agreed that "statutory protections, alone,cannot guarantee the elimination of reprisal among civil servants. Agency heads and supervisorsmust foster an environment where employees are encouraged to come forward with suggestions andreport problems and are appropriately rewarded, rather than punished, for doing so." The statisticsincluded in the board's report "show that Congress' specific statutory efforts to protectwhistleblowers thus far have had no observable impact on encouraging federal employees to blowthe whistle." (93) The committee explained why whistleblowers were vulnerable to reprisal. Even if anemployee was successful in proving a connection between a whistleblowing activity and a reprisal,the agency had an opportunity to show that it would have taken the personnel action even if theemployee had not engaged in protected conduct. This type of agency defense had been developedby the Supreme Court in Mt. Healthy City School District Board of Education v. Doyle , 429 U.S.274 (1977) and later had been applied by the MSPB and the courts in reprisal cases. The committeefound that the Mt. Healthy test allowed an agency "to search an employee's work record for conductthat can be cited as the reason for taking an adverse action. It has proved to be difficult foremployees to refute the agency's contention that it would have taken the personnel actionanyway." (94) To overcome this problem, the committee proposed that the Mt. Healthy test be modifiedonly for whistleblower reprisal cases. Once an employee had made a prima facie case of reprisal byshowing that whistleblowing was a factor in a personnel action, the agency would be required toshow by "clear and convincing evidence" that the whistleblowing was not a "material factor" in thepersonnel action. "Clear and convincing evidence" is less than the criminal standard of "beyond areasonable doubt" but higher than "preponderance of the evidence," which was the current standardfor this type of employee case. (95) The Whistleblowing Protection Act of 1988 passed the Senate and the House. Section 2(b)of the Senate bill stated the "primary role" of the OSC was to "protect employees, especiallywhistleblowers, from prohibited personnel practices," and that the OSC "shall act in the interests ofemployees who seek assistance from the [OSC] and not contrary to such interests." (96) The bill passed the Senateby voice vote on August 2, 1988. (97) The House took up the Senate bill on October 3. Because the100th Congress was about to end, the House skipped conference and worked out a compromiseversion of the bill with the Senate. (98) A letter of October 3 to Representative Schroeder from JosephR. Wright, Jr., Deputy Director of the Office of Management and Budget, indicated that the twobranches were in agreement on the bill. There was no threat of a veto. (99) The bill passed the House,418 to zero. (100) TheSenate agreed to the House changes on October 7. (101) Congress adjourned sine die on October 22. President Reagan pocket vetoed the bill on October 26. He stated that reporting of"mismanagement and violations of the law, often called whistleblowing, contributes to efficient useof taxpayers' dollars and effective government. Such reporting is to be encouraged, and those whomake the reports must be protected." (102) However, he also said it was necessary to "ensure that headsof departments and agencies can manage their personnel effectively." It was his concern that the billwould have changed the law "so that employees who are not genuine whistleblowers couldmanipulate the process to their advantage simply to delay or avoid appropriate adverse personnelactions." (103) Heobjected particularly to the "clear and convincing evidence" test, holding that it "essentially rigs theBoard's process against agency personnel managers in favor of employees. The interests of bothemployees and managers should be fully protected." (104) The pocket veto memorandum also objected to restrictions placed on the power of thePresident to remove the Special Counsel. (105) The Civil Service Reform Act provided that the SpecialCounsel "may be removed by the President only for inefficiency, neglect of duty, or malfeasance inoffice." (106) Section1211(b) of the bill passed by Congress in 1988 contained the same language. (107) President Reagan also objected to a provision that authorized the Special Counsel to obtainjudicial review of most MSPB decisions in proceedings to which the Special Counsel was a party. Implementation of that provision "would place two Executive branch agencies before a Federal courtto resolve a dispute between them. The litigation of intra-Executive branch disputes conflicts withthe constitutional grant of the Executive power to the President, which includes the authority tosupervise and resolve disputes between his subordinates." (108) The vetoed whistleblower bill was modified in 1989 and passed the Senate on March 16 bya vote of 97 to zero. (109) The modified bill retained the language establishing that the"primary role" of the Special Counsel "is to protect employees, especially whistleblowers, fromprohibited personnel practices," and provided that the OSC "shall act in the interests of employeeswho seek assistance" from the office. The limitations on the President's power to remove the SpecialCounsel were retained, but no authority was granted to the Special Counsel to seek judicial reviewof an MSPB decision. The "clear and convincing evidence" test remained. The bill modified the Mt. Healthy testto state that, "in cases involving allegations of reprisal for whistleblowing, an individual must provethat whistleblowing was a contributing factor in the agency's decision to take the action." (110) The burden is thenplaced on the agency to prove by clear and convincing evidence that the same personnel actionwould have been taken in the absence of the protected disclosure. Also, for the first time, the billgave whistleblowers the right to appeal their own cases to the MSPB if the Special Counsel failedor refused to do so. (111) The House passed the bill under suspension of the rules. (112) In the Whistleblower Protection Act (WPA) of 1989, Congress found that federal employeeswho make protected disclosures "serve the public interest by assisting in the elimination of fraud,waste, abuse, and unnecessary Government expenditures." (113) Congress also foundthat protecting employees "who disclose Government illegality, waste, and corruption is a major steptoward a more effective civil service." Moreover, the WPA stated that Congress, in passing the CivilService Reform Act of 1978, "established the Office of Special Counsel to protect whistleblowers"who make protected disclosures. (114) The WPA incorporates the exemptions for national securityinformation included in the 1978 statute. (115) In signing the WPA, President George H. W. Bush said that"a true whistleblower is a public servant of the highest order.... [T]hese dedicated men and womenshould not be fired or rebuked or suffer financially for their honesty and good judgment." (116) Congress passed legislation in 1994 to amend the Whistleblower Protection Act. Legislationwas needed to reauthorize the Office of Special Counsel and to ensure that it functioned "as intended,to protect federal employee whistleblowers from on-the-job harassment, negative job ratings,unfavorable transfers, denial of promotions and other retaliation for their efforts to uncover wasteand mismanagement in their agencies." (117) In reporting the legislation, the Senate Committee on Governmental Affairs expressedconcern "about the extent to which OSC is aggressively acting to protect whistleblowers fromprohibited personnel practices." (118) On the House side, the Committee on Post Office and CivilService stated that "while the Whistleblower Protection Act is the strongest free speech law thatexists on paper, it has been a counterproductive disaster in practice. The WPA has created newreprisal victims at a far greater pace than it is protecting them." (119) The House committeeconcluded that statutory mandates could easily be thwarted by a hostile agency climate: "There islittle question that agency leadership is a far stronger factor than statutory provisions to establish aworkplace environment of respect for the merit system." (120) The House committee also found that the statistical record indicated that the MSPB and theFederal Circuit of Appeals "have not been favorable to Federal whistleblowers." In the first twoyears after enactment of the WPA, whistleblowers won approximately 20% of MSPB decisions onthe merits. From FY1991 to FY1994, that rate dropped to 5%; instead of providing a balance, theFederal Circuit "has been more hostile than the Board. Since its 1982 creation, in reported decisionsemployees have prevailed only twice on the merits with the whistleblower defense." The committeesaid it had received "extensive testimony at hearings that the MSPB and the Federal Circuit have lostcredibility with the practicing bar for civil service cases." (121) In November 1993,GAO released a report indicating that 81 percent of federal employees who sought whistleblowerreprisal protection from OSC gave the office a generally low to very low rating for overalleffectiveness. (122) A more recent study indicates that whistleblowers continue to fare poorly in the MSPB andFederal Circuit. According to the Government Accountability Project, a nonprofit, whistlebloweradvocacy group, only two out of 30 whistleblowers prevailed on the merits before the MSPB from1999 to 2005, and only one whistleblower claim out of 96 prevailed on the merits before the FederalCircuit from 1995 to 2005. (123) Some, however, may view this as an indication that manywhistleblowers present weak cases. The 1994 legislation provided for reasonable attorney fees in certain cases if the federalemployee or applicant for a federal job is the prevailing party and the MSPB or administrative lawjudge determines that payment by the agency "is in the interest of justice." (124) The statute requiredthe Special Counsel, ten days before terminating an investigation of a prohibited personnel practice,to provide a written status report to the whistleblower of the proposed findings of fact and legalconclusions. (125) Theemployee then has an opportunity to respond and provide additional supporting information. Through other provisions in the amendments, Congress attempted to even the field for legitimatewhistleblowers. (126) During debate on the WPA, Representative Barbara Boxer said that Members of Congress"learned when we passed the Military Whistleblower Protection Act that without whistleblowers,frankly, we really could not do our job, because . . . we need information and we need a free flowof information from Federal employees, be they military or civilian." (127) The MilitaryWhistleblower Protection Act (10 U.S.C. § 1034) is not a single statute but rather an accumulationof several. The first mention of Section 1034 was in 1956, with the codification of Title 10. Section1034 provided: "No person may restrict any member of an armed force in communicating with amember of Congress, unless the communication is unlawful or violates a regulation necessary to thesecurity of the United States." (128) Congress adopted this language during a tense confrontationwith the Eisenhower Administration over access to agency information. In 1954, PresidentEisenhower wrote a letter to Secretary of Defense Charles E. Wilson in which he prohibitedtestimony concerning certain conversations and communications between employees in the executivebranch. (129) AttorneyGeneral Herbert Brownnell, Jr. released a legal memorandum stating that the courts had "uniformlyheld that the President and the heads of departments have an uncontrolled discretion to withhold theinformation and papers in the public interest." (130) The Justice Department prepared a 102-page brief concludingthat Congress "cannot, under the Constitution, compel heads of departments to make public whatthe President desires to keep secret in the public interest." (131) Representative JohnMoss said the Justice Department analysis was a demand that Congress "rely upon spoon-fedinformation from the President." (132) Congress had created an inspector general for the Defense Department in 1982. Legislationin 1988 added a section on "Safeguarding of Military Whisteblowers," including prohibitions onretaliatory personnel actions against a member of the armed services for making or preparing aprotected communication with a Member of Congress or an inspector general. The IG wasauthorized to investigate allegations by a member of the armed services who claims that a prohibitedpersonnel action has been taken or threatened to be taken. (133) The conference reportexplained: The conferees note that in the course of their duties,members of the Armed Forces may become aware of information evidencing wrongdoing or wasteof funds. It is generally the duty of members of the Armed Forces to report such information throughthe chain of command. Members of the armed forces, however, have the right to communicatedirectly with Members of Congress and Inspectors General (except to the extent that acommunication is unlawful under applicable law or regulation), and there may be circumstances inwhich service members believe it is necessary to disclose information directly to a Member ofCongress or an Inspector General. When they make lawful disclosures, they should be protectedfrom adverse personnel consequences (or threats of such consequences), and there should be promptinvestigations and administrative review of claims of reprisals. When such a claim is found to bemeritorious, the Secretary concerned should initiate appropriate corrective action, includingdisciplinary action when warranted. (134) Other modifications of the Military Whistleblower Protection Act are found in legislation passed in1989, 1994, 1998, and 2000. (135) A current case of a military whistleblower concerns Bunnatine Greenhouse, who served asthe chief of civilian contracting for the U.S. Army Corps of Engineers until she was demoted onAugust 27, 2005. She and the law firm representing her claim that she was demoted in retaliationfor publicizing the concerns she had about no-bid contracts for work done in Iraq. (136) This case receivedwide notice, including a PBS documentary and a Washington Post article. (137) In 1983, President Ronald Reagan directed that all federal employees with access to classifiedinformation sign "nondisclosure agreements" or risk the loss of their security clearance. (138) Congress, concernedabout the vagueness of some of the terms in the Reagan order and the loss of access to information,passed legislation in 1987 to prohibit the use of appropriated funds to implement theAdministration's nondisclosure policy. (139) The dispute was taken to court and in 1988 District CourtJudge Oliver Gasch held that Congress lacked constitutional authority to interfere, by statute, withnondisclosure agreements drafted by the executive branch to protect the secrecy of classifiedinformation. (140) Judge Gasch quoted from the Supreme Court's decision in Egan , issued in early 1988: "Theauthority to protect such [national security] information falls on the President as head of theExecutive Branch and as Commander in Chief." (141) Egan had been decided on statutory, not constitutional, grounds. The dispute involved theNavy's denial of a security clearance to Thomas Egan, who worked on the Trident submarine. Hewas subsequently removed. Egan sought review by the Merits Systems Protection Board (MSPB),but the Supreme Court upheld the Navy's action by ruling that the grant of security clearance to aparticular employee, "a sensitive and inherently discretionary judgment call, is committed by law tothe appropriate agency of the Executive Branch." (142) The conflict in Egan was solely within the executive branch(Navy versus MSPB), not between Congress and the executive branch. The focus on statutory, not constitutional, issues was reflected in briefs submitted by theparties. The Justice Department noted: "The issue in this case is one of statutory construction and'at bottom . . . turns on congressional intent.'" (143) The Court directed the parties to address this question:"Whether, in the course of reviewing the removal of an employee for failure to maintain a requiredsecurity clearance, the Merit Systems Protection Board is authorized by statute to review thesubstance of the underlying decision to deny or revoke the security clearance." (144) The questions centered on 5 U.S.C. §§ 7512, 7513, 7532, and 7701. The Justice Department,after analyzing the relevant statutes and their legislative history, found no basis for concluding thatCongress intended the MSPB to review the merits of security clearance determinations. (145) Oral argument beforethe Court on December 2, 1987, explored the statutory intent of Congress. At no time did the JusticeDepartment suggest that classified information could be withheld from Congress. The Court's rulingin favor of the Navy did not limit in any way the right of Congress to classified information. TheCourt decided the "narrow question" of whether the MSPB had statutory authority to review thesubstance of a decision to deny a security clearance. (146) Although the Court referred to independent constitutional powers of the President, includingthose as Commander in Chief and as head of the executive branch, (147) and noted thePresident's responsibility with regard to foreign policy, (148) its decision was based on statutory construction. In stating thatcourts "traditionally have been reluctant to intrude upon the authority of the Executive in militaryand national security affairs," the Court added this important qualification: " unless Congressspecifically has provided otherwise ." (149) The Justice Department's brief had also stated: "Absent anunambiguous grant of jurisdiction by Congress, courts have traditionally been reluctant to intrudeupon the authority of the executive branch in military and national security affairs." (150) Nothing in thelegislative history of the Civil Service Reform Act of 1978 convinced the Court that MSPB couldreview, on the merits, an agency's security-clearance determination. (151) The President's national security powers surfaced at times during oral argument before theSupreme Court, when the Justice Department and Egan's attorney, William J. Nold, debated theunderlying statutory issues. After the department made its presentation, Nold told the Justices: "Ithink that we start out with the same premise. We start out with the premise that this is a case thatinvolves statutory interpretation." Nold stated his view of the department's occasional references toconstitutional matters: "What they seem to do in my view is to start building a cloud around thestatute. They start building this cloud and they call it national security, and as their argumentprogresses ... the cloud gets darker and darker and darker, so that by the time we get to the end, wecan't see the statute anymore. What we see is this cloud called national security." (152) In disposing of the issue on statutory grounds, the Court also cited the President's role asCommander in Chief and said that the President's authority to protect classified information "flowsprimarily from this constitutional investment of power in the President and exists quite apart fromany explicit congressional grant." (153) The constitutional issue would have been joined had the Courtfaced statutory language that the administration objected to as an interference with executive power. That issue was not present in Egan . Having relied on Egan , Judge Gasch also looked to language in the Supreme Court's Curtiss-Wright decision. (154) From the latter case Judge Gasch concluded that the "sensitiveand complicated role cast for the President as this nation's emissary in foreign relations requires thatcongressional intrusion upon the President's oversight of national security information be moreseverely limited than might be required in matters of purely domestic concern." (155) The central issue in Curtiss-Wright was the scope of congressional power. The Court wasasked how broadly Congress could delegate its powers to the President in the field of foreign affairs. The previous year the Court had struck down the National Industrial Recovery Act because it haddelegated an excessive amount of legislative power to the President in the field of domesticpolicy. (156) Thequestion before the Court in Curtiss-Wright was whether Congress could use more general standardsin foreign affairs than it could in domestic affairs, and the Court said it could. Several courts have remarked on Justice Sutherland's views in Curtiss-Wright regarding thescope of presidential power in foreign relations. In the Steel Seizure Case of 1952, Justice RobertJackson noted that "much of the [Sutherland] opinion is dictum" -- comments extraneous to the issuebefore the Court. (157) In 1981, a federal appellate court cautioned against placing undue reliance on "certain dicta" inSutherland's opinion: "To the extent that denominating the President as the 'sole organ' of the UnitedStates in international affairs constitutes a blanket endorsement of plenary Presidential power overany matter extending beyond the borders of this country, we reject that characterization." (158) On October 31, 1988, the Supreme Court noted probable jurisdiction in the case decided byJudge Gasch, now styled American Foreign Service Assn. v. Garfinkel. (159) Both the House andthe Senate submitted briefs protesting Judge Gasch's analysis of the President's powers over foreignaffairs. During oral argument, the Justice Department spoke repeatedly about the President'sconstitutional role to control classified information. The attorney for AFSA challenging the Reagannondisclosure policy objected that the decision by Judge Gasch, "by declaring that the ExecutiveBranch has such sweeping power, has impeded the kind of accommodation that should take placein this kind of controversy," and hoped that the Court "wipes that decision off the books." (160) On April 18, 1989, the Court issued a per curiam order that vacated Judge Gasch's order andremanded the case for further consideration. (161) In doing so, the Court cautioned Judge Gasch to avoidexpounding on constitutional matters: "Having thus skirted the statutory question whether theExecutive Branch's implementation of [Nondisclosure] Forms 189 and 4193 violated § 630, the courtproceeded to address appellees' [the government's] argument that the lawsuit should be dismissedbecause § 630 was an unconstitutional interference with the President's authority to protect thenational security." (162) The Court counseled Judge Gasch that the district court "should not pronounce upon the relativeconstitutional authority of Congress and the Executive Branch unless it finds it imperative to do so. Particularly where, as here, a case implicates the fundamental relationship between the Branches,courts should be extremely careful not to issue unnecessary constitutional rulings." (163) On remand, Judge Gasch held that the plaintiffs (American Foreign Service Association andMembers of Congress) failed to state a cause of action for courts to decide. (164) Having dismissed theplaintiffs' complaint on that ground, Judge Gasch found it unnecessary to address any of theconstitutional issues. (165) Congress continues to enact provisions in appropriations bills to deny funds to implementnondisclosure forms. Legislation enacted on January 23, 2004 provided that no funds appropriatedin the Consolidated Appropriation Act for fiscal 2004, or in any other statute, "may be used toimplement or enforce the agreements in Standard Forms 312 and 4414 of the Government or anyother nondisclosure policy, form, or agreement if such policy, form, or agreement does not containthe following provisions: 'These restrictions are consistent with and do not supersede, conflict with,or otherwise alter the employee obligations, rights or liabilities created'" by the Lloyd-LaFollette Act(5 U.S.C. § 7211), the Military Whistleblower Protection Act, the Whistleblower Protection Act, theIntelligence Identities Protection Act, and other statutes that enable Congress to receive informationfrom agency employees. Notwithstanding that provision, a nondisclosure policy form or agreementthat is executed by a person connected with the conduct of an intelligence or intelligence-relatedactivity, other than an employee or officer of the federal government, "may contain provisionsappropriate to the particular activity for which such document is to be used." Such form oragreement shall, at a minimum, require that the person "will not disclose any classified informationreceived in the course of such activity unless specifically authorized to do so by the United StatesGovernment." Furthermore, such nondisclosure forms "shall also make it clear that they do not bardisclosures to Congress or to an authorized official or an executive agency or the Department ofJustice that are essential to reporting a substantial violation of law." (166) That language alsoappears in the Transportation, Treasury appropriations law enacted on November 30, 2005. (167) Also in annual appropriations acts, Congress adopts language to deny funds to pay the salaryof any executive official who prevents agency employees from communicating with a Member ofCongress, committee or subcommittee. Language in the Consolidated Appropriations Act for fiscal2004 provided that no part of any appropriation contained in that statute or any other would beavailable for the payment of the salary of any federal government officer or employee who "(1)prohibits or prevents, or attempts or threatens to prohibit or prevent, any other officer or employeeof the Federal Government from having any direct oral or written communication or contact withany Member, committee, or subcommittee of the Congress in connection with any matter pertainingto the employment of such other officer or employee or pertaining to the department or agency ofsuch officer or employee in any way, irrespective of whether such communication or contact is atthe initiative of such other officer or employee or in response to the request or inquiry of suchMember, committee, or subcommittee." Funds are also denied for the payment of the salary of anyfederal officer or employee who "(2) removes, suspends from duty without pay, demotes, reducesin rank, seniority, status, pay, or performance of efficiency rating, denies promotion to, relocates,reassigns, transfers, disciplines, or discriminates in regard to any employment right, entitlement, orbenefit, or any term or condition of employment of, any other officer or employee of the FederalGovernment, or attempts or threatens to commit any of the foregoing actions with respect to suchother officer or employee, by reason of any communication or contact of such other officer oremployee with any Member, committee, or subcommittee as described in paragraph (1)." (168) That language appearsalso in the Transportation, Treasury appropriations statute for fiscal 2006. (169) On November 26, 1996, the Office of Legal Counsel (OLC) in the Justice Department issuedan eight-page opinion on "(1) the application of executive branch rules and practices on disclosureof classified information to Members of Congress, in light of relevant congressional enactments; (2)the applicability of the Whistleblower Protection Act; and (3) the applicability of Executive Order12674." (170) Executive Order 12674, signed by President Bush on April 12, 1989, established "Principlesof Ethical Conduct for Government Officers and Employees." The principles included: "Employeesshall disclose waste, fraud, abuse and corruption to appropriate authorities." (171) The executive orderdefines "employee" to mean "any officer or employee of an agency, including a special Governmentemployee," (172) anddefines "agency" to mean "any executive agency as defined in 5 U.S.C. 105, including any executivedepartment as defined in 5 U.S.C. 101, Government corporation as defined in 5 U.S.C. 103, or anindependent establishment in the executive branch as defined in 5 U.S.C. 104 (other than the GeneralAccounting Office), and the United States Postal Service and Postal Rate Commission." (173) "Appropriateauthorities" is not defined in the executive order. The question before the OLC was whether this executive order authorized an agencyemployee to disclose "waste, fraud, abuse and corruption" to a Member of Congress, particularly"members of oversight committees with direct interest in such abuse and corruption." (174) The context of thememorandum focused on oversight committees that have jurisdiction over the IntelligenceCommunity. OLC did "not question that in certain circumstances the term ["appropriate authorities"]could include a member of a congressional oversight committee." However, OLC concluded that thequestion of who is an "appropriate authority" to receive classified information "is governed byExecutive Order 12356 and the related directives and practices." The latter executive order "shouldcontrol because it more directly and specifically addresses the subject at issue, the disclosure ofclassified information." (175) Executive Order 12356, signed by President Reagan on April 2, 1982, governed the handlingof classified information in the executive branch. (176) OLC was asked to address the relationship between thatexecutive order and two congressional enactments concerning the rights of federal employees toprovide information to Congress: the Lloyd-LaFollette Act and the annual provision that prohibitedthe use of appropriated funds to implement or enforce the nondisclosure agreement policy. OLC cited the Justice Department's brief in the Garfinkel case to the Supreme Court, wherethe department held that a congressional enactment would be unconstitutional if it were interpreted"to divest the President of his control over national security information in the Executive Branch byvesting lower-ranking personnel in that Branch with a 'right' to furnish such information to a Memberof Congress without receiving official authorization to do so." (177) In effect, this positionwould support restraints such as those in the executive orders issued by Presidents Roosevelt andTaft, at least with respect to classified information. OLC concluded that Lloyd-LaFollette does notconfer a right to furnish national security information to Congress, the nondisclosure agreements maybe validly applied to a disclosure to a Member of Congress, and the appropriations language "doesnot authorize any disclosure to a Member of Congress that is not permitted under Executive Order12356." (178) OLC was also asked whether Executive Order 12356 could be read to permit a clearedemployee of the executive branch "to disclose classified information to a cleared member ofCongress based on the employee's determination of the member's need to know." (179) OLC noted thatMembers of Congress, as constitutionally elected officers, do not receive security clearances but areinstead presumed to be trustworthy. However, lawmakers are not exempt "from fulfilling the'need-to-know' requirement." On the issue whether individual employees "are free to make adisclosure to Members of Congress based on their own determination on the need-to-knowquestion," OLC said that the answer "is most assuredly 'no.'" (180) The determination of"need to know" regarding disclosures of classified information to Congress "is made throughestablished decisionmaking channels at each agency." OLC stated the opinion that it would be"antithetical to the existing system for an agency to permit individual employees to decideunilaterally to disclose classified information to a Member of Congress -- and we are unaware of anyagency that does so." (181) Regarding the WPA, OLC was asked whether denial or revocation of a SensitiveCompartmented Information (SCI) security clearance is a "personnel action" within the meaning ofthe WPA. Citing such cases as the Supreme Court's decision in Egan and McCabe v. Departmentof the Air Force , decided by the Court of Appeals for the Federal Circuit, OLC concluded that therevocation of a security clearance is not a personnel action within the meaning of the WPA. (182) OLC also examined language in Title 5, under prohibited personnel practices, that nothingin that subsection shall be construed "to authorize the withholding of information from the Congressor the taking of any personnel action against an employee who discloses information to theCongress." (183) OLCsaid the Justice Department in Garfinkel had rejected the argument that the quoted language conferred an affirmative right to make disclosures of classified information to Members of Congress. Subsection 2302(b)(8)(B) discussed disclosures of classified information only to inspectors generalor the Office of Special Counsel of the MSPB. OLC's memorandum prompted Congress to hold hearings and analyze the Administration'sposition that the President exercises exclusive control over the disclosure of classified information,including disclosure to Members of Congress and its committees. The Senate IntelligenceCommittee asked CRS to evaluate OLC's statutory and constitutional conclusions, and that analysiswas published. (184) The Committee also held two days of hearings. (185) The Justice Department continued to hold that bills draftedto assure congressional access to classified information, submitted to Congress by intelligencecommunity employees without the permission of their supervisors, were unconstitutional. The Senate Intelligence Committee unanimously reported legislation after commenting thatthe Administration's "intransigence on this issue compelled the Committee to act." (186) The Senate bill wouldhave directed the President to inform employees within the intelligence community that it is notprohibited by law, executive order, or regulation, nor contrary to public law, to disclose certaininformation, including classified information, to an appropriate committee of Congress. (187) The purpose of the billwas to make employees within the intelligence community aware that they may, without seeking orobtaining prior authorization from an agency supervisor, disclose certain information to Congress,including classified information, when they have reason to believe that the information is specificand direct evidence of "a violation of law, rule or regulation; a false statement to Congress on anissue of material fact; or gross mismanagement, a gross waste of funds, a flagrant abuse of authority,or a substantial and specific danger to public health or safety." (188) The House Intelligence Committee held two days of hearings on a bill that provided analternative procedure for gaining information from national security whistleblowers. (189) Chairman Porter J.Goss made these opening comments: The present arrangement, or lack of arrangement, forwhistleblowers in our [intelligence] community is not the answer. CIA, as I understand, has nowritten regulation in place and NSA had one that was disavowed by the current administration. Iknow of no regulation or system within the Intelligence Community that ensures the confidentialityof the whistleblower. There is no legal protective mechanism for an IC whistleblower againstofficial and unofficial retaliation of which I am aware. Nothing currently gives him a right to beheard directly by the intelligence committees. I think the only exception I can think of might be oneunder clauses of the Agent Identities Protection Act, which is a very narrowarea. The result of this system is unacceptable. Employeesof the IC may, at present, have to take huge chances with classified documents, compartmentedinformation and their careers in order to come down to report to us.... Worst of all, from aninstitutional point of view, is that very few employees dare to run this gauntlet to bring us theinformation we need to do appropriate oversight. (190) Chairman Goss identified two central issues in the legislation. One was the question whetherCIA employees should report their concerns only to the inspector general. Was the IG to be the "soleprocess" by which an employee may report a serious or flagrant problem to Congress? Second,should the head of an intelligence agency have a "holdback" power? That is, should the agency headbe authorized to block a whistleblower's complaint "in the exceptional case and in order to protectvital law enforcement, foreign affairs on national security interest." (191) When the House bill was reported it was decided that the IG mechanism for whistleblowersshould not be the "sole process" for them to report wrongdoing to Congress. The House bill wouldprovide an additional procedure to the existing IG route. (192) The House Intelligence Committee recognized that someagency employees might "choose not to report a problem either through the process outlined [in thebill] or through another process authorized by their management, but instead approach the committeedirectly." (193) Thecommittee also decided to eliminate the "holdback" provision. Agency heads would not have theauthority to block disclosures by agency employees to Congress. A statutory acknowledgment ofholdback authority was dropped because it was considered "unwarranted and could undermineimportant congressional prerogatives." (194) Like the Senate, the House Intelligence Committee rejected the Administration's "assertionthat, as Commander in Chief, the President has ultimate and unimpeded constitutional authority overnational security, or classified, information. Rather, national security is a constitutionalresponsibility shared by the executive and legislative branches that proceeds according to theprinciples and practices of comity." (195) Consistent with that position, the committee rejected thetheory that the President, as Chief Executive, "has a constitutional right to authorize all contactbetween executive branch employees and Congress." The issue of whether an agency employee"must 'ask the boss' before approaching the intelligence committees with unclassified informationabout wrongdoing seems well below any constitutional threshold." (196) The handling ofclassified information was addressed in the bill that became law. The two houses worked out their differences in conference committee and reported theIntelligence Community Whistleblower Protection Act as Title VII to the Intelligence AuthorizationAct for Fiscal Year 1999. The compromise bill established "an additional process to accommodatethe disclosure of classified information of interest to Congress." The new procedure was not "theexclusive process by which an Intelligence Community employee may make a report to Congress." The conference report stated that "the managers agree that an Intelligence Community employeeshould not be subject to reprisals or threats of reprisals for making a report to appropriate Membersor staff of the intelligence committees about wrongdoing within the Intelligence Community." (197) The statute coveredcommunications from the agency to Capitol Hill through the intelligence committees. The statutory language lists six findings: "(1) national security is a shared responsibilityrequiring joint efforts and mutual respect by Congress and the President; (2) the principles of comitybetween the branches of Government apply to the handling of national security information; (3)Congress, as a co-equal branch of Government, is empowered by the Constitution to serve as a checkon the executive branch; in that capacity, it has a "need to know" of allegations of wrongdoing withinthe executive branch, including allegations of wrongdoing in the Intelligence Community; (4) nobasis in law exists for requiring prior authorization of disclosures to the intelligence committees ofCongress by employees of the executive branch of classified information about wrongdoing withinthe Intelligence Community; (5) the risk of reprisal perceived by employees and contractors of theIntelligence Community for reporting serious or flagrant problems to Congress may have impairedthe flow of information needed by the intelligence committees to carry out oversight responsibilities;and (6) to encourage such reporting, an additional procedure should be established that provides ameans for such employees and contractors to report to Congress while safeguarding the classifiedinformation involved in such reporting." (198) Under the procedures set forth in the statute, an employee or contractor of the CIA "whointends to report to Congress a complaint or information with respect to an urgent concern mayreport such complaint or information to the Inspector General." (199) The language "mayreport" is consistent with the congressional rejection of the IG office as being the "sole process" forreporting complaints. The statute defines "urgent concern" to mean any of the following: (1) "A serious or flagrantproblem, abuse, violation of law or Executive order, or deficiency relating to the funding,administration, or operations of an intelligence activity involving classified information, but doesnot include differences of opinion concerning public policy matters"; (2) "A false statement toCongress, or a willful withholding from Congress, or an issue of material fact relating to the funding,administration, or operation of an intelligence activity"; and (3) "An action, including a personnelaction described in section 2302(a)(2)(A) of title 5, United States Code, constituting reprisal or threatof reprisal prohibited under subsection (e)(3)(B) in response to an employee's reporting an urgentconcern in accordance with this paragraph." Upon receiving the complaint or information, the IG has 14 calendar days to determinewhether it appears credible. If the IG decides it is, the complaint must be transmitted to the CIADirector who has seven calendar days to forward the matter to the intelligence committees. If theIG does not transmit the complaint or information, or does not transmit it in an accurate form, theemployee may submit the matter to Congress by contacting either or both of the intelligencecommittees. The statute provides for no "holdback" procedure. In 2001, Congress enacted modifications to this statute. (200) The changes relate tocommunications between the IG and the director as to whether a complaint from an agency employeeappears credible, and the authority of employees to contact the intelligence committees when the IGdoes not find the complaint credible. In 2002, the U.S. Court of Federal Claims decided the case of Richard Barlow, who in thelate 1980s faced termination from the Defense Department and suspension of security clearancesfollowing disputes within the executive branch, and between the executive branch and Congress,about Pakistan's nuclear capabilities. Some central questions reportedly were whether executiveofficials had misled lawmakers, in secret briefings, regarding Pakistan's activities, and whether theReagan Administration had improperly certified to Congress that Pakistan did not have nuclearweapons. (201) After a number of investigations by the Defense Department and several by inspectorsgeneral and the General Accounting Office regarding retaliations against Barlow's whistlebloweractivities, a bill was introduced ( S. 2274 ) to provide for the relief of Barlow. (202) The private billincluded the sum of $1,100,000 to compensate him for losses incurred as a consequence of "(1)personnel actions taken by the Department of Defense affecting Mr. Barlow's employment at theDepartment (including Mr. Barlow's top secret security clearance) during the period of August 4,1989, through February 27, 1992; and (2) Mr. Barlow's separation from service with the Departmentof Defense on February 27, 1992." (203) On October 5, 1998, the Senate referred the matter to theCourt of Federal Claims requesting that it report back findings of fact and conclusions "that aresufficient to inform the Congress of the nature, extent, and character of the claim for compensationreferred to in such bill [S. 2274] as a legal or equitable claim against the United States ora gratuity." (204) Barlow and his attorneys, through the discovery process, sought documents which theyalleged would show that Congress had been misled about Pakistan's capabilities. They claimed thatthe evidence would show a motivation on the part of Barlow's supervisor in the Defense Departmentto take adverse personnel actions against him for his whistleblowing. On February 10, 2000, CIADirector George Tenet signed a declaration and formal claim of state secrets privilege and statutoryprivilege. The declaration denied Barlow and his attorney access to any of the classified intelligenceinformation under Tenet's control. Tenet said that it would not be possible "to sanitize or redact inany meaningful way" the information that Barlow sought. (205) A separate declarationby Lt. Gen. Michael V. Hayden, Director of the National Security Agency, also invoked the statesecrets privilege to assert the agency's privilege over NSA intelligence reports and information fromintelligence reports contained in minutes of the Nuclear Export Violations Working Group(NEVWG) meetings. (206) The Tenet declaration did not automatically block Barlow's access to the requested materials. Tenet acknowledged that the branch that decides what evidence to admit is the judiciary, not theexecutive branch: "I recognize it is the Court's decision rather than mine to determine whetherrequested material is relevant to matters being addressed in litigation." (207) The Haydendeclaration did not contain that language, but courts have discretion to determine whether anexecutive claim of state secrets privilege should be treated as absolute or as qualified. The Court ofFederal Claims had several options. It could have ordered the government to provide a full publicaccount of why disclosure of the information would harm national security. (208) It could haveconducted "an in camera examination of the requested materials" (209) and also asked thatsensitive material be redacted to permit access by Barlow. In a decision filed July 18, 2000, and reissued August 3, 2000, the Court of Federal Claimsinitially acknowledged that the state secrets privilege was qualified, not absolute. Although it notedthat some courts have held that state secrets are "absolutely privileged from disclosure in thecourts," (210) it statedthat "the mere formal declaration of the privilege does not end the court's inquiry." (211) Toward the end of thisanalysis, however, the court ruled that state secrets were absolute: "The privilege is absolute, the lawhaving evolved to reflect a choice of secrecy over any balancing of risks and harms." (212) The court concludedthat the documents sought by Barlow, "to the extent not already produced or located, are privileged in toto ." (213) The court continued the trial and allowed the government to introduce the documents andtestimony to support its case, while at the same time denying Barlow access to documents andtestimony he requested to support his position. On May 4, 2000, Barlow's attorneys, Paul C. Warnkeand Diane S. Pickersgill, objected that the state secrets privilege should not apply to congressionalreference cases to prevent Barlow and the court access to "key evidence." (214) Warnke andPickersgill argued that the court should review the documents in camera. (215) They noted that theSenate had ordered the court to "make a determination of the merits" of Barlow's claim forcompensation and that the information he sought in discovery was "necessary for this Court to makea fully-informed decision and thus a fully-informed recommendation to Congress." (216) In the January 14, 2002, ruling, the court recognized that there had been a "temporarysuspension" of Barlow's security clearance. (217) In Egan , the plaintiff's security clearance had been revoked. The court stated that in Egan the Supreme Court held that "the authority to protect classifiedinformation remains within the Executive Branch," determinations about security clearances are anattempt to predict an individual's future behavior, and that such "'[p]redictive judgment of this kindmust be made by those with the necessary expertise in protecting classified information' and, in turn,not by the courts." (218) The court then concluded: "Basing a claim to relief in any way on the suspension of the clearancewould inevitably draw the court into improperly second guessing executive branch offices in a highlydiscretionary function. We decline to do so." (219) The Supreme Court in Egan supported the discretionary judgment of the executive branchto determine security clearances and to revoke them. The Court's decision did address the questionof whether a court may examine, in camera, classified documents to determine whether they wereproperly withheld from a plaintiff under the state secrets privilege. In 2000, Congress passed a bill that would have established criminal penalties for leakingclassified information. Fines and imprisonment for up to three years were included to punish anycurrent or former government employee who "knowingly and willfully discloses, or attempts todisclose," any classified information to a person not authorized to receive the information, "knowingthat the person is not authorized access to such classified information." (220) Criminal liability didnot apply to the disclosure of classified information to federal judges established under Article IIIor to any Member or committee of Congress. During House debate on the bill reported from conference committee, several Membersreferred to it as an "official secrets" law. (221) One Member said it would intimidate whistleblowers. (222) Another thoughtit"would silence whistleblowers in a way that has never before come before this body and which hasnever before been enacted." (223) Another disagreed: "I do not think that is true at all. First ofall, whistle-blowers are protected under the current law. Secondly, whistle-blowers who have aconcern about whether information is properly classified or there is a concern about the agency thatthey are working for, can come to Congress." (224) Similarly, another Member regarded whistleblowers asprotected by the bill "[s]o long as they come forward with matters that are security matters aboutwhich they are concerned and they disclose them to people who are cleared to received suchinformation." (225) This debate raised the possibility that leaking information to the press would put reportersat risk. One Member stated that "this [bill] does not pertain to the news media." (226) Another saw "nothing[in the bill] to prevent reporters from being hauled in before grand juries and being forced to revealtheir sources." (227) Chief executives of four of the largest news organizations (CNN, the New York Times, NewspaperAssociation of America, and the Washington Post) wrote to President Clinton, urging him to vetothe bill. The Radio-Television News Directors Association also joined in this appeal to PresidentClinton. (228) President Clinton vetoed the bill on November 4, 2000. Among other points, he said that thebill "was passed without benefit of public hearings -- a particular concern given that it is the publicthat this law seeks ultimately to protect. The Administration shares the process burden since itsdeliberations lacked the thoroughness this provision warranted, which in turn led to a failure toapprise the Congress of the concerns I am expressing today." (229) Legislation has been introduced in the House and the Senate to make changes in theWhistleblower Protection Act. S. 494 , called the Federal Employee Protection ofDisclosures Act, was introduced on March 2, 2005, and reported from the Committee on HomelandSecurity and Governmental Affairs on May 25. The purpose is "to clarify the disclosures ofinformation protection from prohibited personnel practices, require a statement in nondisclosurepolicies, forms, and agreements that such policies, forms, and agreements conform with certaindisclosure protections, provide certain authority for the Special Counsel, and for otherpurposes." (230) In reporting the bill, the Senate Committee on Homeland Security and Governmental Affairsnoted that the terrorist attacks of 9/11 "have brought renewed attention to those who discloseinformation regarding security lapses at our nation's airports, borders, law enforcement agencies, andnuclear facilities." It further states that the right of federal employees to be free from agencyretaliation "has been diminished as a result of a series of decisions of the Federal Circuit Court ofAppeals that have narrowly defined who qualifies as a whistleblower under the WPA and whatstatements are considered protected disclosures." (231) The bill is designed to clarify that disclosures of classifiedinformation to appropriate committees of Congress are protected, to codify the "anti-gag" provisionthat Congress has placed in annual appropriations bills to protect agency employees who comeforward with disclosures of illegality, to authorize the OSC to file amicus briefs in whistleblowercases, and to allow whistleblower cases to be heard by all federal appellate courts for a period of fiveyears. (232) The committee report also discusses a provision in the bill that relates to whistlebloweractions after 9/11, when agency employees "in several high profile cases have come forward todisclose government waste, fraud, and abuse that posed a risk to national security," but then facedretaliatory action by having their security clearance removed. The Federal Circuit had held that theMSPB lacks jurisdiction over an employee's claim that his security clearance was revoked inretaliation for whistleblowing. Former Special Counsel Elaine Kaplan testified in 2001 that revokinga security clearance "can be a basis for camouflaging retaliation." (233) The Senate bill makesit a prohibited personnel practice for a manager to suspend, revoke, or take other actions regardingan employee's security clearance or access to classified information in retaliation for whistleblowing. Further, the bill provides for expedited review of whistleblower cases by the OSC, the MSPB, andthe reviewing cases where a security clearance has been revoked or suspended. (234) The Justice Department regards this provision as an intrusion into the President's prerogativeto control national security information and those who have access to it. The committee regardsexecutive branch authority over classified material as "not exclusive, and that Congress properlyplays a role." (235) Thecommittee cites Egan for support (" unless Congress has specifically provided otherwise , courtstraditionally have been reluctant to intrude upon the authority of the Executive in military andnational security affairs"). (236) Title 5 has included a provision (Section 2302(b)) that nothing in the subsection shall beconstrued to authorize the withholding of information from Congress or the taking of any personnelaction against an agency employee who discloses information to Congress. The Senate bill providesthat a whistleblower must limit the disclosure to a Member of Congress who is authorized to receivethe information or to a legislative staffer who holds the appropriate security clearance and isauthorized to receive the information. (237) H.R. 1317 , introduced on March 15, 2005, contains a number of provisionssimilar to S. 494 , including clarification of disclosures that are protected fromprohibited personnel practices and a statement to be placed in nondisclosure forms. The House billdirects the Comptroller General to conduct a study of security clearance revocations in whistleblowercases after 1996. H.R. 1317 was marked up on September 29, 2005, and ordered to bereported. To perform its legislative and constitutional functions, Congress depends on information(domestic and national security) available from the executive branch. The Supreme Court remarkedin 1927 that a legislative body "cannot legislate wisely or effectively in the absence of informationrespecting the conditions which the legislation is intended to affect or change; and where thelegislative body does not itself possess the requisite information -- which not infrequently is true --recourse must be had to those who do possess it." (238) Congress needs information to pass legislation, oversee theadministration of programs, inform the public, and carry out its constitutional duties. Balancing this legislative need for information with the protection of sensitive nationalsecurity information remains a continuing policy issue. Congress has never accepted the theory thatthe President has exclusive, ultimate, and unimpeded authority over the collection, retention, anddissemination of national security information. Agency heads provide Congress with information,but some Members of Congress have also expressed a need to receive information directly fromrank-and-file employees within an agency. Whistleblowers have helped uncover agencywrongdoing, illegalities, waste, and corruption. The interest of Congress in maintaining an openchannel with agency employees is demonstrated through such statutes as Lloyd-LaFollette, theappropriations riders on the nondisclosure policy, the Military Whistleblower Protection Act, andthe Intelligence Community Whistleblower Act. Congress also recognizes the need to protect national security information, especially thatrelated to sources and methods, from disclosure. This awareness is reflected in legislation thatallows and encourages intelligence community employees to report issues of waste, fraud, ormismanagement to the intelligence committees of Congress. Several organizations have been active with whistleblowing issues. They testify beforecongressional committees, provide assistance with litigation, and offer other services. Some of theseorganizations cover whistleblowing in general. Others focus on national security whistleblowing. From October 9 to October 12, 2005, in Chincoteague, Va., the first annual National SecurityWhistleblowers Conference was held. It was sponsored by the National Security WhistleblowerCoalition, the Cavallo Foundation, Harriet Crosby, the Fertel Foundation, the Fund for ConstitutionalGovernment, and Project on Government Oversight. The purpose was to bring together nationalsecurity whistleblowers to learn from each other, to find collective support for their efforts, and todevelop strategies. Founded in 1977, GAP is a non-profit, public interest organization and law firm that receivesfunding from foundations, individuals, and legal fees. It describes its mission as protecting thepublic interest by promoting government and corporate accountability through advancingoccupational free speech and ethical conduct, defending whistleblowers, and empowering citizenactivists. It litigates whistleblower cases, publicizes whistleblower concerns, and develops policyand legal reforms for whistleblower laws. Much of its work has been in the area of nuclearoversight, food and drug safety, worker health and safety, international reform and nationalsecurity. (239) The coaliton is a nonpartisan organization dedicated to aiding national securitywhistleblowers. Its stated mission is to advocate governmental and legal reform, educate the publicconcerning whistleblowing activity, provide comfort and fellowship to national securitywhistleblowers subject to retaliation, and work with other public interest organizations to effect goalsdefined in the organization's mission statement. Its membership consists exclusively of current orformer federal employees or civilians working under contract to the United States who, to theirdetriment and personal risk, bring to light fraud, waste, and abuse in government operations andagencies related to national security. (240) The National Whistleblower Center is a non-profit, tax-exempt, educational, and advocacyorganization dedicated to helping whistleblowers. Since 1988, it states it has used whistleblowers'disclosures to improve environmental protection, nuclear safety, and government and corporateaccountability. The primary goal of the center is to ensure that disclosures about government orindustry actions that violated the law or harm the environment are fully heard, and that thewhistleblowers who risk their careers to expose wrongdoing are defended. In addition to assistingwhistleblowers, the center lobbies Congress on the need to protect whistleblowers and insists thatofficials be held fully accountable for their conduct. The center maintains a national referral serviceand sponsors litigation. (241) POGO began in 1981 as an independent, non-profit organization that investigates andexposes corruption in order to achieve a more accountable federal government. It operates on theprinciple that representation and accountability are fundamental to maintaining a strong andfunctioning democracy. Initially it was known as the Project on Military Procurement. It iscommitted to exposing waste, fraud and corruption in the following areas: defense, homelandsecurity, energy and environment, contract oversight, and open government. POGO's "ContractOversight Investigations" examine the federal government's policies and relationships with grantrecipients as well as major companies that receive billions of dollars in contracts and subsidiesannually. (242)

To discharge its constitutional duties, Congress depends on information obtained from theexecutive branch. Domestic and national security information is provided through agency reportsand direct communications from department heads, but lawmakers also receive information directlyfrom employees within the agencies. They take the initiative in notifying Congress, its committees,and Members of Congress about alleged agency illegalities, corruption, and waste within the agency. This type of information comes from a group known as whistleblowers. Through such techniques as "gag orders" and nondisclosure agreements, Presidents haveattempted to block agency employees from coming directly to Congress. In response, Congress hasenacted legislation in an effort to assure the uninterrupted flow of domestic and national securityinformation to lawmakers and their staffs. Members of Congress have made it clear they do not wantto depend solely on information provided by agency heads. Overall, the issue has been how toprotect employees who are willing to alert Congress about agency wrongdoing. The first procedures enacted to protect agency whistleblowers appeared in the Civil ServiceReform of 1978. It also contained language that excluded protections to whistleblowers who workin federal agencies involved in intelligence and counterintelligence. In 1989, Congress passed theWhistleblower Protection Act in an effort to strengthen statutory protections for federal employeeswho assist in the elimination of fraud, waste, abuse, illegality, and corruption. That statute continuedthe exemption for national security information. It did not authorize the disclosure of anyinformation by an agency or any person that is (1) specifically prohibited from disclosure by anyother provision of law, or (2) "specifically required by Executive order to be kept secret in theinterest of national defense or the conduct of foreign affairs." Several statutes apply expressly to national security information. Congress has passed aseries of laws known collectively as the Military Whistleblowers Protection Act, under whichmembers of the military may give information to Members of Congress. It also passed theIntelligence Community Whistleblower Protection Act of 1998 to encourage the reporting toCongress of wrongdoing within the intelligence agencies. In crafting this legislation, Congress hassought to balance its need for information with national security requirements, giving intelligencecommunity whistleblowers access to Congress only through the intelligence committees. For legalanalysis see CRS Report 97-787, Whistleblower Protections for Federal Employees , by L. PaigeWhitaker and Michael Schmerling. This report will be updated as events warrant.

Policymakers are dedicating considerable attention to greenhouse gas emission reduction, primarily discussing options for carbon dioxide (CO 2 ) emission reduction. Less frequently addressed in proposed legislation is emission reduction for non-CO 2 greenhouse gases, such as nitrous oxide (N 2 O). However, N 2 O reduction efforts have the potential to mitigate climate change. Moreover, N 2 O emission sources may be regulated under the existing Clean Air Act as a class I or class II ozone-depleting substance at the discretion of the Environmental Protection Agency (EPA) Administrator. No new legislation needs to be passed to regulate N 2 O for climate protection and ozone recovery. The five non-CO 2 greenhouse gases regularly monitored but not entirely regulated by EPA (methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexaflouride) accounted for approximately 17% of U.S. greenhouse gas (GHG) emissions in 2009, as measured by total tons of CO 2 equivalent. Nitrous oxide—the third-most abundant greenhouse gas—was responsible for roughly 4% of total U.S. GHG emissions in 2009 by weight. Although they comprise a smaller portion of GHG emissions, non-CO 2 greenhouse gases, including N 2 O, are more potent than CO 2 . The gases identified above are 21 to 23,900 times more effective than an equivalent weight of CO 2 at trapping heat in the atmosphere, with N 2 O being 310 times more potent by weight. In addition to being one cause of greenhouse gas emission growth, N 2 O is an ozone-depleting substance (ODS). Indeed, scientific analysis suggests that N 2 O is now the leading ODS being emitted, as emissions of other substances have been reduced significantly owing to regulations enacted in the late 1980s, in the Montreal Protocol on Substances that Deplete the Ozone Layer. N 2 O emission reduction could thus play a compelling role in recovery of the ozone layer as well as in greenhouse gas emission reduction. The agriculture sector is the primary anthropogenic source of nitrous oxide. The bulk of U.S. N 2 O emissions stem from fertilizing agricultural soils for crop production. Strategies or technologies designated for N 2 O emission reduction are limited. This is partly due to the dispersed nature of N 2 O emission sources. In the agriculture sector, the majority of N 2 O is released as a consequence of specific nitrogen cycle processes (nitrification and denitrification) when large amounts of synthetic nitrogen fertilizers are used for crop production. More efficient application of synthetic fertilizers (e.g., precision agriculture, nitrogen inhibitors, nitrogen sensors, controlled-release fertilizer products) is one way to reduce excess amounts of nitrogen available for bacterial processing and eventual release to the atmosphere as N 2 O. High costs and difficulty in measuring these products' efficacy, among other deterrents, have hampered widespread adoption of practices to reduce N 2 O emissions. This report focuses on the contributions of N 2 O to alteration in the Earth's climate and ozone depletion. Policy options for N 2 O emission reduction, sources of N 2 O, and federal support to lower N 2 O emissions are discussed. Nitrous oxide (N 2 O), familiar to some as "laughing gas," contributes to climate change and ozone depletion. Once released, N 2 O lingers in the atmosphere for decades (its atmospheric lifetime is approximately 114 years) and is 310 times more effective at trapping heat in the atmosphere over a 100-year time frame than carbon dioxide (CO 2 ). N 2 O emission quantity estimates remained fairly constant from 2005 to 2007, hovering around 325 million metric tons carbon dioxide equivalent (CO 2 e). N 2 O emission quantity estimates dropped in 2009 to below 300 million metric tons CO 2 e. See Table 1 . Nitrous oxide is emitted from anthropogenic (manmade) and natural sources. Oceans and natural vegetation are the major natural sources of N 2 O. Agricultural soil management (e.g., fertilization, application of manure to soils, drainage and cultivation of organic soils) is responsible for more than two-thirds of anthropogenic U.S. N 2 O emissions. In 2009, N 2 O emissions from agricultural soil management totaled more than 200 million metric tons of CO 2 e. Other anthropogenic sources of N 2 O are combustion by mobile sources (cars, trucks, etc.), manure management, and nitric acid production. Figure 1 depicts the origination and passage of nitrogen (N) that leads to N 2 O emissions from agricultural soil management. The amount of N 2 O emitted from cropland soils largely depends on the amount of nitrogen applied to a crop, weather, and soil conditions. Corn and soybean crops emit the largest amounts of N 2 O, respectively, due to vast planting areas, plentiful synthetic nitrogen fertilizer applications, and, in the case of soybeans, high nitrogen fixation rates ( Figure 2 ). Comprehension of the nitrogen cycle ( Figure 3 ) is beneficial when crafting policy to reduce N 2 O emissions from anthropogenic sources. Nitrogen, an essential element required by organisms to grow, is found throughout the atmosphere in various forms. The nitrogen cycle portrays the routes in which nitrogen moves through the soil and atmosphere in both organic and inorganic form. Certain processes within the nitrogen cycle convert the nitrogen into a form that can be taken up by plants. Four of the major processes are: nitrogen fixation—conversion of nitrogen gas (N 2 ) to a plant-available form; nitrogen mineralization—conversion of organic nitrogen to ammonia (NH 3 ); nitrification—conversion of ammonia (NH 3 ) to nitrate (NO 3 -) via oxidation (that is, by being combined with oxygen); and denitrification—conversion of nitrates back to nitrogen gas. Nitrous oxide is a byproduct of nitrification and denitrification. Both processes occur naturally. Excess application of nitrogen fertilizer can lead to increased nitrification, which can cause nitrate to leach into groundwater or surface runoff (in turn, this causes eutrophication, which can damage aquatic environments). N 2 O emission mitigation options are available for agricultural soil management and nitric acid production. Nitric acid is a chemical compound used to make synthetic fertilizers. N 2 O abatement options for nitric acid production include a high-temperature catalytic reduction method, a low-temperature catalytic reduction method, and nonselective catalytic reduction. The estimated reduction efficiencies (the percentage reduction achieved with adoption of a mitigation option) are 90%, 95%, and 85%, respectively. Agricultural soil management mitigation options recommended by researchers and technology transfer specialists to discourage excess application of nitrogen fertilizers and soil disturbance ( Table 2 ) are not generally being practiced. Fertilizer and soil best-management practices aim to provide the crop with the nutrient and soil conditions necessary for crop production, and prevent nutrient and soil loss from the crop field (e.g., erosion, leaching). Some may consider less money spent towards fertilizer use an economic incentive for agricultural producers. Others may want to ensure that crop yields meet expected feed, fiber, and fuel mandates (e.g., for corn ethanol), which may be difficult to attain with less fertilizer use. Monitoring reduced nitrogen fertilization applications on a large scale for greenhouse gas emission reduction purposes may be difficult; it is not clear how such a program could be managed at a national level. Enforcement options could include voluntary verification, third-party verifiers, or government intervention. Reporting N 2 O emissions from agricultural soil management was not included in the Final Mandatory Reporting of Greenhouse Gases Rule issued by EPA on September 22, 2009. EPA's reasoning behind this decision was that no low-cost or simple direct N 2 O measurement methods exist. Additionally, EPA released a proposed rule requiring new or modified facilities that could trigger Prevention of Significant Deterioration (PSD) permitting requirements to apply for a revision to their operating permits to incorporate the best available control technologies and energy efficiency measures to minimize GHG emissions. USDA provides some financial and technical assistance for nutrient management through its conservation programs. Moreover, USDA's Agricultural Research Service (ARS) is studying the relationship between agricultural management practices and nitrous oxide emissions. In addition to the agriculture sector, work is being done in the transportation sector to reduce N 2 O emissions. Mobile combustion was responsible for roughly 8% of N 2 O emissions reported in 2009. One N 2 O emission reduction effort, proposed by EPA and the Department of Transportation, is a per-vehicle N 2 O emission standard of 0.010 grams per mile effective in model year 2012 for all light-duty cars and trucks as part of a wider effort to reduce greenhouse gas emissions and improve fuel economy in tandem. EPA has allocated financial resources to quantify N 2 O emissions for the greenhouse gas inventory (e.g., DAYCENT model). Congress has begun to investigate the reduction of non-CO 2 greenhouse gas emissions, including N 2 O emissions, as one strategy to mitigate climate change. Some contend that N 2 O emissions reduction could serve as a short-term response in the larger, long-term scheme of mitigation and adaptation efforts. It may be viewed as a short-term response because N 2 O emissions make up a small amount of the GHG inventory compared to CO 2 emissions. Any substantial approach to mitigate climate change is likely at some point to have to address sources that emit CO 2 . Congress could approach N 2 O emissions reduction as part of a comprehensive GHG emission strategy offering economically attractive abatement alternatives to discourage actions leading to climate change. For example, a cap or fee on N 2 O emissions could spur innovative methods for agricultural producers to limit excess synthetic fertilizer application. Congress could also examine the tools necessary to identify N 2 O emission abatement options, assess their cost, and determine their economic impact for full incorporation into climate change legislation. Besides greenhouse gas emission reduction, reducing N 2 O emissions could lead to ozone recovery. Congress could explore the co-benefits that may arise from restricting N 2 O emissions for climate change purposes. N 2 O is not regulated as an ODS under the Clean Air Act, Title VI, Stratospheric Ozone Protection (as guided by the Montreal Protocol). As emissions of other ODSs (e.g., chlorofluorocarbon-11, halon-1211) have declined due to regulation, N 2 O has emerged as the dominant ODS emission. The first-ever published ozone depletion potential (ODP) value assigned to N 2 O, 0.017, is less than the ODP value of 1.0 for the reference gas chlorofluorocarbon 11 (CFC-11). While some may not see a cause for alarm based on the ODP value alone, the quantity of N 2 O emissions and its potency as a GHG can lead to serious harm (see Table 1 ). The ODP value for N 2 O does not allow for its mandatory inclusion as a class I substance for regulation under the Clean Air Act. However, N 2 O could be listed as a class II substance at the direction of the EPA Administrator or regulated under Section 615 of the act. Class I substances have an ODP of 0.2 or more and are more harmful to stratospheric ozone molecules than Class II substances, which have an ODP of less than 0.2. With or without ODP substance listing, Congress may find it useful to incorporate the ozone depletion impacts of N 2 O into its climate change policy proposals both to reduce greenhouse gas emissions and to further ozone recovery achievements. Classifying N 2 O emission reduction as an eligible offset type, including N 2 O as a covered entity within a cap-and-trade program, or directing EPA to use existing authority under the Clean Air Act to regulate N 2 O are other available options to reduce N 2 O emissions for ozone or climate protection. Any option chosen to reduce N 2 O emissions will more than likely require an improvement of N 2 O estimation, measurement, and reporting methods and possible financial incentives. Congress could apply lessons learned from previous international agreements that are intended to abolish harmful compounds. The outcomes of the Montreal Protocol, put into action in the late 1980s, may prove useful to Congress in understanding the long-term implications of certain climate change policy options, specifically cap-and-trade. A number of gases were phased out under the Protocol, which allowed for each country to establish a regulatory framework to monitor and reduce ODSs. Certain ozone-depleting substances, such as N 2 O, were not included in the Protocol partly because their threat was not perceived as urgent at the time. However, one unintended consequence of the success of the Protocol reducing targeted ODSs is that N 2 O has emerged as the leading ODS.

Gases other than carbon dioxide accounted for approximately 17% of total U.S. greenhouse gas emissions in 2009, yet there has been minimal discussion of these other greenhouse gases in climate and energy legislative initiatives. Reducing emissions from non-carbon dioxide greenhouse gases, such as nitrous oxide (N2O), could deliver short-term climate change mitigation results as part of a comprehensive policy approach to combat climate change. Nitrous oxide is 310 times more potent than carbon dioxide in its ability to affect the climate; and moreover, results of a recent scientific study indicate that nitrous oxide is currently the leading ozone-depleting substance being emitted. Thus, legislation to restrict nitrous oxide emissions could contribute to both climate change protection and ozone recovery. The primary human source of nitrous oxide is agricultural soil management, which accounted for more than two-thirds of the N2O emissions reported in 2009 (approximately 205 million metric tons CO2 equivalent). One proposed strategy to lower N2O emissions is more efficient application of synthetic fertilizers. However, further analysis is needed to determine the economic feasibility of this approach as well as techniques to measure and monitor the adoption rate and impact of N2O emission reduction practices for agricultural soil management. As the 112th Congress considers legislation that would limit greenhouse gas emissions, among the issues being discussed is how to address emissions of non-CO2 greenhouse gases. Whether such emissions should be subject to direct regulation, what role EPA should play using its existing Clean Air Act authority, and what role USDA should play in any N2O reduction scheme are among the issues being discussed. How these issues are resolved will have important implications for agriculture, which has taken a keen interest in climate change legislation.

H.R. 157 / S. 160 , the District of Columbia House Voting Rights Act of 2009 introduced in the 111 th Congress, provided for a permanent increase in the size of the U.S. House of Representatives, from 435 seats to 437 seats. The bills specified that one of the additional seats was to be allocated to the District of Columbia while the other seat was to be assigned either by using the normal apportionment formula allocation procedure ( H.R. 157 ) or specifying that the seat would be allocated to Utah, the state which would have received the 436 th seat under the 2000 apportionment process. Thus, this would add a fourth seat to Utah's three ( S. 160 ). While both versions treated the District of Columbia as if it were a state for the purposes of the allocation of House seats, each bill restricted the District of Columbia to a single congressional seat under any future apportionments. Similar bills had been introduced in the 110 th Congress. On April 19, 2007, the House approved H.R. 1905 (a revised version of H.R. 1433 ) by a vote of 241 to 177 (Roll Call vote 231) and sent it to the Senate for consideration. On June 28, 2007, S. 1257 was reported out of the Senate Committee on Homeland Security and Governmental Affairs with amendments. On September 18, 2007, cloture on the motion to proceed to consideration of the measure was not invoked in the Senate on a Yea-Nay vote, 57 - 42, leaving the measure pending. No further action occurred on the legislation. The 435 seat limit for the size of the House was imposed in 1929 by statute (46 Stat. 21, 26-27). Altering the size of the House would require a new law setting a different limit. Article I, §2 of the Constitution establishes a minimum House size (one Representative for each state), and a maximum House size (one for every 30,000 persons, or 10,306 representatives based on the 2010 Census). For the 2010 apportionment, a House size of 468 would have resulted in no state losing seats held from the 112 th to the 116 th Congresses. However, by retaining seats through such an increase in the House size, other state delegations would become larger. At a House size of 468, California's delegation size, for example, would be 56 instead of 53 seats, Texas's delegation size would be 38 instead of 36 seats, and Florida's delegation size would be 29 instead of 27 seats. General congressional practice when admitting new states to the Union has been to increase the size of the House, either permanently or temporarily, to accommodate the new states. New states usually resulted in additions to the size of the House in the 19 th and early 20 th centuries. The exceptions to this general rule occurred when states were formed from other states (Maine, Kentucky, and West Virginia). These states' Representatives came from the allocations of Representatives of the states from which the new ones had been formed. When Alaska and Hawaii were admitted in 1959 and 1960 the House size was temporarily increased to 437. This modern precedent differed from the state admission acts passed following the censuses in the 19 th and early 20 th centuries which provided that new state representatives would be added to the apportionment totals. The apportionment act of 1911 anticipated the admission of Arizona and New Mexico by providing for an increase in the House size from 433 to 435 if the states were admitted. As noted above, the House size was temporarily increased to 437 to accommodate Alaska and Hawaii in 1960. In 1961, when the President reported the 1960 census results and the resulting reapportionment of seats in the reestablished 435-seat House, Alaska was entitled to one seat, and Hawaii to two seats. Massachusetts, Pennsylvania and Missouri each received one less seat than they would have if the House size had been increased to 438 (as was proposed by H.R. 10264, in 1962). Table 1 , below displays the apportionment of the seats in the House of Representatives based on the 2000 Census apportionment population (the current House apportionment) and the apportionment of seats in the House based on the 2010 Census apportionment population (the distribution of seats among the states for the 113 th Congress). In addition, Table 1 also shows the impact on the distribution of seats in the House if the District of Columbia were to be treated as if it were a state for apportionment purposes for both a House size of 435 seats and a House size of 437 seats. First, due to population changes between the 2000 Census and the 2010 Census, Table 1 shows a shift of 12 seats among 18 states for the 113 th Congress (beginning in January 2013). Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, and Pennsylvania will each lose one seat; New York and Ohio will each lose two seats. Arizona, Georgia, Nevada, South Carolina, Utah, and Washington will each gain one seat; Florida will gain two seats; and Texas will gain four seats. These are the actual seats to be allocated based on the results of the 2010 Census. Second, if the District of Columbia were to be given a vote in the House of Representatives and treated as if it were a state in the reapportionment of congressional seats following the 2010 census, and the House size remained at 435, Minnesota would lose a seat relative to what it is scheduled to get as a result of the 2010 Census. Thus, Minnesota's delegation would fall to seven Representatives if the District of Columbia were to given a vote and the House size remained at 435 Representatives. Third, if, on the other hand, the District of Columbia were to be given a vote in the House of Representatives and treated as if it were a state and the House size were to be increased to 437, the District of Columbia would receive one Representative and North Carolina would be entitled to fourteen Representatives, one more than the state is scheduled to receive in the apportionment following the 2010 census. Also, Minnesota would retain its eighth seat and no other state would be affected by the change. Another way to see the impact is to examine the allocation of the last seats assigned to the states when the District of Columbia is allocated a seat (presumably the 51 st seat). The actual apportionment is done through a "priority list" calculated using the equal proportions formula provided in 2 U.S.C. §2a.(a). Table 2 , below, displays the end of the priority list that was used to allocate Representatives based on the 2010 Census, including the District of Columbia. The law only provides for 435 seats in the House, but the table illustrates not only the last seats assigned by the apportionment formula (ending at 435), but the states that would just miss getting additional representation. Table 3 is similar to Table 2 , in that it displays the end of the priority list, but the last seat is 437 instead of 435. The priority values and the population needed to gain or lose a seat do not change if DC is treated like state, as DC is entitled the constitutional minimum of one Representative.

Two proposals (H.R. 157/S. 160, District of Columbia House Voting Rights Act of 2009) were introduced in the 111th Congress to provide for voting representation in the U.S. House of Representatives for the residents of the District of Columbia (DC). H.R. 157/S. 160, for purposes of voting representation, treated the District of Columbia as if it were a state, giving a House seat to the District, but restricting it to a single seat under any future apportionments. The bills also increased the size of the House to 437 members from 435, and gave the additional seat to the state that would have received the 436th seat under the 2000 apportionment, Utah. This report shows the distribution of House seats based on the 2010 Census for 435 seats and for 437 seats as specified in the proposal. North Carolina, which would receive the 436th seat in the 2010 apportionment is substituted for Utah, assuming that any new, similar legislation would adopt the same language as H.R. 157.

The 115 th Congress initiated deliberations on an omnibus water authorization bill with H.R. 8 , the Water Resources Development Act of 2018 (WRDA 2018), and S. 2800 , America's Water Infrastructure Act of 2018 (AWIA 2018). On June 6, 2018, the House passed H.R. 8 , which was subsequently received in the Senate and referred to the Senate Committee on Environment and Public Works (Senate EPW). On July 9, 2018, the Senate EPW posted on its website an amendment in the nature of a substitute to H.R. 8 , titled America's Water Infrastructure Act of 2018. This CRS report discusses H.R. 8 as passed by the House (referred to herein as WRDA 2018) and the Senate EPW-posted amendment in the nature of a substitute to H.R. 8 of July 9, 2018 (referred to herein as AWIA 2018). The Senate did not take up H.R. 8 or S. 2800 . Instead, House and Senate committee leadership agreed on new legislative text for an omnibus water authorization bill. On September 13, 2018, the House amended an unrelated courthouse-naming bill, passed by the Senate as S. 3021 , to include the negotiated text. The negotiated text contained provisions from various pieces of legislation, most prominently H.R. 8 , S. 2800 , and H.R. 3387 (Drinking Water Systems Improvement Act of 2017). Like S. 2800 , the House-passed S. 3021 is titled America's Water Infrastructure Act of 2018. Because S. 3021 was sent to the Senate in the form of a House amendment, the Senate can begin consideration of the text more quickly than it could if it were sent in the form of a House bill. If the Senate agrees to the House amendments to the bill without proposing any further changes, the bill will be sent to the President for his signature. Otherwise, the two chambers can attempt to resolve their differences over the text of S. 3021 prior to the adjournment of the 115 th Congress. This could be through a further exchange of amendments between the chambers or through the creation of a conference committee. For information on S. 3021 , see CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes , by [author name scrubbed], and CRS Report R45304, Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation , by [author name scrubbed]. Enactment of S. 3021 likely would mean that the 115 th Congress would not take further action on H.R. 8 or on the Senate EPW-posted amendment to H.R. 8 , the two legislative texts discussed in this report. For reference, Table 1 provides information on the title and status of the various legislative texts for omnibus water authorization in the 115 th Congress, as of October 2, 2018. This CRS report reflects deliberations and effects of H.R. 8 as it was passed by the House (referred to herein as WRDA 2018) on June 11, 2018, and the amendment in the nature of a substitute to H.R. 8 as it was posted by the Senate EPW on July 9, 2018 (referred to herein as AWIA 2018). Subsequent legislative actions on omnibus water resource legislation (e.g., House-passed amendments to S. 3021 ) generally are not reflected in this report. Deliberations on WRDA 2018 and AWIA 2018 included discussions of the scope of water issues to be addressed and how the legislation would influence federal and nonfederal investments in water infrastructure. In addition, there was some interest in altering how the U.S. Army Corps of Engineers (USACE) was structured and in modifying its operations and delivery of water resource projects. In the Senate, deliberations also focused on a range of drinking water and water quality issues facing communities and rural areas. Issues included infrastructure needs and the federal role and options for funding projects, communities' ability to comply with water quality regulatory requirements and options for compliance flexibility and affordability, infrastructure resiliency, and technology innovation, among others. In the tradition of previous legislation with the Water Resources Development Act (WRDA) title, WRDA 2018 focused primarily on authorizing water resource projects and activities of the U.S. Army Corps of Engineers (USACE) and dam and levee safety programs. AWIA 2018 included not only provisions related to USACE, but also provisions involving water quality and drinking water programs administered by the U.S. Environmental Protection Agency (EPA), particularly in Title V of AWIA 2018 ("EPA-Related Provisions"). In addition, AWIA 2018 included a few other provisions that relate primarily to tribal water-related programs and authorities, and certain Department of the Interior (DOI) activities and programs. This report provides an overview of WRDA 2018 ( H.R. 8 as passed by the House) and AWIA 2018 (the amendment in the nature of a substitute to H.R. 8 posted by the Senate EPW on July 9, 2018) and topics shaping deliberations. After a brief background, the report presents a broad overview of WRDA 2018 and AWIA 2018. The subsequent section describes the context for the USACE provisions of WRDA 2018 and AWIA 2018. The final section describes EPA-related provisions. Congress generally authorizes USACE water resource activities in authorization legislation prior to funding the activities through appropriations legislation. USACE's ability to act on an authorization often is determined by funding. Congress generally authorizes numerous new USACE site-specific activities and provides policy direction in an omnibus USACE authorization bill, typically a WRDA. A few provisions in WRDA bills have time-limited authorizations; therefore, some WRDA provisions may reauthorize expired or expiring authorities. Beginning with WRDA 1986 ( P.L. 99-662 ), Congress loosely followed a biennial WRDA cycle for several years. WRDAs were enacted in 1988 ( P.L. 100-676 ), 1990 ( P.L. 101-640 ), 1992 ( P.L. 102-580 ), 1996 ( P.L. 104-303 ), 1999 ( P.L. 106-53 ), 2000 ( P.L. 106-541 ), and 2007 ( P.L. 110-114 ). The Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121 ) was enacted in June 2014. The most recently enacted water authorization legislation was the Water Infrastructure Improvements for the Nation Act (WIIN; P.L. 114-322 ); it was enacted in December 2016. WIIN included titles on water-related programs and projects spanning various agencies and departments. Title I of the bill—which had a short title of WRDA 2016—focused specifically on USACE water resource authorizations. Titles II, III, and IV focused primarily on other agencies; many of the specific provisions in these titles had little or no relationship to USACE. Both WRDA 2018 and AWIA 2018 included numerous provisions that address USACE-related activities. For example, both WRDA 2018 and AWIA 2018 would have authorized USACE to conduct new studies and construct new projects, and both WRDA 2018 and AWIA 2018 would have modified existing authorizations. For example, USACE and the Federal Emergency Management Agency (FEMA) have certain responsibilities related to national programs for dam and levee safety. Both WRDA 2018 and AWIA 2018 would have extended beyond FY2019 the authorization of appropriations for a federal levee safety initiative and a national dam safety program; WRDA 2018 would have extended the authorizations of appropriations through FY2023, and AWIA 2018 would have extended them through FY2021. Table 2 provides a summary of the organization of WRDA 2018 and AWIA 2018 and their status. A broad difference between the two was their scope. WRDA 2018 focused on USACE water resource projects and programs and dam and levee safety program authorities; although the majority of AWIA 2018's titles and provisions also related to the USACE's water resource projects, numerous provisions of AWIA 2018 were not directly related to USACE water resource activities. AWIA 2018 included provisions addressing a range of other topics, including EPA administered water programs and regulatory authorities, and water-related activities and other authorities of the Department of the Interior and other agencies. For example, the following DOI-related provisions were in AWIA 2018: Section 1046 related to the processing of take permits by DOI's Fish and Wildlife Service for bald and golden eagles or certain other migratory birds (e.g., permits that allow birds to be killed, harassed, or captured); Section 3301 related to the Bureau of Reclamation's Fontenelle reservoir; and Section 5007 related to water resources research institutes at state universities that are supported through a program administered by the U.S. Geological Survey. AWIA 2018 also included provisions that were not tied to a specific agency; Section 1042, for example, related to the use by federal and state agencies of geomatic data in the approval of federal authorizations (conditional upon subsequent onsite inspection). In addition, AWIA 2018 would have addressed an array of water-related programs and activities specific to tribes; most of these provisions were in Subtitle I of Title III. They included provisions related to Indian dam safety and irrigation authorities and USACE housing assistance related to certain dam construction in the Pacific Northwest. A few provisions were in other titles of AWIA 2018; for example, Section 1040 would have required that nonfederal interests for a water resource development study or project be provided "the opportunity to participate in all consultations with Federal and State agencies and Indian tribes required by Federal law." WRDA 2018 had fewer provisions affecting tribes than AWIA 2018, and they directly related to USACE activities. Hearings and statements related to water resource projects during the 115 th Congress have referenced not only the importance of USACE activities in addressing demand for water resource infrastructure and the resulting benefits but also the agency's $96 billion backlog of construction activities. This backlog reflects the costs associated with constructing new works and rehabilitating existing infrastructure to maintain its safety and services. This backlog also reflects the difference between federal funding appropriated for these projects and the rate of project authorization. Among the issues that shaped the deliberation of WRDA 2018 and AWIA 2018 were the extent to which the legislation addresses the delivery of water resource projects and the legislation's effect on federal spending. Congress has, particularly in WRRDA 2014 and WIIN, provided opportunities for nonfederal entities to have more prominent roles in the delivery and funding of projects, while maintaining the division of costs and responsibilities between the federal government and nonfederal project sponsors. Nonfederal entities have been using these authorities to conduct work on studies and projects and to receive federal credit or be eligible for reimbursement for this work. WRRDA 2014 also provided for new or expanded authorities for novel financing of water resource projects, including authorities for piloting public-private partnerships (P3) and the Water Infrastructure Finance and Innovation Act (WIFIA) credit assistance program. USACE's WIFIA and P3 efforts have encountered implementation challenges. Although President Trump (as well as previous Presidents) and many Members of Congress have expressed interest in improving the nation's infrastructure, including its water resource infrastructure, balancing the potential benefits of such improvements and concerns about increased federal expenditures poses an ongoing challenge. Cost estimates by the Congressional Budget Office (CBO) have been part of the deliberations about previous water authorization bills and have influenced which provisions are included in enacted legislation. On June 4, 2018, CBO released a cost estimate on H.R. 8 as reported by the House Committee on Transportation and Infrastructure; on June 28, 2018, CBO released a cost estimate for S. 2800 , as reported; and on July 10, 2018, CBO released an estimate of the direct spending and revenue effects for the amendment in the nature of a substitute to H.R. 8 (as posted on the Senate EPW website on July 9, 2018). Provisions in WRDA 2018 and AWIA 2018 would have addressed the following selected broad USACE topics: information dissemination and public input; USACE permissions and permits for nonfederal activities; studies of USACE structure and efficiency; budget processes for USACE; nature-based alternatives and projects; continuing authorities programs; project and study deauthorization; independent peer review; innovative financing for water resource projects; permitting of nonfederal water storage; and pricing of storage for domestic, municipal, and industrial water supply. Table 3 discusses each of these topics. Although both WRDA 2018 and AWIA 2018 included provisions related to USACE structure and efficiency, neither proposed to shift USACE civil works responsibilities out of the Department of Defense. In June 2018, the Trump Administration proposed transferring the USACE navigation responsibilities to the Department of Transportation and all other civil works responsibilities to the Department of the Interior. In addition to the topics and provisions described in Table 3 , numerous other USACE policies, authorities, and projects were addressed by other provisions of WRDA 2018 and AWIA 2018. These other provisions, as well as concerns that have shaped previous deliberations on USACE authorizing legislation, also shaped congressional deliberations of WRDA 2018 and AWIA 2018. Examples of such topics include the following: authorities for credit and reimbursement for nonfederal investments associated with USACE projects, authorities for USACE beach nourishment activities, USACE authorities for environmental infrastructure assistance, and disposition of functioning and obsolete USACE infrastructure, private funding for the processing of USACE permits and permissions, and mitigation of the wetlands and environmental effects of USACE projects. WRDA 2018 included a limited number of project-specific provisions; AWIA 2018 included project-specific provisions and numerous provisions that related to specific river basins or states. These types of provisions have at times shaped past debates of omnibus USACE authorization legislation. Congressional deliberations in the 115 th Congress also were shaped by project-specific provisions or provisions that address specific river basins or states. H.R. 8 as marked up by the House Transportation and Infrastructure Committee included a provision related to the use of the Harbor Maintenance Trust Fund (HMTF) to support navigation; the provision was not included in the House Rules Committee Print 115-72 or in H.R. 8 as passed by the House. The HMTF provision would have provided that, for FY2029 and thereafter, the Secretary of the Army shall have available without further appropriations monies from the HMTF to cover the eligible operations and maintenance costs assigned to commercial navigation of all U.S. harbors and inland harbors. AWIA 2018 did not contain an HMTF provision similar to the one in H.R. 8 as marked up by House Transportation and Infrastructure Committee. In addition to water resource issues, the 115 th Congress has given considerable attention to drinking water and wastewater infrastructure management and funding issues. Numerous bills have been introduced to amend EPA-administered programs under the Clean Water Act (CWA) and/or the Safe Drinking Water Act (SDWA) to help municipalities meet public health and environmental quality goals through drinking water and wastewater infrastructure improvements and other means. These bills would variously increase federal investment in water infrastructure, promote infrastructure resiliency and sustainability, and increase capacity to comply with CWA and SDWA mandates. Many of these objectives were incorporated in provisions of AWIA 2018. Similarly, WRRDA 2014 and WIIN in 2016 addressed water infrastructure programs administered by EPA. WRRDA 2014 included WIFIA, which authorized EPA and USACE to provide credit assistance for an array of water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment systems—and, specifically, projects eligible to receive assistance under the Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) programs. WIFIA specifies that state infrastructure finance authorities are eligible to receive WIFIA assistance. WRRDA 2014 also made significant revisions to the CWSRF program. In 2016, WIIN, Title II (Water and Waste Act of 2016), made numerous amendments to SDWA. AWIA 2018 included numerous provisions involving EPA-administered water quality infrastructure programs and other authorities. Most of these provisions occurred in Title V, but other titles also featured EPA-relevant provisions (e.g., Section 3702 proposed to amend and reauthorize EPA's Long Island Sound programs). Title V of AWIA 2018 would have amended the CWA to (1) reauthorize the appropriation of grants for municipal sewer overflow projects and to make stormwater management projects eligible for these grants; (2) authorize a technical assistance program for small- and medium-sized wastewater treatment works; and (3) formally authorize EPA's integrated planning initiative, which is intended to help municipalities comply with multiple CWA wastewater discharge mandates. AWIA 2018 would have further amended the CWA to require certain EPA offices to promote the use and coordinate the integration of green infrastructure into permitting, planning, research, funding guidance, and other activities, among other provisions. Section 3308 of AWIA 2018 proposed to amend the CWA to codify in statute the existing EPA regulations on water transfers. It would have defined water transfer as "an activity that conveys or connects waters of the United States without subjecting the water to intervening industrial, municipal, or commercial use." It would also have specified that discharges from water transfers do not require a CWA permit, with the exception of pollutants introduced by the water transfer activity itself to the water being transferred. That is, surface water containing pollutants (e.g., nutrients, sediment, or invasive species) could be transferred to another waterbody or watershed without being subject to CWA controls. Regarding SDWA authorities, Title V of AWIA 2018 would have made several changes to the act's DWSRF provisions, including making permanent the requirement that projects receiving DWSRF assistance must use iron and steel products produced in the United States. Among other SDWA amendments, AWIA 2018 would have (1) expressly authorized EPA's WaterSense program, and (2) revised the SDWA grant program for testing for lead in school and childcare-program drinking water. Additionally, AWIA 2018 included several WIFIA amendments. Title V would have removed WIFIA's designation as a pilot program and added a new section to WIFIA regarding loans to state CWSRF and DWSRF finance authorities. Although state SRF financing authorities are currently eligible to receive WIFIA assistance, these provisions would have authorized EPA to provide secured loans at subsidized interest rates for states meeting certain conditions. Unlike other WIFIA assistance, this section also would have allowed the use of federal assistance to support 100% of project costs, and it would have waived application fees. In addition, AWIA 2018 proposed to authorize EPA to establish a water infrastructure resiliency and sustainability grant program; authorize an Indian reservation drinking water and wastewater infrastructure pilot program at EPA; and support water utility workforce development. AWIA 2018 also called for studies on "intractable water systems" and on WIFIA accessibility for certain communities. These and other water quality and drinking water provisions are described below in Table 4 . In contrast, WRDA 2018 contained none of these provisions.

Omnibus Water Authorization Legislation in the 115th Congress. The 115th Congress initiated deliberations on an omnibus water authorization bill with H.R. 8, the Water Resources Development Act of 2018 (WRDA 2018), and S. 2800, America's Water Infrastructure Act of 2018 (AWIA 2018). The House passed H.R. 8 on June 11, 2018. On July 9, 2018, the Senate Committee on Environment and Public Works (Senate EPW) posted on its website an amendment in the nature of a substitute to H.R. 8, also titled America's Water Infrastructure Act of 2018. The Senate did not take up S. 2800 or the Senate EPW-posted amendment to H.R. 8. Instead, House and Senate committee leadership agreed on new legislative text. S. 3021, which the Senate passed as a courthouse-naming bill, was amended and passed in the House on September 13, 2018, to include the negotiated water authorization text. The negotiated text contains provisions from various pieces of legislation, most prominently H.R. 8, S. 2800, and H.R. 3387 (Drinking Water Systems Improvement Act of 2017). Like S. 2800, the House-passed S. 3021 is titled America's Water Infrastructure Act of 2018. If the Senate agrees to the House amendments to the bill, without proposing any further changes, the bill will be sent to the President. This CRS report reflects H.R. 8 as it was passed by the House on June 11, 2018 (referred to herein as WRDA 2018), and the amendment in the nature of a substitute to H.R. 8 as it was posted by the Senate EPW on July 9, 2018 (referred to herein as AWIA 2018). Subsequent legislative actions on omnibus water resource legislation (e.g., House-passed amendments to S. 3021) generally are not reflected in this report. Enactment of the House amendments to S. 3021 likely would mean that both of the bills discussed in this report would not receive further attention in the 115th Congress. The House amendments to S. 3021 are discussed in CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes, by [author name scrubbed], and CRS Report R45304, Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation, by [author name scrubbed]. H.R. 8 and Senate EPW-Posted Amendment to H.R. 8. WRDA 2018 (H.R. 8) focused primarily on authorizing water resource projects and activities of U.S. Army Corps of Engineers (USACE) and dam and levee safety programs. AWIA 2018, as reflected in the amendment in the nature of a substitute to H.R. 8 posted by the Senate EPW on July 9, 2018, included USACE and dam and levee safety provisions. It also included provisions on clean water and drinking water infrastructure programs and regulatory authorities of the Environmental Protection Agency (EPA), tribal water-related authorities and programs, and water-related activities of the Department of the Interior. Both WRDA 2018 and AWIA 2018 would have authorized USACE to conduct new studies and construct new projects, modified and extended existing project and program authorizations, and altered deauthorization authorities. Both WRDA 2018 and AWIA 2018 included provisions requiring studies of USACE civil works structure and efficiency. WRDA 2018 also would have required a study of the agency's budget processes; AWIA 2018 would have established a five-year budget process for the agency. Both WRDA 2018 and AWIA 2018 included provisions on nature-based alternatives and projects. AWIA 2018 included a larger number and broader set of provisions related to specific USACE projects than WRDA 2018. AWIA 2018, primarily Title V, addressed various EPA-administered water quality and infrastructure programs. Title V would have amended the Clean Water Act (CWA) for various purposes (e.g., to authorize grants for sewer overflow and stormwater management projects). AWIA 2018 also would have amended the Safe Drinking Water Act. It proposed several revisions to the Drinking Water State Revolving Fund program, and it would have expressly authorized EPA's WaterSense program. AWIA 2018 would have amended the Water Infrastructure Finance and Innovation Act (WIFIA) to authorize special terms for loan assistance provided to state Clean Water and Drinking Water State Revolving Fund finance authorities. Further, it would have required a study on WIFIA accessibility for certain communities. WRDA 2018 contained none of the EPA-related provisions and generally focused on USACE and dam and levee safety authorities.

Historically, accreditation in higher education developed as a part of the evolution of the American higher education system, at a time when it was becoming problematic that no single point of control or central body existed to set educational standards. In the late 19 th century, there was no consensus on the content of the educational programs offered by postsecondary educational institutions or the distinctions between educational offerings at secondary and postsecondary institutions. Because the boundaries were unclear, the first voluntary association of postsecondary institutions was formed in 1895 to define the difference between high school and college and to develop some guidelines and procedures for peer review as a condition for membership. Over time, a number of regional associations formed whose membership was contingent on accreditation. The associations established separate accrediting bodies or commissions that were responsible for developing standards and passing on the institutional qualifications for membership. By the early 1970s, all but a small percentage of degree-granting institutions of higher education were either accredited or applicants for accreditation. The United States does not have a centralized authority exercising singular national control over postsecondary educational institutions. The states assume varying degrees of control over education, but in general, institutions of higher education (IHEs) are permitted to operate with considerable independence and autonomy. Consequently, the character and quality of IHEs' programs can vary widely. The role of accreditation in higher education, therefore, is to help ensure a level of acceptable quality across the wide array of programs and institutions in higher education. The U.S. Department of Education (ED) describes the practice of accreditation as "a means of conducting nongovernmental, peer evaluation of educational institutions and programs" and lists the following as some of the purposes of accreditation: assess the quality of academic programs at institutions of higher education; create a culture of continuous improvement of academic quality at colleges and universities and stimulate a general raising of standards among educational institutions; involve the faculty and staff comprehensively in institutional evaluation and planning; and establish criteria for professional certification and licensure and for upgrading courses offering such preparation. The Council for Higher Education Accreditation (CHEA)—a membership organization currently made up of approximately 3,000 colleges and degree-granting universities, and the primary nongovernmental higher education organization that scrutinizes the quality of higher education accrediting agencies—similarly describes accreditation as "a process of external quality review created and used by higher education to scrutinize colleges, universities, and programs for quality assurance and quality improvement." CHEA specifically identifies the following roles or purposes of accreditation: Assur ing quality. Accreditation is the primary means by which colleges, universities, and programs assure quality to students and the public. Accredited status is a signal to students and the public that an institution or program meets minimum threshold standards for, as examples, its faculty, curriculum, student services, and libraries. Accredited status is conveyed only if institutions and programs provide evidence of fiscal stability. [ Provid ing access ] to federal and state funds. Accreditation is required for access to federal funds such as student aid and other federal programs. Federal student aid funds are available to students only if the institution or program they are attending is accredited by [an ED-recognized] accrediting organization.... State funds to institutions and students are generally contingent on accredited status. Engender ing private sector confidence. Accreditation status of an institution or program is important to employers when evaluating credentials of job applicants and when deciding whether to provide aid support for current employees seeking additional education. Private individuals and foundations look for evidence of accreditation when making decisions about private giving. Easing of transfer [ of credits ] . Accreditation is important to students for smooth transfer of courses and programs among colleges and universities. Receiving institutions take note of whether or not the credits a student wishes to transfer have been earned at an accredited institution. There are three general types of accrediting organizations, or agencies, which are discussed in detail below. Both ED and CHEA scrutinize accrediting agencies and determine whether they are reliable authorities as to the quality of education offered. ED recognition is viewed as more important because IHEs must be accredited by an accrediting agency recognized by ED in order to participate in student financial assistance programs under Title IV of the HEA or other federal programs. There are currently seven regional accrediting agencies operating in six regions of the United States. These accreditation agencies concentrate on specific regions of the country. Regional accreditation agencies started as leagues of traditional universities and colleges in particular areas of the country. Accreditation status from regional accrediting agencies is granted to an entire institution, including all of its programs, for purposes of participating in Title IV FSA programs, but such status does not guarantee the quality of individual programs. As of February 2017, these organizations accredited 3,509 institutions and their locations. Table 1 lists the regional accrediting organizations recognized by ED, CHEA, or both. These entities operate across the United States and also accredit entire institutions. National accreditation agencies started as associations of schools with a common theme. Many served schools that were not initially founded as colleges or universities. There are two types of national accrediting organizations—faith-based and private career. The five faith-based accreditors review religiously affiliated or doctrinally based institutions and represent a small percentage of the institutions accredited by national accrediting organizations (241 institutions and locations as of March 2017). The seven private career accreditors accredit a substantially larger number of institutions (2,801 as of March 2017), many of which are single-purpose institutions (e.g., focused on business and technology). Table 2 lists the national accrediting agencies recognized by ED, CHEA, or both. These entities also operate nationwide and review programs and single-purpose institutions (e.g., engineering and technology). In many instances, particular programs (e.g., law) are accredited by a specialized accrediting organization, while the institution at which the program is offered is accredited by a regional or national accrediting organization. Programmatic accreditation can demonstrate that a specific department meets established standards for a certain field of study. For example, many prospective employers require graduation from a program accredited by a certain programmatic organization and licensure requirements for some fields in certain states require recognized programmatic accreditation. Most of the specialized or programmatic accrediting agencies review units within an IHE that is accredited by one of the regional accrediting agencies; however, certain accrediting agencies also accredit professional schools and other specialized or vocational IHEs that are freestanding in their operations. Thus, a specialized or programmatic accrediting agency may also function in the capacity of an institutional accrediting agency. As of March 2017, there are approximately 66 programmatic accrediting agencies recognized by CHEA, ED, or both. The accreditation process is voluntary and must be requested by educational institutions or programs. Accreditation of institutions takes place on a cycle that may range from every few years to as many as 10 years. Accreditation is an ongoing process and the initial earning of accreditation does not guarantee indefinite accredited status. Accrediting organizations are funded primarily by annual dues from IHEs and programs that are accredited and fees that institutions and programs pay for accreditation reviews. In some cases, an accrediting organization may receive financial assistance from sponsoring organizations. Accrediting organizations sometimes obtain funds for special initiatives from government or private foundations. Funds may also be derived from conferences and meetings. Accrediting organizations reported they spent more than $137 million in 2012-2013. Additionally, accrediting organizations employed more than 832 paid full- and part-time staff and worked with more than 19,600 volunteers. To gain accreditation, an institution must be evaluated through a number of steps outlined by the accrediting organization. These procedures are guided, in part, by the federal requirements discussed later in this report. However, the specific procedures for evaluation reviews adopted by accreditation agencies do vary among them. The following description of the evaluation process is intended to provide a general overview of how institutions are evaluated for initial or renewal accreditation status. The process typically begins with institutional self-study. This self-study is designed to be an examination of whether an institution's operation and performance meet the basic requirements or standards of the accrediting organization (which differ somewhat from organization to organization). The self-study typically involves the preparation of detailed written reports showing how the institution or program determines whether it meets or exceeds the agency's standards, as well as how it plans to improve in the future. The next phase in the evaluation process typically involves a peer review and site visit at the institution. Peer review is conducted by an outside team primarily composed of higher education faculty and administrators. These peers review the self-study and serve on visiting teams, which also include practitioners in specific fields and members of the public (nonacademics who have an interest in higher education). After analyzing the self-study, the visiting team conducts a site visit to determine whether the standards of the accrediting organization are being met; the self-study analysis provides the basis for scrutiny by the team during the visit to the campus. During the visit, team members have an opportunity to talk to faculty, students, staff, and administrators about issues and questions arising from the self-study. The team usually conducts an exit interview with the president or dean to discuss issues that have surfaced during the review. All team members are volunteers and are generally not compensated. Following the visit to an institution, the team typically prepares a comprehensive accreditation report that includes judgments about the institution's or program's strengths, weaknesses, and potential for improvement. Staff of the accrediting organization may meet with the visiting review team to discuss the draft report. The final report is submitted to the accreditation agency, with recommendations about which actions should be taken. Based on the results of the self-assessment, peer review, and site visit, the decisionmaking bodies of accrediting organizations (commissions) determine whether accreditation should be awarded to a new institution, renewed for an existing institution, denied, or put on provisional or probationary status. All accreditation agencies have an appeals process and some requirements are determined by federal law. Accrediting agencies also monitor institutions and programs between reviews and may require annual reporting, interim reviews, or substantive change reports from the institutions and programs they have accredited. Annual reporting could include financial statements and updated curricular or planning information. Interim reviews are required when issues are left unresolved from a comprehensive evaluation. According to CHEA, accreditation is "a trust-based, standards-based, evidence-based, judgment-based, peer-based process." Over the years, the accreditation process has come under scrutiny amid calls for reform. Some critics argue the accreditation process places too much emphasis on inputs rather than outputs. Others say accreditation only demonstrates that an institution is following what the accrediting body believes to be the appropriate formula for a successful educational institution, not that it is in fact a successful institution. Accrediting agencies take a range of formal actions following evaluations and reviews at institutions or of programs for initial or continuing accreditation. Table 3 below highlights the types and frequency of actions reported by accrediting agencies to CHEA in 2014, displayed by type of organization. It is important to note that accrediting agencies do not use a common set of definitions for the actions displayed below, so some actions are categorized by their relevancy to more commonly defined actions. Federal recognition of accrediting agencies was initiated in 1952, shortly after the passage of the Veterans' Readjustment Assistance Act of 1952 (the Korean GI Bill; P.L. 82-550), to assess higher education quality and link it to determining which institutions would qualify to receive federal aid under the GI Bill. Rather than creating its own system of quality assurance, the federal government opted to rely on existing accrediting agencies and assumed accreditation agencies were reliable indicators of educational quality. A recognition process was established in the (then) Office of the U.S. Commissioner of Education to produce a list of federally recognized accrediting agencies and associations. The National Defense Education Act of 1958 (NDEA; P.L. 85-864) also addressed the federal role in accreditation of higher education. In defining the term "institution of higher education" for the purposes of identifying institutions eligible to receive federal funds to assist in making low-interest loans to postsecondary students in need, the NDEA maintained the criterion that institutions be accredited by an agency or association recognized by the U.S. Commissioner of Education. In 1965, the importance of the accrediting agencies was augmented further with the enactment of the Higher Education Act (HEA; P.L. 89-329). Title IV of the HEA created new federal student aid programs for nonveterans, and only accredited institutions recognized by the (then) Office of the U.S. Commissioner of Education were eligible to receive these funds. As a result, nonaccredited institutions stood to lose access to billions of dollars in federal funds; thus, achieving and maintaining an accredited status became almost essential for the financial survival of some, if not most, institutions and programs. ED does not accredit IHEs or programs of higher education. Its primary role is to recognize, through the process and conditions set forth in Section 496 of the HEA and Title 34 of the Code of Federal Regulations (C.F.R.), Part 602, an accrediting agency or association as "a reliable authority as to the quality of education or training offered" at IHEs for the purposes of Title IV funding and other federal programs. As part of the recognition process, the accreditation agency must show that it is "effective in its performance" with respect to the criteria established in the law and regulations. Recognition may be revoked at any time if ED determines the agency has become ineffective in its performance. The Accreditation Group was established within ED to help facilitate accreditation matters. In effect, the Accreditation Group carries out the statutory and regulatory requirements of ED as they relate to the application and approval of accrediting agencies. One of its primary functions is to "continuously review standards, policies, procedures, and issues in the area of [ED's] accreditation responsibilities." Section 496 of the HEA sets forth the standards and criteria accrediting agencies must meet to be recognized by ED as reliable authorities as to the quality of education offered at IHEs. Between the 1965 enactment of the HEA and its reauthorization in 1992, accrediting agencies were required to be recognized by ED for Title IV purposes, but the HEA specified few, if any, criteria for ED recognition. Leading up to the 1992 reauthorization of the HEA, concerns about fraud and abuse in the accreditation process by the proprietary school sector were evident. Rather than singling out the proprietary institutions for special oversight, Congress opted to strengthen the criteria for ED recognition of accrediting agencies of all types of institutions. Thus, HEA Section 496 was added in the Higher Education Amendments of 1992 ( P.L. 102-325 ) in an effort to require accrediting agencies to exercise genuine oversight of the schools they accredited. The new Section 496 described the types of organizations eligible for ED recognition (e.g., state, regional, or national agencies with voluntary memberships). It also detailed the types of school assessment standards—such as recruitment and admissions practices; program length; and "success with respect to student achievement in relation to [the school's] mission," which could include consideration of course completion, state licensing examinations, and job placement rates—that agencies were to apply consistently to all IHEs. The 1998 reauthorization (the Higher Education Amendments of 1998; P.L. 105-244 ) saw changes in the scope of the criteria for ED recognition of accrediting agencies, especially in regard to changing education delivery methods and distance education programs. Specifically, the act permitted the Secretary of Education (Secretary) to include within an accrediting agency's scope of recognition the ability to assess an IHE's distance education programs. In doing so, Congress sought to ensure that the federal government was providing Title IV support only to quality programs in the rapidly growing area of distance education. Congress provided a host of additional criteria for ED recognition of accrediting agencies in the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315 ). The 2008 additions included provisions relating to how accrediting agencies were to review distance education programs; transparency of agency policies and decisionmaking processes; due process requirements for IHEs subject to an adverse agency action; and various other standards related to IHE operations, including ensuring that IHEs make transfer-of-credit policies publicly available and submit teach-out plans to accrediting agencies in specified circumstances. Today, many of the ED-recognition requirements put into place since 1992 remain. According to Section 496 of the HEA, an accrediting agency must be a state, regional, or national agency or association that demonstrates the ability and expertise to serve as an accrediting agency or association. These agencies or associations must then meet one of the following specific criteria: For the purpose of determining eligibility for Title IV programs, the agency or association must have a voluntary membership of IHEs and have the accreditation of these institutions as one of its primary purposes; or, for the purposes of participation in other ED or federal programs, the agency must have a voluntary membership and have its primary purpose be accrediting IHEs or programs. It must be a state agency approved by the Secretary as an accrediting agency or association on or before October 1, 1991. For the purpose of determining eligibility for Title IV programs, the agency or association must either conduct accreditation through a voluntary membership organization of individuals participating in a profession, or the agency or association must have as its primary purpose accrediting programs within institutions that have already been accredited by another agency or association recognized by the Secretary. Accrediting agencies or associations meeting the first or third criterion must also be administratively and financially separate and independent from any associated or affiliated trade organization or membership organization. For accrediting organizations meeting the third criterion and that were recognized by the Secretary on or before October 1, 1991, the Secretary may waive the requirement that the agency or association be administratively and financially separate and independent if it can be shown that existing relationships with associated or affiliated trade organizations or membership organizations have not compromised the independence of the accreditation process. Regardless of the type of accrediting association or agency, the organization must consistently apply and enforce standards that ensure that the education programs, training, or courses of study offered by an IHE are of sufficient quality to meet the stated objectives for which they are offered. The standards used by the accrediting agency or association must assess student achievement in relation to the institution's mission, including, as applicable, course completion, passage of state licensing examinations, and job placement rates. The accrediting organization must consider the institution's curricula, faculty, facilities, fiscal and administrative capacity, student support services, recruitment and admissions practices, measures of program length, objectives of the credentials offered, and student complaints received directly by the agency or association or those that are available to the agency or association. The institution's record of compliance with the institutional requirements of Title IV must also be examined with respect to the most recent student loan default rate data provided by ED, the results of financial or compliance audits, program reviews, and other information provided to the agency or association by ED. Accrediting organizations must confirm that the institutions or programs they accredit (1) have transfer of credit policies; (2) make transfer of credit policies public; and (3) make public the criteria by which an institution makes a determination with regard to accepting credits from another institution. Under Section 496(a)(6) of the HEA, accrediting agencies recognized by ED must meet certain requirements with respect to due process. That is, an accrediting agency is required to implement specific procedures to resolve disputes between the accrediting agency and any institution that is subject to the accreditation process. Under current law, accrediting agencies are required to provide an IHE or program with, at minimum, the following: adequate written specification of requirements and deficiencies at the IHE or program being examined; sufficient opportunity to provide a written response to any deficiencies prior to final evaluation and withdrawal proceedings; the opportunity to have a hearing; the right to appeal any adverse action against it; and the right to be represented by counsel. Accrediting agencies and associations must meet additional requirements that focus on operating procedures, including reviewing newly established branch campuses at accredited institutions and publicly disclosing when an institution is considered for accreditation or reaccreditation. Accrediting agencies and associations must also perform regular onsite inspections that focus on educational quality and program effectiveness. Additionally, accrediting agencies must monitor the expansion of programs at institutions that are experiencing significant enrollment growth and must require institutions to submit a teach-out plan in certain circumstances. Accrediting agencies are required to notify ED, state licensing or authorizing agencies, and other appropriate accrediting organizations of adverse accrediting decisions at the same time the institution or program being evaluated is notified of the decision. Accrediting organizations must provide the aforementioned parties and the public with a statement summarizing the reasons for the adverse decision, along with evidence that the affected institution has been offered an opportunity to provide official comment. In a Federal Register dated October 29, 2010, ED published amended regulations pertaining to the eligibility of IHEs to participate in Title IV programs under the HEA. Among these amended regulations was a new requirement, effective July 1, 2011, that accrediting agencies review an institution's policies and procedures for determining credit hours and the application of those policies and procedures to programs and coursework in accordance with a new federal definition of a credit hour for the purposes of Title IV aid eligibility. Like the standards and criteria an accrediting agency must meet to be recognized by ED, the process for ED recognition was not established in the HEA until the 1992 reauthorization. At that time, Congress prescribed the major components of the recognition process, which largely have gone unchanged since that time. The Section 496 procedures for recognition include requirements to conduct independent evaluations. These independent evaluations are to include (1) the solicitation of third party information related to the performance of the accrediting agency; (2) site visits, including, as appropriate, unannounced site visits to accrediting agencies; and (3) at the discretion of the Secretary, site visits to representative member institutions. Other requirements specified in Section 496 include the requirement for ED to make records of the decisionmaking process available and to publish reasons for denial of recognition. ED is specifically prohibited from basing recognition decisions on anything other than the statutory criteria, while accrediting agencies are expressly permitted to have criteria in addition to those needed for recognition. Once granted, recognition is established for up to five years. The accrediting organization must then be reapproved for inclusion on the list of recognized accrediting entities. ED recognizes agencies that accredit all types of institutions (public, private nonprofit, and proprietary) and a variety of educational programs. They include agencies that accredit multi-disciplined universities, as well as those that accredit smaller, specialized institutions or a specific program within an institution. ED publishes lists of recognized accrediting agencies in certain categories that may be used by institutions to seek accreditation or by students to ensure a reasonable assurance of program quality and acceptance of diplomas and degrees by employers. Two of these categories are discussed below. As of March 2017, ED recognizes 36 accrediting agencies for Title IV purposes. These agencies include national, regional, and programmatic accrediting organizations. Institutions may apply to these accrediting agencies to establish eligibility to participate in Title IV programs under the HEA. Distance education programs must be evaluated by an accrediting agency recognized by ED as having the evaluation of distance education programs within its scope of recognition. Accrediting agencies that accredit distance education programs are not required to have separate standards, procedures, or policies for the evaluation of distance education. They are, however, required to ensure that institutions track the identity of students who participate in distance education or correspondence education offerings while protecting students' privacy and notifying students of any additional costs associated with such verifications. As of March 2017, ED recognizes 31 accrediting agencies as having distance education within their scope for Title IV purposes. NACIQI advises the Secretary on matters related to accreditation, including decisions to recognize accrediting organizations. Section 114 of the HEA provides for the establishment of NACIQI, along with the qualifications for membership, meeting procedures, and other reporting requirements. NACIQI was originally established under the HEA under the 1992 Amendments to the Higher Education Act ( P.L. 102-325 ). In 2008, the HEOA amended the structure of NACIQI. Prior to enactment of the HEOA, NACIQI consisted of a 15-member committee appointed solely by the Secretary. Under the HEOA, NACIQI was expanded to an 18-member committee, with 6 appointments made by the Speaker of the U.S. House of Representatives, 6 appointments made by the President pro tempore of the U.S. Senate, and 6 appointments made by the Secretary. These appointees will serve staggered six-year terms. NACIQI advises the Secretary on matters related to accreditation and to the eligibility and certification process for institutions of higher education. Specifically, NACIQI provides recommendations to the Secretary regarding the establishment and enforcement of criteria for recognition of accrediting agencies or associations under Subpart 2 of Part H, Title IV, of the HEA; the recognition of specific accrediting agencies or associations or a specific state approval agency; the preparation and publication of the list of nationally recognized accrediting agencies and associations; the eligibility and certification process for IHEs under Title IV of the HEA; the relationship between (1) accreditation of IHEs and the certification and eligibility of such institutions and (2) state licensing responsibilities with respect to such institutions; and any other advisory functions relating to accreditation and institutional eligibility that the Secretary may prescribe. By law, NACIQI is required to meet not less than twice a year to review applications for recognition submitted by accrediting agencies. The usual times for the meetings are spring (May-June) and fall (November-December). Accrediting agencies seeking initial recognition from the Secretary and those seeking renewals of recognition typically submit application packages to ED in advance of the next scheduled NACIQI meeting. In preparation for the meeting, NACIQI members are provided with the accrediting agencies' applications and supporting documentation, any analyses performed by ED staff, and other information. During the NACIQI meetings, accrediting agencies applying for recognition, ED staff, and third parties who request to be heard are invited to make oral presentations. NACIQI conducts its business in public, and transcripts of the proceedings are made available for public dissemination. After each meeting, recommendations offered by NACIQI concerning recognition are forwarded to the Secretary, who makes the final determination regarding recognition. An appeals process is available to any agency that disagrees with the recommendation provided by NACIQI and to any agency that disagrees with the Secretary's final recognition decision. The following list provides the names, titles, and affiliations of the current NACIQI members, by appointment authority. Appointments by the Secretary of Education: Simon J. Boehme (Student Member), Independent Consultant, San Francisco, CA; Roberta L. Derlin, Associate Provost Emeritus, New Mexico State University at Albuquerque; John Etchemendy, Provost, Stanford University; Susan D. Phillips, Former Provost and Vice President for Academic Affairs and Former Vice President for Strategic Partnerships, University at Albany, State University of New York; Frank H. Wu, NACIQI Vice Chair Distinguished Professor, University of California, Hastings College of Law; and Frederico Zaragoza, Vice Chancellor of Economic and Workforce Development, Alamo Colleges. Appointments made by the House: Kathleen Sullivan Aliota, Strategic Advisor, Fundraiser, and Consultant, New York, NY, San Francisco, CA, and Boston, MA; George T. French, President, Miles College; Arthur E. Keiser, NACIQI Chair, Chancellor and CEO, Keiser University; Arthur J. Rothkopf, President Emeritus, Lafayette College; Ralph Wolff, Independent Consultant, Oakland, CA; Vacant position. Appointments made by the Senate: Steven Van Ausdle, President Emeritus, Walla Walla Community College; Jill Derby, Senior Consultant, Association of Governing Boards of Colleges and Universities; Paul J. LeBlanc, President, Southern New Hampshire University; Anne D. Neal, Senior Fellow, American Council of Trustees and Alumni; Richard F. O'Donnell, Founder and CEO, Skills Fund; and Vacant position. Among the issues that could receive consideration during a reauthorization of the HEA are several issues related to the role of accreditation in determining institutional eligibility to participate in Title IV federal student aid programs. Some issues that may receive attention include the use of accreditation as a measure of quality, potential ways of restructuring or streamlining the accreditation process, accreditation's role in the changing postsecondary education landscape, and transparency and potential conflicts of interest in the accreditation process. Both institutional accreditation and programmatic accreditation are often viewed as measures of the quality of education provided by an IHE. Institutional accreditation may be seen as a measure of institutional quality, signaling that an IHE meets a set of institution-level performance standards, while programmatic accreditation indicates that a specific program meets established standards for a certain field of study. Whether and to what extent the federal government should rely on these two types of accreditation as measures of educational quality are issues that may receive attention during HEA reauthorization. IHEs must be accredited by an ED-recognized accrediting agency to participate in Title IV federal student aid programs and thus gain access to a source of revenue that is vital for many IHEs. Institutional accreditation by an ED-recognized accrediting agency may be considered a measure of institutional quality, because it indicates that an IHE meets performance standards delineated by the accrediting agency and maintains financial stability, as determined by an accrediting agency's review. Issues arise perennially regarding whether accreditation is a true measure of institutional quality and what role the federal government should play in measuring or ensuring institutional quality. Some proponents of accreditation as a measure of institutional quality believe that the accreditation process should be refocused on student achievement or student outcome measures. They suggest accreditation is currently too reliant on assessing inputs (e.g., the proportion of professors with Ph.D.s or the maintenance of facilities and learning resources) and propose incorporating student outcome metrics into the accreditation process, which could include graduation rates; retention rates; job placement rates; and student performance in skills assessment (e.g., critical thinking and communication). There is disagreement, however, as to how such metrics should be determined. Some believe that they should be determined by individual IHEs, based on their own missions, while others advocate for standard metrics to be applied to IHEs participating in the Title IV programs. Under either scenario, accrediting agencies could be the entity to evaluate whether the metrics were met by an IHE. If federal standards were set, consideration might be given to what extent the characteristics of students enrolled at an individual IHE would affect its expected performance (e.g., for-profit IHEs and community colleges enroll a higher proportion of low-income students who tend to have lower graduation rates) and how much discretion accrediting agencies could have in evaluating outcomes based on such characteristics. Also, while this information may prove useful to the federal government in determining which IHEs are of an acceptable quality to participate in the Title IV FSA programs and to consumers choosing which IHE to attend, there are several potential issues relating to the collection of data for determining whether student outcome metrics have been met. For instance, various federal and state entities, accrediting agencies, and individual IHEs already collect data relating to student performance. An analysis of the types of data currently collected by each of these entities could be performed to avoid duplication of collection efforts and the potential for adding time and costs to the accreditation process. The creation of a federal unit record system—a longitudinal data collection system that allows for the collection of individual students' education records over time (i.e., throughout their education careers and time in the workforce)—is a tool that could be used by the federal government and accrediting agencies to aid in collecting data relating to student performance and in evaluating institutional performance. Currently, Section 134 of the HEA specifically prohibits the establishment of a federal unit record system. If permitted, however, such a system may be an efficient means of tracking student progress, because comprehensive data would be accessible in one location. Yet the collection of student outcome data necessarily involves tracking individual students' performance; efforts would need to be made to safeguard individual students' privacy during the collection, merging, and reporting of data. Concerns about privacy have figured prominently in the discourse of tracking student outcomes. Opponents of using accreditation as a measure of institutional quality believe that accreditation's dual role as Title IV gatekeeper and reviewer of institutional quality is inherently in conflict. They suggest that it would be desirable to sever the link between accreditation and access to Title IV funds and return accreditation to its role as a private, voluntary system of quality assurance. Under this paradigm, the federal government might conduct separate reviews of institutions' financial stability, administrative capabilities, and performance with regard to student outcomes. There is often a lack of understanding by consumers about the meaning of programmatic accreditation, as compared to other types of accreditation (i.e., regional or national). Regional and national accreditation attests to the overall quality of institutions and their programs, in general, and allows students at institutions to receive Title IV aid, but it does not address the quality of individual programs with regard to specialized programmatic criteria, such as whether the curriculum offered meets professional guidelines. Programmatic accreditation can demonstrate that a specific educational program within an IHE meets established standards for a certain field of study and often serves as a signal of program quality. While programmatic accreditation is not required for Title IV eligibility, access to some employers, acceptance to some advanced educational programs, and eligibility for professional licensure in some states require individuals to complete a program accredited by certain programmatic accrediting agencies. For example, a student may enroll in a program at a Title IV participating institution that is accredited by a regional or national accrediting agency, but the program may lack programmatic recognition from a professional body, which can result in the benefits associated with program completion being diminished (e.g., the student may not be able to become licensed within his or her state). Congress might consider whether it is desirable to support attendance, via Title IV eligibility, at programs that lack professional recognition from programmatic accrediting agencies, when such accreditation is available. The American postsecondary education landscape is broad and varied, with institutions providing numerous educational offerings to a diverse body of students. The approximately 7,300 Title IV participating institutions have assorted missions (e.g., research university, liberal arts college, sub-baccalaureate certificate programs), offer differing degrees in numerous subject areas, and serve students who range from traditional, full-time college-aged students to part-time, older students. To participate in the Title IV programs, however, most of these varied institutions must, in general, be accredited by one of 18 regional or national accreditation agencies. As part of HEA reauthorization, attention may be devoted to the extent to which the current structure of accreditation meets the needs of such differing institutions and their students and whether the federal accreditation agency recognition process could be restructured or streamlined to help meet those needs. These issues are explored in greater depth below. Regional accrediting agencies alone accredit over 3,500 of the approximately 7,300 Title IV participating institutions, with institutions in each region including two-year, four-year, and less-than-two-year public, private nonprofit, and private for-profit institutions. Additionally, these institutions have diverse missions and student populations. The wide array of institutions served by regional accrediting agencies has led some to propose a restructuring of the accreditation system, with accreditors focusing more narrowly on types of institutions accredited (e.g., community colleges, research universities), rather than on institutions that fall within a particular geographic region. By doing so, they argue, peer reviewers and professionals familiar with the operations of each type of institution would evaluate institutions within that category, thus ensuring a strong peer-review foundation, and help to establish better measures of outcomes and accountability. Congress might consider whether restructuring the current accreditation system is desirable and, if so, how a new structure could be fashioned. Restructuring options that Congress might consider include encouraging or facilitating the transformation of the current regional accreditation system into one organized on the basis of institutional type or mission or allowing other entities, such as a state regulatory body, to serve the accreditation agency role of determining the quality of an institution. The process of receiving initial accreditation and then periodically having it renewed is often viewed as time- and resource-intensive. Although the federal government does not set specific accreditation requirements, it indirectly influences the criteria accrediting agencies review based on the federal standards accrediting agencies must meet to be recognized by the ED. Accrediting agencies often state that the numerous ED-recognition criteria are onerous and unnecessary, potentially discouraging accrediting agencies from placing greater emphasis on educational rigor and innovation. Congress may wish to consider whether all aspects of the federal recognition process are necessary in determining whether an accrediting agency is a reliable authority on the quality of the education being offered or whether other steps could be taken to reduce the costs and burdens associated with the overall process. Some items that have been raised include decreasing or modifying the existing statutory and regulatory criteria for federal recognition of accrediting agencies and redistributing the responsibilities between accrediting agencies and ED (e.g., shifting more oversight of institutional financial sustainability to ED). Efforts to provide access to postsecondary education to a broad variety of students (e.g., older, working, and/or low-income students) and potentially reduce postsecondary educational costs for students have resulted in the emergence or further proliferation of nontraditional educational delivery models and providers. For instance, although competency-based education (CBE) has been used by some schools for decades, recently there has been an increased interest in CBE as a means to potentially decrease time to degree completion and, therefore, costs to students. Additionally, CBE and other models of online education delivery enable students to participate in education in ways that give students the flexibility to work around time constraints and focus on coursework when convenient. While some accrediting agencies have already begun to address such issues in their review processes, Congress could consider whether accreditation is the best way to address these types of educational offerings and, if so, to what extent it should do so. Undergraduate educational programs at public, private nonprofit, and proprietary institutions must meet standards pertaining to minimum amounts of instructional time to be eligible to participate in Title IV federal student aid programs. Generally, these programs are measured in credit hours, with one credit hour typically equaling two hours of homework for each hour of class attendance required of a student per week. Historically, the amount of time a student spent receiving instruction was seen as an indication of the quality of the education being provided (i.e., the more instruction time required, the more a student was expected to learn); however, ED has explicitly stated that there is no implicit "seat time" requirement under the credit hour regulations and that it is used only for federal program purposes, thus allowing institutions to set their own academic standards. As part of the institutional accreditation process, accrediting agencies are required to review an institution's policies for determining credit hours but do not evaluate the course content at IHEs. CBE, an educational delivery model that has gained significant attention in recent years, focuses on assessing a student's mastery of specified learning objectives or competencies. Unlike a traditional educational program in which students must meet a specified number of credit hours to progress and graduate, students in CBE programs progress through a program by demonstrating the mastery of a competency. However, for purposes of participating in the Title IV FSA programs, institutions offering CBE programs must be able to demonstrate how the method of measuring learning equates to the credit hour (i.e., the institution must "convert" competencies into credit hours). This framework, therefore, requires accrediting agencies to examine how the program's competency requirements match up to the traditional federal credit-hour requirement. Some argue that the accreditation framework may need to shift to enable accrediting agencies to better evaluate actual student learning and skills acquired, rather than time spent working. For instance, because CBE programs are not based on time spent on work, might two paths to accreditation—a traditional path based on credit hours and a competency-based path—be established to better serve these two differing educational approaches? Doing so may provide agencies accrediting CBE programs with the ability to focus more attention on learning outcomes in such programs, but may also take time to fully implement, as well-designed assessments of learning outcomes need to be identified and/or developed. Accreditation agencies argue that the regulatory definition of credit hour discourages the use of CBE because it mandates measuring programs with seat time; they recommend that accreditation agencies be given discretion to define the relevant elements of assessing student learning. Additionally, the issue of whether the credit hour should be completely decoupled from the accreditation process for CBE programs (i.e., institutions and their accrediting agencies would not be required to equate self-paced competency completion with credit hours) may arise. Such decoupling could take place within the current accreditation framework or could be used in the above-described two-path framework. As with the creation of a two-path framework, decoupling credit hours from CBE programs could provide accrediting agencies with greater ability to focus on learning outcomes, but it would take time to implement and develop well-designed assessments of learning outcomes. Under current law, the Secretary may include within an accrediting agency's scope of recognition the ability to assess an IHE's distance education programs, which include online education programs. Over the last several years, the use of online education has increased significantly and new forms of online education have developed. One such new form is massive open online courses (MOOCs), which are typically free or low-cost online versions of college courses available to individuals outside of an institution's regular student body, and usually no credits are awarded for class completion. Although the initial view of MOOCs as potential higher education "game changers" has been muted, MOOC-type offerings still remain viable options for the delivery of postsecondary education. For instance, some IHEs are integrating MOOCs into their course offerings in various ways, including offering "flipped classrooms," in which students learn content online at home and then complete assignments in class with faculty support and feedback; offering "blended learning," in which courses are taught in a traditional classroom setting but also incorporate online components; or providing supplementary materials for students. Alternatively, some providers of MOOC-type offerings give students the opportunity to receive certificates of completion or "badges" that signify their mastery of a skill for a fee. Mastery of a skill can be illustrated in a number of ways, such as the passing of an exam, completing a project, or attending classes. Some IHEs have begun exploring whether to award transfer of credit for obtaining badges and some employers may consider them when determining whether to employ an individual. While many of these offerings are currently free-of-charge or incorporated into traditional classes, with some providers there may be fees associated with assessment to certify the mastery of a skill. For instance, providers may charge students a fee for certification of course completion or IHEs may charge students a fee for assessing a course before allowing them to transfer credits. Such charges are currently ineligible for coverage with Title IV aid. Such innovative approaches to delivering a postsecondary education are promising, because they may provide more students with more convenient and lower cost access to postsecondary educational offerings. As such, Congress may be asked to consider whether such programs are prudent investments for federal student aid funds. In doing so, issues of how to delineate accreditation's role in determining the quality of such new educational options might be addressed. For example, different levels of accreditation (e.g., institutional- or course-level assessment) may be needed to evaluate these offerings. Evaluating individual credentials, rather than entire institutions or degrees, may serve as a signal to employers that a student has a very specific skill that the employer may desire, rather than a broader skill set encompassed by an entire degree but that may not include the specific, employer-sought skill. Creating such a bifurcated system, however, may require an assessment of whether currently recognized accrediting agencies or other entities, such as professional organizations, are the appropriate bodies for reviewing these offerings. Congress may consider whether to implement other changes to the current accreditation framework, including reforms to address accrediting agencies' transparency and potential conflict-of-interest issues. Currently, ED-recognized accrediting agencies must make publicly available basic information about an IHE's accreditation status. They must also make available to the Secretary, the relevant state licensing or authorizing agency, and the public, upon request, a summary of an accreditation review leading to a final accreditation decision involving the denial, termination, or suspension of accreditation. Other documents pertaining to the accreditation process may remain private and their release to external parties is often at the discretion of the accrediting agency or IHE. Individuals, including industry participants, argue that more detailed information (e.g., reasons for why accreditation decisions were made, IHEs' self-studies) should be provided to potential consumers to enable them to make well-informed decisions. Such additional information, they assert, could increase public accountability and allow external stakeholders (e.g., potential and current students) to make better informed decisions as to whether funds should be spent at a particular IHE. There are concerns, however, that requiring additional information to be made available may hinder the private and candid discussions between accrediting agencies and institutions. While additional information may be useful, some argue, decisionmakers must be wary of encumbering the candor that is inherent in the peer review-based accreditation process. The foundation of accreditation is the peer-review process, in which the majority of members of the accrediting commissions or boards that make judgments about accreditation status are institutional faculty and administrators. Some view the idea of colleagues reviewing colleagues in accreditation evaluations as a weakness, citing the potential for conflicts of interest in a process that essentially serves a gate-keeping role for access to billions of dollars in federal student aid. Others, however, claim that such a review helps accentuate the difference between genuine quality review by industry experts and bureaucratic scrutiny for compliance, while pointing to the major role peer review plays in government and other nongovernment organizations in research, medicine, and other sciences. To address these concerns, Congress could explore whether a different methodology for institutional review is proper and to what extent peers may be involved in that evaluation.

Title IV of the Higher Education Act (HEA) authorizes programs that provide financial assistance to students to assist them in obtaining a postsecondary education at certain institutions of higher education (IHEs). IHEs wishing to participate in Title IV federal student aid (FSA) programs must meet several requirements, including being accredited by an agency recognized by the Department of Education (ED) as a reliable authority on the quality of the education being offered. There are three general types of accrediting agencies, each of which serves a specific purpose. Regional accrediting agencies operate in six regions of the United States and concentrate their reviews on IHEs within specific regions of the country. National accrediting agencies operate across the United States and review institutions with a common theme (e.g., religiously affiliated institutions). Finally, programmatic accrediting agencies operate nationwide and review programs and single-purpose institutions. The accreditation process is voluntary and must be requested by educational institutions or programs. While accrediting agencies' review processes are guided, in part, by federal requirements, specific procedures for reviews are adopted by the individual agencies and vary among them. In general, however, the review process begins with an institutional self-assessment, then an institution is reviewed by an outside team of peers primarily composed of higher education faculty and practitioners, and finally, a comprehensive report is submitted by the team of peers to the accrediting agency, which then makes an accreditation determination. Although the federal government relies on accrediting agencies to evaluate the quality of education offered at IHEs, the HEA and ED regulations provide a variety of requirements that accrediting agencies must meet to be recognized by ED. Key provisions require that accrediting agencies meet general membership requirements (e.g., agencies must have a voluntary membership of IHEs); consistently apply and enforce standards that ensure the education programs, training, or courses of study offered are of sufficient quality to meet the stated objective for which they are offered; use review standards that assess student achievement in relation to the institution's mission, including, as applicable, course completion, passage of state licensing examinations, and job placement rates; evaluate, among other considerations, an institution's or program's curricula, faculty, facilities, and fiscal and administrative capacity; and meet due process requirements with respect to the institutions and programs they accredit. Congress may wish to focus on several issues related to accreditation as it considers HEA reauthorization. These issues may include further development of institutional quality measures, the potential to restructure or streamline the accreditation system, accreditation's role in the changing higher education landscape, and transparency and potential conflicts of interest in the accreditation process.

Congressional authorization of federal assistance to state and local governments can be traced as far back as 1808, when the first federal grant program was adopted to provide funds to states to support the National Guard. Since that time, there has been significant growth in the number of federal assistance programs to state and local government. There are currently over 2,321 congressionally authorized federal assistance programs. The growing number, perceived fragmentation, and complexity of these programs create challenges for federal agencies and congressional stakeholders in standardizing various financial and administrative aspects of federal grant program management. Federal agencies administering grant programs face challenges in providing timely, accurate, and detailed information on federal grant awards. This can be attributed, in part, to the way grant funds are distributed from the federal to the local level. This may also be attributed to the limitations of the databases used to track the distribution of federal grant funds. These limitations include questions regarding the validity of the data, and the limited ability to track the distribution of grant funds to the subgrant recipient level. Without complete and valid information about the distribution of federal grant funds, Congress may have a diminished capacity to engage in effective oversight of federal grants. Federal grant recipients are currently required to report grant project related information to federal agencies. This information is contained within a number of federal grant databases with limited public accessibility. The information reported by grant recipients varies depending on the federal program and the individual grant award. Federal grants are available for a variety of purposes. Federally funded grant projects may include purchasing fire and police equipment, constructing housing for low-income populations, providing disaster recovery assistance and other social services, and funding educational activities. Organizations generally coordinate the application and administration of federal grants, and individuals are beneficiaries of the grant projects and services provided by organizations. Organizations seeking federal grant funds are required to register in federal grant systems prior to applying for federal grants. Once grant funds are awarded, recipients are required to report information to federal agencies regarding the use of the federal grant funds. The information provided to the federal government by federal grant recipients is contained in several different federal databases. The general public has access to selected information contained in these databases. This report provides an introduction to reporting requirements placed on federal grant recipients, including requirements that must be met to seek federal grant funds. It also describes the types of information collected on grant recipients, the databases containing information about grant awards, and the availability of that information to the public. The reporting requirements discussed in this report are financial reporting requirements for grant recipients and do not include performance related reporting. To comply with guidance issued by the Office of Management and Budget (OMB), federal agencies that administer federal grant programs must collect and report financial grant data to federal grant databases. Federal agencies collect the grant data by requiring federal grant recipients to submit financial and performance data to the federal agency administering the grant program. These reporting requirements are set forth in the authorizing statutes and regulations for each individual grant program. Some reporting requirements, such as post-award audit requirements, are set forth in legislation that applies to almost every federal grant program. A federal grant seeker must provide information about their organization when they obtain a DUNS number and register with SAM. Grant seekers must provide the following information to obtain a DUNS number: legal name of the company, organization, or entity; entity headquarters name and address; secondary, or tradestyle, name of the company or the "Doing Business As" (DBA) name; physical address of the entity including city, street, and zip code; mailing address; telephone number; point of contact name and title; and, number of employees at the physical location. To register with SAM, grant seekers must provide the following information: DUNS number; business information, including the taxpayer identification number (TIN); Commercial and Government Entity (CAGE) code; business type and organization structure; financial information including electronic funds transfer (EFT) information for federal government payment purposes; answers to executive compensation questions; and, Point of Contact (POC) information including name, title, physical address, and email address. Federal agencies use a number of systems to track federal grant recipient data. Before a federal grant is awarded, officials seeking federal grants for their organization are required by law to obtain a unique identifier assigned and maintained by Dun and Bradstreet (D&B). This unique identifier is known as a Data Universal Numbering System (DUNS) number. Federal agencies use the DUNS number to identify federal grant applicants. Once a grant seeker obtains a DUNS number, the organization must register in the System for Award Management (SAM) in order to be eligible to apply for federal grants. Federal agencies use SAM to collect additional information on potential federal grant recipients. Each federal grant award is assigned a number that is then associated with the grant recipient. Federal agencies use the award number to track grant data in agency grant management and financial management systems. When Congress authorizes a federal grant program, the federal agency administering the grant program reports grant program information to the Catalog of Federal Domestic Assistance (CFDA). After a federal grant award is made, the federal agency that made the award collects information about the grant recipient and the grant project. The information provided in a federal grant application is inputted by the federal agency into the grant management system within the agency and a unique grant award number is created. A single entity who has received more than one award under the same grant program may have several grant award numbers. Additionally, a federal agency may have a separate grant management system for each grant program it administers. When the grant agreement is executed, the federal agency also creates a grant account in the agency's cash management system for each individual grant award, which may mean that a single entity that receives more than one grant award by an agency may have several different grant account numbers. Federal grant recipients are required to report financial information pursuant to the conditions contained in the grant agreement executed at the time of the grant award. This information includes financial information, such as expenditures, about the project or services funded by the federal grant award. The financial information is reported periodically to the federal agency administering the grant program. Financial data on the grant award are reported into several federal grant databases, including the following: federal agency cash management systems; Federal Assistance Award Data System PLUS (FAADS-PLUS); Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS); USAspending.gov; and, Federal Audit Clearinghouse (FAC). As detailed in Figure 1 , federal grant data are located in several databases at both the grant recipient and federal government level. A Data Universal Numbering System (DUNS) number is a unique nine-digit identifier for each government contractor and federal grant applicant. The federal government has contracted with D&B since 1978 to provide proprietary DUNS numbers for use in government-wide data systems, and since October 1, 2003, the OMB policy requires the use of a DUNS number on any application for federal grants or cooperative agreements. DUNS numbers are associated with contractor and grant recipient information and are required for each listed organization address. The System for Award Management (SAM) is the federal government's primary contractor and federal grant applicant database used by agencies to validate grantee information. Current and potential government contractors and grant applicants are required to register with SAM in order to be awarded federal government contracts or grants. SAM requires a one-time registration from each potential government vendor, and collects basic procurement and financial information from contractors and grant applicants. SAM consolidates government-wide acquisition and grant award support systems into one new system. The consolidation is planned for four phases. In 2012 the first phase of SAM was launched and phase one systems continue to be consolidated. The first phase of the consolidation included nine information databases: Central Contractor Registration (CCR), Federal Agency Registration (FedReg), Online Representations and Certifications Application (ORCA), and Excluded Parties List System (EPLS). Once completed, the consolidation will also include: Electronic Subcontracting Reporting System (eSRS); FFATA Sub-award Reporting System (FSRS); Catalog of Federal Domestic Assistance (CFDA); FedBizOpps.gov (FBO); Wage Determination Online (WDOL); Federal Procurement Data System-Next Generation (FPDS-NG); Past Performance Information Retrieval System (PPIRS); Contractor Performance Assessment Reporting Systems; and Federal Awardee Performance and Integrity Information System (FAPIIS). Some of the systems that will be consolidated by SAM include data on federal contractors and may not necessarily contain information on federal grant recipients. The Catalog of Federal Domestic Assistance (CFDA) is a publicly searchable reference source for federal grants and nonfinancial assistance programs. The CFDA lists and describes over 2,300 federal programs and includes program-specific information such as program objectives, eligibility requirements, application and award processes, program contact information, and related CFDA assistance programs. CFDA is continuously updated and enables information seekers to search assistance programs by keyword, subject, funding department or agency, and other criteria. Additionally, CFDA provides sources of information on developing and writing grant applications, guidance to review processes, and links to agency and department websites for more in-depth program information and eligibility explanations. The CFDA is maintained by the General Services Administration (GSA) pursuant to the Federal Program Information Act. However, OMB is responsible for the collection of assistance program information from federal agencies. OMB also issues guidance to federal agencies for establishing procedures to ensure accurate and timely data is contained within CFDA. Cash management in this context refers to the methods and procedures used by grant recipients and federal agencies to transfer grant funds. Financial management systems of federal agencies and grant recipients are payment and cash management systems used to track the flow of cash between the federal government and primary grant recipients and sub-grant recipients. As detailed in Figure 1 , each federal agency and each grant recipient may have separate cash management systems, resulting in limited interoperability between cash management systems. The Federal Funding Accountability and Transparency Act of 2006 (FFATA, P.L. 109-282 ) requires that federal contract, grant, loan, and other financial assistance awards of more than $25,000 be displayed on a searchable, publicly accessible website, USAspending.gov. USAspending.gov provides information on grant awards, including the amount of the award, name and location of the recipient, and the name and authorization of the federal program used to make the award. The Digital Accountability and Transparency Act of 2014 (DATA Act, P.L. 113-101 ) amended FFATA, transferring responsibility for USAspending.gov from OMB to the Department of Treasury, Bureau of the Fiscal Service. On March 31, 2015, USAspending.gov was re-launched with changes to the site's usability, presentation, and search functions. The Federal Assistance Awards Data System (FAADS) was established by the Consolidated Federal Funds Report Act of 1982 ( P.L. 97-326 ) and was maintained by the Bureau of the Census in the Department of Commerce. FAADS was a central collection source of Federal financial assistance awards transactions. FAADS-PLUS was introduced in 2007, a result of passage of the FFATA, and is an expanded version of FAADS. FFATA requires prime subgrant recipients receiving a grant award greater than $25,000 to report subaward financial information. The FFATA Subaward Reporting System (FSRS) is the reporting tool used by prime awardees to meet FFATA sub-award reporting requirements. The reported subaward FSRS information is then displayed on USAspending.gov under the prime award information. The Single Audit Act Amendments of 1996 ( P.L. 104-156 ) and OMB guidance stipulate that all grant recipients expending $750,000 or more in federal awards be required to submit an annual single audit detailing award expenditures. The Federal Audit Clearinghouse (FAC) serves as a public database of all audits conducted and submitted and is maintained by OMB. Within the FAC, audits detailing award and expense information are searchable by organization or institution, geographic location, or CFDA program number. As shown in Figure 1 , several databases contain federal grant information. However, grant data contained within cash management systems, grant management systems, FAADS-PLUS, and FSRS are not accessible or searchable by the general public. The federal government has created several data systems and websites to access the systems that are accessible and searchable by the public. These include the following: Catalog of Federal Domestic Assistance ( http://www.cfda.gov ); USAspending.gov ( http://www.usaspending.gov ); Dun and Bradstreet ( http://fedgov.dnb.com/webform ); System for Award Management ( http://www.sam.gov ); and Federal Audit Clearinghouse ( https://harvester.census.gov/fac/ ). Of the above reporting requirements for federal grant applicants, two databases allow opting out of providing publically searchable information: the Dun and Bradstreet (D&B) DUNS number database and SAM. To avoid having a public DUNS number, applicants must first obtain a DUNS number, and then discuss their individual privacy concerns with the D&B government support desk. D&B can withhold the DUNS number from their public database. However, the applicant's DUNS number remains visible to any institution with a DUNS Business Locator subscription, as well as within the required SAM grant application record, unless the opt-out process for SAM is also completed. Grant applicants can opt out of the requirement that information collected during the SAM registration be visible to the public, though the information may still be viewable by certain users: Entities that have opted out will be removed only from the SAM public search, but will still be visible to users with For Official Use Only data access and will be provided in accordance with Freedom of Information Act (FOIA) requests. Please note that your banking information is treated as sensitive data and will not be displayed to the public regardless of your selection.

Congress and federal agencies frequently undertake initiatives to conduct oversight of federal grant programs and expenditures. The ability to oversee is influenced by the existing reporting requirements placed on recipients of federal grant funds. Limitations in accessing information contained in federal databases used to collect grant data also influence the level of transparency into the use of federal grant funds. Congress has also debated the reporting burden placed on federal grant recipients and how to balance grant recipient capacity with the desire for transparency into the use of federal grant funds. This report provides an introduction to reporting requirements placed on federal grant recipients, including requirements that must be met to seek federal grant funds. It also describes the databases containing information about grant awards, the types of information collected on grant recipients, and the availability of that information to the public. Several grant reporting questions are answered, including the following: Why are federal agencies and grant recipients required to report grant data? What information is a federal grant recipient required to report and to whom? How does a federal agency track federal grant data? What is the Data Universal Numbering System (DUNS) number? What is the System for Award Management (SAM)? What is the Catalog of Federal Domestic Assistance (CFDA)? What are cash management systems? What is USAspending.gov? What is the Federal Assistance Award Data System PLUS (FAADS-PLUS)? What is the Federal Funding Accountability and Transparency Act Subaward Reporting System? What is the Federal Audit Clearinghouse (FAC)? What grant data are accessible by the public? Federal grant reporting requirements fall into two categories: financial reporting and program performance reporting. This report focuses on financial reporting requirements and does not address program performance reporting. This report will be updated should significant legislative activity regarding federal grant recipient reporting occur.

The Securities and Exchange Commission's (SEC's) increased use of its in-house administrative forum to resolve charges against persons alleged to have violated federal securities laws is receiving considerable attentio n. Congressional hearings have discussed the issue; several cases are challenging the SEC's authority to use the forum; and the press has widely covered the issue. This report will take a brief look at the administrative law process in general; the likely reason for the increased use by the SEC of the administrative forum; selected cases challenging the SEC's use of the administrative forum on the bases of constitutional violations of due process and equal protection and of unconstitutional selection of the SEC's administrative law judges; possible implications of these cases; and congressional interest in the issue. After Congress has enacted legislation, federal agencies typically issue rules, to the extent permitted by the statutes, to implement the legislation. Although issued by an administrative agency, these rules have the force of law. It is not unusual for an agency to interpret the details of federal statutes, which may have been written in a somewhat general way. This ability to interpret the statutes often gives agencies considerable discretion in issuing rules. However, the agency must have been given the authority by statute to act in this discretionary rule-making manner. The general antifraud provision of the Securities Exchange Act, Section 10(b), in its use of the language "as the Commission may prescribe as necessary or appropriate," is an example of this discretionary authority given by statute. Congress has enacted statutes such as the Administrative Procedure Act (APA) to set out the process by which agencies issue these rules. In general, when a person wishes to challenge in court an action brought by an agency in an administrative forum, such as a charge of rule violation, he must first exhaust the administrative remedies; that is, the agency's action must have reached finality. Administrative actions may include hearings, findings, and decisions by administrative law judges (ALJs). An ALJ is a judge and trier of fact within an agency; the ALJ presides over trials within the agency and adjudicates claims and disputes. ALJs are appointed according to statute. Often, a defendant may not challenge an agency action in court until an ALJ has rendered an opinion. In the Securities Enforcement Remedies and Penny Stock Reform Act of 1990 (Penny Stock Act), the SEC received broad authority to seek in court civil money penalties in enforcement actions. With respect to imposing civil penalties on persons in administrative actions, however, the Penny Stock Act limited the SEC's authority to persons in regulated or registered entities, such as brokerage firms, investment advisers, and investment companies. Section 929P(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), titled "Authority to Impose Civil Penalties in Cease and Desist Proceedings," eliminated the limitation on the SEC's authority to impose civil money penalties in administrative actions. This provision of Dodd-Frank amended Section 8A of the Securities Act, Section 21B(a) of the Securities Exchange Act, Section 9(d)(1) of the Investment Company Act, and Section 203(i)(1) of the Investment Advisers Act to allow the SEC to impose civil money penalties, as well as cease-and-desist orders, on almost any person involved with securities. Section 929P(a) essentially provides the SEC a choice of either proceeding in federal district court or of conducting its own administrative enforcement proceedings against almost any person charged with securities violations. This provision of Dodd-Frank appears to have been a strong incentive for the SEC to bring more administrative actions, instead of going to court. There appear to be both advantages and disadvantages of administrative hearings. Possible advantages of administrative hearings over court proceedings include expedited procedure and the use of hearing examiners with expertise in the complexities of federal securities laws. However, despite a mandate of having fair and impartial hearing examiners, it may be argued that an administrative hearing provides a kind of home-court advantage for the agency. One commenter believes that this Dodd-Frank change has created significant disadvantages for defendants, such as the following: (1) administrative actions go to hearing on an accelerated schedule in which a hearing must be completed and an initial decision rendered by an administrative law judge within 270 days of the filing of the Commission's complaint; (2) there is no discovery in administrative proceedings; (3) there is no right of trial by jury; and (4) factual findings by the SEC in an administrative proceeding can only be reversed on appeal if the defendant shows that the findings failed to meet the "substantial evidence" test. An SEC official, however, has described its use of the administrative forum as having benefits for both the agency and for respondents: There are a number of benefits to using the administrative forum that can lead us to file cases there. First, administrative actions produce prompt decisions.... Second, administrative proceedings have the benefit of specialized factfinders.... Third, the rules governing administrative hearings provide that ALJs should consider relevant evidence.... I should note that these features of the administrative forum can also benefit the respondents. Either side can benefit when witnesses' recollections are fresher. And the relaxed rules of evidence may likewise give them more flexibility in offering evidence. Several cases are challenging the SEC's use of the administrative forum as violating the U.S. Constitution. As mentioned in the "Introduction," plaintiffs have brought suit against the SEC's administrative forum as violating their due process and equal protection rights and as violating the Constitution's Appointments Clause in the way that the SEC chooses its administrative law judges. In addition to defending cases brought against its use of the administrative forum, the SEC has responded to these challenges by issuing in December 2014 a Commission Opinion indicating that it intends to continue to use the administrative forum aggressively to charge alleged securities wrongdoers and to appeal court opinions that strike down the agency's use of its administrative forum. In this case, the plaintiffs charged the SEC with violating their constitutional rights of due process, jury trial, and equal protection and with usurping a legislative prerogative, thereby violating the constitutional separation of powers. The SEC chose to bring an administrative action, instead of an injunction action in federal court, against George Jarkesy, a Houston hedge fund manager, and at least two others (referred to here as co-respondents), charging them with defrauding investors in two hedge funds and with steering unnecessary fees to a brokerage firm. Charges included violations of the antifraud provisions of the Securities Act of 1933 (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b)), as well as various sections of the Investment Advisers Act and SEC regulations. The co-respondents made an offer of settlement, consenting to a finding that they aided, abetted, and caused the manager's and adviser's breaches of fiduciary duties to the hedge funds. Jarkesy brought suit in the U. S. District Court for the District of Columbia, alleging that, in accepting the settlement offer, the SEC "entered detailed and unqualified findings of fact and conclusions of law against plaintiffs, including finding that plaintiffs engaged in fraudulent conduct," thereby violating plaintiffs' constitutional rights. On June 10, 2014, the district court issued a memorandum opinion dismissing the plaintiffs' complaint for lack of subject matter jurisdiction. The district court found that the statutory and regulatory framework applicable to the SEC precluded the court from exercising subject matter jurisdiction. Referring to Section 25 of the Securities Exchange Act, the court stated that, if a person wishes to challenge a final order of the SEC, he may obtain review in the U.S. Court of Appeals. In the instant situation, the plaintiff, according to the court, did not receive a final SEC order and, even if he had, he would have to challenge it in the court of appeals, not in the district court. This is true, according to the district court, even though the plaintiff raised a constitutional due process claim. The court cited to a Supreme Court case, Thunder Basin Coal Company v. Reich , which held that a litigant with an agency grievance can seek relief in district court if he can show that the "claims considered [are] wholly collateral to a statute's review provisions and outside the agency's expertise, particularly where a finding of preclusion could foreclose all meaningful judicial review." Jarkesy, like the plaintiff in Thunder Basin, was unable, according to the district court, to satisfy this requirement. On August 12, 2014, Jarkesy asked the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to review the district court's dismissal of his complaint. In April 2015, the D.C. Circuit heard oral argument, and on September 29, 2015, the D.C. Circuit held that Jarkesy had to exhaust his administrative remedies before bringing a constitutional challenge to the administrative forum in a federal court of appeals. Like the district court, the D.C. Circuit turned to the Thunder Basin decision for guidance. It looked to the two-part approach that Thunder Basin set out for determining the procedure that a litigant must use through a statutory scheme of administrative and judicial review. According to Thunder Basin , if (1) congressional intent is "fairly discernible in the statutory scheme" and (2) the litigant's claims are of the type that Congress intended to be reviewed within the statutory structure, then the statutory structure is the exclusive means by which the litigant can obtain administrative and judicial review. As for the first part—that there be a fairly discernible congressional intent in the statutory scheme—the D.C. Circuit found that the federal securities laws have a comprehensive structure for the adjudication of securities violations in administrative proceedings. In addition, according to the court, the Securities Exchange Act clearly provides that, once an SEC proceeding reaches a final order, an aggrieved party may seek court review in a federal court of appeals. Given the detail that Congress used in setting out the review process by a court of appeals, the D.C. Circuit opined: Congress, though, gave the SEC the option to pursue violations in district court. Congress did not thereby necessarily enable respondents in administrative proceedings to collaterally attack those proceedings in court. In other words, Congress granted the choice of forum to the Commission, and that authority could be for naught if respondents like Jarkesy could countermand the Commission's choice by filing a court action. As for the second part—that the litigant's claims are the type that Congress intended to be reviewed within the statutory structure—the D.C. Circuit looked to the Supreme Court's discussion in Free Enterprise Fund v. Public Company Accounting Oversight Board of three situations in which it may be presumed that Congress wanted the district court to remain open to a litigant's claims: (1) a finding of preclusion (i.e., not allowing district court review) could foreclose all meaningful judicial review, (2) the suit is wholly collateral to a statute's review provisions, and (3) the claims are outside the agency's expertise. The D.C. Circuit found no basis in the Jarkesy case for allowing district court review per any of the three Free Enterprise criteria: (1) Jarkesy's constitutional claims, if the SEC's final order finds him at fault, can be later challenged in a federal court of appeals; (2) Jarkesy's constitutional claims are not outside the SEC administrative enforcement scheme; rather, the claims arise from actions that the SEC took in the administrative scheme, thereby not being collateral to the securities laws' review provisions; and (3) the majority of Jarkesy's challenges are within the SEC's "ordinary course of business" and not outside its areas of expertise. The D.C. Circuit concluded that for these reasons the federal securities laws provide an exclusive avenue for review and that Jarkesy cannot bypass this exclusive avenue by filing suit in federal district court. It therefore affirmed the district court's decision dismissing the case for lack of subject matter jurisdiction. At this time, there does not appear to be information about whether Jarkesy will appeal the decision. In October 2013, the SEC filed an administrative case against Wing F. Chau and Harding Advisory, accusing them of fraud related to selecting securities linked to a synthetic collateralized debt obligation. Instead of accusing the SEC of prejudging by issuing findings against other defendants that implicated him in fraud, as Jarkesy alleged, the plaintiffs argued in court that the SEC filed three similar cases in federal district court but brought theirs before an administrative law judge and that that violated their due process by depriving them of certain procedural safeguards, such as discovery and the right to a trial by jury. The plaintiffs filed suit to enjoin the SEC from going forward with its administrative action. In December 2014, the U.S. District Court for the Southern District of New York held that the court did not have jurisdiction to consider the plaintiffs' lawsuit to prevent the SEC's administrative action. The court found that the SEC has statutory authority and subject matter expertise to decide in the administrative forum whether Chau and Harding violated the securities laws and that the administrative forum would not violate their constitutional guarantees of due process and equal protection. Only after the conclusion of the administrative proceedings, according to the court, might they file suit in federal court. The Court recognizes that the growth of administrative adjudication, especially in preference to adjudication by Article III courts and particularly in the field of securities regulation, troubles some.... These concerns are legitimate, whether born of self-interest or of a personal assessment of whether the public interest would be served best by preserving the important interpretive role of Article III courts in construing the securities laws—a role courts have performed since 1933. But they do not affect the result in this case. This Court's role is a modest one. It is merely to determine whether the Court has the power to reach the merits of plaintiffs' constitutional claims.... [T]his Court holds that it does not. If plaintiffs lose before the Commission, they will have a full opportunity to present their arguments in a court of appeals. In reaching this conclusion, moreover, this Court has not considered any views concerning the proper or wise allocation of interpretive functions between the Commission and the courts. Those are policy matters committed to the legislative and executive branches of government. Undeterred by the initial SEC victories in Jarkesy and Chau , plaintiff Laurie Bebo, formerly CEO of Assisted Living Concepts, Inc. (ALC), filed suit in early 2015 against the SEC for bringing an unconstitutional action against her in an administrative forum rather than in federal district court. In December 2014, the SEC alleged that Bebo and another person listed nonexistent occupants at senior residences in order to meet certain occupancy requirements and to avoid defaulting on leases. The SEC charged that a default would have required ALC to pay tens of millions of dollars of the remaining rent due on the leases, thereby defrauding shareholders. Bebo claimed that the SEC's "unlimited ability" to charge her administratively violated her constitutional equal protection and due process rights. The U.S. District Court for the Eastern District of Wisconsin held that it did not have subject matter jurisdiction, stating: The Court Finds that Bebo's claims are compelling and meritorious, but whether that view is correct cannot be resolved here. This is so because Bebo's claims are subject to the exclusive remedial scheme set forth in the Securities Exchange Act. Bebo must litigate her claims before the SEC and then, if necessary, on appeal to the Court of Appeals for the Seventh Circuit. Bebo appealed to the U.S. Court of Appeals for the Seventh Circuit (Seventh Circuit), which affirmed the district court's dismissal of the case for lack of subject matter jurisdiction. The Seventh Circuit emphasized that courts have consistently required plaintiffs to use the administrative review schemes that Congress has established before being allowed to challenge agency decisions in court. With respect to Section 929P(a) of Dodd-Frank, the Seventh Circuit found "no evidence from the statute's text, structure, and purpose that Congress intended for plaintiffs like Bebo who are already subject to ongoing administrative enforcement proceedings to be able to stop those proceedings by challenging the constitutionality of the enabling legislation or the structural authority of the SEC." In arriving at its decision, the Seventh Circuit looked at which of two Supreme Court decisions controlled Bebo's constitutional challenges to the SEC's administrative forum: Free Enterprise Fund v. Public Company Accounting Oversight Board , which plaintiff urged as allowing a direct route to federal district court to challenge an agency's administrative proceedings as unconstitutional, or Elgin v. Department of the Treasury , which the SEC urged as cutting off a plaintiff's federal district court challenge if the plaintiff has an eventual chance to bring review of the agency's proceedings in a federal court of appeals. The Seventh Circuit ruled that the Elgin case governed because, as the federal district court stated in the above quote, the Securities Exchange Act has set out a statutory scheme by which a plaintiff must first go through the appropriate administrative proceedings and then only afterward may bring suit against the agency in a federal court of appeals. On November 6, 2015, the Seventh Circuit declined Bebo's petition for rehearing en banc. On March 28, 2016, the Supreme Court denied certiorari in Bebo's suit challenging the constitutionality of the SEC's in-house administrative forum. In contrast to the above cases, Hill v. Securities and Exchange Commission did halt an SEC enforcement proceeding and allowed the defendant's constitutional challenge to continue. In February 2015, the SEC brought an administrative proceeding against Charles Hill, a real estate developer, claiming that Hill had engaged in prohibited insider trading when he bought shares in a Georgia-based technology firm with the knowledge provided by a close friend that the firm would soon receive a buyout offer. Hill sued the SEC in federal district court, arguing, among other things, that the SEC's selection of ALJs violated the Constitution's Appointments Clause and that their statutory tenure protections violated the executive appointment and removal powers. Hill stated that, because the ALJs are "inferior officers" under the Appointments Clause but not appointed by "department heads" (in this case, the SEC commissioners) per the dictates of the clause, the SEC's in-house court is unconstitutional. (SEC ALJs are appointed by the SEC's Office of Administrative Law Judges, with input from other entities such as the Office of Personnel Management and the SEC's Chief Administrative Law Judge. ) The district court issued a 45-page order in which it halted the SEC's administrative proceeding against Hill on the basis that the in-house forum was "likely unconstitutional" because of its belief that the SEC's appointment of ALJs is counter to the Appointments Clause. The court first addressed the SEC's argument that the district court did not have subject matter jurisdiction because of the procedure set out by 15 U.S.C. Section 78y (i.e., after a final SEC order, a plaintiff may bring a challenge in a federal court of appeals). In response to this argument, the district court looked at the jurisdictional provision of 28 U.S. Section 1331, which provides that federal district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The district court found no congressional intent under Section 1331 to restrict the district court's statutory grant of jurisdiction. Instead, according to the district court: [T]he clear language [of 28 U.S.C. § 1331 and 78 U.S.C. § 78y, taken together,] provides a choice of forum, and there is no language indicating that the administrative proceeding was to be an exclusive forum. There can be no 'fairly discernible' Congressional intent to limit jurisdiction away from district courts when the text of the statute provides the district court as a viable forum. The SEC cannot manufacture Congressional intent by making that choice for Congress; Congress must express its own intent within the language of the statute. The district court went on to state that, even if the above argument is not dispositive of whether it can exercise jurisdiction in Hill's lawsuit, three additional reasons lead it to conclude that it does have jurisdiction: A court may "presume that Congress does not intend to limit jurisdiction" if (1) "a finding of preclusion could foreclose all meaningful judicial review"; (2) "if the suit is wholly collateral to a statute's review provisions"; and if (3) "the claims are outside the agency's expertise." The court discussed each of these three factors. With respect to the finding that barring plaintiff's claims in the district court would preclude all meaningful judicial review, the district court stated that requiring the plaintiff to wait until the completion of the administrative process—a process that, in fact, the plaintiff claims is unconstitutional—could result in harm to the plaintiff that could not be remedied. Such a situation would have required the plaintiff to endure what may well be an unconstitutional process, thereby depriving him of meaningful judicial review. As for the factor of whether the plaintiff's claims are wholly collateral to the SEC proceeding, the district court found that the claims are wholly collateral and not just a "vehicle" to shut down the SEC's administrative process. The district court emphasized that the plaintiff is not challenging an agency decision; instead, the plaintiff is challenging whether the agency has even the constitutional authority to make that decision. Plaintiff is not challenging an agency decision; Plaintiff is challenging whether the SEC's ability to make that decision was constitutional. What occurs at the administrative proceeding and the SEC's conduct there is irrelevant to this proceeding which seeks to invalidate the entire statutory scheme.... Accordingly, Plaintiff's constitutional claims are wholly collateral to the administrative proceeding. As for the third factor—whether the plaintiff's constitutional claims are outside the agency's expertise—the district court found that they were outside the SEC's expertise. The constitutional claims that Hill brought against the SEC were not, according to the district court: part and parcel of an ordinary securities fraud case, and there is no evidence that (1) Plaintiff's constitutional claims are the type the SEC "routinely considers," or (2) the agency's expertise can be "brought to bear" on Plaintiff's claims.... The district court next turned, perhaps most importantly, to Hill's claim that the selection of the SEC's ALJs violated the Constitution's Article II Appointments Clause. The plaintiff brought two claims under Article II: (1) the appointment of the ALJ violated the Appointments Clause because he was not appointed by the President, a court of law, or a department head and (2) the ALJ's tenure protection violated the Constitution's separation of powers (i.e., the President's ability to exercise power over his inferior officers). The district court stated that the success of both of these arguments depended on its finding that the SEC ALJ is an "inferior officer" under the Constitution. As for whether the ALJ is an inferior officer for purposes of the Appointments Clause, the district court relied on the Supreme Court's decision in Freytag v. Commissioner of Internal Revenue. In Freytag , the Court had to decide whether special trial judges in the Tax Court were inferior officers under Article II. The Court rejected the government's argument that the judges were mere functionaries who lacked real authority, stating that the government's argument: ignores the significance of the duties and discretion that special trial judges possess. The office of special trial judge is "established by Law," Art. II, § 2, cl. 2, and the duties, salary, and means of appointment for that office are specified by statute.... These characteristics distinguish special trial judges from special masters, who are hired by Article III courts on a temporary, episodic basis, whose positions are not established by law, and whose duties and functions are not delineated in a statute. Furthermore, special trial judges perform more than ministerial tasks. They take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders. In the course of carrying out these important functions, the special trial judges exercise significant discretion. The district court found that SEC ALJs are like the special trial judges. The office is established by law; the duties, salary, and means of appointment are specified by statute; they are permanent employees; and they take testimony, conduct trials, rule on the admissibility of evidence, and can issue sanctions. Therefore, the district court found that Freytag requires that, like special trial judges, ALJs exercise significant authority and are inferior officers. The district court went on to state that, because SEC ALJs are inferior officers, they must be appointed by the President, department heads, or courts of law. Because the ALJ in the Hill proceeding was not appointed by SEC commissioners, in accordance with the Constitution, his appointment, according to the district court, was likely unconstitutional. For this reason, the district court held that the plaintiff had shown a substantial likelihood of succeeding on the merits of his claim and granted a preliminary injunction to prevent the SEC from continuing with the administrative proceeding. The district court did not decide whether the ALJs' statutory tenure protections violated the executive appointment and removal procedures because of its finding that the plaintiff had already established a likelihood of success on the Appointments Clause claim. The SEC has appealed the Hill decision to the U.S. Court of Appeals for the Eleventh Circuit. This decision, from the U.S. District Court for the Southern District of New York, also halted an SEC administrative proceeding. The SEC initiated an administrative proceeding against Barbara Duka, a former managing director at Standard & Poor's, alleging that she committed fraud with respect to S&P's misleading ratings of mortgage-backed securities. Duka brought suit against the SEC in federal district court to demand that the SEC's administrative proceedings against her be halted, claiming, like Hill, that the SEC's selection of ALJs was unconstitutional—in violation of the Appointments Clause—and that their statutory tenure protections violated Article II's executive appointment and removal powers. The court preliminarily enjoined the SEC from proceeding against Duka. It held that it had subject matter jurisdiction because, among other reasons, the plaintiff should not have to suffer harm before having meaningful judicial review. As in the Hill decision, the court held that, since SEC ALJs are not directly appointed by the SEC commissioners: they were not appropriately appointed pursuant to Article II [and] their appointment is likely unconstitutional in violation of the Appointments Clause . Concerning Duka's second claim—that the ALJs' tenure protections violated Article II's executive appointment and removal powers—the court found no basis to reconsider its April decision and order, in which it did not conclude that the statutory restrictions concerning removal of the ALJs infringed the President's constitutional authority. In an August 3, 2015, order, the court gave the SEC until August 10 "to allow the SEC the opportunity to notify the Court of its intention to cure any violation of the Appointments Clause " (i.e., to have the SEC commissioners directly appoint the ALJ in the proceeding against Duka). An August 10 letter from the Department of Justice stated the SEC's intention to decline the court's offer to announce a change in the process. On September 17, 2015, the U.S. District Court for the Southern District of New York denied the SEC's request to delay enforcement of the order barring its case against Duka. The SEC has appealed the Duka decision to the U.S. Court of Appeals for the Second Circuit. In March 2015, the SEC brought an administrative cease-and-desist proceeding against Patriarch Partners, its CEO and founder Lynn Tilton, and affiliated companies, alleging that they violated the federal securities laws by fraudulently collecting $200 million in fees and expenses. The SEC alleged that Tilton and her firm hid poor performances of companies in which her funds had investments by failing to use the methodology laid out in the investment documents. This, according to the SEC, allowed Tilton and Patriarch to collect excessive management fees and to commit other fraudulent actions. Tilton brought suit for a preliminary injunction against the SEC in the U.S. District Court for the Southern District of New York to challenge the constitutional authority of the administrative proceeding on the basis of the unconstitutional scheme for appointing and removing the SEC's ALJs. The June 30, 2015, decision, by a different judge in the same district court as the Duka decision, denied Tilton's motion for a preliminary injunction against the SEC. The court recognized that several courts had decided this issue in different ways: In recent months, district courts have reached different conclusions as to whether they have jurisdiction over claims similar to the ones Plaintiffs raise here, or whether jurisdiction is precluded by the statutory scheme.... Ultimately, this Court finds the arguments against jurisdiction more persuasive, and concludes that Plaintiffs have not established that Congress intended to exclude their claims from the designated statutory review scheme. The court stated that the question of whether the SEC had the authority to bring an action in an administrative proceeding was not its decision to make and used the following language, which is similar to language used by courts in decisions such as Jarkesy and Chau , cases that challenged the use of the SEC's administrative forum principally on the bases of due process and equal protection: Congress has carefully delineated the distinct roles of the Commission and the courts in such cases as this. It rests first with the Commission to determine whether to commence an action at all, and if so, whether to do so in federal district court or in its own administrative tribunal. Having chosen the latter, it rests with an ALJ and then the Commission to rule on Plaintiffs' claims. That decision in turn is subject to appeal to a federal court of appeals. In this Court's view, there is no basis to allow Plaintiffs to bypass this congressionally created remedial scheme. Accordingly, this Court lacks subject matter jurisdiction over this action. Tilton has appealed the decision to the U.S. Court of Appeals for the Second Circuit. On September 17, 2015, the Second Circuit issued an order staying the SEC's administrative proceeding. This allows the court to have more time to consider Tilton's claim that the in-house forum is unconstitutional. On June 8, 2015, Timbervest and its executives, ordered by an SEC ALJ to pay $1.9 million in disgorgement for violations of the Investment Advisers Act of 1940, argued before the SEC commissioners that the appointment of the SEC ALJs was unconstitutional as a violation of the Constitution's separation of powers. In a September 17, 2015, opinion, four members of the SEC unanimously stated that the hiring of the ALJs is constitutional and that their removal process does not violate presidential authority. On November 13, 2015, Timbervest petitioned the D.C. Circuit for review of the SEC's final decision. The Timbervest case differs from other cases discussed in this report. The plaintiffs in Timbervest waited for a final administrative decision before taking their constitutional challenge to the court of appeals. This wait for a final administrative decision adheres to the statutory and regulatory procedure outlined by certain other courts as necessary before challenges in a federal court of appeals to the SEC's administrative forum and the selection of SEC ALJs may occur. At this time, the D.C. Circuit does not appear to have decided whether to accept the appeal of the SEC's final order. As described herein, the decisions in cases that have been brought to challenge the constitutionality of the SEC's administrative forum have sometimes validated the SEC's use of the forum and at other times have found in favor of the challenging plaintiff, thus halting the use of the administrative forum. So far, it appears that the cases validating the forum have focused primarily on plaintiffs' due process and equal protection challenges. This is true in the Jarkesy , Chau , and Bebo cases. All three cases held that the plaintiffs had to exhaust their administrative remedies before they could challenge in a federal court of appeals the SEC's final action and thereby the agency's violation of their constitutional rights. These case decisions did not hinge on a discussion of the merits of plaintiffs' constitutional challenges. Instead, they focused on the statutory procedural scheme set out by such statutes as Section 25 of the Securities Exchange Act and Section 929P(a) of Dodd-Frank. The cases held that plaintiffs had to abide by this procedure before they could bring a court challenge. In contrast, the Hill and Duka cases allowed plaintiffs to go forward with their lawsuits in federal district court, holding that their arguments concerning the unconstitutionality of the appointment of SEC ALJs likely had merit. The Tilton decision, however, appeared to criticize the reasoning in Hill and held that the plaintiff's argument about the unconstitutionality of the ALJ selection could not be brought in court until the SEC reached finality in the administrative proceeding. Tilton used language similar to the language used by the courts in Jarkesy , Chau , and Bebo . Timbervest differs from Jarkesy , Chau , and Bebo because the plaintiff waited for a final administrative decision before petitioning a federal court of appeals to accept his case challenging the constitutionality of the SEC's administrative forum. At this time, there does not appear to be a decision by the D.C. Circuit as to whether to accept the appeal of the SEC's final order. Bebo and Jarkesy are the only cases to have been decided by federal courts of appeals, the Seventh Circuit and the D.C Circuit respectively. Other cases discussed in this report, decided by federal district courts, are on appeal to federal courts of appeals. With attacks on two fronts to the SEC's administrative forum—due process and equal protection challenges on one front and selection and tenure protection of SEC ALJs on the other front—there is the possibility of different holdings on the different issues by different circuit courts. If there are different opinions in the federal circuit courts, or even if there is not a split in the circuits, the U.S. Supreme Court may decide to grant certiorari in order to decide the constitutionality of the SEC administrative forum. A Supreme Court decision could be written broadly enough that it would have an impact on the administrative forum in other agencies. For example, should a Supreme Court decision hold unconstitutional the SEC's statutory and regulatory framework requiring exhaustion of administrative remedies before bringing a court of appeals challenge to the SEC's final order, whether constitutional or otherwise, a similar statutory and regulatory framework in other federal agencies could be in jeopardy. At this time, the challenges to the SEC's administrative forum based on due process and equal protection appear to have been unsuccessful. However, challenges to the constitutionality of the forum based on selection procedure and tenure protection have met with some success. Should the plaintiffs in Hill and Duka be ultimately successful, the result could have an impact on agencies in addition to the SEC. The constitutionality of the way in which ALJs are appointed in other federal agencies is beyond the scope of this report. However, the ALJ appointment "quandary" has been discussed for some time. If SEC ALJs are actually determined to be inferior officers, the appointment of ALJs in some agencies other than the SEC may be improper. The APA gives agencies a certain amount of discretion in the manner in which they appoint ALJs. If ALJs have not, for example, been appointed by department heads—the argument made in Hill and Duka —they may face a constitutional Appointments Clause problem. As mentioned in the discussion of the Hill decision, the Supreme Court in Freytag v. Commissioner of Internal Revenue found that special trial judges appointed by the Chief Judge of the U.S. Tax Court exercised significant powers and were therefore to be considered inferior officers requiring appointment by the department head. So too, according to Hill , are SEC ALJs inferior officers who must be appointed by the department head. If this line of reasoning is followed by the courts with respect to the appointment of ALJs of all federal agencies, so too, it might be argued, must all ALJs be appointed by department heads. That may not currently be the situation in agencies other than the SEC. Nevertheless, it is not certain that all ALJs are inferior officers who must be appointed by the department head. For example, the APA refers to ALJs as "presiding employee[s]," although, as mentioned by one scholar, "this reference might be understood as a lingering indignity from the ALJs' 'hearing examiner' past." In addition, the U.S. Court of Appeals for the District of Columbia Circuit held in Landry v. Federal Deposit Insurance Corporation that ALJs appointed by the Office of Thrift Supervision were not inferior officers: [W]e believe that the STJs' power of final decision in certain classes of cases was critical to the Court's decision. As the ALJs hired pursuant to § 916 of FIRREA have no such powers, we conclude that they are not inferior officers. With respect to the argument made by Hill and Duka concerning the unconstitutionality of the tenure protections afforded SEC ALJs—an argument not addressed by either of the courts—Justice Breyer in his dissent in Free Enterprise Fund v. Public Company Accounting Oversight Board stated that the decision in the Free Enterprise Fund case could result in: sweeping hundreds, perhaps thousands of high-level Government officials within the scope of the Court's holding, putting their job security and their administrative actions and decisions constitutionally at risk. Justice Breyer went on to state that the officials and their decisions swept out by the Free Enterprise holding could include ALJs: My research reflects that the Federal Government relies on 1,584 ALJs to adjudicate administrative matters in over 25 agencies. See Appendix C, infra; see also Memorandum of Juanita Love, Office of Personnel Management, to Supreme Court Library (May 28, 2010) (available in Clerk of Court's case file). These ALJs adjudicate Social Security benefits, employment disputes, and other matters highly important to individuals. Does every losing party before an ALJ now have grounds to appeal on the basis that the decision entered against him is unconstitutional? Cf. ante, ("[O]ur holding also does not address" this question). This discussion is not to suggest that a Supreme Court case on SEC ALJs is forthcoming—much less that, should there be a decision, the Court would strike down the SEC ALJ selection process or tenure protections or that a decision would have an impact on ALJs in other agencies. Instead, the discussion is intended to set out only possible ramifications of a definitive decision on the constitutionality of SEC ALJ appointments and tenure protections. As mentioned in this report's "Introduction," at least two congressional hearings have discussed the issue. On December 2, 2015, the Subcommittee on Capital Markets and Government Sponsored Enterprises of the House Committee on Financial Services held a hearing titled "Legislative Proposals to Improve the U.S. Capital Markets." One of the legislative proposals discussed in the hearing was H.R. 3798 , 114 th Congress, titled the "Due Process Restoration Act of 2015." H.R. 3798 would allow a defendant in an SEC administrative proceeding involving a cease-and-desist order and a penalty to require the SEC to terminate the proceeding. After the required termination, the SEC may bring a civil action against the person for the same remedy. The bill would also require that in an administrative proceeding the SEC must show by clear and convincing evidence, instead of the commonly used "preponderance of the evidence" standard, that a person has violated the relevant securities law. On March 19, 2015, the Subcommittee on Capital Markets and Government Sponsored Enterprises of the House Committee on Financial Services held a hearing titled "Oversight of the SEC's Division of Enforcement." In his comments, Representative Garrett, chairman of the subcommittee, expressed concern about the possible infringement of constitutional protections for persons charged with securities violations in SEC administrative forums. He stated in part: [W]hale the SEC is first and foremost a disclosure agency. I support a strong enforcement function of the SEC. This enforcement function, however, must be used in an evenhanded, non-political manner that preserves the due-process rights of issuers, regulated entities, and their employees.... While bringing more cases through the administrative proceedings can lead to lower costs for the agency and increases in efficiency, it is important to realize that those benefits come with a cost. The cost is less due-process protections for defendants. Because the SEC administrative proceedings use the SEC's procedural rules, respondents are forced to operate on a condensed timeframe, and do not have the benefit of many of the fundamental due-process protections provided under the Federal Civil Procedures Act, and the Federal Rules of Evidence, such as full discovery rights, the right to a jury trial, and the exclusion of hearsay evidence. Moreover, initial appeals of administrative law judge (ALJ) rulings must be made to the full Commission, an ALJ's employer, rather than Federal district court. While the Commission's decision may be appealed to the D.C. Circuit Court of Appeals, the SEC's interpretation of the security laws generally will be given significant deference. Appealing an administrative decision is a time-consuming and expensive proposition.... So this, coupled with the SEC's 100% success rate—which is a pretty good success rate—100% success rate from the year 2014 illustrates a very troubling pattern of the SEC's attempting to stack the rules and process in a way that the outcome of the case is, well, predetermined. This is not appropriate in a country that values appropriate due process for its citizens. Due process is a fair process, and fair process is fair play. Andrew Ceresney, the Director of the Division of Enforcement of the SEC and the sole witness at this hearing, defended the SEC's use of the administrative hearing. He stated in part: Administrative proceedings is a procedure that is available to us. And we try to use it when it is appropriate to protect investors. And we look at a whole bunch of factors to determine whether an administrative proceeding is appropriate.... We use a number of facts and circumstances. First, there are certain proceedings we can only bring as administrative proceedings. So that includes failures to supervise and causing violations. Second, in cases where we need quick relief, where we want to get a bar very quickly, or we want to get investors relief quickly, administrative proceedings can be much quicker than district court actions. District court actions will often take years to get a resolution in. APs, we can get a decision within 300 days of the institution of the action. So that is important. And another important point is where we have technical rules, where we have complicated rules, some of our rules are very complicated, we have sophisticated fact-finders who are the ALJs; whereas with a jury, it would be much more difficult for them to grasp those very, very complicated issues.

The Securities and Exchange Commission's (SEC's) increased use of its in-house administrative forum to resolve charges against persons alleged to have violated federal securities laws has generated several court decisions, as well as congressional and media attention. Section 929P(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gave the SEC the authority to impose civil money penalties, as well as cease-and-desist orders, on almost any person, is often stated as the reason that the SEC has increased its use of the administrative forum, instead of taking alleged wrongdoers to court. Plaintiffs in several cases are challenging the SEC's administrative forum as violating their due process and equal protection rights and as violating the Constitution's Appointments Clause in the way that the SEC chooses its administrative law judges (ALJs). The SEC has stated that it intends to use the administrative forum aggressively to charge alleged securities wrongdoers and to appeal opinions that strike down the agency's use of the administrative forum. In three decisions, Jarkesy v. SEC, Wing F. Chau v. SEC, and Bebo v. SEC, federal district courts have held that the plaintiffs had to exhaust their administrative remedies (i.e., reach a final administrative decision within the SEC) before they could bring their constitutional challenges of due process and equal protection violations to a federal court of appeals. Federal courts of appeals have affirmed the district court decisions in two of these cases—Jarkesy and Bebo. The decisions did not address the constitutional challenges but, instead, required that the plaintiffs abide by the statutory procedural scheme for agency proceedings before bringing any court challenges. The Supreme Court denied certiorari in Bebo's challenge to the constitutionality of the SEC's in-house administrative forum. In contrast to the decisions dealing with due process and equal protection claims, two federal district court decisions challenging the constitutionality of the SEC ALJ selection process, Hill v. SEC and Duka v. SEC, held that the plaintiffs could proceed in federal district court with their constitutional challenges because of the likelihood of their success. However, another decision on a challenge to the constitutionality of the SEC ALJ selection process, Tilton v. SEC, appeared to criticize Hill and held that the plaintiffs could not go to court until the SEC reached finality in the administrative proceeding. A definitive court decision (e.g., a U.S. Supreme Court decision) on the constitutionality of plaintiffs' due process and equal protection claims and/or on the constitutionality of the appointment and tenure protections of SEC ALJs may be necessary to resolve these issues. It is possible that such a decision could have an impact on the administrative forums or the ALJs of agencies in addition to the SEC. This report will be updated as events warrant.

Figure 1 and Table 1 show bankruptcy filings since 1980. Business filings peaked in 1987, but the number of consumer filings continued to grow through 2005. In that year, the number of filings surpassed 2 million—there was a "rush to the courthouse" before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA; P.L. 109-8 ) took effect in October 2005. In 2006, filings dropped sharply, suggesting that the new law caused many to accelerate their filings, and that many petitions that would have been filed in 2006 (or later) were pushed forward by bankruptcy reform. Whether BAPCPA will reduce filings in the long run is still unclear. Filings rose steadily from the 2006 lows until 2010, when they exceeded 1.5 million, which was approximately the level during the four years before BAPCPA. Over the first three quarters of 2011, there was a slight decline from the year-earlier numbers. Table 2 shows figures on household debt. The major categories of household debt are mortgage debt and consumer credit, which together comprise about 97% of all household indebtedness. Consumer credit consists of (1) revolving credit, or credit card debt, and (2) non-revolving debt, which is dominated by auto and college loans (though it also includes loans for boats, mobile homes, vacations, and so on). Mortgage debt is borrowing secured by real estate. A subcategory within mortgage debt, home equity lending, is broken out in the table because it may substitute for consumer credit in many cases. Table 2 also includes Federal Reserve estimates of the burden of debt service—that is, the percentage of household disposable income that goes to repay loans. Over the past decade, this measure rose steadily (but not dramatically), until the recession and financial crisis that began in 2007. The debt burden figures in Table 2 fluctuate within a fairly narrow range: from 10.80% to 13.93%. (During the 1980s, the range was similar: from 10.6% to 12.5%.) Although the burden of debt has risen since the 1980s, the increase has been gradual and would not appear to explain much of the fivefold increase in personal bankruptcy filings over the past two decades. Moreover, the decline in the debt service ration since 2007 has not been accompanied by a significant reduction in bankruptcy rates. Interest rates paid by consumers—particularly mortgage rates—declined in recent years to the lowest levels since the 1950s, and they remain low. The relative stability of the debt burden in the face of falling and historically low interest rates implies that the ratio of debt outstanding to income has been rising. This ratio—the sum of consumer and mortgage debt expressed as a percentage of disposable personal income—is shown in the far right column of Table 2 . The increases in this figure, which between 1990 and 2007 rose more than twice as fast as the debt burden, suggest that further increases in bankruptcy filings (and perhaps problems for lenders) may lie ahead if interest rates should rise suddenly or unexpectedly. Since 1980, however, declining interest rates have permitted households to take on more debt without a comparable increase in the interest payments required to service that debt. The aggregate household debt numbers mask important differences among families: some have done very well in the long booms of the 1980s and 1990s, while others have taken on debt that they have difficulty repaying. Table 3 below, based on the Federal Reserve's Survey of Consumer Finances, shows the percentages of families at various income levels that devote more than 40% of their income to debt service, for selected years from 1995 through 2007. Two noteworthy facts emerge from the data in Table 3 . The first is the high rate of distress among lower-income families, who are the most likely to file for bankruptcy. Second, like the debt burden figures shown in Table 2 , there is no sharply rising trend that would explain the dramatic increase in personal bankruptcy filings. The percentage of all families in distress in 2007 was little changed from the 1998 level. The 2007 figures do show a notable increase among families in the upper income percentiles; this may be attributable to increased mortgage debt taken on during the housing boom that ended in that year. The question remains why so many families at or below the national median income take on high levels of debt and end up in bankruptcy court. Some explanations focus on particularly vulnerable populations: the sick and uninsured (or underinsured), the divorced, or residents of states without mandatory uninsured motorist coverage. Supporters of the bankruptcy reform measure finally enacted in 2005 argued that the bankruptcy code was too debtor-friendly and created an incentive to borrow beyond the ability to repay, or in some cases without the intention of repaying. Opponents of reform claimed that financial distress is often a by-product of the marketing strategies of credit card issuers and other consumer lenders. Lack of a consensus explanation for the rise in consumer bankruptcy filings suggests that the issue will remain controversial. In December 2007, the U.S. economy went into recession, in the midst of global financial panic. Household debt levels began to fall in three of the four categories shown in Table 2 . The decline in debt balances continued for 11 calendar quarters, until debt outstanding rose slightly in the second quarter of 2011. In the third quarter, debt levels fell again. On a percentage basis, home equity and credit card debt led the decline, as shown in Table 4 . In dollar terms, however, mortgage debt (other than home equity loans) accounted for most of the drop. Several factors appear to have contributed to the fall in debt balances. Some households may be paying down their debt, others may be borrowing less, and the amount of debt written off by lenders as uncollectible has increased. Some lenders have tightened their credit standards for new loans. Mortgage balances have fallen because of mortgage modifications or other negotiations that reduce principal outstanding, and because foreclosed homes are often sold for less than the amount of the old mortgage. Causes and implications of deleveraging are discussed in CRS Report R41623, U.S. Household Debt Reduction , by [author name scrubbed].

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA; P.L. 109-8) included the most significant amendments to consumer bankruptcy procedures since the 1970s. Bankruptcy reform was enacted in response to the high number of consumer bankruptcy filings, which in 2004 and 2005 reached five times the level of the early 1980s. Why did filings increase so dramatically during a period that included two of the longest economic expansions in U.S. history? Because bankruptcy is by definition a condition of excessive debt, many would expect to see a corresponding increase in the debt burden of U.S. households over the same period. However, while household debt has indeed grown, debt costs as a percentage of income have risen only moderately. What aggregate statistics do not show is that the debt burden does not fall evenly on all families. Financial distress is common among lower-income households: in 2007, 27% of families in the bottom fifth of the income distribution spent more than 40% of their income to repay debt. Following the effective date of BAPCPA, in October 2005, there was a sharp reduction in the number of bankruptcy filings, reflecting the "rush to the courthouse" in the months before the new law took effect. Since the 2006 lows, the number of filings has risen steadily. In 2010, personal bankruptcy filings reached 1.5 million, roughly equal to the pre-BAPCPA level. It appears that BAPCPA has not produced the effect its supporters hoped for—a substantial and permanent reduction in the rate of consumer bankruptcy. With the recession that began in December 2007, the long-term upward trend in consumer indebtedness was interrupted. Beginning in the middle of 2008, the amount of debt held by U.S. households declined for 11 consecutive quarters. Through the third quarter of 2011, households reduced their debt burden by $853 billion, or 6.5%. Causes and implications of this trend are discussed in CRS Report R41623, U.S. Household Debt Reduction, by [author name scrubbed]. This report presents statistics on bankruptcy filings, household debt, and families in financial distress. It will be updated as new statistics become available.

On February 27, 2010, an earthquake of magnitude 8.8 struck off the coast of central Chile. Centered 70 miles northeast of Chile's second-largest city, Concepción, at a depth of 22 miles, the earthquake was the second-largest ever recorded in Chile and the fifth-largest recorded worldwide since 1900. Over 100 aftershocks of magnitude 5.0 or greater were recorded following the initial earthquake. The earthquake and subsequent tsunami, which struck Chile's coast roughly 20 minutes after the earthquake and moved 2,000 feet onto shore in some places, have devastated portions of the country. Preliminary reports indicate that 2 million people have been affected out of a population of 16.6 million, with some 200,000 homes badly damaged or destroyed and more than 500 people confirmed dead. The Chilean government has declared six regions catastrophe zones: Valparaiso, Metropolitana, Libertador O'Higgins, Araucania, Biobío, and Maule. The Maule region was by far the hardest hit, however, accounting for most of the dead, and the humanitarian situation there remains the most pressing. Infrastructure across the country has been affected with roads destroyed, bridges and power lines down, and some ports forced to close. Early estimates suggest the economic damage could be between $15 and $30 billion U.S. dollars, the equivalent of 10% to 20% of Chile's gross domestic product (GDP). The infrastructure damage could also slow Chile's economy in the near term, jeopardizing the country's nascent recovery from the global financial crisis. Many believe the economic and human toll would have been much worse if not for Chile's stringent building codes and past experience with earthquakes. The Chilean government is leading the relief operation and coordinating assistance. Despite offers of assistance, thus far the international humanitarian relief operation has been limited pending further requests for assistance from the government. In addition, there are more than 16,000 Chilean military personnel providing humanitarian relief and maintaining public order. Although there are reports of varying casualty numbers, according to the Ministry of the Interior, the official death toll is 507 (497 bodies have been identified; 10 remain unidentified). The numbers of missing persons are not yet known. According to the Chilean government, approximately 200,000 houses have been badly damaged or destroyed. Estimates suggest as many as 2 million people may have been affected by the earthquake, an unknown number of whom were injured or displaced. Since the earthquake, the Chilean government has rushed to provide relief to the victims. In addition to dispatching search and rescue teams and undertaking preliminary needs assessments, the government has worked to reestablish basic services and has distributed food, blankets, and medical equipment in the affected regions. The Chilean National Emergency Office (ONEMI) is coordinating the relief effort. After its initial assessments, the Chilean government appealed to the international community for aid. Among other items, the Chilean government has requested field hospitals, electric generators, satellite communications equipment, water purification systems, and mobile bridges. Chilean officials have met with United Nations (U.N.) agencies to establish a clear plan for international assistance, and the United States and more than 20 other nations have begun to provide Chile with the aid it has requested. (See Appendix B .) Many aid agencies have offered assistance, pending further instructions from the government. President Michelle Bachelet called the consequences of the earthquake "an emergency without parallel." She issued a State of Catastrophe declaration for the regions of Maule and Biobío on February 28, 2010. The declaration, issued following increasing reports of riots and looting, restricts civil rights and liberties and places the regions under military control to maintain order and avoid social conflict. This is the first time that a State of Catastrophe measure has been employed by the Chilean government since its return to democracy in 1990. President Bachelet deployed approximately 14,000 military troops to the two regions to restore order based on outbreaks of looting and violence. The military commanders of the regions, in consultation with the Minister of the Interior and the Minister of Defense, declared a curfew for the city of Concepción. The curfew was extended to three cities in the Maule region—Talca, Cauquenes, and Constitución—on March 1. Enforcement of order has led to at least 160 arrests and one death. At least two elements of the Chilean government's initial response have been criticized in Chile. The first is that the coastal and island communities did not receive timely warning about the tsunami waves that caused so many of the reported casualties. The first tsunami waves hit the coastal city of Valparaiso (330 kilometers northeast of the epicenter) just 34 minutes after the initial earthquake, according to the National Oceanic and Atmospheric Administration (NOAA). But some claim that the tsunami warnings in coastal areas were not clearly transmitted. The Chilean Navy acknowledged their response was partly at fault and a quicker warning would have saved many lives. According to one report, the Chilean Navy received word of the imminent tsunami threatening the coast just 11 minutes after the initial earthquake. However, no warning was issued locally. The President deflected the criticism saying the time is not right to assign blame. On the morning of the catastrophic quake, the President was unable to communicate with many areas in the country. However, after acknowledging their warning system was faulty, the Navy fired the head of its catastrophic warning unit. Bachelet's successor, Sebastián Piñera has called for a thorough "modernization" of the tsunami warning system as his government comes into office. The second Chilean government response that has been widely questioned is the speed with which the Chilean military was deployed to quell looting and violence in the disaster zone. Some critics have argued that President Bachelet moved too slowly, suggesting she was mistrustful of the military because of her imprisonment and torture under General Augusto Pinochet's military dictatorship more than two decades ago. She began to deploy troops within 48 hours of the earthquake and increased their numbers during the week to a total of 14,000. Troops were welcomed by Chileans both for restoring order and assisting with the ongoing disaster response. The rural poor were the most affected by the earthquake. In some small cities, food was unattainable when poorer customers were priced out of the market because merchants sharply raised prices. Some reports said that services were restored and aid provided first to middle class areas. The urban poor living near Santiago lost their electricity and water for much longer than those living in the capital which recovered quickly. One of the most vulnerable populations in Chile is the Mapuche, Chile's largest indigenous group comprising approximately 4% of the Chile's 16.6 million citizens. The Mapuche live mainly in Chile's central and southern regions with their seat of power in La Araucanía. They suffered many of the difficulties after the earthquake as other poor Chileans; water and electricity were cut off and houses were destroyed or seriously damaged. While critics point to weaknesses in the initial government response, later assessments by disaster managers gave the Chilean government higher marks. Aspects of the response that received special attention included: a careful assessment to target foreign assistance so it would complement Chile's rescue and relief efforts; quick restoration of major roads such as the critical North-South highway; and having the military handle logistics. Within ten days of the earthquake, 90% of homes in the disaster area had regular power and water, 500,000 survivors were getting water trucked in, and relief has been distributed by military helicopter, navy ships, and tractor trailers. Many credited the Bachelet government with success given the scope of the disaster and some labeled it a model. In a post quake poll, President Bachelet received an 84% approval rating, leaving office with the highest level of popular support of her presidency. The Chilean government's response to the earthquake has been complicated by the fact that President Bachelet departed office on March 11, 2010, and was succeeded by Sebastián Piñera, the leader of a center-right coalition that won the country's recent presidential election. Piñera was expected to replace all of Bachelet's cabinet ministers and political appointees, including many of those now overseeing relief operations. Recognizing the need for continuity, Piñera had earlier indicated that he would retain the head of ONEMI and would ask some of the subregional authorities of the six regions declared catastrophe zones to stay on temporarily. On March 9, 2010, President-elect Piñera named key regulators and regional authorities (or intendants as they are called in Chile) to his government before his inauguration, including a new deputy Interior Minister. On March 10, Carmen Fernandez, Director of ONEMI in the Bachelet government, resigned citing weaknesses in the agency's response. President Bachelet held a series of meetings with President-elect Piñera in order to ease the transition. Governments and non-governmental organizations (NGOs) are conferring with President Bachelet and incoming President Piñera on the nation's needs to smooth the transition in power. President-elect Piñera has declared his government "will be the government of the reconstruction, not the government of the earthquake." He faces huge challenges in a recovery that has been estimated will take 3-4 years and will cost between $15 and $30 billion dollars by the outgoing administration. Piñera has toured the hardest hit regions, and continued to make appointments. He is re-orienting his strategy from promising to return Chile to an annual growth rate of 6% to rebuilding and reconstruction. He has also pledged to improve coordination between authorities and the armed forces; to repair damaged infrastructure such as ports, roads, airports and telecommunication and power lines; and to construct homes in the affected zones. A billionaire, conservative politician and one of Chile's wealthiest investors, will face political challenges such as keeping expectations in check, and keeping right wing elements within his coalition with ties to the Pinochet era under control, in addition to steering Chile out of the disaster. Chile declared three days of national mourning for victims of the quake from March 7 to March 9, 2010. The tone of the ceremony to inaugurate the new president was austere out of respect for the national tragedy and widespread mourning resulting from the earthquake. Public activities and ceremonies for the President-elect have been cancelled although official events—including visits from foreign delegations—will take place. Both leaders anticipate a smooth transition. A country-wide telethon held in Chile on March 7 (with the participation of President Bachelet and President-elect Piñera and visiting U.N. Secretary-General Ban Ki-Moon) was expected to raise $30 million and brought in almost $60 million. The funds will go to a local NGO "Un Techo Para Chile" (A Roof For Chile) that plans to use the funds for the construction of 23,000 small wooden shelters in the affected areas. As mentioned above, the Chilean government is leading the relief operation and coordinating assistance. Assessments are ongoing. It remains to be seen how the needs of those affected by the tsunami may differ from those primarily affected by the earthquake and, further, how such differences might be integrated into the overall humanitarian response. Of 130 existing health clinics in the affected areas, six hospitals were evacuated, nine were severely damaged, and 115 remain fully operational. Based on these figures, approximately 4,000 beds (or 20 to 25%) have been lost. Regional health services have now returned to normal levels. Psychological and trauma assistance is needed. Ten field hospitals and a Red Cross mobile unit have been deployed to affected areas. Chilean military personnel are providing medical assistance. On March 1, the government set up a National Committee of Mental Health in Emergencies and Disasters. The Ministry of Health has provided fortified milk, medicines, and vaccines. It has also announced a general vaccine campaign in high risk areas. The Chilean Red Cross and other Red Cross societies are providing medical assistance and conducting assessments for water supplies and relief items. Many of the affected areas are without regular access to food. The numbers of those needing food assistance have not yet been determined. In addition, the military is distributing food and reportedly some NGOs are also providing food assistance. The Chilean government reports there are an estimated 90 shelter camps with 19,000 people. A further 25,000 people are in temporary shelters (such as schools) and another 50,000 are in makeshift camps. Many others have reportedly staying with family and friends, and in the case of migrant workers, have returned to their homes in other parts of the country. An estimated 200,000 houses have been destroyed or badly damaged. Two regions – Maule and Biobio – were hit particularly hard by the earthquake and tsunami and in some places 72% of houses were destroyed and 24% require significant repair. In terms of planning for longer-term emergency shelter, the rainy season does not usually start in Chile until May or June. The International Federation of the Red Cross/Red Crescent (IFRC) has provided relief items to 5,000 families. Volunteers have constructed 300 emergency shelters. The $60 million collected during a weekend telethon in Chile will support the construction of 23,000 emergency shelters. The U.S. Agency for International Development (USAID) has distributed plastic sheeting for 1,500 family shelters. Assessments of shelter needs are ongoing. More than 150 rural water supply systems, affecting approximately 200,000 people, were damaged. Others are not working due to damage to electrical systems. Access to potable water has generally increased in affected areas since the earthquake. However, in Concepción, where 55% of inhabitants have access to potable water and in Arauco where 50% have access, bottled water is urgently needed. In addition, the Chilean military is providing bottled water in water tankers. Three airplane loads of potable water have also been sent from Bolivia. It is estimated that up to 33% of the schools in the six areas most affected by the earthquake are either not operational at all or only partially operational. In areas less affected, such as Santiago, classes were suspended until March 8 when approximately 80% of the children returned to school. Classes in areas more affected by the earthquake are likely to start mid March or later. It is reported that mobile and land telecommunications have improved significantly in affected areas. In the city of Concepción services are up to 65-70%. The Chilean Minister of Public Health has said that rehabilitation of roads and other infrastructure will cost $1.2 billion. The Chilean government has identified some structures for rehabilitation. The government of Sweden has offered eight portable bridges. Various international structural engineers are conducting assessments. Electricity and natural gas conduits are being restored to affected areas. The government reports that more than 26,000 fisherman lost their homes and basis for livelihood (boats and equipment) as a result of the tsunami. The government is providing assistance for coastal towns and has promised agricultural assistance. Some wine-producing areas have also been affected. The United Nations has a country team in Santiago, which is lead by the Economic Commission for Latin America and the Caribbean (ECLAC). The U.N. country team includes agencies such the U.N. Development Program (UNDP), the U.N. Children's Fund (UNICEF), the Office of the High Commissioner for Human Rights (OHCHR), the Pan-American Health Organization (PAHO), the U.N. Educational, Scientific, and Cultural Organization (UNESCO), the Food and Agriculture Organization (FAO), and the International Labor Organization (ILO), as well as other entities such as the European Union and International Organization for Migration (IOM). The Chilean government did not make a specific request to the U.N. Office for the Coordination of Humanitarian Assistance (OCHA) until days after the initial earthquake. At that point, the government made targeted requests for specific assistance such as communication equipment, water purification apparatus, and field hospitals, which were met largely through bilateral support. OCHA did send a small assessment team to Santiago and Concepción. OCHA remains on stand-by should assistance be requested by the Chilean government. A revised request may be forthcoming from the Chilean government with the March 11 transition of power. International recovery efforts are typically complex because they require coordination among numerous different actors. Apart from U.N. agencies, those responding to humanitarian crises include international organizations, NGOs, private voluntary agencies (PVOs), and bilateral and multilateral donors. A great deal of assistance is provided by other governments and international entities. The International Federation of the Red Cross and Red Crescent Societies (IFRC) is working with the Chilean Red Cross Society and other national red cross societies to provide assistance to earthquake survivors. Various international NGOs have also mobilized to respond to the crisis. Many international actors have offered relief assistance to Chile, either through pledges of financial support to the government of Chile or aid organizations or by directly offering relief supplies and emergency personnel. The U.N.'s Central Emergency Response Fund (CERF) has pledged $10 million. The U.N. Country Team in Chile is drafting proposals for use of the CERF funds which are focused on health, water and sanitation, emergency shelter, education and emergency telecommunications. So far, through governments and the private sector, the international community has pledged millions of dollars in aid, materials, and technical support. Appendix B highlights donor contributions and in-kind pledges. At least 29 countries from around the world have contributed to the relief effort. Obtaining an up-to-date record of all international contributions is not possible—in part because some assistance is not reported to governments or coordinating agencies—and in part because of the delay in their recording. Private sector assistance has been given at a much slower rate than private contributions following the earthquake in Haiti. Some reports attribute the slower pace to the fact that Chile is much better prepared to deal with the destruction; others point to the fact that the damage is much less severe. In addition, the Chilean government requested assistance from the United Nations but not so far from international humanitarian groups. Aid groups remain on stand-by pending requests for assistance. Moreover, reports also indicate that Chileans are donating and volunteering in large numbers to fill gaps in the earthquake response. As stated above a weekend telethon organized by a local organization raised $60 million. Rebuilding in the aftermath of the massive earthquake will take years and require an investment in the reconstruction of as much as $30 billion dollars, or between 15-20% of Chile's current GDP. After an initial assessment, President Bachelet stated that Chile will need loans from the World Bank and other multilateral sources to pay for recovery. The World Bank, the Inter-American Development Bank (IDB) and the International Monetary Fund (IMF) all offered assistance to Chile immediately following the earthquake. The World Bank and the IDB have opened credit lines for Chile. As one of the region's strongest economies and democracies, Chile is likely to receive the loans it seeks. The country's growth projections for 2010 are estimated at 5 to 5.5% (J.P. Morgan actually bumped up its prediction of Chile's growth rate to 5.5% following the earthquake in anticipation of economic activity during a vigorous reconstruction effort). Chile's credibility in international markets, strong macroeconomic policies, and open markets will be seen favorably. In addition, Chile has reserved more than $11 billion in a sovereign fund, mostly during President Bachelet's administration, earned from copper exports. These emergency reserves are likely to be used to help finance the nation's recovery. Selected activities of key U.S. government agencies—USAID and the Department of Defense (DOD)—are described briefly below. On February 27, President Barack Obama announced that the U.S. government would assist with earthquake rescue and recovery efforts, pending a request from the Chilean Government. USAID set up a Washington, DC-based Response Management Team (RMT) through the Office of Foreign Disaster Assistance (OFDA) to coordinate and facilitate the humanitarian response to the earthquake. On February 28, 2010, U.S. Ambassador to Chile Paul E. Simons issued a disaster declaration, and through OFDA, authorized $50,000 for the initial implementation of an emergency response program. OFDA deployed a 16-member USAID Disaster Assistance Response Team (DART). The RMT is supporting the USAID/DART. To date, the overall focus of the U.S. government's response has been conducting needs assessments, working with the U.S. embassy in Chile and the Chilean government on priority humanitarian needs, coordinating delivery of USAID/OFDA-funded relief supplies, and providing communications support. See Appendix C for further information about the U.S. Government humanitarian response mechanism. On March 2, Secretary of State Hillary Clinton met with Chilean President Michelle Bachelet and President-elect Sebastián Pinĕra in Santiago as part of a pre-planned regional trip to Latin America. Secretary of State Clinton delivered 20 satellite phones provided by USAID/OFDA and DOD to assist with communications in areas affected by the earthquake. An additional 40 phones have since been provided. As of March 10, 2010, USAID/OFDA reports that it has provided $10.7 million for emergency response activities in Chile. USAID/OFDA issues regular situation reports assessing the progress of relief operations. DOD contributions to the earthquake relief efforts in Chile are on a much more limited scale than Operation Unified Response in Haiti. As with Haiti, the U.S. Southern Command (SOUTHCOM) is overseeing DOD's efforts with a command and control team based in Santiago. The U.S. Air Force has deployed two C-130 cargo aircraft and 50 support personnel to provide airlift to affected areas. The Air Force has also deployed an Emergency Medical Expeditionary Support Team with 84 personnel to the city of Angol. The U.S. Navy has dispatched an engineering assessment team to the Chilean naval base Talcahuano to survey and assess damages to the harbor facilities. Offers of assistance by countries in the region came quickly. On March 1, President Lula of Brazil was the first foreign leader to visit Chile, and at a meeting with President Bachelet pledged all possible Brazilian assistance. Brazil has sent helicopters and C-130 planes carrying a field hospital and staff. Damage to Chile's power supply was widespread. Because both of Chile's main oil refineries were damaged, President Bachelet pledged to increase gasoline, diesel and fuel oil imports. Neighboring Argentina quickly doubled its normal supply of natural gas to Chile to 5.5 million cubic meters per day on March 3. Argentina also sent an Air Force hospital, food, water, medical supplies, electricity power generators and four water purification plants. Many Latin American countries sent in-kind donations with leaders of Ecuador and Bolivia explaining they were cash-strapped. For example, in the first week following the earthquake Venezuela sent seven tons of food and Bolivia sent 40 tons of drinking water. Cuba provided a 26-member medical team and field hospital. (For more details, see Appendix B ). These quick offers of aid are significant in light of Chile's history of sometimes mistrustful relations with its neighbors due to unresolved border disputes. At the summit of the Union of South American Nations (a regional cooperation body) held in the aftermath of the Haitian earthquake in early February, Latin American leaders agreed to set up a $300 million fund for Haiti's reconstruction and to assist one another in future natural disasters. The response by Latin American countries to Chile's earthquake and tsunami seems to be evidence of this commitment. Following a violent coup against democratically elected Marxist President Salvador Allende in 1973, Chile experienced 17 years of military rule under General Augusto Pinochet before reestablishing democratic rule in 1990. A center-left coalition of parties known as the Concertación has governed Chile over the two decades since the end of the dictatorship. In addition to addressing human rights violations from the Pinochet era, the coalition has enacted a number of constitutional changes designed to strengthen civilian democracy. Chile made significant economic progress under the Concertación's free market economic policies and moderate social programs, and produced notable economic growth and considerable reductions in poverty. On January 17, 2010, Sebastián Piñera of the center-right Alianza coalition was elected president in a second-round runoff vote, defeating former President Eduardo Frei (1994-2000) of the Concertación. Piñera's election was the first for the Chilean right since 1958, and his inauguration on March 11, 2010, will bring an end to 20 years of Concertación governance. Throughout his campaign, Piñera pledged to largely maintain Chile's social safety net while implementing policies designed to boost the country's economic growth. Even before the earthquake, Piñera was expected to work closely with Concertación to enact his policy agenda because his coalition does not enjoy absolute majorities in either house of Congress. Chile has enjoyed close relations with the United States since its transition back to democracy. Both countries have emphasized similar priorities in the region, designed to strengthen democracy, improve human rights, and encourage trade. Chile and the United States have also maintained strong commercial ties, which have become more extensive since a bilateral free trade agreement between them entered into force in 2004. Additionally, U.S. officials have expressed appreciation for Chile's leadership and moderating influence in a region increasingly characterized by political unrest and anti-American populism. Because Chile is an advanced developing country the small amount of current assistance the country receives is focused on modernizing the Chilean military to improve its capacity to act as a peacekeeping force and to conduct joint operations with the U.S. military. U.S. assistance also goes to programs that deter weapons of mass destruction, improve civilian control over the military, and upgrade military equipment. Chile received $1.2 million in U.S. assistance in FY2009, an estimated $1.7 million in FY2010, and would receive $2.2 million in FY2011 under the Obama Administration's request. Table 1 shows the distribution between three foreign assistance accounts for Chile. Many Members have already expressed a strong desire to support Chile and provide it with necessary assistance. Humanitarian assistance generally receives strong bipartisan congressional support and the United States is typically a leader and major contributor to relief efforts in humanitarian disasters. When disasters require immediate emergency relief, the Administration may fund pledges by depleting its disaster accounts intended for worldwide use throughout a fiscal year. The United States has so far provided $10.7 million in immediate aid for Chile. That aid is drawn from existing funds. The international community is also making donations toward meeting immediate needs. Finding the resources to sustain U.S. aid pledges may be difficult, particularly amid efforts to tackle rising budget deficits by, among other measures, slowing or reducing discretionary spending. After the 2004 tsunami disaster, some Members of Congress publicly expressed concern that funding for tsunami relief and reconstruction, which depleted most worldwide disaster contingency accounts, could jeopardize resources for subsequent international disasters or for other aid priorities from which tsunami emergency aid had been transferred. These accounts were fully restored through supplemental appropriations. At the time, others noted the substantial size of U.S. private donations for tsunami victims and argued that because of other budget pressures, the United States government did not need to transfer additional aid beyond what was already pledged. In Haiti, the full extent and cost of the disaster is not yet known. Disaster accounts are currently being drawn down to provide relief to Haiti. The State Department reports that in order to respond to future humanitarian crises, these resources would need to be replenished by June 1, 2010. If not replenished, U.S. capacity to respond to other emergencies could be curtailed. Congress will also likely consider a major request to help fund Haiti's recovery and reconstruction. Should substantial funds be required for Chile as well, it is possible this would be added to the request for Haiti. The earthquake in Chile appears to require far less assistance from the international community than in Haiti. It is not always evident whether figures listing donor amounts represent pledges of support or more specific obligations. Pledges made by governments do not necessarily result in actual contributions. It also cannot be assumed that the funds committed to relief actually represent new contributions, since the money may previously have been designated to provide support for the affected country. It will take time to obtain a more complete picture of the actual costs of the disasters in Haiti and Chile and how they will be shared among international donors. Comparing U.S. and international aid is also difficult because of the often dramatically different forms the assistance takes (in-kind contributions vs. cash, for instance). As the situation in Haiti stabilizes, and attention turns to early recovery and reconstruction, sustaining donor interest in Haiti (and commitment to honor existing pledges) could be a challenge. Moreover, this challenge is compounded by the need to maintain funding priorities and secure funds needed for other disaster areas, such as the recent earthquake in Chile. Due to the fact that the earthquake in Chile occurred offshore, it generated a tsunami which struck parts of the Chilean coastline and offshore islands, causing damage and fatalities. Tsunami warnings were issued by the National Weather Service Pacific Tsunami Warning Center for Hawaii, Japan, and other regions bordering the Pacific Ocean that may have been vulnerable to a damaging tsunami, although most regions far from the epicenter did not experience any serious damage. A tsunami caused significant damage to the city of Hilo, Hawaii, following the May 1960 magnitude 9.5 earthquake that also occurred along the subduction zone fault about 143 miles south of the February 27, 2010, earthquake. Why the 1960 earthquake generated a tsunami that caused damage and fatalities in Hawaii, Japan, and the Philippines while the 2010 earthquake did not is not yet well understood and is being actively studied. In addition, these studies will likely consider the effectiveness of existing early warning systems. Subduction zone megathrust faults generate the largest earthquakes in the world. The Cascadia Subduction Zone megathrust that stretches from mid-Vancouver island in southern British Columbia southward to Cape Mendocino in northern California has the potential to generate a very large earthquake, similar in magnitude to the February 27 Chilean earthquake. The fault's proximity to the northwestern United States coastline—approximately 50-100 miles offshore— also poses a significant tsunami hazard; destructive waves from a large earthquake along the fault could reach the coast of Oregon and Washington in less than an hour, possibly as soon as tens of minutes. The Cascadia Subduction Zone fault forms the boundary between the subducting Juan de Fuca tectonic plate and the overriding North American plate, very similar to the relationship between the Nazca Plate and the South American Plate off the Chilean coast. If the Cascadia Subduction Zone megathrust were to "unzip" or rupture along a large section of its entire length, it would likely generate a megathrust earthquake near magnitude 9 or more, similar to the 1964 Alaskan earthquake, the 1960 and 2010 Chilean earthquakes, and the 2004 Indonesian earthquake. Scientists have documented that the last time this occurred along the Cascadia Subduction Zone fault was in 1700. The 1700 earthquake spawned a tsunami that traveled across the Pacific Ocean and struck Japan. Because of the tectonic similarities between the Cascadia Subduction Zone megathrust and the Nazca-South American plate megathrust, scientists hope to learn a great deal about the seismic hazard in the Pacific Northwest by studying the unique strong ground motion recordings from the 2010 Chilean magnitude 8.8 earthquake. The potential damage to Chile's buildings and infrastructure in urban areas was mitigated by the adoption and enforcement of advanced building codes; these codes include requirements aimed at reducing damage from earthquakes' shaking. Assessments of the damage in Chile will provide valuable information on whether changes to Chile's building codes or their enforcement are in order for better managing seismic and tsunami risks. The National Science Foundation and other U.S. federal agencies are supporting or participating in various engineering teams to collect and analyze data from the February 27 event that could inform improvements to international and domestic model building codes. Chile has demonstrated its willingness and capacity to create, implement, and enforce building codes and other hazard mitigation measures to reduce loss and injury. Chile has the mechanisms and technical capacity to learn from the quake to improve its codes and policies to support more resilient structures and communities (e.g., improving tsunami warning and communication technologies and protocols). Construction that complies with location appropriate building codes can make structures more resistant to collapse and damage; however, structures are never earthquake proof, and increased structural resiliency typically increases construction costs. Although the Chilean quake was of a larger magnitude than the January 2010 Haitian quake, Chile's urban centers of Concepcion and Santiago experienced less severe shaking than the violent shaking in Port-au-Prince. A combination of more intense shaking, weak building codes and enforcement, and limited preparedness and response capabilities contributed to Haitians facing significantly higher risk than Chileans. How the United States and other nations provide aid to Chile and Haiti is likely to reflect the understanding that multiple actions can reduce risks, including adoption of building codes, in-country technical capacity building, expert technical assistance, and sharing of preparedness and response knowledge and technology. Appendix A. Earthquake Zones Appendix B. Donor Contributions and Pledges to Chile in Response to the February 27, 2010, Earthquake Appendix C. The U.S. Government Emergency Response Mechanism for International Disasters The United States is generally a leader and major contributor to relief efforts in response to humanitarian disasters. The President has broad authority to provide emergency assistance for foreign disasters and the U.S. government provides disaster assistance through several U.S. agencies. The very nature of humanitarian disasters—the need to respond quickly in order to save lives and provide relief—has resulted in a rather unrestricted definition of what this type of assistance consists of at both a policy and an operational level. While humanitarian assistance is assumed to provide for urgent food, shelter, and medical needs, the agencies within the U.S. government providing this support typically expand or contract the definition in response to circumstances. Funds may be used for U.S. agencies to deliver services or to provide grants to international organizations (IOs), international governmental and non-governmental organizations (NGOs), and private or religious voluntary organizations (PVOs). The U.S. Agency for International Development (USAID) is the U.S. government agency charged with coordinating U.S. government and private sector assistance. It also coordinates with international organizations, the governments of countries suffering disasters, and other governments. The Office of Foreign Disaster Assistance (OFDA) in USAID's Bureau for Democracy, Conflict and Humanitarian Assistance (DCHA) provides immediate relief materials and personnel, many of whom are already abroad on mission. It is responsible for providing non-food humanitarian assistance and can quickly assemble Disaster Assistance Response Teams (DARTs) to assess conditions. OFDA has wide authority to borrow funds, equipment, and personnel from other parts of USAID and other federal agencies. USAID has two other offices that administer U.S. humanitarian aid: Food For Peace (FFP) and the Office of Transition Initiatives (OTI). USAID administers emergency food aid under FFP (Title II of P.L. 480) and provides relief and development food aid that does not have to be repaid. OTI provides post-disaster transition assistance, which includes mainly short-term peace and democratization projects with some attention to humanitarian elements but not emergency relief. The Department of Defense (DOD) Overseas Humanitarian, Disaster and Civic Aid (OHDACA) funds three Dodd humanitarian programs: the Humanitarian Assistance Program (HAP), Humanitarian Mine Action (HMA) Program, and Foreign Disaster Relief and Emergency Response (FDR/ER). OHDACA provides humanitarian support to stabilize emergency situations and deals with a range of tasks including providing food, shelter and supplies, and medical evacuations. In addition the President has the authority to draw down defense equipment and direct military personnel to respond to disasters. The President may also use the Denton program to provide space-available transportation on military aircraft and ships to private donors who wish to transport humanitarian goods and equipment in response to a disaster. Generally, OFDA provides emergency assistance for 30 to 90 days after a disaster. The same is true for Department of Defense humanitarian assistance. After the initial emergency is over, assistance is provided through other channels, such as the regular country development programs of USAID. The State Department also administers programs for humanitarian relief with a focus on refugees and the displaced. The Emergency Refugee and Migration Account (ERMA) is a contingency fund that provides wide latitude to the President in responding to refugee emergencies. Assistance to address emergencies lasting more than a year comes out of the regular Migration and Refugee Account (MRA) through the Population, Migration and Refugees (PRM) bureau. PRM assists refugees worldwide, conflict victims, and populations of concern to the United Nations High Commissioner for Refugees (UNHCR), often extended to include internally displaced people (IDPs). Humanitarian assistance includes a range of services from basic needs to community services. Appendix D. Legislation in the 111th Congress S.Res. 431 . A resolution expressing profound concern, deepest sympathies, and solidarity on behalf of the people of the United States to the people of Chile following the massive earthquake . Introduced March 3, 2010 and agreed to in the Senate March 4, 2010. H.Res. 1144 . A resolution expressing condolences to the families of victims of the February 27, 2010, earthquake in Chile, as well as solidarity and support for the people of Chile as they plan for recovery and reconstruction. Introduced on March 9, 2010, and agreed to in the House on March 10, 2010. H.R. 4783 . The Act to accelerate the income tax benefits for charitable cash contributions for relief of victims of the earthquake in Chile, and to extend the period from which such contributions for the relief of victims of the earthquake in Haiti may be accelerated. Contributors may deduct their donations made by April 15, 2010 from their 2009 tax return. Introduced in the House March 9, 2010, and passed in the House and introduced in the Senate on March 10, 2010. Appendix E. How to Search for or Report on American Citizens in Chile and How to Obtain Security Information Updates This section prepared by [author name scrubbed], Information Research Specialist, Knowledge Services Group. The Department of State has provided phone numbers and an e-mail address for reporting on American citizens who have been living or travelling in Chile: The Chile Task Force phone number is 1-888-407-4747 and its e-mail address is [email protected]. In order to expedite your request, provide the individuals full name, birth date, birthplace, location and contact information in Chile as well as any special circumstances. American citizens living or travelling in Chile may register via the Department of State website at https://travelregistration.state.gov/ibrs/ui/ , or may register in person at the U.S. Embassy in Santiago, located at Avenida Andres Bello 2800, Las Condes. The embassy phone number is 56-2-330 30 00, the fax number is 56-2-330 30 05. Their after-hours emergency phone number is 56-2 330-3000, and email address is [email address scrubbed] . Information about making phone calls from Chile to the United States and from the United States to Chile may be found at http://chile.usembassy.gov/calling-us-chile.html . The Department of State frequently updates security conditions using the following phone numbers: 1-888-407-4747 (from inside the United States) and 1-202-501-4444 (from outside the United States). Appendix F. Links for Further Information This section prepared by [author name scrubbed] and [author name scrubbed], Information Research Specialist, Knowledge Services Group U.S. Government Agencies U.S. Agency for International Development (USAID) http://www.usaid.gov/helpchile/ U.S. Department of State http://www.state.gov/chilequake U.S. Department of State Travel Warnings and How to Locate or Report Status of American Citizens http://travel.state.gov/travel/cis_pa_tw/pa/pa_4737.html U.S. Department of State Embassy, Santiago Chile http://chile.usembassy.gov/2010press0304-relief.html U.S. Geological Survey http://earthquake.usgs.gov/earthquakes/recenteqsww/Quakes/us2010tsa6.php#details White House http://www.whitehouse.gov/blog/2010/02/27/information-chilean-earthquake-and-tsunami-warnings Other Resources Center for International Disaster Information (CIDI) http://www.cidi.org/incident/chile-10b/ Embassy of Chile, Washington DC http://www.chile-usa.org/ European Commission for Humanitarian Aid (ECHO) http://ec.europa.eu/echo/index_en.htm InterAction http://www.interaction.org/crisis-list/interaction-members-respond-earthquake-chile Inter American Development Bank http://www.iadb.org/countries/home.cfm?id_country=CH International Monetary Fund http://www.imf.org/external/country/chl/index.htm Organization of American States/Pan American Development Foundation http://www.panamericanrelief.org/ht/d/sp/i/19624/pid/19624 Pan American Health Organization/World Health Organization http://new.paho.org/disasters/index.php?option=com_content&task=view&id=1133&Itemid=1036 Red Cross Movement American Red Cross http://www.redcross.org/portal/site/en/menuitem.1a019a978f421296e81ec89e43181aa0/?vgnextoid=d0206aafe5517210VgnVCM10000089f0870aRCRD Chilean Red Cross http://www.cruzroja.cl/ International Committee of the Red Cross http://www.icrc.org/Web/Eng/siteeng0.nsf/htmlall/chile?OpenDocument International Federation of the Red Cross http://www.ifrc.org/where/country/cn6.asp?countryid=46 Relief Web http://www.reliefweb.int/rw/dbc.nsf/doc104?OpenForm&rc=2&cc=chl United Nations United Nations Children's Fund (UNICEF) http://www.unicef.org/infobycountry/chile_52861.html United Nations News Center http://www.un.org/apps/news/story.asp?NewsID=34043&Cr=chile&Cr1= United Nations World Food Program (WFP) http://www.wfp.org/content/immediate-response-earthquake-chile World Bank http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/CHILEEXTN/0,,menuPK:325279~pagePK:141159~piPK:141110~theSitePK:325273,00.html

On February 27, 2010, an earthquake of magnitude 8.8 struck off the coast of central Chile. Centered 70 miles northeast of Chile's second-largest city, Concepción, at a depth of 22 miles, the earthquake was the second largest ever recorded in Chile and the fifth largest recorded worldwide since 1900. Over 100 aftershocks of magnitude 5.0 or greater were recorded following the initial earthquake. The earthquake and subsequent tsunami, which struck Chile's coast roughly 20 minutes after the earthquake and moved 2,000 feet onto shore in some places, devastated parts of the country. Although there are reports of varying casualty numbers, according to Chile's Ministry of the Interior, the official death toll is 507 (497 bodies have been identified; 10 remain unidentified). The numbers of missing persons are not yet known. Approximately 200,000 homes have been badly damaged or destroyed. Estimates suggest as many as 2 million people may have been affected by the earthquake, an unknown number of whom were injured or displaced. The Chilean government, through the Chilean National Emergency Office, is leading the relief operation and coordinating assistance. Despite offers of assistance, thus far the international humanitarian relief operation has been limited pending further requests for assistance from the government. In addition, there are more than 16,000 Chilean military personnel providing humanitarian relief and maintaining public order. At least two elements of the Chilean government's initial response have been criticized in Chile. The first is that the coastal and island communities did not receive timely warning about the tsunami waves that caused so many of the reported casualties. The second Chilean government response that has been widely questioned was the speed with which the Chilean military was deployed to quell looting and violence in the disaster zone. While critics point to weaknesses in the initial response, later assessments by disaster managers gave the Chilean government's response higher marks. Many credited the government of President Michelle Bachelet with success given the scope of the disaster and some labeled the government's response a model. The Chilean government's response to the earthquake has been complicated by the fact that President Bachelet left office on March 11, 2010, and has been succeeded by Sebastián Piñera, the leader of a center-right coalition that won the country's recent presidential election. President Bachelet held meetings with President-elect Piñera in order to ease the transition. On February 27, 2010, President Barack Obama announced that the U.S. government would assist with earthquake rescue and recovery efforts, pending a request from the Chilean Government. On February 28, 2010, U.S. Ambassador to Chile Paul E. Simons issued a disaster declaration, and through the U.S. Agency for International Development (USAID) Office of Foreign Disaster Assistance (OFDA), authorized $50,000 for the initial implementation of an emergency response program. OFDA deployed a 16-member USAID Disaster Assistance Response Team. As of March 10, 2010, USAID/OFDA reports that it has provided $10.7 million for emergency response activities in Chile. The U.S. Department of Defense is also providing limited assistance. Policy issues of potential interest include levels of U.S. assistance to Chile, burdensharing and donor fatigue, tsunamis and early warning systems, and managing risk through building codes. Related legislation includes S.Res. 431, H.Res. 1144, H.R. 4783. For more background on Chile, see CRS Report R40126, Chile: Political and Economic Conditions and U.S. Relations.

Over the years, the United States has been concerned about threats to Latin American and Caribbean nations from various terrorist or insurgent groups that have attempted to influence or overthrow elected governments. Although Latin America has not been the focal point in efforts to deter global terrorism, some countries in the region have struggled with domestic terrorism for decades, and international terrorist groups have at times used the region as a battleground to advance their causes. The State Department's annual Country Report s on Terrorism (hereinafter referred to as the terrorism report) highlights U.S. concerns about terrorist threats around the world, including in Latin America. According to the 2015 terrorism report (issued in June 2016), transnational criminal organizations (such as drug trafficking organizations) continued to pose a more significant threat to the region than terrorism, and most countries made efforts to investigate possible connections with terrorist organizations. In terms of Latin American countries' abilities to combat terrorism, the State Department maintained in the 2015 report that in some countries a lack of significant progress on countering terrorism occurred because of "corruption, weak government institutions, insufficient interagency cooperation, weak or non-existent legislation, and a lack of resources." As in recent years, the State Department maintained in the 2015 terrorism report that the primary terrorist threats in Latin America stemmed from two Colombian guerrilla groups—the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN)—responsible for the majority of terrorist attacks in the region. The Colombian government has been involved in peace talks with the FARC since 2012, and it concluded and signed a peace agreement with the FARC in September 2016. Colombian voters rejected the agreement in a national plebiscite in early October 2016, but the Colombian government and the FARC reached a new agreement on November 12, 2016, which was approved by Colombia's Congress at the end of that month. Although preliminary talks between the Colombian government and the ELN were initiated in 2014, the opening of official talks has stalled. (See " Colombia " section, below.) For a number of years, U.S. policymakers have expressed concerns about Iran's deepening relations with several Latin American countries, especially Venezuela, and Iran's activities in the region. A June 2013 State Department report to Congress pursuant to the Countering Iran in the Western Hemisphere Act of 2012 ( P.L. 112-220 ) described Iranian influence in Latin America and the Caribbean as "waning." Many analysts contend that Iranian relations with the region have diminished since current Iranian President Hassan Rouhani took office in 2013. In presenting the 2016 posture statement of the U.S. Southern Command (SOUTHCOM) to Congress in March 2016, Admiral Kurt W. Tidd stated that "as a state sponsor of terrorism, Iran's nefarious involvement in the Western Hemisphere is a matter for concern." He noted that although Iranian engagement has waned in recent years, President Rouhani has pledged several times his intent to increase economic, scientific, and cultural ties with Latin America. (See " Iran's Activities in Latin America ," below.) One of the main concerns about Iran's increasing relations with the region has been Iran's ties to Hezbollah, the radical Lebanon-based Islamic group that the Department of State designated a Foreign Terrorist Organization (FTO) in 1997. The State Department asserted in its 2015 terrorism report that Hezbollah "continued to maintain a presence in the region, with members, facilitators, and supporters engaging in activity in support of the organization," including efforts to build the organization's "infrastructure in South America and fundraising, both through licit and illicit means." It noted Hezbollah fundraising activities in the tri-border area (TBA) of Argentina, Brazil, and Paraguay and the presence of Hezbollah supporters and sympathizers in Venezuela. Beyond Hezbollah, the report noted that the TBA "remained an important regional nexus of arms, narcotics, pirated goods, human smuggling, counterfeiting, and money laundering—all potential funding sources for terrorist organizations." The 2015 terrorism report also stated that South America and the Caribbean served as areas of financial and ideological support for the Islamic State of Iraq and the Levant (ISIL) and other terrorist groups in the Middle East and South Asia. It touched on the issue of individuals from South America and the Caribbean leaving the region to fight with the Islamic State. In March 2016, SOUTCHOM Commander Admiral Tidd estimated that some 100-150 foreign fighters had traveled from the region to Syria and Iraq. By October 2016, however, Admiral Tidd noted in a press conference that the outflow of foreign fighters from the region had been "significantly curtailed" because of the significant success in Iraq and Syria by the U.S.-led coalition. From 1982 until May 2015, Cuba was on the State Department's so-called state sponsors of terrorism list pursuant to Section 6(j) of the Export Administration Act (EAA) of 1979 and other provisions of law. As part of President Obama's shift on Cuba policy announced in December 2014, the State Department conducted a review of Cuba's designation on the state sponsors list, and in April 2015, President Obama submitted a report to Congress justifying the rescission of Cuba's designation. The President certified that the Cuban government "has not provided any support for international terrorism during the preceding 6-month period" and "has provided assurances that it will not support acts of international terrorism in the future." This ultimately led to the Secretary of State rescinding Cuba's designation in May 2015. (See " Cuba " section, below.) Venezuela currently is on the State Department's annual list of countries determined to be not cooperating fully with U.S. antiterrorism efforts pursuant to Section 40A of the Arms Export Control Act. The most recent annual determination was made by the Secretary of State on May 11, 2016. Venezuela has been on the list since 2006 and, as a result, has been subject to a U.S. arms embargo. (Cuba had been on the Section 40A list since 1997, when the annual determination was first established, but was taken off the list in 2015.) U.S. officials have expressed concerns over the past decade about Venezuela's lack of cooperation on antiterrorism efforts, its relations with Iran, and the involvement of senior Venezuelan officials in supporting the drug and weapons trafficking activities of the FARC. (See " Venezuela " section, below.) Three violent Colombian groups have been designated by the Secretary of State as FTOs. Two of these, the leftist Revolutionary Armed Forces of Colombia (FARC) and the leftist National Liberation Army (ELN), were designated in 1997 and are active guerrilla groups. A third group, the rightist paramilitary United Self-Defense Forces of Colombia (AUC), was designated an FTO in 2001, but the group has been demobilized for nine years. In July 2014, the AUC was de-listed as an FTO by the U.S. Secretary of State. The FARC, a leftist guerrilla group heavily involved in drug production and trafficking, was established in the mid-1960s. Over the past several years, the FARC has been weakened significantly by the government's military campaign against it. Yet, the FARC is estimated to have about 7,000-8,000 fighters remaining who have operated in various locations throughout Colombia. The group has been responsible for terrorist attacks, including the destruction of infrastructure, kidnapping, and extortion, and, in recent years, it has diversified into illegal mining. In the aftermath of the killing of FARC leader Alfonso Cano by Colombian security forces in November 2011, the FARC chose Rodrigo Londoño, also known as Timoleón Jiménez or Timochenko, as its new leader. Colombia's President Juan Manuel Santos initiated formal peace talks with the FARC in 2012 concentrating on a six-part agenda, including land and rural development; political participation; illicit drugs; victims' reparations and transitional justice; and the demobilization, disarmament, and reintegration of the FARC. In September 2016, the government and the FARC signed a peace accord that ultimately was rejected by a slim majority in a plebiscite in October. Peace accord critics, led by popular former president and now Senator Álvaro Uribe, had mobilized a campaign to reject the accord. They highlighted many perceived weaknesses of the accord, such as inadequate punishment for FARC violations, lack of an appropriate appeal for forgiveness from FARC fighters, and overly generous guarantees for the FARC's future political role. A second peace accord, which the government maintained responded to criticisms of the No campaign, was signed and then ratified by Colombia's Congress on November 30, 2016. The U.N. Security Council, which had sent a mission to help with the anticipated FARC demobilization, was redirected to serve as a guarantor of the bilateral cease-fire through the end of 2016. An immediate concern is whether the cease-fire will hold. Some observers maintain that a swiftly enacted peace accord leading to FARC disarmament and reintegration into rural communities will reduce violence and have many benefits, including enhanced economic growth. Critics of the second accord, however, contend that the Santos Administration still gave too many concessions to the FARC, especially in allowing the FARC's top leadership to enter politics and avoid prison. The State Department's 2015 terrorism report maintained that terrorist incidents in the country—perpetrated largely by the FARC (Colombia's largest active terrorist group) and the ELN—decreased considerably during the year compared to 2014 and that government statistics showed that infrastructure sabotage was down. According to the report, the FARC reportedly focused on low-cost, high-impact attacks, such as launching mortars at police stations or the military, placing explosive devices near roads or paths, and conducting ambushes. The report notes that the Colombian government gradually reduced military operations against the FARC during the year, including suspension of aerial bombardments as a de-escalation measure in response to unilateral cease-fires declared by the FARC. This resulted in less violence, except for an interlude in April and May 2015 after a FARC attack on Colombian soldiers in Cauca. The 2015 report maintained that the number of FARC and ELN guerrilla fighters who were captured, killed, or demobilized decreased slightly during 2015 in comparison to 2014 and that civilian deaths caused by the guerrilla organizations also decreased. The FARC has continued to use the territory of several of Colombia's neighbors—Ecuador, Panama, and Venezuela—according to the State Department's 2015 terrorism report, although all the governments worked with Colombia and in some cases independently to reduce the presence of Colombian insurgents and drug trafficking groups. Border areas with Venezuela, Panama, and Ecuador reportedly are used for incursions into Colombia, and Venezuelan and Ecuadorian territory reportedly is used for safe haven, according to the report. (See Figure 1 .) The ELN, a Marxist-Leninist group formed in 1965, reportedly has a membership of around 2,000 fighters but has continued to undertake attacks and inflict casualties despite diminished resources and reduced offensive capability. In recent years, the ELN has been involved in joint attacks with the FARC. Like the FARC, the group derives its funding from drug trafficking as well as from kidnapping and extorting oil and gas companies. In 2015, the ELN increased its attacks on oil pipelines and equipment and continued to kidnap for ransom, a factor that continues to be at issue with opening a formal peace process with the current Colombian government. The ELN has been located largely in the rural and mountainous areas of northern, northeastern, and southwestern Colombia and in the eastern border region with Venezuela, where the group reportedly has its base. In June 2014, the ELN and the Colombian government confirmed that they were engaged in exploratory peace talks, but official talks slated to begin in Ecuador at the end of March 2016 were delayed. Formal peace talks slated to open in late October 2016 had to be deferred as well because the ELN would not release all kidnap victims that it held, which was a Santos government precondition to start official talks. The AUC was formed in 1997 as a loose affiliation of right-wing paramilitary groups targeting leftist guerrillas. It carried out numerous political killings and kidnappings and was heavily involved in the drug trade. Although more than 32,000 AUC members demobilized between 2003 and 2006 and the group's paramilitary chiefs stepped down, the organization remained on the FTO list until 2014. Consequently, many former paramilitaries joined criminal groups, called criminal bands or Bacrim by the Colombian government. The Bacrim are primarily involved in drug trafficking but also participate in extortion and other violent crimes. In 2013, Los Urabeños emerged as the dominant Bacrim (sometimes referred to as the Clan Úsuga), gaining nearly 3,000 members by 2015. A Colombian NGO, Indepaz, has anticipated that there could be a territorial reorganization of the "narco-paramilitary groups" in the aftermath of a peace accord with the FARC, with the Bacrim groups vying to take over FARC drug and illegal mining businesses. Cuba had a history of supporting revolutionary movements and governments in Latin America and Africa, but, in 1992, then Cuban leader Fidel Castro said that his country's support for insurgents abroad was a thing of the past. Most analysts accept that Cuba's policy generally did change, largely because the breakup of the Soviet Union resulted in the loss of billions in subsidies. From March 1982 until May 2015, the Department of State, pursuant to Section 6(j) of the Export Administration Act (EAA) of 1979 and other laws, had included Cuba among its list of states sponsoring terrorism. For a number of years, Cuba's retention on the terrorism list had been questioned by some observers. In general, those who supported keeping Cuba on the list pointed to the government's history of supporting terrorist acts and armed insurgencies and continued hosting of members of foreign terrorist organizations and U.S. fugitives from justice. Critics of retaining Cuba on the terrorism list maintained that it was a holdover of the Cold War. They argued that domestic political considerations kept Cuba on the terrorism list and maintained that Cuba's presence on the list diverted U.S. attention from struggles against serious terrorist threats. In December 2014, President Obama unveiled a new policy approach toward Cuba that would move U.S. policy away from sanctions and toward a policy of engagement. One element of the changed policy was ordering a review of Cuba's designation by the State Department as a state sponsor of international terrorism. President Obama directed Secretary of State Kerry to review Cuba's designation "guided by the facts and the law." The President stated that "at a time when we are focused on threats from al Qaeda to ISIL, a nation that meets our conditions and renounces the use of terrorism should not face this sanction." The State Department review was completed in April 2015, and the President transmitted to Congress a report justifying the rescission of Cuba's designation as a state sponsor of terrorism. No resolutions of disapproval were introduced in Congress to block the rescission, which took place on May 29, 2015, 45 days after the submission of the report to Congress. In the Administration's report, President Obama, following the process set forth by terrorist-list provisions of law cited above, certified that the Cuban government "has not provided any support for international terrorism during the preceding 6-month period" and "has provided assurances that it will not support acts of international terrorism in the future." The memorandum of justification accompanying the report maintained that Cuba had taken steps in recent years to fully distance itself from international terrorism and to strengthen its counterterrorism laws. The justification stated there was no credible evidence that Cuba had, within the preceding six months, provided specific material support, services, or resources to members of the FARC or ELN, two Colombian guerrilla groups, outside of facilitating the peace process between those organizations and the government of Colombia. It also stated that the Cuban government continued to allow approximately two dozen members of Basque Fatherland and Liberty (ETA), a Spanish terrorist group, to remain in the country, with most of those entering Cuba following an agreement with the government of Spain. The justification also noted the problem of Cuba's harboring of fugitives wanted in the United States and stated that the "strong U.S. interest in the return of these fugitives" would be served by entering into a bilateral law enforcement dialogue with Cuba to resolve these cases. (For additional information, see CRS Report R43926, Cuba: Issues and Actions in the 114th Congress .) In addition to Cuba's removal from the state sponsors of terrorism list, in May 2015, Secretary of State Kerry dropped Cuba from the annual determination (pursuant to Section 40A of the Arms Export Control Act and due by May 15 of each year) identifying countries that are not fully cooperating with United States antiterrorism efforts. Cuba had been designated annually since that annual determination was established in 1997. The brutal Shining Path (Sendero Luminoso, or SL) Maoist insurgency has operated as a terrorist group in Peru since 1980 and was designated by the Department of State as a foreign terrorist organization in 1997. The group was significantly weakened in the 1990s with the capture of its leader, Abimael Guzman, who, after a new trial in 2006, was sentenced to life in prison. According to the 2015 State Department terrorism report, although SL remained active, its strength was reduced and its "ability to conduct coordinated attacks and its membership both continued to decline with successful Peruvian military operations." The group reportedly had just one active faction, with its area of operation limited to the Apurimac, Ene, and Mantaro River Valley (VRAEM) in south-central Peru. SL is reported to sustain itself through its involvement in drug production and trafficking and extortion of taxes from others involved in the drug trade. Its strength was reported to number 250-300 combatants, including some 60-100 hardcore fighters, according to the terrorism report. It reportedly committed 13 terrorist acts in 2015 compared to 20 in 2014. In addition to the SL's designation as an FTO, in June 2015, the Treasury Department's Office of Foreign Assets Control identified SL as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act, and sanctioned three SL leaders—Victor Quispe Palomino (Comrade José), Jorge Quispe Palomino (Comrade Raúl), and Florindo Eleuterio Flores Hala (Comrade Artemio, who has been imprisoned in Peru since 2012). All three SL leaders had been indicted by a U.S. federal court in New York in July 2014 on charges including conspiring to provide material support to the SL and conspiracy to commit narco-terrorism. In November 2016, the State Department designated Victor and Jorge Quispe Palomino and Tarcela Loya Vilchez as Specially Designated Global Terrorists under Executive Order 13224, which authorizes sanctions on foreign persons and groups who commit, threaten to commit, or support terrorism. The sanctions block all property of the individuals subject to U.S. jurisdiction and prohibit U.S. persons from engaging in any transactions with them. U.S. officials have expressed concerns over the past several years about Venezuela's lack of cooperation on antiterrorism efforts, the involvement of senior Venezuelan government officials in supporting the drug and arms trafficking activities of the FARC, and Venezuela's relations with Iran. Since May 2006, the Secretary of State has made an annual determination that Venezuela has not been "cooperating fully with United States antiterrorism efforts" pursuant to Section 40A of the Arms Export Control Act (AECA). The most recent determination was made in May 2016. As a result, the United States has imposed an arms embargo on Venezuela since 2006, which ended all U.S. commercial arms sales and retransfers to Venezuela. (Other countries currently on the Section 40A list include Eritrea, Iran, North Korea, and Syria, not to be confused with the "state sponsors of terrorism" list under Section 6(j) of the Export Administration Act of 1979 and other provisions of law.) The United States has also imposed various sanctions on Venezuelan individuals and companies for supporting the FARC, Iran, and Hezbollah. As it has for several years, the State Department maintained in its 2015 terrorism report that, although Venezuela is not classified as a state sponsor of terrorism, "there were credible reports that Venezuela maintained a permissive environment that allowed for support of activities that benefited known terrorist groups." It further stated that individuals linked to such terrorist groups as the FARC, ELN, and ETA, as well as Hezbollah sympathizers and supporters, were present in Venezuela. According to the 2015 terrorism report, the FARC often uses Colombia's border areas with Venezuela for incursions into Colombia and also used Venezuelan territory for safe haven. The State Department also stated, however, that the foreign ministers of Venezuela and Colombia met several times to address such issues as the activity of illegally armed groups, the smuggling of illegal goods, and narcotics trafficking. It further noted Venezuela's participation in support of ongoing negotiations between the FARC and the Colombian government. As in previous reports, the State Department maintained in the 2015 terrorism report that Venezuela's border security at ports of entry is vulnerable and susceptible to corruption. It noted that the Venezuelan government did not perform biographic and biometric screening at ports of entry or exit and that there was no automated system to collect advance passenger name records on commercial flights. With regard to Venezuela's relations with Iran, there was significant concern among policymakers about the growing relationship between the two countries during the rule of Venezuelan President Hugo Chávez (1999-2013) and Iranian President Mahmoud Ahmadinejad (2005-2013), during which Venezuela arguably served as Iran's entry to the region. In the aftermath of the departure of Ahmadinejad from office and the death of Chávez in 2013, many analysts contend that Iranian relations with the region have diminished since current Iranian President Hassan Rouhani took office in 2013. Nevertheless, Iranian activities in the region remain a concern for U.S. officials. (For more see " Iran's Activities in Latin America ," below.) For a number of years, there has been concern among policymakers about Iran's activities in Latin America. During the presidency of Mahmoud Ahmadinejad (2005-2013), Iran worked to increase its ties with Latin American countries, centered on Iran's attempts to work with regional governments to circumvent international sanctions. During this period, Venezuela under President Hugo Chávez (1999-2013) arguably served as Iran's gateway to the region. (See " Iran's Latin America Overtures Under Ahmadinejad ," below.) Both Iran and Hezbollah, the radical Lebanon-based Islamic group and U.S.-designated FTO with which Iran has strong ties, are reported to be linked to two bombings against Jewish targets in Buenos Aires, Argentina, in the early 1990s: the 1992 bombing of the Israeli Embassy, which killed 30 people, and the 1994 bombing of the Argentine-Israeli Mutual Association (AMIA), which killed 85 people. (See " AMIA Bombing Investigation ," below.) In the aftermath of Ahmadinejad's departure from office and Chavez's death in 2013, many analysts contend that Iranian relations with the region have diminished. Current Iranian President Hassan Rouhani, who took office in August 2013, has not prioritized relations with Latin America. Rouhani undertook his first trip to the region in September 2016, three years after he first took office, stopping in Venezuela for a meeting of the Non-Aligned Movement and then traveling to Cuba for a two-day official visit before heading to the U.N. General Assembly meeting in New York. Iran's Foreign Minister traveled to seven Latin American countries in August and September 2016—Cuba, Nicaragua, Ecuador, Chile, Bolivia, Venezuela, and Mexico—with the goal of strengthening trade and cooperation in the aftermath of international sanctions on the country being lifted. Despite the waning of Iranian engagement in the region, U.S. officials remain vigilant about Iran's activities in Latin America. SOUTHCOM Commander Admiral Kurt Tidd stated in the command's 2016 posture statement that "as a state sponsor of terrorism, Iran's nefarious involvement in the Western Hemisphere is a matter for concern." He noted that President Rouhani has pledged to increase economic, scientific, and cultural ties with Latin America. Middle East analysts point out that Iran's key foreign policy focus remains its immediate region. It is in the Middle East, and South and Central Asia, where the Iranian regime perceives potential threats to its survival, and in which Iran has, for ideological, religious, and political motives, tried to alter political outcomes in its favor. Whatever efforts Iran has made to engage like-minded leaders in Latin America, these efforts do not approach its level of involvement in countries such as Iraq, Afghanistan, Syria, or Lebanon. As noted above, another reason for U.S. concern about Iran's relations with Latin America has been its ties to Hezbollah, which, along with Iran, reportedly is linked to two bombings against Jewish targets in Argentina in the early 1990s. In recent years, U.S. concerns regarding Hezbollah in Latin America have focused on its fundraising activities among sympathizers in the region, particularly the tri-border area (TBA) of Argentina, Brazil, and Paraguay (see Figure 2 ), but also in other parts of the region. (At the same time, U.S. officials point out that Hezbollah's primary funding is from Iran and not from fundraising activities in Latin America.) The Brazilian city of Foz do Iguaçu and the Paraguayan city of Ciudad del Este have large Muslim populations. The TBA has long been used for arms and drug trafficking, contraband smuggling, document and currency fraud, money laundering, and the manufacture and movement of pirated goods. The State Department's 2015 terrorism report states that Hezbollah has continued to maintain a presence in the region, "with members, facilitators, and supporters engaging in activity in support of the organization." This activity, according to the report, included "efforts to build Hezbollah's infrastructure in South America and fundraising, both through licit and illicit means." Some observers view Hezbollah's regional involvement in illicit activities as a means to raise money, as opposed to the organization having an ideological agenda in Latin America or pursuing one on behalf of Iran. Venezuela's relations with Iran have been long-standing because they were both founding members of OPEC in 1960. In the aftermath of the 1979 Iranian revolution, Iran fostered closer relations with Cuba and with Nicaragua (after the 1979 Sandinista revolution). Under the government of President Mohammed Khatami (1997-2005), Iran made efforts to increase its trade with Latin America, particularly Brazil, and there were also efforts to increase cooperation with Venezuela. Venezuelan President Hugo Chávez visited Iran in 2001 and 2003, which led to a joint venture agreement to produce tractors in Venezuela. Not until President Ahmadinejad's rule began in 2005, however, did Iran aggressively work to increase its diplomatic and economic linkages with Latin American countries. A major rationale for this increased focus on Latin America was Iran's efforts to overcome its international isolation and reduce the effect of increasing sanctions. The personal relationship between Ahmadinejad and Venezuelan President Hugo Chávez also drove the strengthening of bilateral ties. The two nations signed a variety of agreements in agriculture, petrochemicals, oil exploration in the Orinoco region of Venezuela, the manufacturing of automobiles, and housing. Weekly flights between the two countries began in 2007 but were curtailed in 2010. The State Department had expressed concern about these flights, maintaining that they were only subject to cursory immigration and customs controls. Venezuela under Hugo Chávez also played a key role in the development of Iran's expanding relations with other countries in the region. This outreach largely focused on leftist governments that share the goal of reducing U.S. influence in the region. Iran's relations have grown with Bolivia under President Evo Morales, with Ecuador under President Rafael Correa, and with Nicaragua under President Daniel Ortega. While Iran has promised assistance and investment to these countries, observers maintain that there is little evidence that such promises have been fulfilled. From 2006 to 2013, Iranian President Ahmadinejad visited Latin America eight times, most often Venezuela, but he also visited Bolivia, Brazil, Ecuador, Nicaragua, and Cuba. In 2012, Ahmadinejad undertook two trips to the region: a visit in January to Cuba, Ecuador, Nicaragua, and Venezuela and a June trip to Brazil to attend the U.N. Conference on Sustainable Development in Rio de Janeiro (which notably did not include bilateral meetings with the Brazilian government) along with side trips to Bolivia and Venezuela. While Ahmadinejad's January 2012 trip to Venezuela, Nicaragua, Cuba, and Ecuador increased concerns of some U.S. policymakers about Iran's efforts to deepen ties with Latin America, some policy analysts and U.S. officials contend that the trip was not successful. Analysts point out that leaders' statements during these trips were largely propaganda, with the official Iranian press trumpeting relations with these countries in order to show that Iran is not isolated internationally and that it has good relations with countries geographically close to the United States. The January 2012 trip was restricted to meeting with four leftist governments that have often opposed U.S. policy in the region and have limited regional influence. The fact that the tour notably did not include a trip to Brazil to meet with President Dilma Rousseff detracted from the significance of the visit to the region. A close adviser to Ahmadinejad maintained in an interview in the Brazilian press that President Rousseff had "destroyed years of good relations" between Iran and Brazil. Director of National Intelligence James Clapper testified before Congress in late January 2012 that while the U.S. intelligence community remained concerned about Iran's connection with Venezuela, Ahmadinejad's trip to Latin America "was not all that successful." On the diplomatic front, Iran under President Ahmadinejad opened six embassies in Latin America by 2009—Bolivia, Chile, Colombia, Ecuador, Nicaragua, and Uruguay. These added to existing embassies in Argentina, Brazil, Cuba, Mexico, and Venezuela. In 2012, Iran also launched a Spanish-language satellite TV network as part of its ideological battle to counter what it views as biased reporting—then-President Ahmadinejad said that it would help end the West's "hegemony" of the airwaves. Reports that Iran was building a large embassy in Managua, Nicaragua, turned out to be erroneous. Other reports that Iran's embassy in Venezuela is one of the largest in the world were also inaccurate. State Department officials maintained that there are many embassies in Caracas that have a diplomatic presence far larger than that of Iran, including the U.S. Embassy. A 2010 unclassified Department of Defense report to Congress on Iran's military power (required by Section 1245 of the National Defense Authorization Act for FY2010, P.L. 111-84 ) maintained that Iran's Qods Force, which maintains operational capabilities around the world, had increased its presence in Latin America in recent years, particularly in Venezuela. At the same time, however, then-commander of the U.S. Southern Command, General Douglas Fraser, maintained that the focus of Iran in the region was diplomatic and commercial and that he had not seen an increase in Iran's military presence in the region. In 2012, General Fraser maintained in a press interview that Iran's relationship with Venezuela was primarily diplomatic and economic and that Iran's ties with Venezuela did not amount to a military alliance. In 2011, the Department of Justice filed criminal charges against a dual Iranian-American citizen from Texas, Manssor Arbabsiar, and a member of Iran's Qods Force in Iran, Gholam Shakuri, for their alleged participation in a bizarre plot to kill the Saudi Ambassador in Washington, DC. The indictment alleged that Arbabsiar met several times in Mexico City with an informant of the U.S Drug Enforcement Administration (DEA) posing as a member of one of Mexico's most violent drug trafficking organizations, Los Zetas, and had arranged to hire the informant to murder the ambassador with the financial support of Shakuri. Arbabsiar subsequently pled guilty and was sentenced in 2013 to 25 years in prison. At the time, U.S. officials expressed concern about the implications of the failed Iranian plot on the nexus between terrorist and criminal groups as well as on Iran's intentions. The DEA testified in 2011 that the alleged plot "illustrates the extent to which terrorist organizations will align themselves with other criminals to achieve their goals." Director of National Intelligence (DNI) James Clapper stated before the Senate Select Committee on Intelligence in 2012 that the plot to kill the Saudi Ambassador shows that "some Iranian officials … are now more willing to conduct an attack in the United States," and he expressed concern "about Iranian plotting against U.S. or allied interests overseas." In 2013, DNI Clapper again testified before the Senate Select Committee on Intelligence that the failed 2011 plot against the Saudi Ambassador in Washington showed that Iran may be willing to attack in the United States in response to perceived offenses against the regime. Argentine Special Prosecutor Alberto Nisman was appointed to lead the AMIA investigation in 2004. Until then, progress on the investigation and prosecution of those responsible for the 1994 bombing had been stymied because of the government's mishandling of the case. In September 2004, a three-judge panel acquitted all 22 Argentine defendants in the case and faulted the shortcomings of the original investigation. With Nisman's appointment in 2004, however, the government moved forward with a new investigation. As a result, an Argentine judge issued arrest warrants in November 2006 for nine foreign individuals: an internationally wanted Hezbollah militant from Lebanon, Imad Mughniyah (subsequently killed by a car bomb in Damascus, Syria, in 2008), and eight Iranian government officials. INTERPOL, the International Criminal Police Organization, subsequently posted Red Notices (international wanted persons notices) in 2007 for Mughniyah and five of the Iranian officials: Ali Fallahijan, Mohsen Rabbani, Ahmad Reza Asghari, Ahmad Vahidi, and Mohsen Rezai. In 2009, Argentina also issued an arrest warrant for the capture of Samuel Salman El Reda, a Colombian citizen thought to be living in Lebanon, alleged to have coordinated a Hezbollah cell that carried out the bombing; he was subsequently added to the INTERPOL Red Notice list. Current Argentine President Mauricio Macri, inaugurated in December 2015, has maintained these Red Notices. Under the previous Argentine government of President Cristina Fernández de Kirchner, Argentina had shifted its stance in 2011 with respect to engagement with Iran over the AMIA bombing issue. Then-President Fernández indicated Argentina's willingness to enter into a dialogue with the Iranian government despite its refusal to turn over suspects in the case. Several rounds of talks with Iran were held in 2012, with then-Argentine Foreign Minister Hector Timerman leading the effort. In January 2013, Argentina announced that it had reached an agreement with Iran and signed a memorandum of understanding to establish a joint Truth Commission made up of impartial jurists from third countries to review the bombing case. After extensive debate, Argentina's Congress completed its approval of the agreement in February 2013. Argentina's two main Jewish groups, AMIA and the Delegation of Israeli Associations (DAIA), strongly opposed the agreement because they believe that it could guarantee impunity for the Iranian suspects. Several Members of the U.S. Congress also expressed their strong concerns about the Truth Commission because they believed it could jeopardize Argentina's AMIA investigation and charges against the Iranians. In May 2014, an Argentine court declared unconstitutional the agreement with Iran to jointly investigate the AMIA bombing. Special Prosecutor Nisman had maintained that the agreement with Iran constituted an "undue interference of the executive branch in the exclusive sphere of the judiciary." The Fernández government maintained that it would appeal the ruling to Argentina's Supreme Court. In a speech before the U.N. General Assembly on September 24, 2014, President Fernández acknowledged the 20 th anniversary of the AMIA bombing and expressed support for the memorandum of understanding with Iran, maintaining that it would enable the accused Iranian citizens to make statements before an Argentine judge. Soon after his election in 2015, however, President Macri said that his government would drop the appeal. Nisman ' s Report on Iran. In May 2013, Nisman issued a 500-page report alleging that Iran has been working for decades in Latin America, setting up intelligence stations in the region by utilizing embassies, cultural organizations, and even mosques as a source of recruitment. In the report, Nisman highlighted the key role of Mohsen Rabbani (one of eight Iranian officials wanted by Argentina for the AMIA bombing) as Iran's South America "coordinator for the export of revolution," working in the tri-border countries of Argentina, Brazil, and Paraguay as well as in Chile, Colombia, and Uruguay. The report also highlighted the role of Guyanese national Abdul Kadir, who Nisman maintained was an intelligence agent working for Iran and a follower of Rabbani, in establishing an Iranian intelligence network in Guyana. Kadir, a former member of Guyana's parliament, is serving a life sentence in the United States for his role in a 2007 plot to bomb a jet fuel artery at John F. Kennedy International Airport in New York. The Nisman report contended that the 1994 AMIA bombing was not an isolated act but was part of a regional strategy involving Iran's establishment of intelligence bases in several countries utilizing political, religious, and cultural institutions that could be used to support terrorist acts. Nisman ' s Death. On January 14, 2015, Nisman made explosive accusations that President Fernández and other government officials attempted to whitewash the AMIA investigation to secure oil supplies from Iran and restore Argentina's grain exports to Iran. Four days later, and one day before he was to testify before Argentina's Congress, Nisman was found dead in his apartment from a gunshot wound. Although preliminary reports indicated that Nisman committed suicide, a majority of Argentines, including President Fernández, contend that Nisman was murdered. The president maintained that Nisman was misled into making the accusations against her government by elements in Argentina's Intelligence Secretariat (SI) that had conducted illegal wiretaps of government officials. Fernández called for the dissolution of the SI, and in February 2015, Argentina's Congress approved a measure setting up a new intelligence service, the Federal Agency of Investigations (AFI). Nisman's death prompted a massive demonstration in Argentina, with tens of thousands of participants. A federal prosecutor in Argentina pursued Nisman's case against President Fernández related to Iran, but the case was thrown out by several Argentine courts and dismissed by the country's highest appellate court in April 2015. The investigation into Nisman's death continues, although many observers are skeptical that the truth will be uncovered. In December 2015, a week after President Macri took office, Judge Fabiana Palmaghini took over the investigation of Nisman's death from the prosecutor in the case. On the anniversary of Nisman's death in January 2016, President Macri ordered the declassification of all state information related to Nisman since September 2012, when Argentina's talks with Iran over AMIA reportedly began. Palmaghini reportedly had been expected by many observers to issue a ruling that Nisman's death was the result of a suicide. In March 2016, however, reportedly just hours after former SI head Antonio Stiuso testified that Nisman had been killed by a group with ties to former President Fernández, Judge Palmaghini ruled that the case should be elevated to the federal courts. The case went to Argentina's federal court in April 2016, but in June 2016 was returned to Judge Palmaghini's jurisdiction until September 2016, when the case was once again elevated to the federal courts. President Macri has said that he will be respectful of the judicial process but stated in a September 2016 press interview that he believes Nisman was murdered. The President said that a "definitive investigation" is needed to find out how Nisman died and that he wants Argentina's justice system to carry out the investigation with total independence. AMIA Investigation. In the aftermath of Nisman's death, Argentina's attorney general appointed a team of lawyers in February 2015 to continue the work of the AMIA investigation. Court proceedings began in Buenos Aires in August 2015 against 13 former officials alleged to be involved in efforts to cover up the 1994 bombing investigation. The suspects include former President Carlos Menem (1989-1999), former judge Juan José Galeano, two former prosecutors who conducted investigations during the 1990s, three former intelligence officials, two former police officials, a former head of DAIA, and the owner of a van used in the AMIA bombing. In December 2015, President Macri established a special unit within the Justice Ministry to investigate the AMIA bombing. The head of the new unit, former Radical Civic Union leader Mario Cimadevilla, maintained that Macri's election opened up a new route into solving the case and praised President Macri's decision to drop the agreement with Iran to jointly investigate the AMIA bombing. As in other parts of the world, the United States has assisted Latin American and Caribbean nations over the years in their struggle against terrorist or insurgent groups indigenous to the region. For example, in the 1980s, the United States supported the government of El Salvador with significant economic and military assistance in its struggle against a leftist guerrilla insurgency. In recent years, the United States has employed various policy tools to combat terrorism in the Latin America and Caribbean region, including sanctions, antiterrorism assistance and training, law enforcement cooperation, and multilateral cooperation through the OAS. Moreover, given the nexus between terrorism and drug trafficking, one can argue that assistance and sanctions aimed at combating drug trafficking organizations in the Andean region have also been a means of combating terrorism by cutting off a source of revenue for terrorist organizations. The same argument can be made regarding efforts to combat money laundering in the region. U.S. attention to terrorism issues in Latin America increased in the aftermath of the 9/11 terrorist attacks on New York and Washington. Antiterrorism assistance increased along with bilateral and regional cooperation against terrorism. Congress approved the Bush Administration's request in 2002 to expand the scope of U.S. assistance to Colombia beyond a counternarcotics focus to include counterterrorism assistance to the government in its military efforts against drug-financed leftist guerrillas and rightist paramilitaries. Border security with Mexico also became a prominent issue in bilateral relations, with attention focused on the potential transit of terrorists through Mexico to the United States. Since 2011, some in Congress have focused extensively on concerns regarding the activities of both Iran and Hezbollah in the region. Several House and Senate committee hearings have been held, and most significantly, in December 2012, Congress enacted the Countering Iran in the Western Hemisphere Act of 2012 ( P.L. 112-220 ). As enacted, the measure required the Secretary of State to conduct an assessment within 180 days of the "threats posed to the United States by Iran's growing presence and activity in the Western Hemisphere" and to develop a strategy to address these threats. Submitted to Congress in June 2013, the State Department report was mostly classified but, as specified in the law, also included an unclassified summary of policy recommendations that included border security and enforcement, diplomacy, sanctions, and intelligence sharing. The State Department maintained in the unclassified portion of the report that "Iranian influence in Latin America and the Caribbean is waning" because of U.S. diplomatic outreach, the strengthening of allies' capacity to disrupt illicit Iranian activity, international nonproliferation efforts, a strong sanctions policy, and Iran's poor management of its foreign relations. The report also stated that current U.S., European Union, and U.N. Security Council sanctions had limited the economic relationship between the region and Iran. The United States currently imposes sanctions on two groups in Colombia (ELN and FARC) and one group in Peru (SL) designated by the Department of State as Foreign Terrorist Organizations. Official designation of such groups as FTOs triggers a number of sanctions, including visa restrictions and Treasury Department sanctions blocking any funds of these groups in U.S. financial institutions. The designation also has the effect of increasing public awareness about these terrorist organizations and the concerns that the United States has about them. Numerous groups, individuals, and companies in the region with links to the above and other terrorist groups (such as Hezbollah) have also been sanctioned by the Treasury Department for drug trafficking under the Foreign Narcotics Kingpin Designation Act, Executive Order 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), and Executive Order 12978 (Blocking Assets and Prohibiting Transactions with Significant Narcotics Traffickers). As discussed above, the United States included Cuba on its list of state sponsors of terrorism since 1982, pursuant to Section 6(j) of the EAA and other laws, but rescinded Cuba's designation in May 2015. Venezuela currently remains on the annual Section 40A AECA list of countries that are not cooperating fully with U.S. antiterrorism efforts. With regard to Venezuela, the Treasury Department has imposed financial sanctions against eight current or former Venezuelan government and military officials for providing support to the FARC's weapons and drug trafficking. The State Department also maintains sanctions against the Venezuelan Military Industries Company (CAVIM) pursuant to the Iran, North Korea, and Syria Nonproliferation Act ( P.L. 109-353 ) for allegedly violating a ban on technology that could assist Iran in the development of weapons systems. The sanction, which prohibits any U.S. government procurement or assistance to the company, was last renewed in December 2014 for a period of two years. Sanctions against two other Venezuelan companies because of their support for Iran—the Banco Internacional de Desarrollo, C.A. , and the state-run oil company, Petróleos de Venezuela, S.A. —were removed in the aftermath of the comprehensive nuclear accord with Iran negotiated in 2015. (For more on sanctions on Venezuela, see CRS Report R43239, Venezuela: Issues for Congress, 2013-2016 .) With regard to Hezbollah, the Treasury Department also has imposed sanctions on numerous individuals and companies in Latin America for providing support to Hezbollah. These have included sanctions against individuals and entities in the tri-border Area of Argentina, Brazil, and Paraguay as well as in Colombia, Panama, and Venezuela. At times, sanctions have been connected to law enforcement cases, including cases involving the DEA. (For discussion of Hezbollah-linked trade-based money laundering, see CRS Report R44541, Trade-Based Money Laundering: Overview and Policy Issues .) The United States provides assistance to improve Latin American countries' counterterrorism capabilities through several types of programs administered by the Department of State, including an Anti-Terrorism Assistance (ATA) program, an Export Control and Related Border Security (EXBS) program, and a Conventional Weapons Destruction (CWD) program. The programs are funded through the Nonproliferation, Anti-terrorism, Demining, and Related Programs (NADR) foreign aid funding account. The ATA program has provided training and equipment to Latin American countries to help improve their capabilities in such areas as airport security management, hostage negotiations, bomb detection and deactivation, and countering terrorism financing. Such training was expanded to Argentina in the aftermath of the two bombings in 1992 and 1994. Assistance was also stepped up in 1997 to Argentina, Brazil, and Paraguay in light of increased U.S. concern over illicit activities in the tri-border area of those countries. In recent years, ATA for Western Hemisphere countries amounted to almost $8 million in FY2014, almost $5.1 million in FY2015, and $2.2 million in FY2016. For FY2017, the Administration requested almost $5.1 million, with $1.75 million for Mexico, $0.8 million for Colombia, and $2.5 million for other Latin American countries through a State Department regional program. The EXBS program helps countries develop export and border control systems in order to prevent states and terrorist organizations from acquiring weapons of mass destruction, their delivery systems, and destabilizing conventional weapons. Latin American countries received $3 million in EXBS funding in each of FY2014 and FY2015 and $2.87 million in FY2016. For FY2017, the Administration requested $2.87 million, with assistance slated for Argentina, Brazil, Chile, Mexico, Panama, and a regional program. The sole recipient of CWD funding in Latin America is Colombia, where the program is helping government's demining program become self-sufficient. U.S. assistance increases Colombia's ability to successfully clear mines and improvised explosive devices placed by the FARC and the ELN. Colombia received $3.5 million in CWD funding for each of FY2014, FY2015, and FY2016, while the Administration's request for FY2017 was for $21 million. In addition to these specific types of counterterrorism assistance, other U.S. assistance provided to Latin American countries likely helps countries to improve their capabilities to deter potential threats emanating from terrorist groups. This includes assistance to combat drug trafficking and other transnational crime and advance citizen security through such programs as the Mérida Initiative for Mexico, the Central America Regional Security Initiative, and the Caribbean Basin Security Initiative. It also includes assistance aimed at strengthening democratic governance, including improvements in the capacity of state institutions to address citizens' needs through responsive legislative, judicial, law enforcement, and penal institutions. A number of Latin American countries participate in U.S.-government port security programs administered by the Department of Homeland Security (DHS). The Container Security Initiative (CSI) operated by the U.S. Customs and Border Protection of DHS uses a security regime to ensure that all containers that pose a potential risk for terrorism are identified and inspected at foreign ports before they are placed on vessels destined for the United States. Ten Latin American ports in Argentina, the Bahamas, Brazil, Colombia, the Dominican Republic, Honduras, Jamaica, and Panama participate in the CSI program. The Department of Homeland Security's Immigration and Customs Enforcement (ICE) has partnered with several Latin American countries to establish Trade Transparency Units (TTUs) that facilitate exchanges of information in order to combat trade-based money laundering. TTUs have been established in Argentina, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Paraguay, Peru, and Uruguay. (Also see CRS Report R44541, Trade-Based Money Laundering: Overview and Policy Issues .) The United States also participates in the multilateral Financial Action Task Force, an intergovernmental body established in 1989 to set standards and promote effective implementation of measures to combat money laundering and terrorist financing. Two of FATF's regional bodies in the Americas are the Financial Action Task Force of Latin America (GAFILAT) and the Caribbean Financial Action Task Force (CFATF). The organizations conduct evaluations or assessment of countries' efforts to combat money laundering and terrorist financing. In addition to its annual Country Reports on Terrorism , the State Department also examines countries' efforts worldwide to counter money laundering and terrorist financing in its annual International Narcotics Control Strategy Report . In its 2016 report, the State Department identified 20 countries or jurisdictions in Latin America or the Caribbean as "major laundering countries" or "jurisdictions of primary concern," meaning the country has financial institutions engaging in financial transactions involving significant amounts of proceeds from all forms of serious crime. The report includes a discussion of money laundering in each country and its efforts taken to combat money laundering and potential terrorist financing. In the aftermath of the September 2001 terrorist attacks on the United States, the United States joined with Latin American and Caribbean nations and took action through the Organization of American States (OAS) and the Rio Treaty to strengthen hemispheric cooperation against terrorism. The OAS, which happened to be meeting in Peru at the time, swiftly condemned the attacks, reiterated the need to strengthen hemispheric cooperation to combat terrorism, and expressed full solidarity with the United States. At a special session on September 19, 2001, OAS members invoked the 1947 Inter-American Treaty of Reciprocal Assistance, also known as the Rio Treaty, which obligates signatories to the treaty to come to one another's defense in case of outside attack. Another resolution approved on September 21, 2001, called on Rio Treaty signatories to "use all legally available measures to pursue, capture, extradite, and punish those individuals" involved in the attacks and to "render additional assistance and support to the United States, as appropriate, to address the September 11 attacks, and also to prevent future terrorist acts." In June 2002, OAS members signed the Inter-American Convention Against Terrorism, which had the objective of improving regional cooperation against terrorism. Among its provisions, the treaty committed parties to sign and ratify U.N. antiterrorism instruments, take actions against the financing of terrorism, and deny safe haven to suspected terrorists. In the aftermath of 9/11, OAS members also reinvigorated efforts of the Inter-American Committee on Terrorism (CICTE), first established in 1999, to combat terrorism in the hemisphere. CICTE has cooperated on border security mechanisms, controls to prevent terrorist funding, and law enforcement and counterterrorism intelligence and information. It has worked on a wide range of capacity building and training programs, including border controls (covering maritime and aviation security, customs, and immigration), critical infrastructure protection (covering cybersecurity, major events security, and tourism security), counterterrorism legislative assistance and combating terrorism financing, and strengthening strategies on emerging terrorist threats. At its 16 th regular session held in February 2016, CICTE focused on the use of the Internet for terrorist and criminal purposes and the issue of cybersecurity. Over the past several years, Congress has introduced legislative initiatives and held oversight hearings pertaining to terrorism issues in the Western Hemisphere. Iran , Hezbollah, and the AMIA Bombing . With regard to Iran, the 111 th Congress enacted the Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010 ( P.L. 111-195 ), which included a provision making gasoline sales to Iran subject to U.S. sanctions. The measure led to the sanctioning of Venezuela's state oil company in 2011 for sales to Iran. (As noted above, the sanctions were lifted in the aftermath of the 2015 comprehensive nuclear accord negotiated with Iran.) The 112 th Congress enacted the Countering Iran in the Western Hemisphere Act of 2012 ( H.R. 3783 , P.L. 112-220 ), which required the Administration to conduct an assessment and present "a strategy to address Iran's growing hostile presence and activity in the Western Hemisphere." The law also stated that it shall be the policy of the United States to use a comprehensive government-wide strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere by working together with United States allies and partners in the region to mutually deter threats to United States interests by the Government of Iran, the Iranian Islamic Revolutionary Guards Corps (IRGC), the IRGC's Qods Force, and Hezbollah. For many years, Congress expressed concern about progress in Argentina's investigation of the 1994 AMIA bombing, with the House often passing resolutions on the issue around the time of the anniversary of the bombing in July. In the 111 th Congress, the House approved H.Con.Res. 156 (Ros-Lehtinen), which condemned the AMIA bombing and urged Western Hemisphere governments to take actions to curb the activities that support Hezbollah and other such extremist groups. In the 114 th Congress, two Senate resolutions were introduced related to the AMIA bombing. S.Res. 167 (Rubio), introduced in May 2015, would have called for a swift, transparent, and internationally backed investigation into the tragic death of Alberto Nisman (the special prosecutor in the AMIA investigation); expressed concern about Iran's activities in Argentina and all of the Western Hemisphere; and urged the President to continue to monitor Iran's activities in Latin America and the Caribbean. S.Res. 620 (Coons), introduced November 29, 2016, would have, among its provisions, encouraged the government of Argentina to investigate and prosecute those responsible for the 1994 AMIA bombing as well as the death of Nisman. Cuba. With regard to Cuba, H.R. 274 (Rush), introduced in January 2015, would, among its provisions, have rescinded any determination of the Secretary of State that Cuba has repeatedly provided support for acts of international terrorism. As noted above, in May 2015, President Obama rescinded Cuba's designation as a state sponsor of terrorism and Congress did not take any legislative action to block the Administration's action. As discussed above, for a number of years, the State Department had noted in its annual terrorism report Cuba's harboring of fugitives wanted in the United States. The House-passed version of the FY2017 National Defense Authorization Act (NDAA), H.R. 4909 , had a provision that would have prohibited funds in the act for any bilateral military-to-military contact or cooperation pending certification from the Secretaries of State and Defense that Cuba has fulfilled numerous conditions, including Cuba's return of U.S. fugitives wanted by the Department of Justice; ultimately the language regarding fugitives was not included in the conference report to the FY2017 NDAA ( H.Rept. 114-840 to S. 2943 ). Among other initiatives: H.Res. 181 (King), introduced in March 2015, would have called for the immediate extradition or rendering to the United States of all fugitives from justice who are receiving safe harbor in Cuba to escape prosecution or confinement for criminal offenses in the United States; H.R. 2937 (Nunes)/ S. 1489 (Rubio), introduced in June 2015, included a provision that would have called for the Attorney General, in coordination with the Secretary of State, to work with INTERPOL to pursue the location and arrest of U.S. fugitives from justice in Cuba; and H.R. 4772 (Pearce), introduced in March 2016, would have prohibited funding to accept commercial flight plans between the United States and Cuba until Cuba extradited U.S. fugitives from justice. Another bill, H.R. 2189 (Smith, NJ), would have required a report from the President regarding information on U.S. fugitives from justice abroad (not just Cuba) and U.S. efforts to secure the return of such fugitives. Mexico. In April 2016, the House approved H.R. 4482 (McSally), which would have required the Secretary of Homeland Security to prepare a southwest border threat analysis and strategic plan, including efforts to detect and prevent terrorists and instruments of terrorism from entering the United States. Oversight Hearings. The 114 th Congress continued its oversight of terrorism concerns in Latin America and the Caribbean. In March 2015, two subcommittees of the House Committee on Foreign Affairs—the Subcommittee on the Middle East and North Africa and the Subcommittee on the Western Hemisphere—held an oversight hearing on Iran and Hezbollah in the Western Hemisphere with private witnesses. In June 2015, the House Western Hemisphere Subcommittee held a hearing on prospects for a peace accord between the Colombian government and the FARC. In March 2016, the House Western Hemisphere Subcommittee held a hearing on border security challenges in Latin America and the Caribbean. In June 2016, the House Financial Service Committee's Task Force to Investigate Terrorism Financing held a hearing on terrorist funding in South America. The SOUTHCOM Commander usually testifies before the Armed Services Committees annually. In presenting the command's 2016 posture statement to Congress in March 2016, Admiral Kurt Tidd testified that "as a state sponsor of terrorism, Iran's nefarious involvement in the Western Hemisphere is a matter for concern." He also noted a number of individuals and families leaving the region to join the Islamic State in Syria or Iraq.

Compared to other parts of the world, the potential threat emanating from terrorism is low in most countries in Latin America. Most terrorist acts occur in the Andean region of South America, committed by two Colombian guerrilla groups—the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN)—and one Peruvian guerrilla group, the Shining Path (SL). All three of these groups have been designated by the U.S. State Department as Foreign Terrorist Organizations (FTOs). The FARC, however, has been engaged in peace negotiations with the Colombian government since 2012, culminating in a peace accord signed in September 2016. Although the accord was narrowly rejected by a national plebiscite in early October, both sides hammered out a new peace accord in November 2016, which was ratified by Colombia's Congress at the end of that month. Negotiations between the Colombian government and the smaller ELN had several false starts in 2016, although to date formal talks with the government have not started. The Shining Path has been significantly diminished because of Peruvian military operations. For a number of years, there has also been U.S. concern about Iran's increasing activities in the region as well as those of Hezbollah, the radical Lebanon-based Islamic group with close ties to Iran. Both are reported to be linked to the 1994 bombing of the Argentine-Israeli Mutual Association (AMIA) that killed 85 people in Buenos Aires. More recently, U.S. concerns have included financial and ideological support in South America and the Caribbean for the Islamic State (also known as the Islamic State of Iraq and the Levant, ISIL/ISIS), including the issue of individuals from the region leaving to fight with the Islamic State. The United States employs various policy tools to counter terrorism in the region, including sanctions, antiterrorism assistance and training, law enforcement cooperation, and multilateral cooperation through the Organization of American States (OAS). In addition to sanctions against U.S.-designated FTOs in the region, the United States has imposed an arms embargo on Venezuela since 2006 because the Department of State has determined that Venezuela is not fully cooperating with U.S. antiterrorism efforts. The United States has also imposed sanctions on several current and former Venezuelan officials for assisting the FARC and on numerous individuals and companies in Latin America for providing support to Hezbollah. Cuba had been on the State Department's so-called list of state sponsors of terrorism since 1982, but in May 2015, the Obama Administration rescinded Cuba's designation as part of its overall policy shift on Cuba. Legislative Initiatives and Oversight The 114th Congress continued oversight of terrorism concerns in the Western Hemisphere, with House hearings on the activities of Iran and Hezbollah, the peace agreement in Colombia, border security management and concerns, and terrorist financing in South America. Several legislative initiatives were introduced in the 114th Congress but ultimately not approved. The House passed H.R. 4482 (McSally) in April 2016, which would have required the Secretary of Homeland Security to prepare a southwest border threat analysis and strategic plan, including efforts to detect and prevent terrorists and instruments of terrorism from entering the United States. With regard to the AMIA bombing and Iran, two Senate resolutions were introduced: S.Res. 167 (Rubio) would have called for an internationally backed investigation into the January 2015 death of the AMIA special prosecutor in Argentina, Alberto Nisman, and urged the President to continue to monitor Iran's activities in Latin America and the Caribbean, and S.Res. 620 (Coons) would have, among its provisions, encouraged Argentina to investigate and prosecute those responsible for the AMIA bombing and the death of Nisman. Several initiatives dealt with Cuba's harboring of U.S.-wanted fugitives, an issue that had been noted for many years in the State Department's annual terrorism report. A provision in the House version of the FY2017 National Defense Authorization Act (NDAA), H.R. 4909, would have prohibited funding for any bilateral military-to-military contact or cooperation pending certification that Cuba had fulfilled numerous conditions, including Cuba's return of U.S. fugitives; ultimately, the language regarding fugitives was not included in the conference report to the FY2017 NDAA. (For more information on these and other bills, see "Legislative Initiatives and Oversight," below.)

Class action lawsuits—that is, lawsuits by representative parties on behalf of a group of similar plaintiffs that have aggregated their claims in a single action—are frequently in the forefront of debates over the American private law system. According to the Supreme Court, class actions are the "most adventuresome" innovation in American law. To some commentators, the class action device is the tool that "gives American workers and consumers the power and ability to level the playing field, even when facing the most powerful corporations in the world." To others, class actions are typically brought "to essentially shakedown a defendant—hurting businesses and the American economy." Unsurprisingly then, class actions have been a frequent subject of debate in Congress. This report serves as a primer on class action law and analyzes areas that have been the focus of congressional discussions concerning class actions. The report first discusses the broader public policy debate over class actions, including why class actions exist and what risks they pose to the American system of civil justice. The report then details what a plaintiff is required to show under the Federal Rules of Civil Procedure in order to achieve class action "certification"—that is, in order to pursue an action on behalf of an entire class. Throughout, the report addresses the ways in which the Supreme Court and lower federal courts have attempted to balance the benefits of class actions against their potential drawbacks. Lastly, this report discusses key aspects of class action litigation that have been the focus of recent congressional legislative debates. In particular, the report focuses on three areas which have been of particular concern: (1) the cohesiveness (or lack thereof) of the class; (2) ascertainability and administrative feasibility of the class action; and (3) divergent incentives and fees for class counsel compared with the benefits received by class members. The main lens for considering these areas is the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 ( H.R. 985 ), which passed the House of Representatives in March 2017. Accordingly, this report considers how H.R. 985 would modify existing law, along with other potential avenues for change. The default rule in American litigation is that a lawsuit is conducted by, or on behalf of, the named parties only. Class actions, however, are an exception to this rule. A class action is a procedure by which a large group of entities—that is, a "class" —may challenge a defendant's allegedly unlawful conduct in a single lawsuit, rather than through numerous, separate suits initiated by individual plaintiffs. Class actions have an ancient pedigree; analogues to class actions "have been recognized in various forms since the earliest days of English law," and class actions have "been a fixture" of federal litigation in the United States "for over seventy-five years." Under the modern version of the class action, a plaintiff (known as the "class representative," the "named representative," or the "named plaintiff") may sue the defendant not only on his own behalf, but also on behalf of other entities (the "class members") who are similarly situated to the class representative in order to resolve legal or factual questions that are common to the entire class. To illustrate, if, for example, a large number of consumers all purchased a product that turned out to be defective, one of those consumers could potentially bring a single class action against the manufacturer on his own behalf as well as on behalf of all others who purchased the product, thereby eliminating the need for other plaintiffs to join that consumer's lawsuit or initiate their own separate lawsuits. Importantly, a class action differs from other forms of litigation involving large numbers of injured persons. In ordinary multiparty litigation, everyone seeking relief from the defendant is a party to the lawsuit and directly participates in the litigation. In a class action, by contrast, the class representative is "the only plaintiff[] actually named in the complaint"; the class members are not formal parties to the lawsuit and typically do not directly guide the litigation. The class representative therefore "acts on behalf of the entire class." The class members, by virtue of not being directly "present before the court," are often referred to as being "absent" from the litigation. The Supreme Court has recognized that the class action device serves several purposes. First, as the Supreme Court has explained, a "principal purpose" of class actions is to advance "the efficiency and economy of litigation." By consolidating what would normally be multiple suits or a multiple-plaintiff litigation into a single suit sharing common questions, the class action is "designed to avoid . . . unnecessary filing of repetitious papers and motions." If every plaintiff had to independently prove and answer the same common questions, it would typically be "grossly inefficient, costly, and time consuming because the parties, witnesses, and courts would be forced to endure unnecessarily duplicative litigation." Class actions thereby potentially economize litigation by consolidating every class member's claim into a single proceeding. A class action also enables large numbers of persons injured by a defendant's unlawful conduct "to obtain relief as a group" when each class member's individual claim is "too small to justify the expense of a separate suit." Oftentimes, when a defendant inflicts comparatively small injuries to a large number of people, no plaintiff standing alone has a sufficient financial "incentive . . . to bring a solo action prosecuting his or her rights." As the Supreme Court has noted, a class action resolves this "problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor." To illustrate, suppose a defendant injures a million consumers for $30.00 in damages each. If each plaintiff had to file a stand-alone suit to recover the money he lost, few would take the trouble to do so. As former federal Judge Richard Posner once colorfully noted, "Only a lunatic or a fanatic sues for $30" because the costs of prosecuting the lawsuit would far exceed the maximum award each victim could recover. Thus, some legal observers have argued that absent some other deterrent, like a successful criminal prosecution, the defendant's $30 million wrong would go unpunished, and the victims would remain uncompensated. If, however, an individual plaintiff could bring a single class action lawsuit on behalf of everyone the defendant wronged to resolve the common questions, then the plaintiff could potentially aggregate each class member's $30.00 loss, resulting in a potential $30 million recovery. That $30 million potential award would then make it economically rational for attorneys to expend time and resources to pursue the class's claims. Then, if the plaintiff ultimately prevailed in his class action, the resulting award could be divided among the plaintiff, his counsel, and the other class members. In this way, class actions compensate victims who might otherwise go uncompensated and punish wrongdoers who might otherwise go unpunished. However, as explained in greater detail below, a court's decision to not allow a particular lawsuit to proceed as a class action can effectively "sound the 'death knell' of the litigation on the part of the plaintiffs" because the individual plaintiff's claim will often be "too small to justify the expense of" prosecuting a non-class action lawsuit. Lastly, the Supreme Court has stated that the class action serves to protect defendants from repeated and possibly inconsistent adjudications. By consolidating all potential plaintiffs' claims in a single proceeding, a defendant can obtain finality with respect to all future actions, rather than be subject to an unknown number of repeated suits and possibly inconsistent judgments. Finality benefits defendants by freeing them from "the distraction of litigation" and by allowing them to "proceed with [their] business affairs more clearly." While the Supreme Court has recognized that the class action device serves several useful purposes, the procedural mechanism also poses risks for the U.S. civil justice system. First, because a class action permits thousands or millions of class members to aggregate their claims, a defendant who opts to defend rather than settle a class action may face "potentially ruinous liability." Consequently, "even if a class's claim is weak, the sheer number of class members and the potential payout that could be required if all members prove liability might force a defendant to settle a meritless claim in order to avoid breaking the company." Thus, without effective legal safeguards, class actions could potentially encourage plaintiffs to file lawsuits that have minimal chances of success in order to extract settlements from defendants. While it would of course be inaccurate to conclude that all class actions are meritless or abusive, it is fair to say that plaintiffs have sometimes attempted to bring class action lawsuits that could charitably be described as fanciful or humorous. To name one example, a resident of California sued the manufacturer of Cap'n Crunch cereal for deceptive advertising, contending that the defendant had unlawfully misled consumers to believe that "Crunchberries" were made of fruit. The court presiding over that case, rather than permitting the case to proceed as a class action, dismissed the case in its entirety, opining that "the survival of the [plaintiff's] claim would require th[e] Court to ignore all concepts of personal responsibility and common sense." Additionally, even though class actions may economize litigation in some respects, class action litigation still "place[s] an enormous burden of costs and expense upon parties." As one federal district judge has maintained, almost "all class action law suits involve complex issues, which are costly to resolve and often result in protracted proceedings." Secondly, the fact that a class action permits a named plaintiff to represent absent class members raises the concern that the named plaintiff may not always zealously represent the class's interests. As noted above, class action litigation "is 'an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'" "Class members who are not parties to a class action suit" are generally "bound by the judgment in the suit," even if they have not actively participated in the case in any way —and, indeed, even if the parties and the court do not (and cannot) know the specific identities of each and every class member. Class actions thereby effectively "delegate" the "class members' right to a day in court . . . to the named plaintiff." Because class members usually do not control or actively participate in the litigation, class action litigation poses a risk that, without effective safeguards, the class representative may "'sell[] out' the interests of absent class members in favor of his or her own" self-interest or otherwise fail to fairly represent the class. Just as class members usually have no direct control over the class representative, class members also typically "have no control over class counsel." Because each class member's interest in the case is typically small, class members may have relatively little financial interest in the outcome of the litigation for the class as a whole. For instance, if class counsel obtains a favorable result for the class in the $30 million fraud example described above, each class member may win a maximum of only $30, but class counsel could potentially receive a sizable award of attorney's fees. For this reason, courts and commentators have expressed concern that plaintiffs' attorneys may not always act in the best interests of class members, particularly when negotiating a settlement with the defendant. As the U.S. Court of Appeals for the Seventh Circuit ("Seventh Circuit") explained, Class counsel rarely have clients to whom they are responsive. The named plaintiffs in a class action, though supposed to be the representatives of the class, are typically chosen by class counsel; the other class members are not parties and have no control over class counsel. The result is an acute conflict of interest between class counsel, whose pecuniary interest is in their fees, and class members, whose pecuniary interest is in the award to the class. The structure of class actions may thereby give class counsel "an incentive to negotiate settlements that enrich themselves but give scant reward to" the class members —who, by virtue of being nonparties, may lack a meaningful opportunity to safeguard their interests against enterprising plaintiff's attorneys. Federal Rule of Civil Procedure 23 governs the initiation and maintenance of class actions in federal court. A class action will not bind absent class members unless and until the court presiding over the case "certifies" the proposed class action under Rule 23. A court may not certify a class unless 1. the proposed class satisfies each of the four mandatory requirements established by Rule 23(a); 2. the proposed class action falls into at least one of the three categories of class actions established by Rule 23(b); and 3. the membership of the proposed class is "ascertainable." A reference chart illustrating the prerequisites for class certification is available in the Appendix of this report. A court's decision to grant or deny class certification "is often the defining moment" of a class action case. On the one hand, a court's decision to deny class certification may effectively "sound the 'death knell' of the litigation on the part of the plaintiffs" "because the representative plaintiff's claim is too small to justify the expense of" initiating and litigating an individual suit. On the other hand, a court's decision to grant class certification "may force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability," even if the class's claims have only a minimal chance of success. Because the decision to grant or deny certification is so momentous, the Supreme Court has repeatedly instructed federal courts to conduct a "rigorous analysis" confirming that the prerequisites of Rule 23 are satisfied before certifying a class. The "court 'must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits'" of the class members' claims against the defendant. Nonetheless, the Supreme Court has cautioned that "merits questions may" only "be considered to the extent . . . that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." The court must conduct the class certification analysis at "an early practicable time" after the commencement of the class action. "The word 'practicable' imports some leeway in determining the timing of such a decision" by the court. Although "the issue of certification should generally be resolved prior to addressing the merits of the plaintiff's claims," there is no categorical rule prohibiting courts from ruling on case-dispositive motions before deciding whether to certify the proposed class. "A party seeking class certification" bears the burden to "affirmatively demonstrate his compliance with" each of the requirements described below, and he must satisfy that burden "by a preponderance of the evidence." It is not sufficient to merely " plead compliance with the . . . Rule 23 requirements"; the plaintiff must instead introduce " evidence that the putative class complies with Rule 23." If a court determines that the class satisfies the requirements for certification, then Rule 23 directs the court to issue a certification order that defines the class and appoints class counsel. As explained later in this report, a court can certify "subclasses" with separate legal representation in a single action, and should do so where interests within the proposed class might diverge. Lastly, the court should then direct notice to the class members as required by Rule 23. The notice required depends on the category under which the class which is certified. The sections that follow analyze each of the requirements for class certification in detail. First, a court may not certify a class action unless the proposed class satisfies all four of the mandatory requirements established by Rule 23(a). "Rule 23(a) ensures that the named plaintiffs are appropriate representatives of the class whose claims they wish to litigate. The Rule's four requirements—numerosity, commonality, typicality, and adequate representation—effectively limit the class claims to those fairly encompassed by the named plaintiff's claims." The plaintiff must first show that the proposed "class is so numerous that joinder of all members"—that is, identifying everyone who claims to be injured by the defendant's conduct and having them actively participate in the lawsuit as named parties—would be "impracticable." This prerequisite is known as the "numerosity" requirement. "The numerosity requirement exists because the power of class actions to bind absent class members carries due process risks and should be invoked only when necessary"—namely, when it would not be possible or practicable for all of the class members to participate as formal parties to the suit. Although the text of Federal Rule of Civil Procedure 23 is "conspicuously devoid of any numerical minimum" of class members "required for class certification," "numerosity is generally satisfied if there are more than 40 class members," and generally unsatisfied if the proposed class contains 20 members or fewer. Courts give "classes with between 21 and 40 members . . . varying treatment"; "these midsized classes may or may not meet the numerosity requirement depending on the circumstances of each particular case." While the number of class members is the "starting point" of the numerosity analysis, "the number of members in a proposed class is not determinative of whether joinder is impracticable." Courts also consider a variety of other factors when evaluating numerosity, the most common of which include (i) whether the class members are geographically dispersed; (ii) the financial resources of the class members; (iii) the burden that multiple individual actions would place on the judiciary; and (iv) the ease with which class members may be identified. The plaintiff must then show that "there are questions of law or fact common to the class." This prerequisite is known as the "commonality" requirement, and it exists to ensure that the claims of the full class are "limit[ed] . . . to those fairly encompassed by the named plaintiff's claims." In its 2010 decision in Wal-Mart Stores, Inc. v. Dukes , the Supreme Court explained that the commonality prerequisite requires more than an incidental common question within the class; rather, the plaintiff must establish that the claims "depend upon a common contention" that is of such a nature that "determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Commentators generally agree that Wal-Mart expanded the significance of commonality. There, the Court reviewed a decision certifying a proposed class of approximately 1.5 million former and current female Wal-Mart employees. The plaintiffs asserted a sex discrimination against Wal-Mart under Title VII of the Civil Rights Act of 1964, alleging that local Wal-Mart supervisors favored men over women when exercising their discretion over pay and promotion. The plaintiffs presented statistical evidence that local managers were disproportionately using their discretionary authority to favor men, but they did not present any evidence of an express corporate policy against women. The question before the Court was whether this proposed class met the requirement of commonality, given the different nature of the alleged discrimination faced by each class member. As the Court observed, the class members certainly raised "common questions"—for example, "[d]o all of us plaintiffs indeed work for Wal-Mart?" or "[d]o all of our managers have discretion over pay?" or even "[i]s that an unlawful employment practice?" Nevertheless, these sorts of questions were, in the view of the Court, insufficient to satisfy the commonality requirement, as "any competently crafted class complaint literally raises common 'questions.'" Instead, the Court explained that, to satisfy the commonality requirement, a plaintiff must "demonstrate that the class members 'have suffered the same injury.'" "This does not mean merely that" all of the class members have allegedly "suffered a violation of the same provision of law." Rather, the claims must depend on a common contention that is "capable of classwide resolution"; a classwide proceeding must "generate common answers apt to drive the resolution of the litigation." The Court explained that the plaintiffs in Wal-Mart could not satisfy that requirement because, due to the nature of the underlying Title VII claim, "it w[ould] be impossible to say that examination of all the class members' claims for relief will produce a common answer to the crucial question of why was I disfavored ." Because the plaintiffs in Wal-Mart had presented no evidence of a general corporate policy of discrimination, there was no reason to believe that every class member could point to the same common answer. Lower courts have since affirmed that, as in Wal-Mart , a plaintiff generally cannot satisfy the commonality requirement "where the defendant's allegedly injurious conduct differs from plaintiff to plaintiff." Nevertheless, "commonality does not require perfect identity of questions of law or fact among all class members," and there is no requirement "that every question be common" to the class. To the contrary, "even a 'single common legal or factual issue can suffice'" to satisfy the commonality requirement, provided that all class members have suffered from the same injurious conduct. For example, in Su chanek v. Sturm Foods, Inc. , the Seventh Circuit concluded that the district court erred in finding that there was no commonality in a consumer class action involving Keurig-style coffee pods. The defendant in Suchanek sold a product which outwardly resembled the original Keurig-brand coffee pods, but which contained instant coffee rather than fresh coffee grounds. Plaintiffs argued that the packaging was deceptive and sought to certify a class on behalf of all consumers of the defendant's product in several states to resolve the common question of whether the packaging was in fact deceptive. The district court refused to certify the class action due to variation within the class members claims. For example, in the view of the district court, some class members may have purchased different versions of the packaging in question. However, the Seventh Circuit vacated the district court's order denying class certification, explaining that these differences within the proposed class did not preclude certification. The Seventh Circuit explained that all that mattered for commonality was the existence of a question decisive to all class members that was capable of a common resolution. The court concluded that the question of whether the packaging in question was materially misleading to a reasonable person satisfied the commonality requirement because the success of each class member's state law fraud claim depended, at least in part, on the basis of the answer to that question. Nor did it matter for the appellate court that some members of the proposed class were uninjured because, for example, they did not rely on the allegedly deceptive packaging. For the Seventh Circuit, "[h]ow many (if any) of the class members have a valid claim is the issue to be determined after the class is certified." In sum, although Wal-Mart reinforces that Rule 23(a)(2)'s commonality requirement is rigorous, cases like Suchanek indicate that the commonality requirement is not an insurmountable barrier to class certification. Third, the proposed class representative must satisfy what is known as the "typicality" requirement —that is, that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." The primary purpose of the typicality requirement is to ensure that "the interests of the class and the class representatives are aligned 'so that the latter will work to benefit the entire class through the pursuit of their own goals.'" A proposed class will generally satisfy the typicality requirement if the class representative's claim against the defendant is based on roughly the same legal and factual basis as the claims of the absent class members that the class representative seeks to represent. "Representative claims are 'typical' if they are reasonably coextensive with those of absent class members; they need not be substantially identical." Thus, "even relatively pronounced factual differences" between the named plaintiff's claims and those of the class members "will generally not preclude a finding of typicality where there is a strong similarity of legal theories." Many courts, when evaluating whether a proposed class action satisfies the typicality requirement, also inquire whether the proposed class representative's claim "arises from the same event or practice or course of conduct that gives rise to the claims of other class members." In this respect, the typicality requirement "tend[s] to merge" with the commonality requirement, which likewise examines whether "the same conduct or practice by the same defendant gives rise to the same kind of claims from all class members." Other courts have suggested that typicality overlaps with the "adequate representation" requirement discussed below, which similarly seeks to ensure that representative parties "adequately protect the interests of the class." Fourth, a plaintiff must demonstrate that "the representative parties will fairly and adequately protect the interests of the class." This prerequisite is alternatively known as the "adequacy of representation" requirement, the "adequate representation" requirement, or just the "adequacy" requirement. The "adequate representation inquiry consists of two parts": 1. "The adequacy of the named plaintiffs as representatives of the proposed class's myriad members, with their differing and separate interests"; and 2. "The adequacy of the proposed class counsel." "The adequacy inquiry" serves primarily "to uncover conflicts of interest between named parties and the class they seek to represent." "To assure vigorous prosecution" of the proposed class action, courts consider 1. "Whether the class representative has adequate incentive to pursue the class's claim"; and 2. "Whether some difference between the class representative and some class members might undermine that incentive." "Conflicts of interest between the named plaintiffs and the class they seek to represent" can potentially defeat class certification on adequacy grounds. Importantly, however, a conflict between the class representative and the absent class members will defeat class certification only if the conflict is "fundamental to the suit" and goes "to the heart of the litigation." The Supreme Court's opinion in Amchem Prod ucts v. Windsor illustrates this concept. In that case, the plaintiffs sought to certify a settlement-only class consisting of all persons who had either been exposed or who had a family member who was exposed to the defendant's asbestos—a class of unknown size that may well have contained tens of thousands of persons. The action sought to settle all present and future asbestos-related claims that might be brought against the defendant, once and for all, on behalf of this untold number of class members, some of whom were already sick and others of whom were presently uninjured and might never be injured in the future. The Supreme Court concluded that this proposed class action could not proceed for a number of reasons, one of which was that the class could not satisfy the adequacy requirement. The proposed class contained both the currently injured and those who might manifest an injury only in the future, leading to a "serious intra-class conflict." In particular, the uninjured plaintiffs had an interest in an "ample, inflation-protected fund for the future," while currently injured plaintiffs had the diametrically opposed interest of "generous immediate payments." Because of these conflicts of interest, the Court concluded that structural assurances of fairness, like separate subclasses with separate representation, were needed to ensure adequate representation. After Amchem , the lower courts have avoided similar conflicts of interest by certifying separate subclasses, each with their own counsel and class representative. Not all conflicts, however, require such treatment. Some conflicts are not fundamental, and therefore do not threaten class certification on adequacy grounds. For instance, most courts have agreed that a named plaintiff's eligibility for "incentive awards that are intended to compensate class representatives for work undertaken on behalf of a class . . . do not, by themselves, create an impermissible conflict between class members and their representatives," even if those incentive awards will result in the named plaintiff receiving more money than the absent class members. Because such awards do not dull the named plaintiff's motivation to "prosecute the action vigorously on behalf of the class," a named plaintiff who stands to receive an incentive award at the conclusion of the litigation will generally be able to adequately represent the class. In addition to assessing whether a fundamental conflict renders the named plaintiff unable to adequately represent the absent class members, a few courts also consider whether the proposed class representative "possess[es] a sufficient level of knowledge and understanding to be capable of 'controlling' or 'prosecuting' the litigation." Many other courts, however, "disfavor . . . 'attacks on the adequacy of a class representative based on the representative's ignorance'" about the litigation, especially in complex cases. The adequacy inquiry also requires the court to evaluate the "competency and conflicts of class counsel." The court must ensure that the attorney who seeks to represent the class is "qualified, experienced, and generally able to conduct the litigation." Rule 23 "lists several non-exclusive factors that a district court must consider in determining 'counsel's ability to fairly and adequately represent the interests of the class,'" including 1. the work counsel has done in identifying or investigating potential claims in the action; 2. counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; 3. counsel's knowledge of the applicable law; and 4. the resources that counsel will commit to representing the class. Under this section, courts have also scrutinized any conflicts that a class representative may have with class counsel. As the Seventh Circuit explained in Eubank v. Pella Corporation , "[c]lass representatives are . . . fiduciaries of the class members, and fiduciaries are not allowed to have conflicts of interest without the informed consent of their beneficiaries." In that case, the court reversed an order certifying a class because the class counsel was the son-in-law of the class representative, leading to a "grave conflict of interest" because the class representative had less reason to attempt to constrain the fee to counsel. Other courts have found that representation is inadequate where the named plaintiff was a friend and former business partner with class counsel, or where the named plaintiff was an employee of class counsel. However, not every preexisting relationship between class counsel and the named plaintiff is fatal to class certification. In Levitt v. Southwest Airlines Co. , for example, the Seventh Circuit upheld a class where one of the two class representatives was co-counsel with lead class counsel in a separate case. Although the Levitt court reduced the attorney's fee award by $15,000 because the attorney had failed to disclose the conflict, the court nonetheless affirmed the class certification order in part because counsel had successfully obtained a favorable settlement for the class. "In addition to the[] four general requirements" for classes established by Rule 23(a), "there are additional requirements that must be met depending on the type of class [action] the [plaintiff] seeks to certify." "There are three types of class actions that can be maintained, and Rule 23(b)(1)-(3) specifies the additional requirements that apply to each of them." If the proposed class action does not satisfy the requirements of any of those three categories, the court must deny class certification. As is true of the Rule 23(a) requirements, the court must perform "a rigorous analysis" to determine whether the Rule 23(b) requirements are satisfied. Rule 23(b)(1) provides that a class action may be maintained if prosecuting separate actions by individual class members would create a risk of (A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or (B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests. Class members have no right to opt out of a Rule 23(b)(1) class, as "allowing class members to opt out of the class and pursue individual claims would deplete the fund to the detriment of other class members." "The phrase 'incompatible standards of conduct' refers to the situation where 'different results in separate actions would impair the opposing party's ability to pursue a uniform continuing course of conduct.'" So, for example, if separate lawsuits proceeding in different courts could result in one court ordering the defendant to reimburse a plaintiff from a retirement plan while another court prohibits the plaintiff from recovering anything from that plan, then "the risk of inconsistent orders . . . satisfies Rule 23(b)(1)(A)." "Class actions certified under Rule 23(b)(1)(B) . . . typically involve limited pools of money that may not be adequate to cover the claims of all plaintiffs," as may occur when there are "multiple claims to a single, tangible fund, such as a bank account, trust, insurance policy, or proceeds from a sale of an asset." In such cases involving "limited funds," "every award made to one claimant" would reduce "the amount of funds available to other claimants until, in the absence of equitable management of the fund, some claimants are able to obtain full satisfaction of their claims, while others are left with no recovery at all." Rule 23(b)(1)(B) therefore ensures "equitable distribution of those limited funds, so that the first plaintiffs bringing claims do not deprive later suing plaintiffs the opportunity to press their own claims." Rule 23(b)(1)(B) classes are therefore "designed to protect plaintiffs from one another." A plaintiff may obtain class certification pursuant to Rule 23(b)(2) by demonstrating that "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." "Colloquially, 23(b)(2) is the appropriate rule to enlist when the plaintiffs' primary goal is not monetary relief, but rather to require the defendant to do or not do something that would benefit the whole class." In order to obtain class certification under Rule 23(b)(2), the plaintiff must demonstrate that "a single injunction or declaratory judgment would provide relief to each member of the class." Rule 23(b)(2) does "not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant." In other words, the relief sought by the proposed class must be "indivisible, benefitting all members of the (b)(2) [c]lass at once." Nor does Rule 23(b)(2) "authorize class certification when each class member would be entitled to an individualized award of monetary damages." Courts generally agree that "a 23(b)(2) class cannot seek money damages unless the monetary relief" sought is merely "incidental to the injunctive or declaratory relief" requested by the class. Rule 23(b)(2), like Rule 23(b)(1), generally "provides no opportunity for (b)(2) class members to opt out." Courts have concluded that "these procedural safeguards are not required because a (b)(2) class is presumed to be homogenous in nature, with few conflicting interests among its members." As a result, "all class members" of a certified Rule 23(b)(2) class will generally "be bound by a single judgment" at the conclusion of the litigation. "The most common" type of class action is an action certified pursuant to Federal Rule of Civil Procedure 23(b)(3), which authorizes "class actions for damages designed to secure judgments binding all class members save those who affirmatively elected to be excluded" from the class. "Rule 23(b)(3) applies to most classes seeking monetary relief." Unlike the two types of class action described above, Rule 23(b)(3) grants class members an opportunity to opt out of the class, as explained in greater detail below. "To qualify for certification under Rule 23(b)(3), a proposed class must meet two prerequisites beyond the Rule 23(a) prerequisites." The plaintiff must demonstrate that: 1. "The questions of law or fact common to class members predominate over any questions affecting only individual members"; and 2. "A class action is superior to other methods for fairly and efficiently adjudicating the controversy." These prerequisites are known as "predominance" and "superiority," respectively. "The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." The predominance requirement's "purpose is to 'ensure that the class will be certified only when it would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.'" The predominance question is complex, and courts have not set forth a clear methodology for determining whether a proposed class action satisfies the predominance requirement. Most courts agree that "[t]he main concern of the predominance inquiry under Rule 23(b)(3) is the balance between" the "individual and common" questions raised by the proposed class action. "An individual question is one where 'members of a proposed class will need to present evidence that varies from member to member.'" A common question, by contrast, "is one where 'the same evidence will suffice for each member to make a prima facie showing [or] the issue is susceptible to generalized, class-wide proof.'" A plaintiff may satisfy the predominance requirement if the "issues that are 'susceptible to generalized, class-wide proof' are 'more prevalent or important'" to the case than the issues that require individualized proof. The Supreme Court has provided general guidelines on predominance. The most significant Supreme Court case on predominance is Amchem , discussed above. There, the Court rejected a class containing all persons who had either been exposed or who had a family member who was exposed to the defendant's asbestos. In considering whether to certify this class, the Court, explaining that the purpose of predominance is to test "whether proposed classes are sufficiently cohesive to warrant adjudication by representation," held that there were too many questions of too great a significance which were peculiar to the categories of class members and to individual class members for predominance to be met. Specifically, the Court noted the following: Class members were exposed to different asbestos-containing products, for different amounts of time, in different ways, and over different periods. Some class members suffer no physical injury . . . each has a different history of cigarette smoking . . . . Differences in state law . . . compound these disparities. Amchem thus stands for the proposition that divergent questions on the facts or on the law within the class can defeat predominance. So, for example, many lower courts have held that a proposed class action may violate the predominance requirement if each class member's claim is governed by a materially different set of substantive laws, which can occur when class members who live in different states sue the defendant under different state laws. Where "variations in state law raise the potential for the application of multiple and diverse legal standards and a related need for multiple jury instructions" or "multiply the individualized factual determinations that the court would be required to undertake in individualized hearings," those variations may "overwhelm the ability of the trier of fact meaningfully to advance the litigation through classwide proof" and thereby defeat predominance. However, the lower courts have not concluded that any difference of circumstance or damages within the class automatically means a failure to meet the predominance requirement. For example, the Seventh Circuit suggested that predominance could be satisfied in Suchanek v. Sturm Foods, Inc. , also discussed above. In that case, involving consumers in eight different states who had purchased instant-coffee coffee pods, the class of consumers would have encountered the allegedly deceptive advertising necessarily in a particularized context based on the individual's circumstances, leading to individualized questions on reliance and causation. Nonetheless, the court concluded that the question of whether the advertising was materially misleading could still be resolved on a class basis. The court explained that, because it "would be a straightforward matter" to resolve the individualized issues of reliance and causation in "individualized follow-on proceedings," class certification was likely appropriate. Similarly, courts have generally confirmed that individualized damages inquiries generally do not preclude class certification. Because "individual issues of damages" are often "easy to resolve because the calculations are formulaic" and "district courts have many tools to decide individual damages" in an efficient manner, individualized damages calculations will rarely eclipse the issues common to all class members. Thus, in most jurisdictions, the plaintiff "need not show that each member's damages . . . are identical" in order to obtain class certification. Lastly, a few federal appellate courts have held that "[e]ven if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and proceed with class treatment of these particular issues." However, the Fifth Circuit, in its oft-cited opinion in Castano v. American Tobacco Co. , disagreed, stating that Rule 23(c)(4) may not be used to sever particular issues in order to avoid the application of predominance to the entire claim; according to the Fifth Circuit, Rule 23(c)(4) is simply a "housekeeping rule" which permits courts to certify particular issues when the class as a whole meets the other requirements of the Rule. The Third Circuit has adopted yet another approach, applying a multifactor test to determine whether it is appropriate to certify an issue class. In addition to satisfying the predominance requirement, a plaintiff seeking certification of an opt-out class pursuant to Rule 23(b)(3) must also show that "a class action is superior to other methods for fairly and efficiently adjudicating the controversy." "The focus of this analysis is on 'the relative advantages of a class action suit over whatever other forms of litigation might be realistically available to the plaintiffs.'" To determine whether a class action would be superior to the available alternatives, the Rule sets out four factors for courts to consider: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action. These four factors are "nonexhaustive." The last of those four factors—"the likely difficulties in managing a class action," also known as "manageability"—"is, by far, the most critical concern in determining whether a class action is a superior means of adjudication." To determine whether a proposed class action would be more manageable than alternative methods for adjudicating the dispute, the court must consider "the whole range of practical problems that may render the class action format inappropriate for a particular suit," such as "potential difficulties in notifying class members of the suit, calculation of individual damages, and distribution of damages." The superiority inquiry asks not whether the proposed class action "will create significant management problems," but rather "whether it will create relatively more management problems than any of the alternatives" potentially available to the class members. If the mere existence of manageability problems was enough to defeat class certification, then no class action would ever be certified, as virtually "all class actions pose[] manageability concerns" by virtue of their scope and complexity. "The superiority of a class action also depends on the existence of a realistic alternative to class litigation." For instance, the court could compare the advantages and disadvantages of allowing the case to proceed as a class action to those of other adjudicatory procedures, such as "multiple individual actions, coordinated individual actions, consolidated individual actions, [or] test cases." However, a proposed class action generally satisfies the superiority requirement if the plaintiff's claims would likely not be adjudicated at all absent a class action. Proposed class actions are particularly likely to satisfy the superiority requirement "where recovery on an individual basis would be dwarfed by the cost of litigating on an individual basis." Where, by contrast, "individual damages run high," such that individual class members "have a substantial stake in the dispute and" consequently "do not lack the means of obtaining representation," then separate suits by individual plaintiffs may be a realistic and superior alternative to class action litigation. "Class members are bound by [any] judgment" ultimately entered in a certified class action, "whether favorable or unfavorable." Thus, to protect the rights of absent class members, Rule 23(b)(3) affords class members an opportunity to withdraw from—that is, "opt out" —of a certified Rule 23(b)(3) class. A person who opts out of a certified Rule 23(b)(3) class will not be bound by any judgment or settlement ultimately entered in the case. He may then, if he wishes, commence his own individual lawsuit challenging the defendant's alleged misconduct. Most courts have concluded that, in addition to the aforementioned prerequisites enumerated in Federal Rule of Civil Procedure 23(a)-(b), a plaintiff seeking to certify a class action must also show that the membership of the proposed class is "ascertainable." Although not articulated in Rule 23 explicitly, courts have concluded that Rule 23 implicitly requires the named plaintiff to prove that members of the proposed class are "ascertainable." To satisfy this "ascertainability" requirement, "the members of the proposed class" must be "readily identifiable." "The purpose of the ascertainability requirement is to avoid 'satellite litigation' over who is a member of the class and to 'properly enforce the preclusive effect of [a] final judgment' by clarifying 'who gets the benefit of any relief and who gets the burden of any loss.'" Significantly, however, courts have disagreed regarding what a plaintiff must prove in order to satisfy the ascertainability requirement. As explained below, some courts have required the named plaintiff to demonstrate an "administratively feasible mechanism" for determining whether putative class members fall within the class definition, while other courts have explicitly refused to adopt any such requirement. For example, to certify a class action in the Third and Eleventh Circuits, the plaintiff must show that 1. "the class is defined with reference to objective criteria"; and 2. "there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition." To be "defined with reference to objective criteria," membership in a class cannot be based on subjective considerations "such as class members' state of mind." The "administratively feasible" requirement, by contrast, mandates that there be "a 'manageable process'" to identify class members "that does not require much, if any, individual inquiry." "If individualized fact-finding or mini-trials will be required to prove class membership," then the proposed class action cannot "satisfy the ascertainability requirement." As a result, when a plaintiff alleges, for instance, that a defendant manufacturer falsely and deceptively advertised a product to the class members, but the plaintiff produces no evidence that it would ultimately be possible to identify which purchasers bought that product, that plaintiff cannot satisfy the administrative feasibility requirement. If, by contrast, "'objective records' . . . can 'readily identify'" who purchased the product in question, then the plaintiff can satisfy the administrative feasibility requirement. Other courts, including the Second, Sixth, Seventh, Eighth, and Ninth Circuits, have concluded that the plaintiff is not required to "prove at the certification stage that there is a 'reliable and administratively feasible' way to identify all who fall within the class definition." Instead, plaintiffs in these jurisdictions need only demonstrate that membership in the proposed class is "defined clearly and based on objective criteria." So, for instance, a class composed of "persons who acquired specific securities during a specific time period" satisfies the objective criteria requirement, as the "subject matter, timing, and location" of those purchases are all a matter of objective fact. On the other hand, "classes that are defined by subjective criteria, such as by a person's state of mind, fail the objectivity requirement" even in jurisdictions that have not adopted the administrative feasibility requirement. If the plaintiff satisfies all of the applicable requirements discussed in the previous sections of this report, the court may enter an order "certify[ing] the action as a class action." "An order that certifies a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel." Once a class is certified according to Rule 23, all class members—except for members of a Rule 23(b)(3) class who affirmatively opt out—are bound by the court's rulings in the case. Importantly, "certification of a class is always provisional in nature until the final resolution of the case." "A district court 'retains the ability to monitor the appropriateness of class certification throughout the proceedings and to modify or decertify a class at any time before final judgment.'" Ordinarily, interlocutory orders (that is, nonfinal judgments) are not appealable. Accordingly, a litigant may generally not immediately appeal a district court's order granting or denying class certification. However, because a district court's decision to grant or deny class certification is so consequential, the Federal Rules of Civil Procedure grant the federal courts of appeals "broad discretion" to permit a litigant to file an interlocutory appeal "from an order granting or denying class action certification." Appellate courts apply a variety of legal standards when deciding whether to grant an interlocutory appeal of an order granting or denying class certification. However, most courts consider whether the class certification order is "manifestly erroneous," as well as whether granting an interlocutory appeal will allow the appellate court to resolve an unsettled and important issue of class action law. Federal Rule of Civil Procedure 23 authorizes the court to divide a class "into subclasses that are each treated as" a separate class for the purposes of the class action. Splitting a proposed class into subclasses may be appropriate, for example, "to prevent conflicts of interest" between subgroups of class members that might otherwise preclude class certification on adequacy grounds. "District courts have broad discretion in determining whether to . . . divide a class action into subclasses." Federal Rule of Civil Procedure 23 also authorizes the court to permit an action to proceed as a class action only "with respect to particular issues." So, for instance, "if a case requires determinations of individual issues of causation and damages" that cannot be resolved classwide, "a court may 'bifurcate the case into a liability phase and a damages phase,'" whereby the court determines liability on a classwide basis and then conducts separate individualized hearings to determine each class member's damages. "Once certified, the class action can then proceed to discovery, pretrial, and trial." The members of the certified class who do not (or cannot) opt out of the class will generally be bound by any judgment ultimately rendered in the case with respect to the issues that have been certified. Because a certified class action potentially presents "opportunities for abuse as well as problems for courts and counsel in the management of cases . . . a district court has both the duty and the broad authority to . . . enter appropriate orders governing the conduct of counsel and parties," such as "orders that . . . determine the course of proceedings or prescribe measures to prevent undue repetition or complication in presenting evidence or argument." Significantly, however, "very few class actions are tried"; most instead culminate in a settlement. Just as a final judgment entered in a certified class action that proceeds to trial generally binds the absent class members, a class action settlement typically binds absent class members who do not (or cannot) opt out of the class. Because "plaintiffs in a class action may release claims that were or could have been pled in exchange for settlement relief"; a settlement agreement may thereby preclude class members from pursuing "claims not presented in the complaint" if those claims are "based on the identical factual predicate as that underlying the claims in the settled class action." Because the settlement of a certified class action will bind absent class members, "the claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval," and "any class member may object to the" proposed settlement of a certified class action. "The court may approve" the proposed settlement "only after a hearing and on finding that it is fair, reasonable, and adequate." "The burden is on the settlement proponents to persuade the court that the agreement is fair, reasonable, and adequate for the absent class members who are to be bound by the settlement." Although different courts consider different factors when determining whether a proposed settlement is "fair, reasonable, and adequate," the following factors are particularly common: whether the class members favor or disfavor the proposed settlement; the complexity, expense, and likely duration of the continued litigation that would occur if the court rejected the settlement; the likelihood that the class would prevail if the case proceeded to a trial on the merits; and the current stage of the litigation and the amount of discovery the parties have completed. When evaluating a proposed class action settlement, the court must also determine whether "any attorneys' fees claimed as part of the settlement are reasonable" and whether "the settlement itself is reasonable in light of those fees." To make that determination, the court assesses whether the proposed award of attorney's fees is "unreasonably excessive in light of the results achieved" by the proposed settlement. Additionally, the court must evaluate whether the proposed settlement will actually benefit the class in some meaningful way. The court must "be assured that the settlement secures an adequate advantage for the class in return for" absent class members giving up their "litigation rights against the defendants." So, for instance, a court may not approve a settlement that affords class counsel a substantial fee but gives the class nothing but effectively worthless injunctive relief. As the foregoing discussion illustrates, the Federal Rules of Civil Procedure and the federal courts interpreting those rules have attempted to balance the interests inherent in the class action device. If Congress concludes that Rule 23 and the judicial decisions interpreting it have properly struck that balance, it may leave the existing class action framework unchanged. If, instead, Congress wishes to modify the existing laws governing class actions to make them more or less favorable to plaintiffs, defendants, class members, or class counsel, Congress has multiple options. Calls to modify the class action framework have primarily focused on three areas: (1) the cohesiveness (or lack thereof) of the class; (2) ascertainability and the administrative feasibility of the class action; and (3) divergent incentives and fees for class counsel compared with the benefits received by class members. For instance, Members of Congress have introduced a variety of proposals to change the class action system in recent years, including modifying Rule 23, restricting the ability of private parties to waive class action treatment in financial adviser contracts, and proposing that certain classes would be presumed to meet the requirement of commonality. Most notably, on March 9, 2017, the House of Representatives passed H.R. 985 , known as the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 (FICALA). FICALA represents possibly the most sweeping set of proposed modifications to the class action device that has been proposed in years, suggesting a host of changes to the operation of class actions in federal courts. Cohesiveness was the focus of the Supreme Court's attention in both Amchem and Wal-Mart , discussed above. In each of those cases, the Court reversed the certification of the class action because, in one way or another, the class claims had severe differences which made class treatment inappropriate. The Court in Wal-Mart framed the lack of cohesiveness as being about commonality—the lack of a single common question which could resolve an issue "central to the validity of each one of the claims in one stroke." In Amchem , this concern about cohesion centered on Rule 23(b)(3)'s predominance requirement: the number and importance of the disparate questions among the class members claims made class treatment inappropriate. As noted above, however, there is no consistent approach in the lower courts with respect to cohesiveness on either commonality or predominance. Splits have arisen between the federal courts as to a number of questions, such as the importance of individualized damages to the predominance inquiry and the use of the issue class to segregate the common issues notwithstanding predominance for the claim as a whole. Some commentators and judges (including some Supreme Court Justices in dissent) have argued that the courts have failed to strike the correct balance. Some have maintained that some courts have expanded class action certification beyond the bounds of what should be permissible particularly with respect to classes including both injured and uninjured parties, impermissibly broadening the traditional power of courts. Others disagree and argue that the courts have placed too much emphasis on cohesiveness at the expense of judicial efficiency, suggesting that the class action should be expanded further. As passed by the House, FICALA proposes to add several sections to Title 28 of the U.S. Code that would alter this area of class action law. Proposed 28 U.S.C. § 1716 would bar federal courts from certifying a class seeking monetary relief for personal injury or "economic loss" unless the plaintiff demonstrates that "each proposed class member suffered the same type and scope of injury as the named class representative." Every certification order in federal court would have to contain a determination "based on a rigorous analysis of the evidence presented" that the plaintiff certified this requirement. FICALA does not define the phrase "type and scope of injury." FICALA would also add 28 U.S.C. § 1720, which would prohibit so-called "issue classes," by prohibiting a federal court from issuing "an order granting certification . . . with respect to particular issues pursuant to Rule 23(c)(4) . . . unless the entirety of the cause of action from which the particular issues arise satisfies all the class certification prerequisites" of Rule 23. The committee report from the House Judiciary Committee (the "Committee Report") confirms that these sections are driven by concerns over cohesiveness. In particular, the Committee Report notes a goal of ensuring that "similarly injured people" are grouped in a single class action. The alleged purpose is to prevent "uninjured class members" receiving money that could go to those with actual injuries, in order to create "classes in which those who are most injured receive the most compensation." The Committee Report cites Wal-Mart Stores, Inc. v. Dukes as the source of the principle, particularly the Supreme Court's statement that "a class representative must be part of the class and possess the same interest and suffer the same injury as the class members." With respect to proposed Section 1720, the Committee Report suggests that the purpose of this provision is to codify the approach to issue classes announced by the Fifth Circuit in Castano v. American Tobacco Co. , discussed above, that a "district court cannot manufacture predominance" by segregating the issues it wishes to certify into a separate predominance inquiry—rather, the court must evaluate predominance for the cause of action as a whole. Critics of FICALA, including those cited in the Committee Report, have argued that far from protecting absent class members, these provisions would simply lead to fewer individuals being able to obtain relief through class litigation. As these critics point out, the term "scope of injury" in proposed Section 1716 is undefined. Furthermore, these critics argue that at the early stage of litigation when class certification is supposed to occur, the exact "scope" of an injury cannot be measured with any precision, and the proposed section would effectively require "a decision on the merits before trial and before appropriate class members can even be identified." Because of this structure, FICALA critics argue that uninjured class members, or class members with different injuries, are an inevitable component of class actions, as membership in a class has never equated to an "entitlement to damages." Further, the critics argue that proposed Section 1720 would particularly threaten certain types of civil rights class actions, which can be maintained only as to particular issues such as liability because, as demonstrated in cases like Wal-mart v. Dukes , individualized questions tend to predominate in such suits. In some ways, the arguments above echo larger disputes. On the one hand, a relatively broader view of cohesiveness enables courts to provide resolutions for injured class members where they might not otherwise exist. For example, in Nassau County Strip Search Cases , the Second Circuit approved class treatment in a case involving an allegedly unconstitutional blanket strip search policy for Nassau County misdemeanor detainees. By approving class action treatment on the issues of whether the defendants had implemented the policy and whether they were liable for it, the court sidelined the individualized questions relating to whether some class members might have been appropriately searched. Nassau County serves as an example of a case where few of the class members would have had an incentive to seek redress individually for injury they had sustained—in this case, an allegedly unlawful strip search. As such, supporters of relaxation of cohesiveness would likely argue that Nassau County is indicative of why it is necessary to permit otherwise noncohesive classes to proceed and why the change proposed by Section 1717 to issue classes would harm plaintiffs. On the other hand, some commentators have argued that resolving the rights of absent class members without a strong element of cohesion threatens the constitutional values of individual rights and separation of powers. According to these commentators, individual rights are threatened because noncohesive class actions undermine an individual's right to a "day in court." Where large classes resolve questions on behalf of absent class members on the basis of an opt-out system, absent class members may be deprived of the individual autonomy rights and the right to control their own cases, a problem that is less severe when classes are highly cohesive. Further, these commentators argue that separation of powers is undermined because the proper role of the courts is to resolve claims that are in front of them—it is the role of legislatures to devise solutions to generalized problems affecting large swaths of society. Where a class action is certified and the class members are not truly cohesive, especially where the damages are small and class members are unlikely to receive a meaningful benefit, courts, in the view of these commentators, act more like legislatures or administrative agencies by disciplining corporations and handing out bounties to class counsel, rather than by redressing individual rights and handing out relief to injured persons. The circuit split over ascertainability discussed above has likewise captured the attention of policymakers. FICALA would add Section 1718 to Title 28 of the U.S. Code, which would forbid a federal court from granting certification of a class action without determining that there is "a reliable and administratively feasible mechanism" for determining whether putative class members fall within the class definition and for determining how to distribute to a substantial majority of class members any monetary relief secured. This new provision would codify the approach currently in use within the Third and Eleventh Circuits discussed above. To support this provision, the FICALA's Committee Report majority favorably cites a dissenting opinion by Judge Kayatta in the First Circuit, stating that district courts should have to "identify a culling method to ensure that the class, by judgment, includes only members who were actually injured." In response, the dissenting Members who signed the "Dissenting Views" portion of the Committee Report argue that the ascertainability requirement has been "rejected by most courts for good reason." The dissenters argue that the practical effect would be that many small claim consumer class actions would allow defendants to escape liability because the class is not ascertainable by this standard. These statements echo the debate in the federal courts on ascertainability. "Defendants in class actions" have "invok[ed] the ascertainability requirement with increasing frequency" in recent years "in order to defeat class certification." Some commentators have therefore called the ascertainability doctrine "one of the most contentious issues in class action litigation these days." Supporters of a rigorous ascertainability requirement—such as that adopted by the Third and Eleventh Circuits—maintain that requiring the proposed class representative to demonstrate an administratively feasible mechanism for determining whether putative class members fall within the class definition "serves several important policy objectives," such as eliminating administrative burdens "by insisting on the easy identification of class members"; "protect[ing] absent class members by facilitating" notice to the class; and "protect[ing] defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable." Critics, by contrast, argue that a rigorous ascertainability requirement inappropriately "scuttle[s] small-claim class actions, especially consumer class actions involving low-priced items." In such cases, consumers typically "do not have documentary proof of purchases," but this, by itself, should, in the view of critics, not bar their ability to recover. Some commentators also claim that the existing class action framework results in a mismatch between the incentives of class members and those of class counsel, especially with respect to settlement. The adequacy requirement of Rule 23(a) presently seeks to constrain the ability of counsel with conflicts or competence issues to represent the class, and Rule 23(e) requires the court to find that settlements are "fair, reasonable and adequate." However, the standards applied to these rules are largely court-made, and some have argued that they are inadequate to the task of protecting class members. FICALA would add two relevant provisions to the U.S. Code. The first, 28 U.S.C. § 1717, would require class action complaints to state whether any proposed class representative "is a relative of, is a present or former employee of, is a present or former client of . . . or has any contractual relationship . . . with class counsel." Further, this section would forbid a federal court from granting class certification to any proposed class action in which the class representative is a "relative or employee of class counsel." Second, proposed 28 U.S.C. § 1718(2)-(3) would forbid class counsel from collecting fees until "the distribution of any monetary recovery to class members has been completed" and would limit the fees that class counsel could obtain in cases involving monetary recovery to "a reasonable percentage of any payments directly distributed to and received by class members . . . [not to] exceed the total amount of money directly distributed to and received by class members." Proposed Section 1717 would effectuate, at least relative to other provisions in FICALA, a minor change in the law. It would require additional disclosure of conflicts to the court and would codify the requirement, already accepted by many courts, that class counsel should not have certain conflicts of interest. It would also largely codify the words of the Seventh Circuit in Levitt v. Southwest Airlines Co. : "Our message to the class action bar is short and simple: when in doubt, disclose [potential conflicts]." Proposed Section 1718, on the other hand, proposes significant limitations on the fees that class counsel would be able to obtain. This provision would work a major change. Currently, Rule 23(h) provides that a court may award "reasonable" attorney's fees following a motion under Federal Rule of Civil Procedure 54(d)(2), which provides that the motion for fees must be made within 14 days after judgment. Class counsel is ordinarily entitled to fees only in cases involving either a common-fund created by the attorney's effort or in cases where substantive law provides for fee shifting. Case law states that a "reasonable" fee is determined by a number of factors, which include the benefits obtained by the class. Where the fee is based on a common fund created by the litigation, generally, a reasonable fee extends to a percentage of the fund that is created, including any unclaimed portion. Proposed Section 1718 would change that rule, insofar as percentage recoveries would have to be based on only the recovered portion of the funds actually received, rather than the total fund including any unclaimed portion. Further, this section apparently ensures that class counsel cannot collect fees until monetary recovery has been completed. This provision, if enacted, could raise issues in cases where fee awards would potentially be difficult to administer or in class actions where funds are created but the potential beneficiaries are unknown or their injuries are uncertain. An example of such a case is the National Football League's (NFL's) concussion settlement. In that case, the court approved a settlement covering 20,000 retired NFL players, even though the injuries sustained by some of the claimants are not likely to become apparent for some time (if ever), meaning the payment owed to those claimants is unknown. The FICALA provision prohibiting the collection of fees until recovery has been completed raises the question of whether attorneys in such a case would be effectively unable to receive payment from the fund, because it would likely never be known when the distribution to class members is completed. A court may interpret the language in the section—"until the distribution of monetary recovery to class members"—in such cases to mean "until the fund is created," but this interpretation is not necessarily obvious. The problem that these provisions seek to resolve is a mismatch between the incentives possessed by class counsel and class representatives, particularly with respect to settlements. Once the class is certified, class counsel and defendants could be united in the desire to obtain a quick settlement that resolves all of the claims and pays class counsel. The defendant wants finality and class counsel wants its fees; neither the defendant nor class counsel particularly has an incentive to care if absent class members, at the end of the day, receive any benefit from the funds that are being distributed on their behalf. Unlike in a traditional lawsuit where the client is an active participant, class members are usually absent and unavailable to check class counsel for the same reason that class actions are needed—class members often have a negligible individual stake in the recovery. Sponsors of FICALA assert that consumer class members take the offered compensation in only .023 percent of cases and that class counsel nonetheless frequently obtains seemingly large fee awards. It is this mismatch between the reward obtainable by the attorney and that which flows to his ostensible client which creates the problem. Critics of FICALA, however, argue that this mismatch of incentives is an issue that courts have already recognized and attempted to curtail. Current law, as noted above, requires courts to scrutinize class action settlements for fairness to class members. As the Seventh Circuit has explained, courts are aware that "[t]he structure of class actions under Rule 23 of the federal rules gives class action lawyers an incentive to negotiate settlements that enrich themselves but give scant reward to class members." Courts therefore attempt to ensure "that the settlement secures an adequate advantage for the class in return for" absent class members giving up their "litigation rights against the defendants." As the Seventh Circuit has colorfully explained, "a class settlement that results in fees for class counsel but yields no meaningful relief for the class 'is no better than a racket.'" Following this case law, courts have struck down the occasional settlement as unfair. However, some commentators argue that district courts are too lenient and too inclined to approve unfair settlements that pay the attorneys but leave little to nothing for the class. Whether courts have struck the right balance on this question is an open debate, but there is no question that courts are aware of these issues and do scrutinize class action settlements for fairness.

A class action is a procedure by which a large group of entities (known as a "class") may challenge a defendant's allegedly unlawful conduct in a single lawsuit, rather than through numerous, separate suits initiated by individual plaintiffs. In a class action, a plaintiff (known as the "class representative," the "named representative," or the "named plaintiff") may sue the defendant not only on his own behalf, but also on behalf of other entities (the "class members") who are similarly situated to the class representative in order to resolve any legal or factual questions that are common to the entire class. Courts and commentators have recognized that class actions can serve several beneficial purposes, including economizing litigation and incentivizing plaintiffs to pursue socially desirable lawsuits. At the same time, however, class actions can occasionally subject defendants to costly or abusive litigation. Moreover, because the class members generally do not actively participate in a class action lawsuit, class actions pose a risk that the class representative and his counsel will not always act in accordance with the class members' best interests. In an attempt to balance the benefits of class actions against the risks to defendants and class members, Federal Rule of Civil Procedure 23 establishes a rigorous series of prerequisites that a federal class action must satisfy. For similar reasons, Rule 23 also subjects proposed class action settlements to the scrutiny of the federal courts. This report serves as a primer on class action litigation in the federal courts. It begins by discussing the purpose of class actions, as well as the risks class actions may pose to defendants, class members, and society at large. The report also discusses the prerequisites that a class action must satisfy before a court may "certify" it—that is, before a federal court may allow a case to proceed as a class action. An Appendix to the report also contains a reference chart that graphically illustrates those prerequisites for class certification. The report then discusses Rule 23's restrictions on the parties' ability to settle a certified class action. The report concludes by identifying ways in which Congress could modify the legal framework governing class actions if it were so inclined, with a particular focus on a bill currently pending in the 115th Congress that would effectuate a variety of changes to the class action system.

On December 23, 2010, the Roman Catholic Archdiocese of Havana announced that two more political prisoners would be released. This brought to 57 the number of political prisoners released since July, with 56 agreeing to be sent to Spain and 1 released on humanitarian parole to remain in Cuba. It also includes 41 of 52 prisoners arrested in 2003 that the government had agreed in July 2010 to release. Cardinal Jaime Ortega maintains that the remaining 11 political prisoners on the list from July (some who want to remain in Cuba and some who want to travel to the United States) would be released in coming months. Overall, human rights groups estimate that there are around 100 remaining political prisoners in Cuba. (See " Political Prisoners " below.) On December 3, 2010, the State Department issued a statement on the one-year anniversary of the detention of USAID subcontractor Alan Gross in Cuba, calling for his release and maintaining that "the continued detention of Alan Gross is a major impediment to advancing the dialogue between our two countries." On November 8, 2010, President Castro announced that the Cuban Communist Party's sixth congress would be held in April 2011, and would concentrate on updating the Cuban economic model, and outlining the economic and social policy of the party and the revolution. The last party congress was held in 1997. In September 2010, the Cuban government announced a significant series of reforms designed to reduce the public sector and increase private enterprise. On September 13, 2010, the government announced that by the end of March 2011 it would identify half a million state workers that would be laid off, with most expected to find work in the expanding private sector. On September 24, the government announced an expansion of self-employment, identifying 178 categories of work allowed with 83 of those allowing small businesses to hire non-family members. (See " Economic Changes Under Raúl " below.) On September 13, 2010, President Obama issued his annual determination with respect to foreign governments' efforts regarding trafficking in persons. With regard to Cuba, which has been on the State Department's list of countries (Tier 3) that do not cooperate in the fight against trafficking since 2003, the President provided a partial waiver to allow for educational and cultural exchange programs. (See the presidential memorandum available at: http://www.whitehouse.gov/the-press-office/2010/09/13/presidential-memorandum-trafficking-persons .) On July 29, 2010, the Senate Committee on Appropriations reported S. 3677 ( S.Rept. 111-238 ), the FY2011 Financial Services and General Government Appropriations Act, with a provision in section 621 that would continue to define during fiscal year 2011 "payment of cash in advance" under the Trade Sanctions Reform and Export Enhancement Act of 2000 as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser. This would extend a similar provision for FY2010. For entries from 2010 and 2009, see Appendix A . Raúl Castro officially became Cuba's president on February 24, 2008. On that day, Cuba's legislature selected him as president of the 31-member Council of State, a position that officially made him Cuba's head of government and state. Most observers expected this since he already had been heading the Cuban government on a provisional basis since July 2006 when his brother Fidel Castro, Cuba's long-ruling communist leader, stepped down as president because of poor health. For many years, Raúl, as first vice president of the Council of State and the Council of Ministers, had been the officially designated successor and was slated to become chief of state with Fidel's departure. Raúl also had served as Minister of the Revolutionary Armed Forces (FAR) since the beginning of the Cuban Revolution. When Fidel stepped down from power in late July 2006 because of poor health, he signed a proclamation that ceded political power to Raúl on a provisional basis, including the positions of first secretary of the Cuban Communist Party (PCC), commander in chief of the Revolutionary Armed Forces (FAR), and president of the Council of State. Despite the change in government in February 2008, Fidel still holds the official title of first secretary of the PCC. While it was not a surprise to observers for Raúl to succeed his brother Fidel as head of government, the selection of José Ramón Machado Ventura as the Council of State's first vice president was a surprise. Born in 1930, Machado is a physician by training and is part of the older generation of so-called históricos of the 1959 Cuban revolution (Fidel Castro was born on August 13, 1926, while Raúl Castro was born on June 3, 1931). He has been described as a hard-line communist party ideologue, and reportedly has been a close friend and confident of Raul for many years. Machado's position is significant because it makes him the official successor to Raúl, according to the Cuban Constitution. Many observers had expected that Carlos Lage, one of five other vice presidents on the Council of State, would have been chosen as first vice president. Born in 1951, Lage was responsible for Cuba's economic reforms in the 1990s, and represented a younger generation of Cuban leaders. Several key military officers and confidants of Raúl also became members of the Council, increasing the role of the military in the government. General Julio Casas Regueiro, who already was on the Council, became one of its five vice presidents. Most significantly, Casas, who had been first vice minister in the FAR, was selected by Raúl as the country's new minister of the FAR, officially replacing Raúl in that position. Casas also is chairman of GAESA (Grupo de Administracion Empresarial, S.A.), the Cuban military's holding company for its extensive business operations. Two other military appointments to the Council were Gen. Alvaro López Miera, the army's chief of staff, and Gen. Leopoldo Cintra Frías, who commanded the Western army, one of Cuba's three military regions. Until Fidel stepped down in 2006, he had ruled the island nation since the 1959 Cuban Revolution, which ousted the corrupt government of Fulgencio Batista. In April 1961, Castro stated that the Cuban Revolution was socialist, and in December 1961, he proclaimed himself to be a Marxist-Leninist. From 1959 until 1976, Castro ruled by decree. A Constitution was enacted in 1976 setting forth the PCC as the leading force in state and society, with power centered in a Political Bureau headed by Fidel Castro. In October 1997, the Cuban Communist Party held its 5 th Congress (the prior one was held in 1991) in which the party reaffirmed its commitment to a single party state and reelected Fidel and Raúl Castro as the party's first and second secretaries. Cuba's Constitution also outlines national, provincial, and local governmental structures. Legislative authority is vested in a National Assembly of People's Power that meets twice annually for brief periods. When the Assembly is not in session, a Council of State, elected by the Assembly, acts on its behalf. According to Cuba's Constitution, the president of the Council of State is the country's head of state and government. Executive power in Cuba is vested in a Council of Ministers, also headed by the country's head of state and government, that is, the president of the Council of State. From the promulgation of the 1976 Constitution until February 24, 2008, Fidel served as head of state and government through his position as president of the Council of State. Although National Assembly members were directly elected for the first time in February 1993, only a single slate of candidates was offered. Direct elections for the National Assembly were again held in January 1998 and January 2003, but voters again were not offered a choice of candidates. In contrast, municipal elections at the local level are competitive, with from two to eight candidates. To be elected, the candidate must receive more than half of the votes cast. As a result, runoff elections between the two top candidates are common. National Assembly elections were held on January 20, 2008 (along with elections for 1,201 delegates to 14 provincial assemblies), and Fidel Castro was once again among the candidates elected to the now 614-member legislative body. As in the past, voters were only offered a single slate of candidates. On February 24, 2008, the new Assembly was scheduled to select from among its ranks the members of the Council of State and its president. Many observers speculated that because of his poor health, Fidel would choose not be re-elected as president of the Council of State, which would officially confirm his departure from heading the Cuban government. Statements from Castro himself in December 2007 hinted at his potential retirement. That proved true on February 19, 2008, when Fidel announced that he would not accept the position as president of the Council of State, essentially confirming his departure as titular head of the Cuban government. Before Fidel stepped down from power in July 2006 for health reasons, observers discerned several potential scenarios for Cuba's future after Fidel. These fit into three broad categories: the continuation of a communist government; a military government; or some type of democratic government, whether it be a democratic transition or fully democratic government. According to most observers, the most likely scenario, at least in the short term, was the continuation of the regime under the leadership of Raúl. This was likely for a variety of reasons, but especially because of Raúl's designation by Fidel as successor in the party and his position as leader of the FAR. The FAR has been in control of the government's security apparatus since 1989 and has played an increasing role in Cuba's economy through the ownership of numerous business enterprises. The scenario of a military-led government was viewed by some observers as a possibility only if a successor communist government failed because of divisiveness among leaders or political instability. For many observers, the least likely scenario upon Fidel's death or departure was a democratic transition government. With a strong totalitarian security apparatus, the Castro government successfully impeded the development of independent civil society, with only a small and tightly regulated private sector, no independent labor movement, and no unified political opposition. In early March 2009, President Raúl Castro orchestrated a government shake-up that combined four ministries into two and ousted a dozen high-ranking officials, most notably including Foreign Minister Felipe Pérez Roque, Council of Ministers Secretary Carlos Lage, and Minister of Economy and Planning José Luis Rodriguez García. The streamlining combined the portfolios of food and fishing into one ministry and the foreign investment and trade portfolios into another ministry. Changes in the bureaucracy had been anticipated since February 2008 when Raúl Castro vowed to make the government smaller and more efficient, but the ouster of both Felipe Pérez Roque and Carlos Lage, who lost all their government and party positions, caught many observers by surprise. Pérez Roque was replaced by career diplomat Bruno Rodriguez Parrilla, who served for eight years (1995-2003) as Cuba's U.N. Ambassador and most recently served as vice foreign minister. Carlos Lage, who most significantly lost his position as a vice president of the Council of State, was replaced by military General José Amado Guerra, who had worked for Raúl Castro as secretary of the FAR. What was unexpected about the simultaneous ouster of both Pérez Roque and Lage was that they represented different tendencies within Cuba's communist political system. Pérez Roque, a former private secretary to Fidel, was known as a hardliner, while Carlos Lage, who was responsible for Cuba's limited economic reforms in the 1990s, was viewed as a potential economic reformer. Some observers maintain that the ouster of both Pérez Roque and Lage was a move by Raúl to replace so-called Fidelistas with his own supporters. Fidel, however, wrote in one of his reflections in the Cuban press that both officials had been seduced by ambitions for power, and that a majority of the other officials who were replaced by Raúl had not originally been appointed by Fidel. Along these lines, a number of observers maintain that the ouster of Pérez Roque and Lage had more to do with removing potential contenders for power in a post-Castro Cuba. What appears clear from the government shake-up is that Raúl Castro begun putting his mark on the Cuban government bureaucracy. Some observers contend that Raúl was moving forward with his pledge to make the government more efficient. According to this view, ideology did not play a role in the appointments, and several of those brought in as ministers were relatively unknown technocrats. The new appointments also continued the trend toward bringing more military officials into the government. In addition to Gen. José Amado Guerra becoming Secretary of the Council of Ministers, another military official, General Salvador Pardo Cruz, became minister of the steelmaking industry. Three other military officials already head the ministries of the FAR, Interior, and Agriculture. Since Fidel stepped down from power in 2006, Cuba's political succession from Fidel to Raúl Castro has been characterized by a remarkable degree of stability. Although initially there were not any significant economic changes under Raúl, there were signs that changes could be coming. In a July 2007 speech, Raúl maintained that structural changes were needed in the Cuban economy in order to increase efficiency and production. In his first speech as president in February 2008, Raúl promised to make the government smaller and more efficient, to review the potential revaluation of the Cuban peso, and to eliminate excessive bans and regulations that curb productivity. In March and April 2008, the government implemented a number of economic changes that from the outside might not seem significant, but were noteworthy policy changes for a government that has heretofore followed a centralized communist economic model. The government also began some reform efforts in the agriculture sector beginning in 2008 in an effort to boost food production, but the results have been disappointing. Until recently, there was dissatisfaction that more reforms were not forthcoming, but as discussed below, the government announced a significant series of reforms in September 2010 designed to reduce the public sector (by half a million over the next six months) and to increase private enterprise by authorizing more areas for self-employment. (See " Economic Changes Under Raúl " below.) In the political sphere, however, few expect there will be any change to the government's tight control over the political system, which is backed up by a strong security apparatus. Some observers point to the significantly reduced number of political prisoners over the past several years as evidence of a lessening of repression, but while human rights activists welcome the release, some maintain that the overall situation has not improved, with the government resorting to short term detentions and other forms of intimidation. Originally, the PCC's sixth congress was expected to be held at end of 2009 (the last was held in 1997), but the party postponed it, with Raúl Castro maintaining that additional and extensive preparation was needed for the meeting. Observers maintain that Cuba's poor economic situation prompted the postponement of the congress. In early November 2010, however, Raúl Castro announced that the sixth party congress would be held in April 2011. The President maintained that the congress would concentrate on the economy, with decisions on updating the Cuban economic model, and outlining the economic and social policy of the party and the revolution. While some analysts had speculated that Fidel Castro would be officially replaced as head of the party during the congress, and that it was likely that some of the PCC's 25-member Political Bureau (Politburo) would also be replaced, Raúl Castro maintained that decisions regarding the party's leadership would be postponed until the end of the year when a party conference would be held. Cuba has a poor record on human rights, with the government sharply restricting freedoms of expression, association, assembly, movement, and other basic rights. It has cracked down on dissent, arrested human rights activists and independent journalists, and staged demonstrations against critics. Some observers anticipated a relaxation of the government's oppressive tactics in the aftermath of the January 1998 visit of Pope John Paul II, but government attacks against human rights activists and other dissidents have continued since that time. The Cuban government conducted a severe crackdown in March 2003 (often referred to as the Primavera Negra , or Black Spring) and imprisoned 75 democracy activists, including independent journalists and librarians and leaders of independent labor unions and opposition parties. In May 2010, however, Cuba's Catholic Cardinal Jaime Ortega met with President Castro in talks that led to the release of several political prisoners. After a subsequent meeting on July 7, 2010, along with visiting Spanish Foreign Minister Miguel Ángel Moratinos, the Church announced that authorities would free 52 political prisoners, with 5 to be released soon and 47 others over the next 3 to 4 months. By the end of 2010, human rights groups estimated that around 100 political prisoners remained. (See discussion of " Political Prisoners " below.) The Inter-American Commission on Human Rights maintained in its 2008 annual human rights report that the Cuban government's "restrictions on political rights, freedom of expression, and dissemination of ideas have created, over a period of decades, a situation of permanent and systematic violations of the fundamental rights of Cuban citizens, which is made notably worse by the lack of independence of the judiciary." Cuba signed two U.N. human rights treaties in 2008: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights. Some considered this a positive step, but others maintain that the Cuban government has not taken any significant action to guarantee civil and political freedoms. In March 2008, the Cuban government did lift the ban on Cubans staying at tourist hotels. Although few Cubans will be able to afford the cost of staying in such hotels, the move was symbolically significant and ended the practices of what critics had dubbed "tourism apartheid." On December 17, 2008, Cuban President Raúl Castro offered to exchange some imprisoned Cuban political dissidents for five Cubans imprisoned in the United States since 2001 for espionage. The so-called "Cuban five" are serving sentences ranging from 15 years to life. (For additional background, see " Cuban Spies in the United States " below.) In response, the State Department rejected the offer, insisting that the jailed dissidents in Cuba should be released immediately without any conditions. Human Rights Watch issued a report in November 2009 criticizing Cuba's human rights record under the government of Raúl Castro. According to the report, Raúl has kept Cuba's repressive machinery in place, with scores of political prisoners languishing in jail and the use of "draconian laws and sham trials to incarcerate scores more who have dared to exercise their fundamental freedoms." In particular, the report notes that the Cuban government has relied on a "dangerousness" provision of the Cuban criminal code that allows the state to imprison individuals before they have committed a crime. According to the State Department's human rights report for 2009, issued in March 2010, the Cuban government continued to commit numerous serious abuses during the year. Among the human rights problems cited in the State Department report were "beatings and abuse of prisoners and detainees, harsh and life-threatening prison conditions, including denial of medical care; harassment, beatings, and threats against political opponents by government-recruited mobs, police, and state security officials acting with impunity; arbitrary arrest and detention of human rights advocates and members of independent professional organizations; and denial of fair trial, including for at least 194 political prisoners and as many 5,000 persons who have been convicted of potential 'dangerousness' without being charged with any specific crime." As noted in the report, Cuban authorities engaged in pervasive monitoring of private communications and severely limited freedoms of speech and press, peaceful assembly, and association and freedom of movement. (See the full State Department human rights report on Cuba, available at http://www.state.gov/g/drl/rls/hrrpt/2009/wha/136108.htm .) Amnesty International published a report in late June 2010, Restrictions on Freedom of Expression in Cuba , which concluded that the Cuban government "continues to resort to repressive tactics and criminal proceeding to restrict and punish the free expression of opinions." According to the report, Cuba's laws severely restrict the legitimate exercise of free expression in violation of international human rights standards while the judiciary, which lacks impartiality and independence, is complicit in the repression of human rights and fundamental freedoms. The report called on Cuba to make changes to its laws and practices restricting freedom of expression, end the harassment of dissidents, ratify the U.N. human rights treaties that it signed in 2008, and allow U.N. and OAS human rights officials access to visit Cuba with unfettered access to all individuals and groups of civil society. While Cuban authorities have continued to stifle dissent and repress freedoms, pro-democracy and human rights activists continue to call attention to Cuba's poor human rights record and many have been recognized over the years by the international community for their efforts. A human rights group known as the Ladies in White ( Damas de Blanco ) was formed in April 2003 by the wives, mothers, daughters, sisters, and aunts of the members of the "group of 75" dissidents arrested a month earlier in Cuba's human rights crackdown. The group conducts peaceful protests calling for the unconditional release of political prisoners. Dressed in white, its members attend Mass each Sunday at St. Rita's Church in Havana and then walk silently through the streets to a nearby park. In April 2008, 10 members of the Ladies in White were physically removed from a park near the Plaza of the Revolution in Havana when they demanded the release of their husbands and the other members of the "group of 75" still imprisoned. The group held protests during the third week of March 2010 to commemorate the March 2003 crackdown. Cuban security forces and government-orchestrated mobs forcefully broke up the protests on March 16 and 17, while protests on other days were subject to verbal abuse by mobs. In April, the Ladies in White were prevented from conducting their weekly protests by government-orchestrated mobs. Through the intercession of Roman Catholic Cardinal Jaime Ortega, the Cuban government ended the harassment in early May 2010 and allowed the Ladies in White to continue with their weekly marches. Cuban Internet blogger Yoaní Sánchez has received considerable international attention since late 2007 for her website, Generación Y, which includes commentary critical of the Cuban government. In May 2008, Sánchez was awarded Spain's Ortega y Gasset award for digital journalism, but the Cuban government did not provide her with an exit permit to accept the award. (Sánchez's website is available at http://www.desdecuba.com/generaciony/ ). On November 6, 2009, Sánchez and two other bloggers, Orlando Luis Pardo and Claudia Cadelo, were intercepted by state security agents while walking on a Havana street on their way to participate in a march against violence. Sánchez and Pardo were beaten in the assault. The Department of State issued a statement deploring the assault, and expressed its deep concern to the Cuban government for the incident. The death of imprisoned Cuban dissident Orlando Zapata Tamayo on February 23, 2010, after an 83-day hunger strike focused increased U.S. and world attention on the plight of Cuba's political prisoners. Zapata, who was 42 years old at the time of his death, was arrested on March 20, 2003, while taking part in a hunger strike to demand the release of political prisoner Oscar Biscet. He was a member of the Alternative Republican Movement and the National Civic Resistance Committee. Zapata was not counted among the "group of 75" political prisoners arrested in 2003, but in January 2004, Amnesty International declared that he was a prisoner of conscience. In May 2004, Zapata was sentenced to three years in prison for "disrespect, public disorder, and resistance," but he was subsequently tried on further charges and was serving a total sentence of 36 years. U.S. officials maintained that Zapata's death highlighted the injustice of Cuba's holding of more than 200 political prisoners and called for their immediate release. President Obama issued a statement on March 24, 2010, expressing deep concern about the human rights situation in Cuba, including the death of Zapata, the repression of the Ladies in White, and increased harassment of those who dare to express the desires of their fellow Cuban citizens. The President called for the end of repression, the immediate and unconditional release of all political prisoners, and respect for the basic rights of the Cuban people. On March 18, 2010, the Senate approved S.Con.Res. 54 (Nelson, Bill), which recognized Zapata's life and called for a continued focus on the promotion of internationally recognized human rights in Cuba. Similar resolutions have been introduced in the House: H.Con.Res. 251 (McGovern) and H.Con.Res. 252 (Ros-Lehtinen). Zapata' s death also prompted considerable criticism from human rights organizations and other countries. Amnesty International expressed strong criticism of the death of Zapata, which it maintained was an "indictment of the continuing repression of political dissidents in Cuba." It called for Cuba to invite international human rights experts to visit Cuba to verify respect for human rights. The European Parliament condemned the death of Zapata and called for the "immediate and unconditional release of political prisoners," and even Spain, which had been lobbying the European Union for a relaxation of its common policy on Cuba, urged the release of Cuban political prisoners. Chile and Costa Rica also criticized Cuba for Zapata's death, and Mexico expressed concern for the health of Cuban dissidents. President Raúl Castro said that he regretted Zapata's death, but also maintained that no one has been tortured or murdered in Cuba. Zapata's death prompted protests by other dissidents and several dissidents vowed to undertake hunger strikes. Cuban dissident Guillermo Fariñas began a hunger strike on February 24, 2010, calling for the release of 26 political prisoners who were reported to be in ill health. Fariñas had undertaken numerous other hunger strikes over the years, but he developed complications and a blood clot that drove him near death before he ended the strike on July 8, 2010, after Cuba announced that it would release 52 political prisoners (see discussion below). The independent Havana-based Cuban Commission on Human Rights and National Reconciliation (CCDHRN) documented in its July 5, 2010, report that Cuba held at least 167 political prisoners, down significantly from the 201 prisoners documented in January 2010. The figures reflect a continuing decline from previous years when the commission estimated at least 205 prisoners at the beginning of 2009, 283 prisoners at the beginning of 2007, and 333 at the beginning of 2006. Despite the reduction in the number of prisoners, human rights activists maintain that the overall situation has not improved. As noted in the commission's most recent report, the government has adopted lower-profile tactics of political repression against human rights activists over the past several years, including arbitrary short-term detentions and other forms of harassment or intimidation. The commission estimated that there were thousands of people imprisoned under the charge of "social dangerousness," which allows detention of those who authorities think will commit a crime. As noted above, the State Department estimates that there are 5,000 Cubans imprisoned under this charge. Since May 2010, Cuba's Catholic Church has played a key role that has led to the release of political prisoners. On May 19, 2010, Cardinal Jaime Ortega, Archbishop of Havana, and Archbishop Dionisio Garcia from Santiago met with President Castro, the first such meeting to take place since Raúl officially took over the presidency from his brother. The Church leaders described the meeting as positive, and said that discussion included the status of imprisoned dissidents. Reports soon surfaced that the government was going to move sick political prisoners to facilities near their home provinces. By the end of June, the government had released seven political prisoners and also begun transferring a number of other political prisoners closer to their homes. On July 7, 2010, Cardinal Ortega met again with President Castro along with visiting Spanish Foreign Minister Miguel Ángel Moratinos and Cuban Foreign Minister Bruno Rodríguez. After the meeting, Cuba's Catholic Church announced that Cuban authorities would free 52 political prisoners, with 5 to be released soon and 47 others over the next 3 to 4 months. The prisoners are those remaining of the "group of 75" imprisoned during Cuba's so-called Black Spring of March 2003. Notably, a press release from the Archdiocese of Havana announcing the release was printed in the Cuban daily Granma . Since October 2010, the Catholic Church has announced that additional prisoners were being released beyond the 52 who the government had agreed in July to release within 3 to 4 months. By late December 2010, Cuba had released 57 political prisoners, with 56 agreeing to go to exile in Spain and 1 released on humanitarian parole to remain in Cuba. This included 41 of the 52 prisoners that the government agreed in July to release. According to Cardinal Ortega, some of the remaining 11 political prisoners want to stay in Cuba and some want to travel to the United States. In early January 2011, Cardinal Ortega maintained that he expected the remaining 11 would be released in the coming months. Human rights groups estimate that there are around 100 remaining political prisoners in the country. While human rights organizations viewed positively the news that 52 political prisoners would be released, some qualified their statements. Amnesty International called for the dissidents' immediate release instead of waiting three to four months. Human Rights Watch called for the release of all remaining political prisoners as well as the dismantling of Cuba's authoritarian laws and practices. Upon hearing of the Church's initial announcement of the prisoner release in July 2010, Secretary of State Clinton said that it was "a positive sign" and that the United States welcomed it. The State Department subsequently issued a statement welcoming the announcement by Cardinal Ortega that the prisoners would be released, and lauding the efforts of the Cuban Catholic Church, Spain, and others who have worked toward the release of Cuba's prisoners of conscience. The State Department maintained that "this is a positive development that we hope will represent a step towards increased respect for human rights and fundamental freedoms in Cuba," while also calling for the immediate and unconditional release of all political prisoners. The State Department also stated that "all those released from prison should be free to decide for themselves whether to remain in Cuba or travel to another country." After the collapse of the former Soviet Union, Russian financial assistance to Cuba practically ended, and as a result, Cuba experienced severe economic deterioration from 1989-1993, with estimates of economic decline ranging from 35%-50%. Since then, however, there has been considerable improvement. From 1994-2000, as Cuba moved forward with some limited market-oriented economic reforms, economic growth averaged 3.7% annually. Economic growth was strong in the 2005-2007 period, registering an impressive 11.2% in 2005 (despite widespread damage caused by Hurricanes Dennis and Wilma), 12.1% in 2006, and 7.3% in 2007. The economy benefitted from the growth of the tourism, nickel, and oil sectors, and support from Venezuela and China in terms of investment commitments and credit lines. Cuba also benefits from a preferential oil agreement with Venezuela, which provides Cuba with more than 90,000 barrels of oil a day. The market value of Venezuela's oil to Cuba reportedly amounted to over $2 billion annually in 2006 and 2007, and over $3 billion in 2008. Venezuela also helped Cuba upgrade an oil refinery in Cienfuegos, which was inaugurated in 2007. In 2008, economic growth slowed to an estimated 4.1%. This was prompted by several problems, including the declining price of nickel, which accounts for a major share of Cuba's exports, the rising cost of food imports, and the devastation wrought by Hurricanes Gustav and Ike, particularly in the agricultural sectors. The global financial crisis had a negative effect on the Cuban economy in 2009 because of lower world prices for nickel and a reduction in tourism from Canada and Europe. As a result, economic growth slowed to 1.4% in 2009 while the estimate for 2010 is for 1.5% growth. In 2009, the government announced austerity measures that included energy rationing and cutbacks in transportation and some food programs. Over the years, Cuba has expressed pride for the nation's accomplishments in health and education. According to the U.N. Development Program's 2010 Human Development Report, life expectancy in Cuba in 2010 was 79 years and adult literacy was estimated at almost 100%. Cuba has also boasted a 2009 infant mortality rate of 4.8 per 1,000 live births. When Cuba's economic slide began in 1989, the government showed little willingness to adopt any significant market-oriented economic reforms, but in 1993, faced with unprecedented economic decline, Cuba began to change policy direction. Beginning in 1993, Cubans were allowed to own and use U.S. dollars and to shop at dollar-only shops previously limited to tourists and diplomats. Self-employment was authorized in more than 100 occupations in 1993, most in the service sector, and by 1996 that figure had grown to more than 150 occupations. Also in 1993, the government divided large state farms into smaller, more autonomous, agricultural cooperatives (Basic Units of Cooperative Production, UBPCs). It opened agricultural markets in 1994, where farmers could sell part of their produce on the open market, and it also permitted artisan markets for the sale of handicrafts. In 1995, the government allowed private food catering, including home restaurants ( paladares) , in effect legalizing activities that were already taking place, and approved a new foreign investment law that allows fully owned investments by foreigners in all sectors of the economy with the exception of defense, health, and education. In 1996, it authorized the establishment of free trade zones with tariff reductions typical of such zones. In 1997, the government enacted legislation to reform the banking system and established a new Central Bank (BCC) to operate as an autonomous and independent entity. After Cuba began to recover from its economic decline, the government began to backtrack on some of its reform efforts. Regulations and new taxes made it extremely difficult for many of the nation's self-employed. Some home restaurants were forced to close because of the new regulations. In 2004, the Cuban government limited the use of dollars by state companies for any services or products not considered part of their core business. Some analysts viewed the measure as an effort to turn back the clock on economic reform measures. Also in 2004, Fidel Castro announced that U.S. dollars no longer would be used in entities that at the time accepted dollars (such as stores, restaurants, and hotels). Instead, dollars had to be exchanged for "convertible pesos," with a 10% surcharge for the exchange. Dollar bank accounts are still allowed, but Cubans are not able to deposit new dollars into the accounts. Beginning in April 2005, convertible pesos were no longer on par with the U.S. dollar, but instead were linked to a basket of foreign currencies. This reduces the value of dollar remittances sent to Cuba and provides more hard currency to the Cuban government. When Raúl Castro assumed provisional power in July 2006, there was some expectation that the government would be more open to economic policy changes, and a debate about potential economic reforms re-emerged in Cuba. On July 26, 2007, in a speech commemorating Cuba's revolutionary anniversary, Raúl Castro acknowledged that Cuban salaries were insufficient to satisfy needs, and maintained that structural changes were necessary in order to increase efficiency and production. In the aftermath of Raúl's July 2007 speech, Cuban public expectations for economic reform increased. Thousands of officially sanctioned meetings were held in workplaces and local PCC branches around the country where Cubans were encouraged to air their views and discuss the future direction of the country. Complaints focused on low salaries and housing and transportation problems, and some participants advocated legalization of more private businesses. Raised expectations for economic change in Cuba increased the chance that the government actually would adopt some policy changes. Doing nothing would run the risk of increased public frustration and a potential for social unrest. Increased public frustration was evident in a clandestine video, widely circulated on the Internet in early February 2008, of a meeting between Ricardo Alarcón, the head of Cuba's legislature, and university students in which a student was questioning why Cuban wages are so low and why Cubans are prohibited from visiting tourist hotels (a policy subsequently changed in late March 2008) or traveling abroad. The video demonstrated the disillusionment of many Cuban youth with the poor economic situation and repressive environment in Cuba. After Raúl Castro officially assumed the presidency in 2008, his government announced a series of economic changes. In his first speech as president in February 2008, Raúl promised to make the government smaller and more efficient, to review the potential revaluation of the Cuban peso, and to eliminate excessive bans and regulations that curb productivity. In mid-March, the government announced that restrictions on the sales of consumer products such as computers, microwaves, and DVD and video players would be lifted. In late March, it announced that it would lift restrictions on the use of cell phones. This officially occurred in mid-April. The government also announced in April 2008 that it would begin revamping the state's wage system by removing the limit that a state worker can earn. This was an effort to boost productivity and to deal with one of Cuba's major economic problems: how to raise wages to a level where basic human needs can be satisfied. The promised revamp of the wage system, however, has been delayed, reportedly by poor preparation and bureaucratic hurdles. The problem of low wages in Cuba is closely related to another major economic problem: how to unify the two official currencies circulating in the country—the Cuban convertible peso (CUC) and the Cuban peso, which traded at about 24 to 1 CUC in 2008. Most people are paid in Cuban pesos, and the minimum monthly wage in Cuba is about 225 pesos (about $9 U.S. dollars ), but for increasing amounts of consumer goods, convertible pesos are used. Cubans with access to foreign remittances or who work in jobs that give them access to convertible pesos are far better off than those Cubans who do not have such access. A significant reform effort under Raúl Castro has focused on the agriculture sector, a vital issue because Cuba reportedly imports some two-thirds of its food needs. In an effort to boost food production, the government began in 2008 to give farmers more discretion over how to use their land and what supplies to buy. Decision-making on agriculture reportedly has shifted from the national government to the local municipal level, with government bureaucracy cut significantly. The government also began a program of turning idle land into productive use through a land grant program, whereby private farmers and cooperatives can apply for land. Despite these efforts, it has been reported in 2010 that overall food production is significantly below targets, and shortages of some basic agricultural products have been reported in Havana and elsewhere. Continued problems in the agricultural sector focus on an entrenched system whereby famers depend on the state for fuel, pesticides, fertilizers and other resources in exchange for 70%-80% of what they produce. The government's inability to provide enough resources to farmers has hampered production, and its domination of the distribution process has hampered the delivery of products to market. At the beginning of 2010, there was a hint of forthcoming changes when Cuban Minister of Economy and Planning Marino Murillo reportedly said in January 2010 that "the gigantic paternalist state can no longer be, because there is no longer any way to maintain it." In April 2010, the Cuban government began a pilot project turning over some state-run barber shops and hair salons to their employees. Since September 2010, the Cuban government has announced a series of significant reforms designed to reduce the public sector and increase private enterprise. On September 13, 2010, the government announced that by the end of March 2011 it would identify half a million state workers that would be laid off, with most expected to find work in the expanding private sector. The layoffs reportedly will affect all public sector employees, including in the public service and state-owned enterprises. Over the next five years, a total of 1.2 million state employees would be cut (out of about 4.3 million state workers). On September 24, the government announced an expansion of self-employment, identifying 178 categories of work allowed with 83 of those allowing small businesses to hire non-family members. The self-employment categories cover a wide range of employment from "carpenters, gardeners, artisans, and animal trainers to small businesses such as home-based bed and breakfasts, rental property, restaurants, pizzerias, and snack shops." New tax provisions would generate income for the government and include a new sales tax and social security tax. During the cold war, Cuba had extensive relations with and support from the Soviet Union, with billions in annual subsidies to sustain the Cuban economy that helped fund an activist foreign policy and support for guerrilla movements and revolutionary governments abroad in Latin America and Africa. With the dissolution of the Soviet Union, an end to the cold war, and the loss of Soviet financial support, Cuba was forced to abandon its revolutionary exploits abroad. As its economy reeled from the loss of Soviet support, Cuba was forced to open up its economy and economic relations with countries worldwide, and developed significant economic linkages with Canada, Spain, other European countries, and China. In recent years, Venezuela—under populist President Hugo Chávez—has become a significant source of support for subsidized oil imports and investment. Relations with Russia have also intensified recently, with the visit of Russian President Dmitry Medvedev to Havana in November 2008, the visit of several Russian warships to Cuba in December 2008, and Raúl Castro's visit to Moscow in late January 2009. Chinese President Hu Jintao also visited Cuba in November 2008, signing a dozen agreements. With El Salvador's restoration of relations with Cuba in June 2009, all Latin American nations now have official diplomatic relations with Cuba. Cuba has increasingly become more engaged in Latin America beyond the already close relations with Venezuela. Brazilian President Luiz Inácio Lula da Silva visited Cuba twice in 2008, and Cuba seems especially interested in expanding relations with Brazil. Cuba became a full member of the 23 member Rio Group of Latin American and Caribbean nations in November 2008; some observers see the group, which excludes the United States, as an alternative to the Organization of American States (OAS). Raúl Castro made his first foreign trip as president in December 2008, when he traveled to Venezuela, and then to Bahia, Brazil, where he attended the Latin American and Caribbean Integration and Development Summit, a regional initiative of President Lula. Cuba is an active participant in international forums, including the United Nations and the controversial United Nations Human Rights Council. Cuba hosted the 14 th summit of the Non-aligned Movement (NAM) in 2006, and held the Secretary Generalship of the NAM until its July 2009 summit in Egypt. Cuba is a member of the Bolivarian Alternative for the Americas, (ALBA), a Venezuelan-led integration and cooperation scheme founded as an alternative to U.S. efforts to negotiate a region-wide Free Trade Area of the Americas (FTAA). Cuba was excluded from participation in the OAS in 1962 because of its identification with Marxism-Leninism, but in early June 2009, the OAS overturned the 1962 resolution in a move that could eventually lead to Cuba's reentry into the regional organization. While the Cuban government welcomed the OAS vote to overturn the 1962 resolution, it asserted that it would not return to the OAS. (For additional information on the OAS vote, see " Cuba and the Organization of American States .") In the early 1960s, U.S.-Cuban relations deteriorated sharply when Fidel Castro began to build a repressive communist dictatorship and moved his country toward close relations with the Soviet Union. The often tense and hostile nature of the U.S.-Cuban relationship is illustrated by such events and actions as U.S. covert operations to overthrow the Castro government culminating in the ill-fated April 1961 Bay of Pigs invasion; the October 1962 missile crisis in which the United States confronted the Soviet Union over its attempt to place offensive nuclear missiles in Cuba; Cuban support for guerrilla insurgencies and military support for revolutionary governments in Africa and the Western Hemisphere; the 1980 exodus of around 125,000 Cubans to the United States in the so-called Mariel boatlift; the 1994 exodus of more than 30,000 Cubans who were interdicted and housed at U.S. facilities in Guantanamo and Panama; and the February 1996 shootdown by Cuban fighter jets of two U.S. civilian planes operated by the Cuban American group Brothers to the Rescue, which resulted in the death of four U.S. crew members. Since the early 1960s, U.S. policy toward Cuba has consisted largely of isolating the island nation through comprehensive economic sanctions, including an embargo on trade and financial transactions. The Cuban Assets Control Regulations (CACR), first issued by the Treasury Department in July 1963, lay out a comprehensive set of economic sanctions against Cuba, including a prohibition on most financial transactions with Cuba and a freeze of Cuban government assets in the United States. The CACR have been amended many times over the years to reflect changes in policy, and remain in force today. These sanctions were made stronger with the Cuban Democracy Act (CDA) of 1992 ( P.L. 102-484 , Title XVII) and with the Cuban Liberty and Democratic Solidarity Act of 1996 ( P.L. 104-114 ), the latter often referred to as the Helms/Burton legislation. The CDA prohibits U.S. subsidiaries from engaging in trade with Cuba and prohibits entry into the United States for any sea-borne vessel to load or unload freight if it has been involved in trade with Cuba within the previous 180 days. The Cuban Liberty and Democratic Solidarity Act, enacted in the aftermath of Cuba's shooting down of two U.S. civilian planes in February 1996, combines a variety of measures to increase pressure on Cuba and provides for a plan to assist Cuba once it begins the transition to democracy. Most significantly, the law codified the Cuban embargo, including all restrictions under the CACR. This provision is especially noteworthy because of its long-lasting effect on U.S. policy options toward Cuba. The executive branch is circumscribed in lifting or substantially loosening the economic embargo without congressional concurrence until certain democratic conditions are met, although the CACR includes licensing authority that provides the executive branch with some administrative flexibility (e.g., travel-related restrictions in the CACR have been eased and tightened on numerous occasions). Another significant sanction in the law is a provision in Title III that holds any person or government that traffics in U.S. property confiscated by the Cuban government liable for monetary damages in U.S. federal court. Acting under provisions of the law, however, both President Clinton and President Bush have suspended the implementation of Title III at six-month intervals. In addition to sanctions, another component of U.S. policy, a so-called second track, consists of support measures for the Cuban people. This includes U.S. private humanitarian donations, medical exports to Cuba under the terms of the Cuban Democracy Act of 1992, U.S. government support for democracy-building efforts, and U.S.-sponsored radio and television broadcasting to Cuba. In addition, the 106 th Congress approved the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 , Title IX) that allows for agricultural exports to Cuba, albeit with restrictions on financing such exports. This led to the United States becoming Cuba's largest supplier of food and agricultural products since 2002. Over the years, although U.S. policymakers have agreed on the overall objectives of U.S. policy toward Cuba—to help bring democracy and respect for human rights to the island—there have been several schools of thought about how to achieve those objectives. Some have advocated a policy of keeping maximum pressure on the Cuban government until reforms are enacted, while continuing efforts to support the Cuban people. Others argue for an approach, sometimes referred to as constructive engagement, that would lift some U.S. sanctions that they believe are hurting the Cuban people, and move toward engaging Cuba in dialogue. Still others call for a swift normalization of U.S.-Cuban relations by lifting the U.S. embargo. Legislative initiatives introduced over the past decade have reflected these three policy approaches. Dating back to 2000, there have been significant efforts in Congress to ease U.S. sanctions, with, one or both houses at times approving amendments to appropriations measures that would have eased U.S. sanctions on Cuba. Until March 2009, these provisions were stripped out of final enacted measures, in part because of presidential veto threats. In light of Fidel Castro's departure as head of government, many observers have called for a re-examination of U.S. policy toward Cuba. In this new context, there are two broad policy approaches to contend with political change in Cuba: a status-quo approach that would maintain the U.S. dual-track policy of isolating the Cuban government while providing support to the Cuban people; and an approach aimed at influencing the attitudes of the Cuban government and Cuban society through increased contact and engagement. In general, those who advocate easing U.S. sanctions on Cuba make several policy arguments. They assert that if the United States moderated its policy toward Cuba—through increased travel, trade, and diplomatic dialogue—then the seeds of reform would be planted, which would stimulate and strengthen forces for peaceful change on the island. They stress the importance to the United States of avoiding violent change in Cuba, with the prospect of a mass exodus to the United States and the potential of involving the United States in a civil war scenario. They argue that since the demise of Cuba's communist government does not appear imminent, even without Fidel Castro at the helm, the United States should espouse a more pragmatic approach in trying to induce change in Cuba. Supporters of changing policy also point to broad international support for lifting the U.S. embargo, to the missed opportunities for U.S. businesses because of the unilateral nature of the embargo, and to the increased suffering of the Cuban people because of the embargo. Proponents of change also argue that the United States should be consistent in its policies with the world's few remaining communist governments, including China and Vietnam, and also maintain that moderating policy will help advance human rights. On the other side, opponents of changing U.S. policy maintain that the current two-track policy of isolating Cuba, but reaching out to the Cuban people through measures of support, is the best means for realizing political change in Cuba. They point out that the Cuban Liberty and Democratic Solidarity Act of 1996 sets forth the steps that Cuba needs to take in order for the United States to normalize relations. They argue that softening U.S. policy at this time without concrete Cuban reforms would boost the Castro government, politically and economically, and facilitate the survival of the communist regime. Opponents of softening U.S. policy argue that the United States should stay the course in its commitment to democracy and human rights in Cuba, and that sustained sanctions can work. Opponents of loosening U.S. sanctions further argue that Cuba's failed economic policies, not the U.S. embargo, are the causes of Cuba's difficult living conditions. The Clinton Administration made several changes to U.S. policy in the aftermath of Pope John Paul II's 1998 visit to Cuba, which were intended to bolster U.S. support for the Cuban people. These included the resumption of direct flights to Cuba (which had been curtailed after the February 1996 shootdown of two U.S. civilian planes), the resumption of cash remittances by U.S. nationals and residents for the support of close relatives in Cuba (which had been curtailed in August 1994 in response to the migration crisis with Cuba), and the streamlining of procedures for the commercial sale of medicines and medical supplies and equipment to Cuba. In January 1999, President Clinton announced several additional measures to support the Cuban people. These included a broadening of cash remittances to Cuba, so that all U.S. residents (not just those with close relatives in Cuba) could send remittances to Cuba; an expansion of direct passenger charter flights to Cuba from additional U.S. cities other than Miami (direct flights later in the year began from Los Angeles and New York); and an expansion of people-to-people contact by loosening restrictions on travel to Cuba for certain categories of travelers, such as professional researchers and those involved in a wide range of educational, religious, and sports activities. The Bush Administration essentially continued the two-track U.S. policy of isolating Cuba through economic sanctions while supporting the Cuban people through a variety of measures. However, within this policy framework, the Administration emphasized stronger enforcement of economic sanctions and further tightened restrictions on travel, remittances, and humanitarian gift parcels to Cuba. There was considerable reaction to the Administration's June 2004 tightening of restrictions for family visits and other categories of travel, and to the Administration's February 2005 tightening of restrictions on payment terms for U.S. agricultural exports to Cuba. Nevertheless, the Bush Administration did not completely eliminate the easing of sanctions that occurred under the Clinton Administration. For example, Americans could still travel to Cuba to participate in educational activities, but these needed to be part of a structured academic program. In October 2003, President Bush called for the establishment of an interagency Commission for Assistance to a Free Cuba, a Cabinet-level commission chaired by then-Secretary of State Colin Powell. The Commission, which had its first meeting in December 2003, was tasked with the objectives of (1) identifying additional means to help the Cuban people bring about an expeditious end to Cuba's dictatorship and (2) considering the requirements for U.S. assistance to a post-dictatorship Cuba. In May 2004, President Bush endorsed the recommendations of the Commission's first report, which made recommendations for immediate measures to "hasten the end of Cuba's dictatorship" as well as longer-term recommendations to help plan for Cuba's transition from communism to democracy in various areas. The President directed that up to $59 million be committed to implement key recommendations of the commission, including support for democracy-building activities and for airborne broadcasts of Radio and TV Marti to Cuba. The report's most significant recommendations included a number of measures to tighten economic sanctions on family visits and other categories of travel and on private humanitarian assistance in the form of remittances and gift parcels. Subsequent regulations issued by the Treasury and Commerce Departments in June 2004 implemented these new sanctions. (The full Commission report is on the State Department website at http://www.state.gov/p/wha/rt/cuba/commission/2004/ .) In February 2005, the Administration continued to tighten U.S. economic sanctions against Cuba by further restricting the process of how U.S. agricultural exporters may be paid for their cash sales, a move opposed by many U.S. agricultural exporters ( For more, see " Agricultural Exports and Sanctions " below.) In July 2005, Secretary of State Condoleezza Rice appointed Caleb McCarry as the State Department's new Cuba Transition Coordinator to direct U.S. government "actions in support of a free Cuba." Secretary Rice reconvened the Commission for Assistance to a Free Cuba in December 2005 to identify additional measures to help Cubans hasten the transition to democracy and to develop a plan to help the Cuban people move toward free and fair elections. In July 2006, the commission issued its second report, making recommendations to hasten political change in Cuba toward a democratic transition. (The full report is available at http://www.cafc.gov/rpt/ .) In the report, the commission called for the United States to provide $80 million over two years for the following: to support Cuban civil society ($31 million); to fund education programs and exchanges, including university training in Cuba provided by third countries and scholarships for economically disadvantaged students from Cuba at U.S. and third country universities ($10 million); to fund additional efforts to break the Cuban government's information blockade and expand access to independent information, including through the Internet ($24 million); and to support international efforts at strengthening civil society and transition planning ($15 million). According to the Cuba Transition Coordinator, this assistance would be additional funding beyond what the Administration is already currently budgeting for these programs. Thereafter, the commission recommended funding of not less than $20 million annually for Cuba democracy programs "until the dictatorship ceases to exist." This would roughly double the amount currently spent on Cuba democracy programs. The report also set forth detailed plans of how the U.S. government, along with the international community and the Cuban community abroad, could provide assistance to a Cuban transition government to help it respond to critical humanitarian and social needs, to conduct free and fair elections, and to move toward a market-based economy. The report also outlined a series of preparatory steps in the areas of government organization, electoral preparation, and anticipating humanitarian and social needs that the U.S. government could take now, before Cuba's transition begins, so that it would be well prepared in the event that assistance was requested by the new Cuban government. The commission's second report received a mixed response from Cuba's dissident community. Although some dissidents, like former political prisoner Vladimiro Roca, maintain that they would welcome any U.S. assistance that helps support the Cuban dissident movement, others expressed concerns about the report. Dissident economist and former political prisoner Oscar Espinosa Chepe stressed that Cubans have to be the ones to solve their own problems. According to Chepe, "We are thankful for the solidarity we have received from North America, Europe, and elsewhere, but we request that they do not meddle in our country." Miriam Leiva, a founding member of the Ladies in White, a human rights organization, expressed concern that the report could serve as a rationale for the government to imprison dissidents. Leiva also faulted the commission's report for presuming what a Cuban transition must be before U.S. recognition or assistance can be provided. According to Leiva, "Only we Cubans, of our own volition ... can decide issues of such singular importance. Cubans on the island have sufficient intellectual ability to tackle a difficult, peaceful transition and reconcile with other Cubans here and abroad." In response to Fidel Castro's announcement that he was temporarily ceding power to his brother Raúl, President Bush issued a statement on August 3, 2006, that "the United States is absolutely committed to supporting the Cuban people's aspiration for democracy and freedom." The President urged "the Cuban people to work for democratic change" and pledged U.S. support to the Cuban people in their effort to build a transitional government in Cuba. At the time, U.S. officials indicated that there were no plans for the United States to "reach out" to the new leader. Secretary of State Condoleezza Rice reiterated U.S. support for the Cuban people in an August 4, 2006, statement broadcast on Radio and TV Marti. According to Secretary Rice, "All Cubans who desire peaceful democratic change can count on the support of the United States." Although there was some U.S. concern that political change in Cuba could prompt a migration crisis, there was no unusual traffic after Castro ceded provisional power to his brother. The U.S. Coast Guard had plans to respond to such a migration crisis, with support from the Navy if needed. In her August 4, 2006, message to the Cuban people, Secretary of State Rice encouraged "the Cuban people to work at home for positive change." Department of Homeland Security officials also announced several measures to discourage Cubans from risking their lives on the open seas. U.S. officials also discouraged those in the Cuban American community wanting to travel by boat to Cuba to speed political change in Cuba. (For more, see " Migration Issues " below.) Raúl Castro asserted in an August 18, 2006, published interview that Cuba has "always been disposed to normalize relations on an equal plane," but at the same time he expressed strong opposition to current U.S. policy toward Cuba, which he described as "arrogant and interventionist." In response, Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon reiterated a U.S. offer to Cuba, first articulated by President Bush in May 2002, that the Administration was willing to work with Congress to lift U.S. economic sanctions if Cuba were to begin a political opening and a transition to democracy. According to Shannon, the Bush Administration remained prepared to work with Congress for ways to lift the embargo if Cuba was prepared to free political prisoners, respect human rights, permit the creation of independent organizations, and create a mechanism and pathway toward free and fair elections. In a December 2, 2006, speech, Raúl reiterated an offer to negotiate with the United States. He said that "we are willing to resolve at the negotiating table the longstanding dispute between the United States and Cuba, of course, provided they accept, as we have previously said, our condition as a country that will not tolerate any blemishes on its independence, and as long as said resolution is based on the principles of equality, reciprocity, non-interference, and mutual respect." On July 26, 2007, in a speech on Cuba's revolutionary anniversary (commemorating the 1953 attack on the Moncada military barracks), Raúl Castro reiterated for the third time an offer to engage in dialogue with the United States, and strongly criticized U.S. trade and economic sanctions on Cuba. A U.S. State Department spokesman responded that "the only real dialogue that's needed is with the Cuban people." In the second half of 2007, President Bush and other U.S. officials continued to call for a transition to democracy in Cuba. In a September 25, 2007, speech before the U.N. General Assembly, President Bush stated that "the long rule of a cruel dictator is nearing its end," and called on the United Nations to insist on free speech, free assembly, and free elections as Cuba "enters a period of transition." U.S. Commerce Secretary Carlos Gutierrez stated in a speech on September 17 that "unless the regime changes, our policy will not," but indicated that the United States is "prepared to respond to genuine democratic change in Cuba." On October 24, 2007, President Bush made a policy speech on Cuba that reflected a continuation of the sanctions-based approach toward Cuba. According to the President, "As long as the [Cuban] regime maintains its monopoly over the political and economic life of the Cuban people, the United States will keep the embargo in place." In his speech, President Bush also sent a message to Cuban military, police, and government officials that "when Cubans rise up to demand their liberty," they have a choice to embrace the Cuban people's desire for change or "defend a disgraced and dying order by using force." The President conveyed to these officials that "there is a place for you in a free Cuba." In the aftermath of Fidel Castro's February 19, 2008, announcement that he was officially stepping down as head of state, President Bush maintained that he viewed "this as a period of transition and it should be the beginning of a democratic transition in Cuba." State Department officials made clear that U.S. policy would not change. On February 24, 2008, the day that Raúl Castro officially became Cuba's head of state, Secretary of State Condoleezza Rice issued a statement urging "the Cuban government to begin a process of peaceful, democratic change by releasing all political prisoners, respecting human rights, and creating a clear pathway towards free and fair elections." In remarks on Cuba policy in early March 2008, President Bush maintained that in order to improve U.S.-Cuban relations, "what needs to change is not the United States; what needs to change is Cuba." The President asserted that Cuba "must release all political prisoners ... have respect for human rights in word and deed, and pave the way for free and fair elections." He reiterated these words again in a speech to the Council of the Americas on May 7, 2008. On May 21, 2008, President Bush called for the Cuban government to take steps to improve life for the Cuban people, including opening up access to the Internet. He also announced that the United States would change regulations to allow Americans to send mobile phones to family members in Cuba. During the electoral campaign, President Obama had pledged to lift restrictions on family travel to Cuba as well as restrictions on Cuban Americans sending remittances to Cuba. At the same time, he also pledged to maintain the embargo as a source of leverage to bring about change in Cuba. However, Obama also asserted that if the Cuban government takes significant steps toward democracy, beginning with the freeing of all political prisoners, then the United States would take steps to normalize relations and ease the embargo. He also maintained that, after careful preparation, his Administration would pursue direct diplomacy with Cuba without preconditions, but only when there is an opportunity to advance U.S. interests and advance the cause of freedom for the Cuban people. In March 2009, Congress took some action ahead of the Administration to change U.S. policy toward Cuba when it approved the FY2009 omnibus appropriations measure ( P.L. 111-8 ). The measure included several provisions easing Cuba sanctions, including restrictions on family travel. Observers had anticipated that President Obama would fulfill his campaign pledges with regard to lifting restrictions on family travel and remittances before the fifth Summit of the Americas in Trinidad and Tobago scheduled for April 17-19, 2009. This in fact occurred on April 13, 2009, when the Obama Administration announced several significant measures to ease U.S. sanctions on Cuba. The President announced that all restrictions on family travel and on remittances to family members in Cuba would be lifted. This superseded the action taken by Congress in March that had essentially reverted family travel restrictions to as they were in 2004 before they were tightened. The Administration also announced that measures would be taken to increase telecommunications links with Cuba and to expand the scope of eligible humanitarian donations through gift parcels. (Both the Treasury and Commerce Department amended the Cuba embargo regulations in early September 2009 to implement these policy changes.) At the Summit of the Americas, President Obama maintained that "the United States seeks a new beginning with Cuba." While recognizing that it will take time to "overcome decades of mistrust," the President said "there are critical steps we can take toward a new day." He stated that he was prepared to have his Administration "engage with the Cuban government on a wide range of issues—from drugs, migration, and economic issues, to human rights, free speech, and democratic reform." The President maintained that he was "not interested in talking just for the sake of talking," but said he believed that U.S.-Cuban relations could move in a new direction. In June 2009, the State Department turned off the electronic billboard at the U.S. Interests Section in Havana that had been had been set up in 2006 and had featured news and pro-democracy messages that irked the Cuban government. Earlier in the year, the Cuban government had taken down anti-U.S. billboards around the U.S. mission. Cuba and the United States also agreed to restart the semi-annual migration talks that had been suspended by the United States in 2004 and to begin new talks on direct postal service between the two countries. To date, three rounds of migration talks have been held, with the most recent held in Washington in June 2010. (For more details, see " Migration Talks " below.) In September 2009, the United States and Cuba held talks in Havana on resuming direct mail service between the two countries. The Department of State expressed satisfaction with the talks, which included discussion on issues related to the transportation, quality, and security of mail service. According to the State Department, both sides agreed that they would meet again after consultations with their governments. There reportedly has been working level discussion and cooperation on the issue, but no new talks have been scheduled. In early December 2009, Alan Gross, an American subcontractor working on USAID-funded Cuba democracy projects in Cuba was arrested in Havana. He was reported to have distributed communications equipment such as cell phones and laptops. Cuban officials claimed that the subcontractor was a spy, but U.S. officials strongly denied that he was working with the U.S. intelligence services. Members of Congress have raised considerable concern about Mr. Gross's detention. In June 2010, Secretary of State Clinton has said that Mr. Gross's detention is harming U.S.-Cuban relations, and that his release would be viewed favorably. On December 3, 2010, the one-year anniversary of Mr. Gross's detention, the State Department issued a statement again calling for his release and maintaining that "the continued detention of Alan Gross is a major impediment to advancing the dialogue between our two countries." (Also see " December 2009 Detainment of American Subcontractor " below.) Cuban officials had become increasingly critical of the Obama Administration in late 2009. In December 2009, Cuban Foreign Minister Bruno Rodriguez criticized President Obama as "imperial" and "arrogant," which prompted former U.S. drug czar Barry McCaffrey to withdraw from a planned trip to Cuba in early January 2010 to discuss drug trafficking issues. In 2010, the Obama Administration expressed significant concern about the poor human rights situation. In the semi-annual migration talks in February, U.S. officials urged Cuban officials to provide imprisoned hunger striker Orlando Zapata Tamayo with all necessary medical care. After Zapata's death, U.S. officials called attention to the more than 200 political prisoners held by Cuba and called for their immediate release. President Obama issued a statement on March 24, 2010, expressing deep concern about the human rights situation in Cuba, including the death of Zapata, the repression of the Ladies in White, and increased harassment of those who dare to express the desires of their fellow Cuban citizens. He asserted that these events underscore that "Cuban authorities continue to respond to the aspirations of the Cuban people with a clenched fist." The President called for the end of repression, the immediate and unconditional release of all political prisoners, and respect for the basic rights of the Cuban people. The President noted that he has taken steps during the year to reach out to the Cuban people and to signal his desire to seek a new era in relations with the government of Cuba. He asserted that he remains "committed to supporting the simple desire of the Cuban people to freely determine their future and to enjoy the rights and freedoms that define the Americas, and that should be universal to all human beings." In response to the Cuban Catholic Church's July 7, 2010, announcement that 52 political prisoners would be released, Secretary of State Clinton said that it was "a positive sign" and that the United States welcomed it. A subsequent State Department statement maintained that "this is a positive development that we hope will represent a step towards increased respect for human rights and fundamental freedoms in Cuba." In the same statement, the State Department called for the immediate and unconditional release of all political prisoners, and maintained that those released should be able to "decide for themselves whether to remain in Cuba or travel to another country." In August 2010, there were numerous press reports maintaining that the Obama Administration would be taking action to ease travel restrictions further and allow all Americans to send remittances to Cuba. Various reports indicated that the relaxation of the travel regulations would involve looser restrictions on educational and religious travel as well as other types of people-to-people travel. The number of charter flights and U.S. cities (beyond Los Angeles, Miami, and New York) would also reportedly be expanded. Some reports also indicated that restrictions could be eased to make it easier to pay in the United States for telecommunications services in Cuba as a means of increasing telecommunications links among Cuban families. Many of the reported forthcoming policy changes on travel and remittances appeared similar to policy that was in effect during the last years of the Clinton Administration and the early years of the Bush Administration until 2004. By the end of the year, however, the Administration had not announced any of the reported policy changes. As noted above, the State Department issued a statement on the one-year anniversary of the incarceration of USAID subcontractor Alan Gross in December 2010. The statement called for Mr. Gross's release and maintained that his continued detention was a major impediment to advancing dialogue between the United States and Cuba. Restrictions on travel to Cuba have been a key and often contentious component of U.S. efforts to isolate the communist government of Fidel Castro for much of the past 40 years. Over time there have been numerous changes to the restrictions and for five years, from 1977 until 1982, there were no restrictions on travel. Restrictions on travel and remittances to Cuba are part of the CACR, the overall embargo regulations administered by the Treasury Department's Office of Foreign Assets Control (OFAC). Under the Bush Administration, enforcement of U.S. restrictions on Cuba travel increased, and restrictions on travel and on private remittances to Cuba were tightened. In March 2003, the Administration eliminated travel for people-to-people educational exchanges unrelated to academic course work. In June 2004, the Administration significantly restricted travel, especially family travel, and the provision of private humanitarian assistance to Cuba in the form of remittances and gift parcels. As noted above, during the 2008 electoral campaign, Barack Obama pledged to lift restrictions on family travel to Cuba as well as restrictions on Cuban Americans sending remittances to Cuba. Senator Hillary Clinton reiterated President Obama's pledge during her confirmation hearing for Secretary of State in January 2009. In March 2009, Congress took action on its own in the 111 th Congress by including two provisions in the FY2009 omnibus appropriations measure ( P.L. 111-8 ) that ease sanctions on travel to Cuba. As implemented by the Treasury Department, family travel was once again allowed once every 12 months to visit a close relative for an unlimited length of stay, and the limit for daily expenditure allowed by family travelers became the same as for other authorized travelers to Cuba (State Department maximum per diem rate for Havana, currently $179 day). The definition of "close relative" was expanded to mean any individual related to the traveler by blood, marriage, or adoption who is no more than three generations removed from that person. The omnibus measure also included a provision requiring a general license for travel related to the marketing and sale of agricultural and medical goods to Cuba. The Treasury Department's Office of Foreign Assets Control ultimately issued regulations implementing this omnibus provision on September 3, 2009. The regulations require a written report at least 14 days before departure identifying both the traveler and the producer or distributor and describing the purpose and scope of such travel. Another written report is required within 14 days of return from Cuba describing the activities conducted, the persons met, and the expenses incurred. The regulations also require that such travelers under this provision be regularly employed by a producer or distributor of the agricultural commodities or medical products or an entity duly appointed to represent such a producer or distributor. The activity schedules for such travelers cannot include free time, travel, or recreation in excess of that consistent with a full work schedule. On April 13, 2009, the Obama Administration announced several significant measures to ease U.S. sanctions on Cuba. Fulfilling a campaign pledge, President Obama announced that all restrictions on family travel and on remittances to family members in Cuba would be lifted. This significantly superseded the action taken by Congress in March that had essentially reverted family travel restrictions to as they had been before they were tightened in 2004. Under the new policy announced by the Administration in April, there would be no limitations on the frequency or duration of family visits, and the 44-pound limitation on accompanied baggage would be removed. Family travelers would be able to spend the same as allowed for other travelers, up to $179 per day. With regard to family remittances, the previous limitation of no more than $300 per quarter would be removed and there would be no restriction on the amount or frequency of the remittances. Authorized travelers would be able once again carry up to $3,000 in remittances. Regulations for the above policy changes were issued by the Treasury and Commerce Departments on September 3, 2009. As noted above, there were numerous press reports in August 2010 maintaining that President Obama would take further action to ease restrictions on travel and remittances by making it easier to engage in educational, religious, and other types of people-to-people travel and allowing all Americans to send remittances to Cuba. The reported changes appeared similar to policy that was in place from 1999 under the Clinton Administration through mid-2004 under the Bush Administration. By the end of the 111 th Congress, however, the Administration had not announced any policy changes. Major arguments made for lifting the Cuba travel ban are that it abridges the rights of ordinary Americans to travel; it hinders efforts to influence conditions in Cuba and may be aiding Castro by helping restrict the flow of information; and Americans can travel to other countries with communist or authoritarian governments. Major arguments in opposition to lifting the Cuba travel ban are that more American travel would support Castro's rule by providing his government with potentially millions of dollars in hard currency; that there are legal provisions allowing travel to Cuba for humanitarian purposes that are used by thousands of Americans each year; and that the President should be free to restrict travel for foreign policy reasons. Two house hearings were held in the 111 th Congress on the issue of restrictions on travel to Cuba. On November 19, 2009, the House Committee on Foreign Affairs held a hearing on U.S. restrictions on travel to Cuba entitled "Is it Time to Lift the Ban on Travel to Cuba?" that featured former U.S. government officials and other private witnesses. On April 29, 2010, the House Ways and Means Committee, Subcommittee on Trade, held a hearing on U.S.-Cuba policy that examined whether relaxing current Cuba travel and trade restrictions would advance U.S. economic objectives, as well as U.S. political and human rights goals in Cuba. With regard to legislative action, the House Agriculture Committee reported out H.R. 4645 (Peterson) on June 30, 2010, by a vote of 25-20, a bill that would have lifted all restrictions on travel to Cuba and also would have eased restrictions on payment mechanisms for U.S. agricultural exports to Cuba (also see " Agricultural Exports and Sanctions " below). The House Committee on Foreign Affairs was scheduled to hold a markup of the bill on September 29, 2010, but postponed its consideration, and no further action was taken. An identical companion bill in the Senate, S. 3112 (Klobuchar), had been introduced March 15, 2010. Several other legislative initiatives were introduced in the 111 th Congress that would have eased Cuba travel restrictions: H.R. 874 (Delahunt)/ S. 428 (Dorgan) and H.R. 1528 (Rangel) would have prohibited restrictions on travel to Cuba; H.R. 188 (Serrano), H.R. 1530 (Rangel), and H.R. 2272 (Rush), which would have lifted the overall embargo on Cuba, would also have lifted travel restrictions; H.R. 1531 (Rangel)/ S. 1089 (Baucus), which would have removed some restrictions on the export of U.S. agricultural products to Cuba, would also have prohibited Cuba travel restrictions; H.R. 332 (Lee) would have eased restrictions on educational travel; S. 774 (Dorgan), H.R. 1918 (Flake), and S. 1517 (Murkowski) would have allowed for travel related to hydrocarbon exploration and extraction activities. In contrast, H.Con.Res. 132 (Tiahrt) would have called for the fulfillment of certain democratic conditions before the United States increases trade and tourism to Cuba. (For additional information, see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances .) U.S. commercial agricultural exports to Cuba have been allowed for several years, but with numerous restrictions and licensing requirements. The 106 th Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000 or TSRA ( P.L. 106-387 , Title IX) that allows for one-year export licenses for selling agricultural commodities to Cuba, although no U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees are available to finance such exports. TSRA also denies exporters access to U.S. private commercial financing or credit; all transactions must be conducted in cash in advance or with financing from third countries. TSRA reiterates the existing ban on importing goods from Cuba but authorizes travel to Cuba, under a specific license, to conduct business related to the newly allowed agricultural sales. Since 2002, the United States has been Cuba's largest supplier of food and agricultural products. Cuba has purchased over $3.2 billion in agricultural products from the United States since late 2001. Overall U.S exports to Cuba rose from about $7 million in 2001 to $404 million in 2004. U.S. exports to Cuba declined in 2005 and 2006 to $369 million and $340 million, respectively, but increased to $447 million in 2007. In 2008, U.S. exports to Cuba rose to $712 million, 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. The decline was largely related to Cuba's shortage of hard currency. In 2010, U.S. agricultural exports to Cuba have continued to fall. From January through October 2010, U.S. exports to Cuba amounted to $311 million, down 31% from the same period in 2009. Analysts again cite Cuba's shortage of hard currency as the main reason for the decline. In February 2005, OFAC amended the Cuba embargo regulations to clarify that TSRA's term of "payment of cash in advance" means that the payment is received by the seller or the seller's agent prior to the shipment of the goods from the port at which they are loaded. U.S. agricultural exporters and some Members of Congress strongly objected 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. OFAC Director Robert Werner maintained that the clarification "conforms to the common understanding of the term in international trade." On July 29, 2005, OFAC clarified that, for "payment of cash in advance" for the commercial sale of U.S. agricultural exports to Cuba, vessels can leave U.S. ports as soon as a foreign bank confirms receipt of payment from Cuba. OFAC's action was aimed at ensuring that the goods would not be vulnerable to seizure for unrelated claims while still at the U.S. port. Supporters of overturning OFAC's February 22, 2005, amendment, such as the American Farm Bureau Federation, were pleased by the clarification but indicated that they would still work to overturn the February rule. In December 2009, Congress took action in the FY2010 omnibus appropriations measure ( P.L. 111-117 ) to define, during FY2010, "payment of cash in advance" as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser. This overturned OFAC's February 2005 clarification that payment had to be received before vessels could leave U.S. ports. The 111 th Congress did not complete action on FY2011 Financial Services and General Government appropriations legislation, but instead approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which provided funding for federal agencies through March 4, 2011 under conditions provided in enacted FY2010 appropriations measures. Several legislative initiatives introduced in the 111 th Congress would have made permanent the "payment of cash in advance" provision, but no action was completed on these measures. On June 30, 2010, the House Agriculture Committee reported out H.R. 4645 (Peterson), which would have permanently changed the definition of "payment of cash in advance," allowed direct transfers between U.S. and Cuban financial institutions for payment for products sold to Cuba under TSRA, and also would have lifted all restrictions on travel to Cuba. No further action was taken on the measure. The House Committee on Agriculture had held a hearing to review U.S. agricultural sales to Cuba on March 11, 2010. (For more details, see " Legislative Action and Initiatives on Agricultural Sanctions " below.) Some groups favor further easing restrictions on agricultural exports to Cuba. They argue that the restrictions harm the health and nutrition of the Cuban population. U.S. agribusiness companies that support the removal of restrictions on agricultural exports to Cuba believe that U.S. farmers are missing out on a market so close to the United States. Some exporters want to change U.S. restrictions so that they can sell agriculture and farm equipment to Cuba. Agricultural exporters who support the lifting of the prohibition on financing contend that allowing such financing would help smaller U.S. companies expand purchases to Cuba more rapidly. On July 19, 2007, the U.S. International Trade Commission issued a report, requested by the Senate Committee on Finance, maintaining that the U.S. share of Cuba's agricultural, fish, and forest imports would rise from one-third to between one-half and two-thirds if trade restrictions were lifted. (See the full report available at http://www.usitc.gov/ext_relations/news_release/2007/er0719ee1.htm .) Opponents of further easing restrictions on agricultural exports to Cuba maintain that U.S. policy does not deny such sales to Cuba, as evidenced by the large amount of sales since 2001. Moreover, according to the State Department, since the Cuban Democracy Act was enacted in 1992, the United States has licensed billions of dollars in private humanitarian donations. Opponents further argue that easing pressure on the Cuban government would in effect be lending support and extending the duration of the Castro regime. They maintain that the United States should remain steadfast in its opposition to any easing of pressure on Cuba that could prolong the Castro regime and its repressive policies. Some agricultural producers that export to Cuba support continuation of the prohibition on financing for agricultural exports to Cuba because it ensures that they will be paid. The 111 th Congress took action in March 2009 by including two provisions in the FY2009 omnibus appropriations measure ( P.L. 111-8 ) intended to ease sanctions related to the payment terms and travel related to the export of U.S. agricultural products to Cuba. Section 620, Division D, of the FY2009 omnibus measure amended TSRA to require the Secretary of the Treasury to issue regulations for travel to, from, or within Cuba under a general license for the marketing and sale of agricultural and medical goods. Such travel had required a specific license from OFAC, issued on a case by case basis. On March 9, 2009, Secretary of the Treasury Geithner stated in a letter published in the Congressional Record that the regulations issued pursuant to this provision "would provide that the representatives of only a narrow class of businesses would be eligible, under a new general license, to travel to market and sell agricultural and medical goods." The Secretary also maintained that "any business using the general license would be required to provide both advance written notice outlining the purpose and scope of the planned travel and, upon return, a report outlining the activities conducted, including the persons with whom they met, the expenses incurred, and business conducted in Cuba." The regulations ultimately were issued on September 3, 2009, and included the reporting requirements promised by Secretary Geithner. Section 622, Division D, of the FY2009 omnibus measure prohibited funds in the Act from being used to administer, implement, or enforce an amendment to the Cuban embargo regulations on February 25, 2005, requiring that U.S. agricultural exporters using the "payment of cash in advance'" payment mechanism for selling their goods to Cuba must be paid in cash for their goods before the goods leave U.S. ports. As noted above, TSRA requires either the "payment of cash of advance" for such exports (or financing by third country financial institutions), but does not provide a definition of cash in advance. Prior to the February 2005 amendment to the Cuban embargo regulations, U.S. exporters could be paid for the goods before they were unloaded in Cuba. OFAC guidance on the implementation of this provision stated that TSRA's statutory provisions remain in place that agricultural exports to Cuba be either paid for by "cash in advance" or financed using a third-country bank. Secretary of the Treasury Geithner provided additional guidance on the implementation of this provision in a letter published in the Congressional Record that stated that, "exporters will still be required to receive payment in advance of shipment." This continued the Bush Administration policy imposed in February 2005. Given the Secretary's interpretation, this provision had little, if any, practical effect. While the Secretary's response ameliorated the concerns that several Senators had regarding the provision, it also triggered concerns by other Senators who maintained that the Secretary's action ignored the legislative intent of the Cuba provision to ease restrictions on agricultural sales to Cuba. In other significant legislative action in December 2009, Congress included a clarifying provision in the Section 619 of Division C of the Consolidated Appropriations Act, 2010 ( H.R. 3288 / P.L. 111-117 ) related to the issue of payment of cash in advance for U.S. agricultural exports to Cuba. The provision states that during FY2010, the term "payment of cash in advance" as used in TSRA "shall be interpreted as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser." Supporters of the provision maintained that it restored congressional intent on the matter, and will make it easier for U.S. agricultural producers to export to Cuba, while opponents maintain the provision constituted a foreign policy change included in a must-pass spending bill without appropriate congressional consideration. The Administration issued regulations implementing this provision in early March 2010. The regulations maintained that the definition applied to items delivered by September 30, 2010, or delivered pursuant to a contract entered into by September 30, 2010, and shipped within 12 months of the signing of the contract. This "payment of cash in advance" provision had been included in the House version of the FY2010 Financial Services and General Government Appropriations Act, H.R. 3170 , approved on July 16, 2009. The Senate version of the bill, S. 1432 , reported out of committee on July 10, 2009 ( S.Rept. 111-43 ), also had an identical provision. In its report to the bill ( S.Rept. 111-43 ), the Senate Appropriations Committee maintained that it was aware that the Treasury Department was continuing to require the sellers of agricultural goods to Cuba to receive cash payments in advance of shipping rather than in advance of delivering the goods, and asserted that the policy impedes U.S. sales since it increases the cost of doing business. In the report, the committee urged the Treasury Department to use its rulemaking authority to permanently amend the Cuban Assets Control Regulations and remove impediments to U.S. agricultural sales to Cuba. For FY2011, the Senate Appropriations Committee included a provision in the FY2011 Financial Services and General Government Appropriations Act ( S. 3677 , section 621) that would have continued to define during fiscal year 2011 "payment of cash in advance" under TSRA as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser. This would have extended the provision from the FY2010 Consolidated Appropriation Act noted above. The bill was reported out of committee on July 29, 2010 ( S.Rept. 111-238 ), but no further action was taken. While the House Appropriations Committee version of the bill was not officially introduced, the bill reportedly would have included a provision similar to that in the Senate bill regarding payment of cash in advance under TSRA. The 111 th Congress did not complete action on the FY2011 Financial Services and General Government appropriations measure. Instead, it approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which provided funding for federal agencies through March 4, 2011, under conditions provided in enacted FY2010 appropriations measures. This included continuation of the "payment of cash in advance" provision. Several other legislative initiatives in the 111 th Congress would have eased restrictions on the sale U.S. agricultural exports to Cuba. H.R. 188 (Serrano), H.R. 1530 (Rangel), and H.R. 2272 (Rush) would have lifted overall economic sanctions on Cuba, including restrictions on agricultural exports. H.R. 2272 also would have extended nondiscriminatory trade treatment to Cuba. H.R. 1737 (Moran) would have focused on ways to facilitate U.S. agricultural exports to Cuba. The measure would have amended TSRA to clarify the definition of payment of cash in advance so that payments would not have to be made before the goods are shipped from U.S. ports, and would have allowed direct transfers between U.S. and Cuban financial institutions to pay for U.S. agricultural exports. Similar but not identical bills H.R. 1531 (Rangel) and S. 1089 (Baucus) included the same provisions as in H.R. 1737 , but also would have established a U.S. agricultural export promotion program that would be funded by a $1 increase in the airport ticket tax for U.S.-Cuba air travel. Both measures would also have lifted overall restrictions on travel to Cuba. Finally, identical bills H.R. 4645 (Peterson) and S. 3112 (Klobuchar) would have amended TSRA to clarify the definition of payment of cash in advance, authorize direct transfer between Cuban and U.S. financial institutions for sales under TSRA, and prohibit restrictions on travel to Cuba. As noted above, the House Agriculture Committee reported out H.R. 4645 on June 30, 2010, by a vote of 25-20, but no further action was taken on the measure. For over a decade, the United States has imposed a sanction that denies protection for trademarks connected with businesses confiscated from their owners by the Cuban government. A provision in the FY1999 omnibus appropriations measure (Section 211 of Division A, Title II, P.L. 105-277 , signed into law October 21, 1998) prevents the United States from accepting payment for trademark registrations and renewals from Cuban or foreign nationals that were used in connection with a business or assets in Cuba that were confiscated, unless the original owner of the trademark has consented. The provision prohibits U.S. courts from recognizing such trademarks without the consent of the original owner. The measure was enacted because of a dispute between the French spirits company, Pernod Ricard, and the Bermuda-based Bacardi Ltd. Pernod Ricard entered into a joint venture in 1993 with the Cuban government to produce and export Havana Club rum. Bacardi maintains that it holds the right to the Havana Club name because in 1995 it entered into an agreement for the Havana Club trademark with the Arechabala family, who had originally produced the rum until its assets and property were confiscated by the Cuban government in 1960. Although Pernod Ricard cannot market Havana Club in the United States because of the trade embargo, it wants to protect its future distribution rights should the embargo be lifted. The European Union initiated World Trade Organization dispute settlement proceedings in June 2000, maintaining that the U.S. law violates the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). In January 2002, the WTO ultimately found that the trademark sanction violated WTO provisions on national treatment and most-favored-nation obligations in the TRIPS Agreement. On March 28, 2002, the United States agreed that it would come into compliance with the WTO ruling through legislative action by January 3, 2003. That deadline was extended several times since no legislative action had been taken to bring Section 211 into compliance with the WTO ruling. On July 1, 2005, however, in an EU-U.S. bilateral agreement, the EU agreed that it would not request authorization to retaliate at that time, but reserved the right to do so at a future date, and the United States agreed not to block a future EU request. On August 3, 2006, the U.S. Patent and Trademark Office announced that Cuba's Havana Club trademark registration was "cancelled/expired," a week after OFAC had denied a Cuban government company the license that it needed to renew the registration of the trademark. Two different approaches have been advocated to bring Section 211 into compliance with the WTO ruling. Some want a narrow fix in which Section 211 would be amended so that it also applies to U.S. companies instead of being limited to foreign companies. Advocates of this approach argue that it would affirm that the United States "will not give effect to a claim or right to U.S. property if that claim is based on a foreign compensation." Others want Section 211 repealed altogether. They argue that the law endangers over 5,000 trademarks of over 500 U.S. companies registered in Cuba. The House Committee on the Judiciary held a March 2, 2010, hearing on the "Domestic and International Trademark Implications of HAVANA CLUB and Section 211 of the Omnibus Appropriations Act of 2009." (See http://judiciary.house.gov/hearings/hear_100303.html .) Several legislative initiatives were introduced during the 111 th Congress reflecting these two approaches to bring Section 211 into compliance with the WTO ruling, but no action was taken on these measures. Identical bills H.R. 1103 (Wexler) and S. 1234 (Lieberman) would have amended Section 211 with a narrow fix to bring it into compliance with the WTO ruling, while several measures, H.R. 188 (Serrano), H.R. 1530 (Rangel), H.R. 1531 (Rangel), H.R. 2272 (Rush), and S. 1089 would have repealed Section 211 altogether. The July 2005 EU-U.S. bilateral agreement, in which the EU agreed not to retaliate against the United States, but reserved the right to do so at a later date, has reduced pressure on Congress to take action to comply with the WTO ruling. The issue of Cuba's development of its deepwater offshore oil reserves in the Gulf of Mexico has been a concern among some Members of Congress. According to the U.S. Energy Information Administration, industry analysts maintain that there could be at least 1.6 billion barrels of crude oil reserves in Cuba's offshore sector; the U.S. Geological Survey estimated a mean of 4.6 billion barrels of undiscovered oil and 9.8 trillion cubic feet of undiscovered natural gas reserves. In October 2008, an official of Cuba's state oil company, Cubapetróleo (Cupet), maintained there may be more than 20 billion barrels of oil in Cuba's deepwaters, but energy analysts expressed skepticism for such a claim. At present, Cuba has agreements in place for six concessions involving seven foreign oil companies for the exploration of offshore oil and gas. Repsol (Spain), Norsk-Hydro (Norway), and ONGC (India) are partners in a joint project, while ONGC, PdVSA (Venezuela), Petronas (Malaysia), PetroVietnam, and Petrobras (Brazil) have separate concessions. In addition, Cuba is in negotiation with the China National Petroleum Corporation (CNPC) and Angola's Sonangol for offshore leases. Although there have been some claims that China is drilling in Cuba's offshore deepwater oil sector, to date its involvement in Cuba's oil sector has been focused on exploring onshore/close coastal oil extraction in Piñar del Rio province through its state-run China Petroleum and Chemical Corporation (Sinopec). At this juncture, China does not have a concession in Cuba's offshore oil sector in the deepwaters of the Gulf of Mexico, although as noted above, CNPC is reportedly in negotiations for offshore leases. Some Members of Congress have expressed concern about oil development so close to the United States and about potential environmental damage to the Florida coast. The Repsol-led project had plans to drill a second well in August 2009 (the first was drilled in 2004), but this has been postponed and reportedly will take place in early 2011. With the Deepwater Horizon oil spill in the Gulf of Mexico, Cuba had concerns about potential damage from oil reaching its shore and reportedly has been preparing coastal residents who could be affected. U.S. officials in Havana kept the Cuban government informed about the oil spill in working-level discussions. With Cuba's interest in developing its offshore oil resources so close to the United States, some analysts have called for U.S.-Cuban energy and environmental cooperation and planning to minimize potential damage from a future oil spill. In late May 2010, the Administration approved a license for a U.S. company to travel to Cuba to start cooperation on oil safety and environmental practices. Some analysts have called for the Administration to proactively identify, and take action to amend or rescind as required, any regulatory restrictions or prohibitions on the transfer of U.S. equipment, technology, and personnel to Cuba that would be needed to combat an oil spill in Cuba. Some have also called for more formal U.S.-Cuban government cooperation and planning to minimize potential damage from an oil spill. Similar U.S. cooperation with Mexico could be a potential model for U.S.-Cuban cooperation, while two multilateral agreements on oil spills under the auspices of the International Maritime Organization also could provide a mechanism for some U.S.-Cuban engagement on oil pollution preparedness and response. In the 111 th Congress, three measures were introduced that would have allowed for U.S. involvement in Cuba's offshore oil sector, while another measure would have imposed visa restrictions and sanctions on aliens who help facilitate the development of Cuba's petroleum resources. No action was taken on these measures. S. 774 (Dorgan), H.R. 1918 (Flake), and S. 1517 (Murkowski) would have authorized U.S. companies to work with Cuba for the exploration and extraction of oil, and to export without license all necessary equipment. The bills would have amended the Trade Sanctions Reform and Export Enhancement Act of 2000 to provide for a general license for travel by persons engaging in hydrocarbon exploration and extraction activities. H.R. 1918 would also have allowed for the importation of such hydrocarbon resources from Cuba. In contrast, H.R. 5620 (Ros-Lehtinen) would have amended the Cuban Liberty and Democratic Solidarity Act of 1996 to exclude from the United States aliens who invest $1 million or more that contributes to the ability of Cuba to develop its offshore petroleum resources. The bill also would have provided for the imposition of sanctions and prohibition on the facilitation of development of Cuba's petroleum resources. For additional information, see CRS Report R41522, Cuba's Offshore Oil Development: Background and U.S. Policy Considerations . Cuba is not a major producer or consumer of illicit drugs, but its numerous small keys, extensive shoreline, and geographic location make it susceptible to narcotics smuggling operations. Drugs that enter the Cuban market are largely the result of onshore wash-ups from smuggling by high-speed boats moving drugs from Jamaica to the Bahamas, Haiti, and the United States or by small aircraft from clandestine airfields in Jamaica. For a number of years, Cuban officials have expressed concerns over the use of their waters and airspace for drug transit and about increased domestic drug use. The Cuban government has taken a number of measures to deal with the drug problem, including legislation to stiffen penalties for traffickers, increased training for counternarcotics personnel, and cooperation with a number of countries on anti-drug efforts. According to the State Department's March 2010 International Narcotics Control Strategy Report (INCSR) , Cuba maintains that it has some 56 judicial assistance agreements and two memoranda of understanding with other countries related to anti-drug cooperation. For a decade, Cuba's Operation Hatchet has focused on maritime and air interdiction and the recovery of narcotics washed up on Cuban shores. Since 2003, Cuba has aggressively pursued an internal enforcement and investigation program against its incipient drug market with an effective nationwide drug prevention and awareness campaign, Operation Popular Shield. Over the years, there have been varying levels of U.S.-Cuban cooperation on anti-drug efforts. In 1996, Cuban authorities cooperated with the United States in the seizure of 6.6 tons of cocaine aboard the Miami-bound Limerick , a Honduran-flag ship. Cuba turned over the cocaine to the United States and cooperated fully in the investigation and subsequent prosecution of two defendants in the case in the United States. Cooperation has increased since 1999 when U.S. and Cuban officials met in Havana to discuss ways of improving anti-drug cooperation. Cuba accepted an upgrading of the communications link between the Cuban Border Guard and the U.S. Coast Guard as well as the stationing of a U.S. Coast Guard Drug Interdiction Specialist (DIS) at the U.S. Interests Section in Havana. The Coast Guard official was posted to the U.S. Interests Section in September 2000, and since that time, coordination has increased. In the March 2010 INCSR , the State Department reported that some of Cuba's anti-drug operations were undertaken in coordination with the U.S. Coast Guard DIS at the U.S. Interests Section in Havana. It maintained that Cuban authorities have provided the DIS continued access to Cuban counternarcotics efforts, including providing investigative criminal information, such as the names of suspects and vessels; debriefings on drug trafficking cases; visits to the Cuban national canine training center and antidoping laboratory in Havana; tours of Cuban Border Guard facilities and container x-ray equipment at the Port of Havana; and opportunities to meet with the chiefs of Cuba's INTERPOL and Customs offices. Cuba maintains that it wants to cooperate with the United States to combat drug trafficking, and on various occasions has called for a bilateral anti-drug cooperation agreement with the United States. In January 2002, Cuba deported to the United States Jesse James Bell, a U.S. fugitive wanted on drug charges, and in early March 2002, Cuba arrested a convicted Colombian drug trafficker, Rafael Bustamante, who escaped from jail in Alabama in 1992. At the time, then Drug Enforcement Administration head Asa Hutchison expressed appreciation for Cuba's actions, but indicated that cooperation would continue on a case-by-case basis, not through a bilateral agreement. In February 2007, Cuba extradited drug trafficker Luis Hernando Gómez Bustamante to Colombia, an action that drew praise from U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Anne Patterson. Gómez Bustamante was subsequently extradited to the United States in July 2007 to face drug trafficking charges. In April 2008, John Walters, Director of the White House Office of National Drug Control Policy, lauded U.S. anti-drug cooperation with Cuba as a good example of how cooperation has been achieved despite overall political differences between the two countries. In early January 2009, then Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon maintained in an interview with Spain's El País newspaper that a drug trafficking accord with Cuba would be logical, although he could not anticipate what the next Administration would do. In its March 2010 INCSR , the State Department stated that "both nations may gain by pressing forward with expanded cooperation, especially considering Cuba's location in the Caribbean, and the potential for the island and its territorial seas to be utilized for drug transshipments to the United States." Over the past several years, House and Senate versions of Foreign Operations appropriations bills have contained contrasting provisions related to funding for cooperation with Cuba on counternarcotics efforts. House bills have generally prohibited funds for such efforts, while Senate versions would have funded such efforts. Ultimately, none of these provisions were included in enacted measures. In the second session of the 110 th Congress, the Senate Appropriations Committee version of the FY2009 State, Department, Foreign Operations, and Related Agencies Appropriations Act, S. 3288 , contained a provision (section 779) that would have provided for $1 million for preliminary work by the Department of State, or other entity designated by the Secretary of State, to establish cooperation with appropriate Cuban agencies on counternarcotics matters. No action was taken on the measure, and no such provision was ultimately included in the FY2009 Omnibus Appropriations Act, ( P.L. 111-8 ) in the 111 th Congress. For FY2010, the Senate Appropriations Committee-reported version of S. 1434 , the State Department, Foreign Operations and Related Programs Appropriations Act, 2010, contained a provision in section 7092 that would have provided $1 million in International Narcotics Control and Law Enforcement (INCLE) assistance for preliminary work by the State Department or other entity designated by the Secretary of State to establish cooperation with appropriate agencies of the government of Cuba on counternarcotics matters, including matters relating to cooperation, coordination, and mutual assistance in the interdiction of illicit drugs being transported through Cuban airspace or over Cuba waters. The amount would not have been available if the Secretary of State certified that Cuba did not have in place appropriate procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs, and that there was credible evidence of involvement of the government of Cuba in drug trafficking during the preceding 10 years. The House-passed version of the appropriations measure, H.R. 3081 , did not have a similar provision, and ultimately the final enacted FY2010 omnibus appropriations measure ( P.L. 111-117 ) did not include the Senate committee provision. Over the past decade, a number of individuals, including three U.S. government officials, have been convicted in the United States on charges involving spying for Cuba. Most recently in June 2009, the FBI arrested a retired State Department employee and his wife, Walter Kendall Myers and Gwendolyn Steingraber Myers, for spying for Cuba for three decades. The two were accused of acting as agents of the Cuban government and of passing classified information to the Cuban government. In November 2009, the Myerses pled guilty to the spying charges, and in July 2010 Kendall Myers was sentenced to life in prison while Gwendolyn Myers was sentenced to 81 months. In 2006, Florida International University (FIU) professor Carlos Alvarez pled guilty to conspiring to be an unregistered agent who has informed on the Cuban exile community, while his wife Elsa Prieto Alvarez, an FIU counselor, pled guilty to being aware of and failing to disclose her husband's activities. Carlos Alvarez received a five-year sentence, while his wife received three years. In May 2003, the Bush Administration ordered the expulsion of 14 Cuban diplomats (seven from New York and seven from Washington, DC), maintaining that they were involved in monitoring and surveillance activities. On September 21, 2001, Defense Intelligence Agency (DIA) analyst Ana Montes was arrested on charges of spying for the Cuban government. Montes reportedly supplied Cuba with classified information about U.S. military exercises and other sensitive operations. Montes ultimately pled guilty to spying for the Cuban government for 16 years, during which she divulged the names of four U.S. government intelligence agents working in Cuba and information about a "special access program" related to U.S. national defense. She was sentenced in October 2002 to 25 years in prison in exchange for her cooperation with prosecutors as part of a plea bargain. In response to the espionage case, the State Department ordered the expulsion of four Cuban diplomats (two from Cuba's U.N. Mission in New York and two from the Cuban Interests Section in Washington, DC) in November 2002. In June 2001, five members of the so-called "Wasp Network" who were originally arrested in September 1998 were convicted on espionage charges by a U.S. Federal Court in Miami. Sentences handed down for the so-called "Cuban five" in December 2001 ranged from 15 years to life in prison for three of the five. (In addition to the five, a married couple in the so-called "Wasp Network" was sentenced in January 2002 to prison terms of seven years and three and one-half years for their participation in the spy network.) The group of five Cuban intelligence agents penetrated Cuban exile groups and targeted U.S. military bases. The Cuban government vowed to work for the return of the "Cuban five" who have been dubbed "Heroes of the Republic" by Cuba's National Assembly. In December 2008, Cuban President Raúl Castro offered to exchange some imprisoned Cuban political dissidents for the "Cuban five," an offer that was rejected by the State Department, which maintained that the dissidents should be released immediately without any conditions. On June 15, 2009, the U.S. Supreme Court chose not to hear an appeal of the case of the "Cuban five" in which their lawyers were asking for a new trial outside Miami before an unbiased jury. However, in 2009, sentences for three of the five were reduced; in October, one defendant with a life sentence had his sentence reduced to 20 years, while in December a second defendant facing a life sentence had his sentenced reduced to 30 years and another facing 19 years had his sentence slightly reduced sentence to 18 years. In February 2000, an Immigration and Naturalization Service (INS) official from Miami, Mariano Faget, was arrested and ultimately convicted in May 2000 for passing classified information to a friend with ties to Cuba. He was sentenced to five years in prison in June 2001. The case led to the State Department's expulsion of a Cuban diplomat working in Washington, DC. Cuba was added to the State Department's list of states sponsoring international terrorism in 1982 (pursuant to section 6(j) of the Export Administration Act of 1979) because of its alleged ties to international terrorism and support for terrorist groups in Latin America, and has remained on the list since that time. Cuba had a long history of supporting revolutionary movements and governments in Latin America and Africa, but in 1992, Fidel Castro said that his country's support for insurgents abroad was a thing of the past. Cuba's change in policy was in large part due to the breakup of the Soviet Union, which resulted in the loss of billions of dollars in annual subsidies to Cuba, and led to substantial Cuban economic decline. Critics of retaining Cuba on the terrorism list maintain that it is a holdover from the cold war. They argue that domestic political considerations keep Cuba on the terrorism list and maintain that Cuba's presence on the list diverts U.S. attention from struggles against serious terrorist threats. Those who support keeping Cuba on the terrorism list argue that there is ample evidence that Cuba supports terrorism. They point to the government's history of supporting terrorist acts and armed insurgencies in Latin America and Africa. They point to the government's continued hosting of members of foreign terrorist organizations and U.S. fugitives from justice. The State Department's Country Reports on Terrorism 2009 report (issued August 5, 2010) maintained that the Cuban government and its official media publicly condemned acts of terrorism by al-Qa'ida and its affiliates, but at the same time remained critical of the U.S. approach to combating international terrorism. The report noted that while Cuba no longer supports armed struggle in Latin America or elsewhere, that it continued to provide physical safe haven and ideological support to members of three terrorist organizations—Basque Homeland and Freedom (ETA ), the Revolutionary Armed Forces of Colombia (FARC), and Colombia's National Liberation Army (ELN). The report noted that Cuba cooperated with the United States on a limited number of law enforcement matters, but also pointed out that the Cuban government continued to permit U.S. fugitives to live legally in Cuba, including convicted murders and hijackers. Both the President and Congress have powers to take a country off the state sponsors of terrorism list. As set forth in Section 6(j) of the Export Administration Act, a country's retention on the list may be rescinded in two ways. The first option is for the President to submit a report to Congress certifying that there has been a fundamental change in the leadership and policies of the government and that the government is not supporting acts of international terrorism and is providing assurances that it will not support such acts in the future. The second option is for the President to submit a report to Congress, at least 45 days in advance justifying the rescission and certifying that the government has not provided any support for international terrorism during the preceding six-months, and has provided assurances that it will not support such acts in the future. If Congress disagrees with the President's decision to remove a country from the list, it could seek to block the rescission through legislation. Congress also has the power on its own to remove a country from the terrorism list. For example, legislation introduced on Cuba in the 111 th Congress, H.R. 2272 (Rush), includes a provision that would rescind the Secretary of State's determination that Cuba "has repeatedly provided support for acts of international terrorism." Cuban officials have criticized the United States for including Cuba on its list of countries requiring extra screening for Cuban citizens flying into the United States, an action taken by the Obama Administration on January 4, 2010, in the aftermath of the attempted bombing of a U.S. flight from Amsterdam on Christmas Day. Cuba was included on the extra screening list because of its retention on the State Department's state sponsors of terrorism list. Cuban officials maintain that the Cuba's inclusion on the terrorism list is unfounded, and that Cuba has never been used to organize, finance, or execute terrorist acts against the United States. Cuba has been the target of various terrorist incidents over the years. In 1976, a Cuban plane was bombed, killing 73 people. In 1997, there were almost a dozen bombings in the tourist sector in Havana and in the Varadero beach area in which an Italian businessman was killed and several others were injured. Two Salvadorans were convicted and sentenced to death for the bombings in March 1999, and three Guatemalans were sentenced to prison terms ranging from 10-15 years in January 2002 for plans to conduct bombings in 1998. Cuban officials maintain that Cuban exiles funded the bombings. In November 2000, four anti-Castro activists were arrested in Panama for a plot to kill Fidel Castro. One of the accused, Luis Posada Carriles, was also allegedly involved in the 1976 Cuban airline bombing noted above. The four stood trial in March 2004 and were sentenced on weapons charges in the case to prison terms ranging from seven to eight years. In late August 2004, Panamanian President Mireya Moscoso pardoned the four men before the end of her presidential term. Three of the men are U.S. citizens and traveled to Florida, where they received strong support from some in the Cuban American community, while Posada reportedly traveled to another country. On April 13, 2005, Posada's lawyer said that his client, reportedly in the United States after entering the country illegally, would seek asylum in the United States because he has a "well-founded fear of persecution" for his opposition to Fidel Castro. Posada, a Venezuelan citizen, had been imprisoned in Venezuela for the bombing of the Cuban airliner in 1976, but reportedly was allowed to "escape" from prison in 1985 after his supporters paid a bribe to the prison warden. He had been acquitted for the bombing but remained in prison pending a prosecutorial appeal. Posada also reportedly admitted, but later denied, involvement in the string of bombings in Havana in 1997, one of which killed an Italian tourist. Posada subsequently withdrew his application for asylum on May 17, 2005. Later that day, U.S. Immigration and Customs Enforcement (ICE) arrested Posada, and subsequently charged him with illegally entering the United States. A Department of Homeland Security press release indicated that ICE does not generally deport people to Cuba or countries believed to be acting on Cuba's behalf. Venezuela requested Posada's extradition and pledged that it would not hand Posada over to Cuba. On September 26, 2005, however, a U.S. immigration judge ruled that Posada likely faced torture in Venezuela and could not be deported in keeping with U.S. obligations under the Convention Against Torture. ICE reviewed the case and determined on March 22, 2006, that Posada would not be freed from a federal immigration facility in El Paso, TX. In November 2006, however, a U.S. federal judge, who was considering Posada's plea that he be released, ordered the government to supply evidence, by February 1, 2007, justifying his continued detention. On January 11, 2007, a federal grand jury in Texas indicted Posada on seven counts for lying about how he entered the United States illegally in March 2005, whereupon he was transferred from immigration detention in El Paso to a county prison in New Mexico near the Texas border. The Cuban government responded by maintaining that Posada needs to be charged with terrorism, not just lying about how he entered the United States. Posada was released from jail in New Mexico on April 19, 2007, and allowed to return to Miami under house arrest to await an upcoming trial on immigration fraud charges, but on May 9, 2007, a federal judge in Texas dismissed the charges. The judge maintained that the U.S. government mistranslated testimony from Posada and manipulated evidence. Both Cuba and Venezuela strongly denounced Posada's release, contending that he is a terrorist. In a new turn of events, Posada was again indicted by a federal grand jury in Texas on April 8, 2009. In the 11-count indictment, Posada was accused, among other things, of lying during immigration proceedings regarding his involvement in bombings in Havana in 1997. Originally a federal trial was set to begin in August 2009, but has been rescheduled three times and is now scheduled to take place in January 2011. On July 7, 2010, Venezuelan authorities extradited to Cuba an alleged Posada associate, Salvadoran citizen Francisco Chávez Abarca, who is charged with involvement in one of the 1997 bombings in Havana. Chávez Abarca had been imprisoned from 2005-2007 in El Salvador for running a car theft ring, but charges ultimately were dropped, reportedly because of a botched investigation, and he was set free. On July 1, 2010, he was arrested in Venezuela upon entering the county and allegedly confessed to plans to organize protests in Venezuela around the time of the country's legislative elections in September 2010. In late September 2010, the Cuban government released Chávez Abarca's video confessions and reenactment of the bombings, as well as his alleged association with Luis Posada, in a public information campaign featured in the Cuban media as well as abroad on social media sites such as YouTube and Facebook. According to Chávez Abarca, Posada recruited him in El Salvador for the Cuba bombings, and paid him $2,000 for each bomb that went off. Only one of the bombs that Chávez Abarca planted actually detonated – on April 12, 2007 in the bathroom of a disco at the Melia Cohiba hotel in Havana. Since 1996, the United States has provided assistance—primarily through the U.S. Agency for International Development (USAID), but also through the State Department and the National Endowment for Democracy (NED)—to increase the flow of information on democracy, human rights, and free enterprise to Cuba. USAID's Cuba program has supported a variety of U.S.-based non-governmental organizations with the goals of promoting a rapid, peaceful transition to democracy, helping develop civil society, and building solidarity with Cuba's human rights activists. These efforts are largely funded through Economic Support Funds (ESF) in the annual foreign operations appropriations bill. From FY2001-FY2010, Congress appropriated almost $157 million in funding for Cuba democracy efforts. This included $45.3 million for FY2008, $20 million for FY2009, and $20 million for FY2010. For FY2009, Congress fully funded the Administration's $20 million request in ESF to continue to implement the program recommendations of the Commission for Assistance to a Free Cuba. According to the request, the funding was aimed at assisting human rights activists, independent journalists, Afro-Cubans, and women, youth, and student activists. The report to the Senate Appropriations Committee version of the FY2009 State Department, Foreign Operations, and Related Agencies Appropriations Act, S. 3288 ( S.Rept. 110-425 ), recommended fully funding the Administration's request for Cuba, but also called for the State Department and USAID to conduct regular evaluations to ensure the cost effectiveness of the programs. No final action on the appropriations measure was taken in the 110 th Congress, but in the 111 th Congress, the FY2009 Omnibus Appropriations Act ( P.L. 111-8 ) funded overall foreign operations funding, including the $20 million for Cuba democracy funding. Two members of Congress placed a hold on the assistance until the Administration provided more information on the proposed funding, but in early June 2010, the hold was lifted and $15 million of the $20 million was released. Subsequently in August 2010, USAID notified Congress that it would be obligating $620,000 more in FY2009 ESF for Cuba, bringing total FY2009 Cuba funding to $15.620 million. At the same time, the USAID shifted the remaining $4.380 million originally notified for Cuba to a humanitarian assistance program for Guatemala. For FY2010, Congress once again fully funded the Administration's $20 million ESF request for Cuba democracy programs in the conference report ( H.Rept. 111-366 ) to the Consolidated Appropriations Act, 2010 ( H.R. 3288 / P.L. 111-117 ). According to the State Department's FY2010 Congressional Budget Justification for Foreign Operations , U.S. assistance programs focus on providing humanitarian assistance to victims of repression, strengthening civil society, weakening the information blockade, and helping Cubans to create space for dialogue about democratic change and reconciliation. Both House-passed H.R. 3081 and Senate Appropriations Committee-reported S. 1434 , the FY2010 State Department, Foreign Operations, and Related Programs Appropriations Act, recommended full funding of the Administration's $20 million request. For FY2011, the Administration once again requested $20 million in ESF to support democracy and human rights projects. According to the Administration's request, the assistance would focus on providing humanitarian assistance to prisoners of conscience and their families, strengthening civil society, supporting issue-based civic action movements and coalitions, and promoting fundamental freedoms, especially freedom of expression and freedom of the press. The Senate version of the State Department and Foreign Operations appropriations measure, S. 3676 , reported by the Senate Appropriations Committee on July 29, 2010 ( S.Rept. 111-237 ), provided that $2 million of the ESF appropriated for Cuba be transferred and merged with funds for the National Endowment for Democracy for democracy programs in Cuba. The 111 th Congress did not complete action on the FY2011 State Department and Foreign Operations appropriations measure. Instead, it approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which provided funding for federal agencies through March 4, 2011, generally at FY2010 levels and under conditions provided in enacted FY2010 appropriations measures. Until FY2008, NED's democratization assistance for Cuba had been funded largely through the annual Commerce, Justice, and State (CJS) appropriations measure, but is now funded through the State Department, Foreign Operations and Related Agencies appropriations measure. NED funding for Cuba has steadily increased over the past several years: $765,000 in FY2001; $841,000 in FY2002; $1.14 million in FY2003; and $1.15 million in FY2004. For FY2005, NED funded 17 Cuba projects with $2.4 million. For FY2006, NED funded 13 projects with almost $1.5 million, including $0.4 million from State Department ESF. For FY2007, NED funded 12 projects with almost $1.5 million, which included almost $1.4 million funded by the State Department. For FY2008, NED funded 11 projects with over $1.4 million. In FY2009, NED funded 10 Cuba projects with about $1.5 million from the State Department. In November 2006, the Government Accountability Office (GAO) issued a report examining U.S. democracy assistance for Cuba from 1996-2005, and concluded that the U.S. program had significant problems and needed better management and oversight. According to GAO, internal controls, for both the awarding of Cuba program grants and oversight of grantees, "do not provide adequate assurance that the funds are being used properly and that grantees are in compliance with applicable law and regulations." Investigative news reports on the program maintained that high shipping costs and lax oversight have diminished its effectiveness. Representative William Delahunt, chairman of the House Foreign Affairs Committee's Subcommittee on International Organizations, Human Rights, and Oversight, had requested the GAO study along with Representative Jeff Flake. In March 2008, a White House aide to President Bush, Felipe Sixto, resigned because of alleged misuse of funds when he worked for the Center for a Free Cuba, which has been a major recipient of U.S. democracy funding. On December 19, 2008, Sixto pled guilty to stealing nearly $600,000, and was sentenced to two and one-half years in prison in March 2009. Another group, Grupo de Apoyo a la Democracia (Group in Support of Democracy), has also been under investigation by USAID for misuse of funds. Historically these two groups have been the two largest recipients of U.S. democracy funding for Cuba. GAO issued a second report examining USAID's Cuba democracy program on November 24, 2008. The report lauded the steps that USAID had taken since 2006 to address problems with its Cuba program and improve oversight of the assistance. These included awarding all grants competitively since 2006, hiring more staff for the program office since January 2008, and contracting for financial services in April 2008 to enhance oversight of grantees. The GAO report also noted that USAID had worked to strengthen program oversight through pre-award and follow-up reviews, improving grantee internal controls and implementation plans, and providing guidance and monitoring about permitted types of assistance and cost sharing. The GAO report also maintained, however, that USAID had not staffed the Cuba program to the level needed for effective grant oversight. GAO also noted the difficulty of assessing USAID's action to improve its Cuba program because most of its actions to improve the program were only taken recently. Procurement reviews completed in August 2008 by the new financial services contractor identified internal control, financial management, and procurement weaknesses at three grantees. GAO recommended that USAID (1) ensure that its Cuba program office is staffed at the level that is needed to fully implement planned monitoring activities; and (2) periodically assess the Cuba program's overall efforts to address and reduce grantee risks, especially regarding internal controls, procurement practices, expenditures, and compliance with laws and regulations. The Cuban American National Foundation (CANF) released a report in May 2008 maintaining that a majority of the assistance for Cuba has been spent in operating expenses by U.S.-based grantees, transition studies, and U.S.-based activities. Among the recommendations in its report, the CANF called for USAID grantees to spend a minimum of 75% of government funds in direct aid to Cuban civil society. It also called for the assistance program to provide direct cash aid to independent civil society groups, dissidents, and families of political prisoners. On December 4, 2009, Cuban authorities arrested an American subcontractor, Alan Gross, working for Development Alternatives Inc. (DAI), a Bethesda-based company that had received a contract from USAID to help support Cuban civil society organizations. Gross was arrested at Jose Martí International Airport in Havana when he was planning to leave the country. Gross's identity had not been made public until January 13, 2010, when various press reports cited his name. He reportedly was distributing communications equipment in Cuba such as cell phones and laptop computers to Jewish organizations in Cuba. High-ranking Cuban official Ricardo Alarcon, the head of Cuba's National Assembly, asserted on January 6, 2010, that the contractor was working for American intelligence, but U.S. officials strongly denied the accusation. A State Department spokesman maintained that the contractor "is not associated with our intelligence services" and noted that "Cuba has a history of mischaracterizing what Americans and NGOs in Cuba are doing." According to a statement by DAI, "the detained subcontractor was not working for any intelligence service … he was working with a peaceful, non-dissident civic group—a religious and cultural group recognized by the Cuban government—to improve its ability to communicate with its members across the island and overseas." Numerous U.S. officials have raised the issue of Alan Gross's release. At the semi-annual migration talks with Cuba in February and June 2010, U.S. officials raised the issue and called for his release. Some 40 House Members called for Mr. Gross's release in a letter to the Cuban government, warning that improved relations between the United States and Cuba will not be possible until he is released. The letter maintained that Mr. Gross's work in Cuba with the Jewish community "emanated from his desire to make a positive impact for others of faith on the island." It expressed concern for Mr. Gross's health and the deteriorating health of his elderly mother. A number of other Members and Senators have also called for Mr. Gross's immediate release. On June 17, 2010, Secretary of State Clinton met with family members of Mr. Gross, and issued a statement expressing deep concern about his welfare and poor health. The Secretary maintained that his continued detention "is harming U.S.-Cuba relations," and that his release would be viewed favorably. In September 2010, at the time of the U.N. General Assembly meeting, Assistant Secretary of State for Western Hemisphere Affairs met with Cuban Foreign Minister Bruno Rodriguez in New York to encourage the release of Mr. Gross. As noted above, in early December 2010, on the one-year anniversary of Mr. Gross's detention, the State Department again issued a statement calling for his release, and maintaining that "the continued detention of Alan Gross is a major impediment to advancing the dialogue between our two countries." U.S.-government sponsored radio and television broadcasting to Cuba—Radio and TV Martí—began in 1985 and 1990 respectively. According to the Broadcasting Board of Governors FY2011 Budget Request , Radio and TV Martí are dedicated to providing a reliable source of news and information that is accurate, objective, and credible. The request maintains that the two programs support the right of the Cuban people to seek, receive, and impart information and ideas through any media, regardless of frontiers. Until October 1999, U.S.-government funded international broadcasting programs had been a primary function of the United States Information Agency (USIA). When USIA was abolished and its functions were merged into the Department of State at the beginning of FY2000, the Broadcasting Board of Governors (BBG) became an independent agency that included such entities as the Voice of America (VOA), Radio Free Europe/Radio Liberty (RFE/RL), Radio Free Asia, and the Office of Cuba Broadcasting (OCB), which manages Radio and TV Marti. OCB is headquartered in Miami, FL, and operates under the BBG's International Broadcasting Bureau (IBB). Legislation in the 104 th Congress ( P.L. 104-134 ) required the relocation of OCB from Washington, DC, to south Florida. The move began in 1996 and was completed in 1998. Radio Martí broadcasts on short and medium wave (AM) channels for 24 hours six days per week, and for18 hours one day per week utilizing transmission facilities in Marathon, FL, and Greenville, NC, according to the BBG. It also transmits to Cuba 24 hours daily through Hispasat satellite television and the internet. TV Martí programming has been broadcast through multiple transmission methods over the years. From its beginning in 1990 until July 2005, it was broadcast via an aerostat (blimp) from facilities in Cudjoe Key, Florida for four and one-half hours daily, but the aerostat was destroyed by Hurricane Dennis. Currently TV Martí is broadcast via the internet, satellite television—Hispasat and DirecTV, and by an airborne platform—AeroMartí. In December 2006, the OCB contracted with two private U.S. commercial stations to transmit Radio and TV Martí. It provided a six-month contract with Radio Mambí (710 AM) in Florida, at a cost of $182,500, to broadcast one hour of Radio Martí programming five days a week from midnight to 1:00 am. Radio Mambí is a popular station in south Florida, with a 50,000 watt capacity, that is well-known for its strong anti-Castro stance. A second six-month OCB contract with WPMF (Channel 38) in Miami, known as TV Azteca, at a cost of $195,000, provided for two 30-minute TV Martí newscasts at 6 pm and 11:30 pm weekdays, along with one-minute news updates hourly over a 12 hour period weekdays. OCB chose the station because it is offered on DirecTV and because it has only a small audience in Miami. In June 2007, the two contracts were extended for an additional six months with similar terms. The contract with Radio Mambí subsequently expired in early 2008, whereas TV Martí continues to be shown on Channel 38. From mid-2004 until 2006, TV Martí programming was transmitted for several hours once a week via an airborne platform known as Commando Solo operated by the Department of Defense utilizing a C-130 aircraft. In August 2006, OCB began to use contracted private aircraft to transmit pre-recorded TV Martí broadcasts six days weekly, and by late October 2006 the OCB inaugurated an aircraft-broadcasting platform known as AeroMartí with the capability of transmitting live broadcasts. OCB uses two privately contracted airplanes for AeroMartí to transmit broadcasts four and one-half hours daily from Monday to Saturday during the evening. In June 2010, according to the BBG's FY2011 budget request, this was cut to two and one-half hours for five days weekly, Both Radio and TV Martí have at times been the focus of controversies, including questions about adherence to broadcast standards. There have been various attempts over the years to cut funding for the programs, especially for TV Martí, which has not had much of an audience because of Cuban jamming efforts. In December 2006, press reports alleged significant problems in the OCB's operations, with claims of cronyism, patronage, and bias in its coverage. In February 2007, the former director of TV Martí programming pled guilty in U.S. federal court to receiving more than $100,000 in kickbacks over a three-year period from a vendor receiving OCB contracts. Over the years, there have been various government studies and audits of the OCB, including investigations by the GAO, by a 1994 congressionally-established Advisory Panel on Radio and TV Martí, by the State Department Office Inspector General (OIG) in 1999, and by the combined State Department/BBG Office Inspector General in 2003 and 2007. In July 2008, GAO issued a report that criticized the IBB's and OCB's practices in awarding the two contracts to Radio Mambí and TV Azteca as lacking discipline required to ensure transparency and accountability. According to GAO, the approach for awarding the Radio Mambí and TV Azteca contracts did not reflect sound business practices. The most recent State Department/BBG Office of Inspector General (OIG) report, issued in June 2007, maintained that OCB had significantly improved its operations under its then-director, Pedro Roig, with an organizational realignment that streamlined operations and helped improve the quality of broadcasts. According to the report, "IBB quality reviews show that radio and television broadcasts have markedly improved over the past two years in production quality and content," although the report also called for greater emphasis on internal quality control to ensure that editorial standards are followed. The report lauded the introduction of new technology allowing OCB to broadcast television signals live into Cuba using airborne platforms, and maintained that there are indications that more Cubans are watching TV Martí broadcasts. It recommended that the BBG's International Broadcasting Bureau should review and assess the leases with Radio Mambí and TV Azteca at the end of the lease period to determine whether they provide additional listeners and viewers and are worth the cost, or whether they could be replaced with lease options for other stations. Looking ahead, the report maintained that OCB needs a "long-term strategic plan that anticipates the future needs of the Cuban audience, provides a template on how to compete with commercial broadcasters, and addresses what to do with OCB and its broadcasting facilities if and when uncensored broadcasting is allowed inside a democratic Cuba." One of the most controversial aspects of the OIG report, and one that has often been at the center of past congressional debate over TV Martí, is the extent to which TV Martí can be viewed in Cuba. The report maintained that there was anecdotal evidence that the AeroMartí airborne transmissions had increased viewership. The report referred to a January 2007 survey of Cuban arrivals—commissioned by Spanish Radio Productions with the cooperation of Miami Dade College—that found listening rates for Radio and TV Martí within Cuba were significantly higher than previously reported, especially for TV Martí. Although specific survey figures were not cited in the OIG report, OCB officials maintained that the survey showed that 17% of recent Cuban arrivals had watched TV Martí. The OIG report also pointed to a February 2007 survey by the U.S. Interests Section (USINT) in Havana that reflected increased viewership. According to the BBG, that survey was completed by 500 Cuban visitors to the USINT (where TV Martí can be viewed) in January and February 2007, with 10% of the visitors indicating that they could watch TV Martí via UHF for brief periods. At the same time as the release of the OIG report in 2007, other observers contended that TV Martí could hardly be viewed in Cuba because of the government's jamming efforts. John Nichols, a Pennsylvania State University communications professor, visited Cuba in late June 2007 on a fact-finding mission sponsored by the Center for International Policy (a group that opposes current U.S. policy toward Cuba), and concluded "that the signal from the plane is essentially unusable" and that there was "no evidence of significant viewership of TV Martí." In interviews with the Associated Press, more than two dozen Cuban immigrants to Florida contended that while Radio Martí can be heard throughout Cuba, TV Martí can rarely be seen. Prior BBG commissioned phone surveys in Cuba from 2003, 2005, and November 2006 estimated past week TV Martí viewership between 0.1% and 0.3% of those surveyed and past month viewership of almost 0.5%. The November 2006 survey, reportedly designed to show the early effects of the AeroMartí transmissions that began in late October, showed no statistically significant change from the 2003 and 2005 surveys. In the same surveys, Radio Martí had listenership of between 1% to 2% in the past week and 4% to 5% in the past month. More recently, in January 2009, GAO issued a report asserting that the best available research suggests that Radio and TV Martí's audience is small, and cited telephone surveys since 2003 showing that less than 2% of respondents reported tuning in to Radio or TV Martí during the past week. With regard to TV Martí viewership, according to the report, all of the IBB's telephone surveys since 2003 show that less than 1% of respondents said that they had watched TV Martí during the past week. According to the GAO report, the IBB surveys show that there was no increase in reported TV Martí viewership following the beginning of AeroMartí and DirecTV satellite broadcasting in 2006.The GAO report also cited concerns with adherence to relevant domestic laws and international standards, including the domestic dissemination of OCB programming, inappropriate advertisements during OCB programming, and TV Martí's interference with Cuban broadcasts. GAO testified on its report in a hearing held by the House Subcommittee on International Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs on June 17, 2009. In April 2010, the Senate Foreign Relations Committee majority issued a staff report that concluded that Radio and TV Martí "continue to fail in their efforts to influence Cuban society, politics, and policy." The report cited problems with adherence to broadcast standards, audience size, and Cuban government jamming. Among its recommendation, the report called for the IBB to move the Office of Cuba Broadcasting back to Washington and integrate it fully into the Voice of America. From FY1984 through FY2009, about $629 million has been spent for broadcasting to Cuba. In recent years, funding amounted to $33.9 million in FY2007, $33.4 million in FY2008, and an estimated $34.8 million in FY2009. Until FY2005, the Administration provided funding information for Cuba broadcasting with a breakdown of the amounts spent for Radio versus TV Martí. Since FY2005, however, the Broadcasting Board of Governors has not made such a distinction in its annual budget request. FY2009. The BBG requested, and Congress fully funded, $34.4 million for broadcasting to Cuba in FY2009, slightly more than provided by Congress in FY2008. The requested amount included funding for the airborne platform that the Office of Cuba Broadcasting uses to broadcast Radio and TV Martí. The report to the Senate Appropriations Committee version of the FY2009 State Department, Foreign Operations, and Related Agencies Appropriations Act, S. 3288 ( S.Rept. 110-425 ), recommended fully funding the Administration's request for Cuba broadcasting. The 110 th Congress did not finalize FY2009 appropriations, although it did approve the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009. In the 111 th Congress, the FY2009 Omnibus Appropriations Act, ( P.L. 111-8 ) provided funding for Cuba broadcasting under the Broadcasting Board of Governors' International Broadcasting Operations account, which fully funded the Administration's request for Cuba broadcasting. FY2010. The BBG requested $32.47 million in FY2010, about $2.3 million less than provided in FY2009, and ultimately Congress appropriated $30.474 million. The BBG proposed to change the news format for TV Martí by replacing the two evening news programs with news updates on the half hour, and to convert Radio Martí to an all news format. The proposed changes would eliminate 35 jobs from the Office of Cuba Broadcasting, representing a staffing cut of about 20% from 171 to 136 positions. Some press reports maintain that the change appears to be in part a way for the BBG to deal with criticism of political bias and propaganda at the station, while BBG officials maintain that the cut is an effort to streamline programming and to respond to feedback from audience research. In the Consolidated Appropriations Act, 2010 ( H.R. 3288 / P.L. 111-117 ) enacted in December 2009, Congress provided $30.474 million for Cuba broadcasting in FY2010, with not more than $5.5 million for non-salary and benefits expenses for TV Martí. This was almost $2 million less than the Administration's request of $32.47 million. Prior to the approval of the omnibus appropriations measure, House-passed H.R. 3081 would have fully funded the Administration's request while the Senate Appropriations Committee-reported version, S. 1434 , would have provided $15 million less than requested and prohibit funding for TV Martí broadcasts The conference report to the bill ( H.Rept. 111-366 ) also required two reports for the Committees on Appropriations: the first from the BBG within 90 days providing a multi-year strategic plan for broadcasting to Cuba; and the second from the GAO within 90 days of the submission of the BBG report, providing an assessment of the strategic plan. As set forth in the conference report, the BBG strategic plan is required to include (1) an analysis of the current situation in Cuba and an allocation of resources consistent with the relative priority of broadcasting to Cuba as determined by the annual Language Service Review and other factors, including input form the Secretary of State on the relative U.S. interest of broadcasting to Cuba; (2) the estimated audience sizes in Cuba for Radio and TV Martí and the sources and relative reliability of the data on which such estimates are based; (3) the annual operating cost (and total cost over the life of the contract) of any and all types of TV transmission and the effectiveness of each in increasing such audience size; (4) the principal obstacles to increasing such audience size; (5) an analysis of other options for disseminating news and information to Cuba, including DVDs, the Internet, and cell phones and other handheld electronic devices and a report on the cost effectiveness of each; and (6) an analysis of the program efficiencies and effectiveness that can be achieved through shared resources and cost saving opportunities in radio and television production between Radio and TV Martí and the Voice of America. FY2011. The BBG requested $29.179 million for Cuba broadcasting in FY2011, about $1 million less than that appropriated in FY2010. Staffing would remain the same at 136 positions. The Senate version of the State Department and Foreign Operations appropriations measure, S. 3676 , reported by the Senate Appropriations Committee on July 29, 2010 ( S.Rept. 111-237 ), recommended $28.789 million for broadcasting to Cuba ($390,000 less than the request of $29.179 million). In the report to the bill, the committee also stated that it did not support closing the Greenville Station in North Carolina that transmits the Cuba broadcasts, expanding TV Martí's transmission on DirecTV, or expanding and renovating the TV Martí studio until the Broadcasting Board of Governors submitted a multi-year strategic plan for broadcasting to Cuba. The 111 th Congress did not complete action on the FY2011 State Department and Foreign Operations appropriations measure. Instead, it approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which provided funding for federal agencies through March 4, 2011, generally at FY2010 levels and under conditions provided in enacted FY2010 appropriations measures. Cuba and the United States reached two migration accords in 1994 and 1995 designed to stem the mass exodus of Cubans attempting to reach the United States by boat. On the minds of U.S. policymakers was the 1980 Mariel boatlift in which 125,000 Cubans fled to the United States with the approval of Cuban officials. In response to Castro's threat to unleash another Mariel, U.S. officials reiterated U.S. resolve not to allow another exodus. Amid escalating numbers of fleeing Cubans, on August 19, 1994, President Clinton abruptly changed U.S. migration policy, under which Cubans attempting to flee their homeland were allowed into the United States, and announced that the U.S. Coast Guard and Navy would take Cubans rescued at sea to the U.S. naval base at Guantanamo Bay, Cuba. Despite the change in policy, Cubans continued fleeing in large numbers. As a result, in early September 1994, Cuba and the United States began talks that culminated in a September 9, 1994, bilateral agreement to stem the flow of Cubans fleeing to the United States by boat. In the agreement, the United States and Cuba agreed to facilitate safe, legal, and orderly Cuban migration to the United States, consistent with a 1984 migration agreement. The United States agreed to ensure that total legal Cuban migration to the United States would be a minimum of 20,000 each year, not including immediate relatives of U.S. citizens. In a change of policy, the United States agreed to discontinue the practice of granting parole to all Cuban migrants who reach the United States, while Cuba agreed to take measures to prevent unsafe departures from Cuba. In May 1995, the United States reached another accord with Cuba under which the United States would parole the more than 30,000 Cubans housed at Guantanamo into the United States, but would intercept future Cuban migrants attempting to enter the United States by sea and would return them to Cuba. The two countries would cooperate jointly in the effort. Both countries also pledged to ensure that no action would be taken against those migrants returned to Cuba as a consequence of their attempt to immigrate illegally. On January 31, 1996, the Department of Defense announced that the last of some 32,000 Cubans intercepted at sea and housed at Guantanamo had left the U.S. Naval Station, most having been paroled into the United States. Since the 1995 migration accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to their country, while those deemed at risk for persecution have been transferred to Guantanamo and then found asylum in a third country or eventually the United States. Those Cubans who reach shore are allowed to apply for permanent resident status in one year, pursuant to the Cuban Adjustment Act of 1966 (P.L. 89-732). This so-called "wet foot/dry foot" policy has been criticized by some as encouraging Cubans to risk their lives in order to make it to the United States and as encouraging alien smuggling. Others maintain that U.S. policy should welcome those migrants fleeing communist Cuba whether or not they are able to make it to land. In recent years, the number of Cubans interdicted at sea by the U.S. Coast Guard rose from 666 in FY2002 to a high of 2,868 in FY2007. Subsequently, sea interdictions declined to 2,199 in FY2008, 799 in FY2009, and 422 in FY2010. Major reasons for the decline in migrant interdictions from Cuba are reported to include the U.S. economic downturn, more efficient coastal patrolling, and more aggressive prosecution of migrant smugglers. In October 2008, Mexico and Cuba negotiated a migration accord in October 2008 in an attempt to curb the irregular flow of migrants through Mexico. U.S. prosecution against migrant smugglers in Florida has increased in recent years with numerous convictions. There have been several violent incidents in which Cuban migrants have brandished weapons or in which Coast Guard officials have used force to prevent Cubans from reaching shore. In late December 2007, a Coast Guard official in Florida called on the local Cuban American community to denounce the smuggling and stop financing the trips that are leading to more deaths at sea. In July 2010, three Cuban nationals (two living in Florida and one in Mexico) were charged in a U.S. federal court in Tampa with conspiracy, kidnapping, and extortion involving the abduction of Cuban migrants in Mexico. The Cuban government also has taken forceful action against individuals engaging in alien smuggling. Prison sentences of up to three years may be imposed against those engaging in alien smuggling. In the aftermath of Fidel Castro's July 2006, announcement that he was temporarily ceding political power to his brother, Department of Homeland Security officials announced several measures to discourage Cubans from risking their lives on the open seas. On August 11, 2006, Department of Homeland Security (DHS) Deputy Secretary Michael P. Jackson urged "the Cuban people to stay on the island" and discouraged "anyone from risking their life in the open seas in order to travel to the United States." At the same time, DHS announced additional measures to discourage Cubans from turning to alien smuggling as a way to enter the United States. The measures support family reunification by increasing the numbers of Cuban migrants admitted to the United States each year who have family members in the United States, although the overall number of Cubans admitted to the United States annually will remain at about 21,000. Cubans who attempt to enter the United States illegally will be deemed ineligible to enter under this new family reunification procedure. In another change of policy, Cuban medical personnel currently conscripted by the Cuban government to work in third countries are now allowed to enter the United States; their families in Cuba are also allowed to enter the United States. Semi-annual U.S.-Cuban talks alternating between Cuba and the United States had been held regularly on the implementation of the 1994 and 1995 migration accords, but the State Department cancelled the 20 th round of talks scheduled for January 2004. At the time, the State Department maintained that Cuba refused to discuss five issues identified by the United States: (1) Cuba's issuance of exit permits for all qualified migrants; (2) Cuba's cooperation in holding a new registration for an immigrant lottery; (3) the need for a deeper Cuban port used by the U.S. Coast Guard for the repatriation of Cubans interdicted at sea; (4) Cuba's responsibility to permit U.S. diplomats to travel to monitor returned migrants; and (5) Cuba's obligation to accept the return of Cuban nationals determined to be inadmissible to the United States. In response to the cancellation of the talks, Cuban officials maintained that the U.S. decision was irresponsible and that Cuba was prepared to discuss all of the issues raised by the United States. Under the Obama Administration, Cuba and the United States agreed to restart the biannual migration talks (in addition to talks on direct mail service). The State Department took the first step to restart the talks when it sent a diplomatic note to the Cuban Interests Section on May 22, 2009. A State Department spokesman maintained that the talks would be used "to reaffirm both sides' commitment to safe, legal and orderly migration" as well as "to improve operational relations with Cuba on migration issues." Cuba responded on May 30, 2009, and the State Department subsequently announced that the two countries would restart the talks. Since mid-2009, there are have three rounds of talks, with the U.S. team led by Principal Deputy Assistant Secretary of State for Western Hemisphere Affairs Craig Kelly, and the Cuba team led by Deputy Foreign Minister Dagoberto Rodriguez. The first round was held on July 14, 2009, in New York City. The State Department outlined its four objectives in the talks: ensuring that the U.S. Interests Section in Havana is able to operate effectively; gaining access to a deep-water port for the safe return of Cuban migrants picked up at sea; ensuring that U.S. diplomats are able to monitor the welfare of those Cubans who are sent back to the island; and gaining Cuban government acceptance of Cubans who are excluded from the United States because they have committed crimes. Cuba reportedly proposed a new immigration agreement and more effective cooperation to combat alien smuggling, and also made known its opposition to the so-called "wet foot/dry foot policy." The second round of talks were held on February 19, 2010, in Havana. According to the Department of State, "engaging in these talks underscores our interest in pursuing constructive discussions with the government of Cuba to advance U.S. interests of mutual concern." It maintained that the United States views the talks "as an avenue to achieve practical, positive results that contribute to the full implementation of the [Migration] Accords and to the safety of citizens of both countries." Cuba's Ministry of Foreign Affairs maintained that the meeting took place in an atmosphere of respect and included discussion of some aspects of a new draft migration accord proposed by Cuba at the in the July 2009 round of talks. Cuba also reportedly raised the issue of improving and expanding the Cuban Interests Section in Washington. During the talks, U.S. officials urged Cuban officials to provide political prisoner Orlando Zapata Tamayo all necessary medical care, and also raised the case of USAID subcontractor Alan Gross detained in Cuba since early December 2009 and called for his release. The third round of talks was held on June 18, 2010, in Washington, DC. In addition to migration issues, the U.S. team separately raised the case of Alan Gross and called for his immediate release. A day before the meeting, Secretary of State Clinton met with family members of Alan Gross and issued a statement expressing deep concern about his welfare and poor health and maintaining that his "continued detention … is harming U.S.-Cuba relations." For additional information on migration issues, see CRS Report R40566, Cuban Migration to the United States: Policy and Trends , by [author name scrubbed]. The 45-square mile U.S. Naval Station at Guantanamo Bay, Cuba, has been a U.S. base since 1903, and under a 1934 treaty that remains in force, the U.S. presence can only be terminated by mutual agreement or by abandonment by the United States. When Fidel Castro assumed power in the 1959 Cuban revolution, the new government gave assurances that it would respect all its treaty commitments, including the 1934 treaty covering the Guantanamo base. Subsequently, however, as U.S.-Cuban relations deteriorated, the Cuban government opposed the presence as illegal. The mission of the base has changed over time. During the cold war, the base was viewed as a good location for controlling Caribbean sea lanes, as a deterrent to the Soviet presence in the Caribbean, and as a location for supporting potential military operations in the region. In 1994-1995, the base was used to house thousands of Cubans and Haitians fleeing their homeland, but by 1996 the last of the refugees had departed, with most Cubans paroled into the United States, pursuant to a May 1995 U.S.-Cuban migration accord. Since the 1995 accord, the U.S. Coast Guard has interdicted thousands of Cubans at sea and returned them to Cuba, while a much smaller number, those deemed at risk for persecution, have been taken to Guantanamo and then granted asylum in a third country. Another mission for the Guantanamo base emerged with the U.S.-led global campaign against terrorism in the aftermath of the September 11, 2001, terrorist attacks in the United States. With the U.S. war in Afghanistan in 2001, the United States decided to send some captured Taliban and Al Qaeda fighters to be imprisoned in Guantanamo. Although the Cuban government has objected to the U.S. presence at Guantanamo, it did not initially oppose the new mission of housing detainees. Then-Defense Minister Raúl Castro noted that, in the unlikely event that a prisoner would escape into Cuban territory, Cuba would capture the prisoner and return him to the base. The Cuban government, however, has expressed concerns about the treatment of prisoners at the U.S. base and has said it will keep pressing the international community to investigate the treatment of terrorist suspects. In January 2005, it denounced what it described as "atrocities" committed at the Guantanamo base. President Obama issued Executive Order 13492 on January 22, 2009, that requires the closure of the Guantanamo detention facility (not the base itself) as soon as practicable, but no later than one year. Some Members of Congress also have called for the closure of the detention facility and have introduced legislation in the 111 th Congress. Other measures have been introduced to prohibit the transfer of the enemy combatants detained at Guantanamo from being transferred to various military prisons in the United States. (For information on legislative initiatives related to the closing of the detention center, see CRS Report R40139, Closing the Guantanamo Detention Center: Legal Issues , by [author name scrubbed] et al, and CRS Report R40754, Guantanamo Detention Center: Legislative Activity in the 111th Congress , by [author name scrubbed].) With regard to the future of the Guantanamo base overall, a provision in the Cuban Liberty and Democratic Solidarity Act of 1996 ( P.L. 104-114 , Section 210) states that once a democratically elected Cuban government is in place, U.S. policy is to be prepared to enter into negotiations either to return the base to Cuba or to renegotiate the present agreement under mutually agreeable terms. As noted above, the OAS voted in 1962 to exclude Cuba from participation in the regional organization because of its identification with Marxism-Leninism, but in early June 2009, the OAS overturned the 1962 resolution in a move that could eventually lead to Cuba's reentry into the regional organization. While Cuban government welcomed the OAS vote to overturn the 1962 resolution, it asserted that it would not return to the OAS because of its domination by the United States and because the organization promotes "neoliberal and egotistical capitalism." In January 1962, the OAS approved a resolution that excluded the government of Cuba from participation in the OAS because of its self-identification as a Marxist-Leninist government. The resolution was approved by the Eighth Meeting of Consultation of Ministers of Foreign Affairs that had been requested by Colombia in November 1961 pursuant to the Inter-American Treaty of Reciprocal Assistance (Río Treaty). Colombia's official request for the meeting contained no specific reference to Cuba or the Soviet Union. Instead, Colombia requested the meeting of foreign ministers to consider "threats to the peace and political independence of the American states that might arise from the intervention of extracontinental powers directed toward breaking American solidarity." It was clear, however, that Colombia's request referred to the potential threat from Cuba and the Soviet Union. In October 1961, Peru had also made a request for a meeting of consultation under the Río Treaty to discuss Cuba, and emphasized the Cuban government's "repression of the rights of the Cuban people" and its "use of diplomatic missions and secret agents to carry out communist infiltration in other countries of the hemisphere." Peru's request ultimately was referred to the Inter-American Peace Committee, which provided a report on Cuba to the Eighth Meeting of Consultation of Foreign Ministers that helped inform the foreign ministers as they deliberated on Cuba. The report asserted that Cuba's connections with the Sino-Soviet bloc of countries were incompatible with the principles and standards that govern the regional system, and particularly with the collective security established by the charter of the OAS and the Río Treaty. Ultimately, the resolution that excluded Cuba from OAS participation had three main provisions: "That adherence by any member of the Organization of American States to Marxism-Leninism is incompatible with the inter-American system and the alignment of such a government with the communist bloc breaks the unity and solidarity of the hemisphere." It was approved by a vote of 20-1, with Cuba voting against. "That the present Government of Cuba, which has officially identified itself as a Marxist-Leninist government, is incompatible with the principles and objectives of the inter-American system." It was approved by a vote of 20-1, with Cuba voting against. "That this incompatibility excludes the present Government of Cuba from participation in the inter-American system." It was approved by a vote of 14-1, with Cuba voting against, and 6 abstentions—Argentina, Bolivia, Brazil, Chile, Ecuador, and Mexico. It is noteworthy that the operative provision of the resolution excluding Cuba from participation in the OAS received, by just one vote, the required two-thirds vote. The countries abstaining from the operative provision justified their votes on juridical rather than political considerations, maintaining that the exclusion of an OAS member was not legally possible unless the OAS Charter itself was amended. In 2009, Cuba's reinstatement into the inter-American system has become an issue taken up by a number of Latin American countries. In a public statement before the Fifth Summit of the Americas was held in mid-April 2009, OAS Secretary General José Miguel Insulza maintained that the 1962 resolution was outdated and that the upcoming OAS General Assembly meeting would be the appropriate forum to debate repealing or overturning it. Insulza explained, however, that repealing the resolution would not mean that Cuba would automatically be readmitted to the OAS. The Secretary General maintained that full reintegration of Cuba to the OAS is a decision for Cuba itself and for all OAS members to make, and is a decision that would have to be debated after the repeal of the 1962 resolution. In a press interview, Insulza said that the resolution "was a bad idea in the first place," and maintained that he wants "Cuba back in the Inter-American system." Insulza also maintained that the Inter-American Democratic Charter does not prevent Cuba from rejoining the organization. As the June 2-3, 2009, OAS General Assembly in Honduras approached, a number of countries offered resolutions on the Cuba issue. At a meeting of the OAS Permanent Council on May 27, 2009, three countries—Honduras, Nicaragua, and the United States—offered draft resolutions on Cuba for consideration by the OAS General Assembly, but since none of the resolutions received enough support, the Permanent Council agreed to create a Working Group to attempt to find a consensus text for a resolution on Cuba. As originally proposed, the draft resolutions by Honduras and Nicaragua were similar in that both would overturn the 1962 resolution. However, while the Honduran resolution would have simply revoked the 1962 resolution, the Nicaraguan resolution would have characterized the rescinding of the resolution "as an act of justice and historical redress toward Cuba and the peoples of the hemisphere." Moreover, the Nicaraguan resolution would also have stated that the "exclusion of the Republic of Cuba from the inter-American system violates the Charter of the OAS and international law and constitutes an injustice and an unacceptable act of discrimination to the sovereignty of states and the right to self-determination of peoples." The draft Honduran resolution also had a provision stating that future relations between Cuba and the OAS would depend on the express will of the Cuban Government and the relevant bodies of the OAS. The draft U.S. resolution would not have explicitly repealed the 1962 resolution, but would have noted that "some of the circumstances since Cuba's suspension from full participation in the Organization of American States may have changed." The resolution would have supported "the eventual reintegration of Cuba into the Inter-American system," but "consistent with commitments, principles, and values of the OAS Charter, the Inter-American Democratic Charter, and other instruments." It would have instructed the OAS Permanent Council "to initiate a dialogue" with the government of Cuba regarding its "eventual reintegration into the inter-American system, consistent with the principles of sovereignty, independence, non-intervention, democracy, and full respect for human rights and fundamental freedoms, as enshrined in the OAS Charter, the Inter-American Democratic Charter, and other OAS instruments." After the first day of the OAS General Assembly on June 2, 2009, it appeared that OAS members were having difficulty reaching consensus on any of the resolutions, while press reports indicated that there was a possibility that there could be enough votes to readmit Cuba into the OAS without the conditions offered by the United States in its resolution. Ultimately, however, a consensus resolution was agreed to on June 3, 2009, with the support of all OAS members. The resolution overturns the 1962 resolution, and also states that Cuba's participation in the OAS "will be the result of a process of dialogue initiated at the request of the Government of Cuba, and in accordance with the practices, purposes, and principles of the OAS." The resolution does not have specific reference to the Inter-American Democratic Charter that had been included in the U.S. resolution, but it does link Cuba's re-admittance to the purposes and principles of the OAS. Moreover, an introductory provision of the resolution stated that the General Assembly's action was "guided by the purposes and principles of the Organization of American States embodied in the Charter of the Organization and its other fundamental instruments related to security, democracy, self determination, non-intervention, human rights, and development." U.S. officials portrayed the consensus resolution as a diplomatic success because it averted the passage of a resolution that would have simply overturned the 1962 resolution, and allowed Cuba to immediately participate in the OAS. Instead, according to Dan Restrepo, Senior Director for Western Hemisphere Affairs at the National Security Council, "we have a result that lays out a process that specifically refers to the fundamental instruments of this organization of democracy, human rights, self-determination and other enumerated rights are precisely the rights that this Administration is working to advance and defend in Cuba and throughout the Americas." Secretary of State Hillary Clinton lauded the passage of the resolution, stating that the member nations of the OAS showed flexibility and openness today, and as a result we reached a consensus that focuses on the future instead of the past." She expressed satisfaction that there was agreement "that Cuba cannot simply take its seat and that we must put Cuba's participation to a determination down the road if it ever chooses to seek reentry." She asserted that "if and when the day comes to make that determination, the United States will continue to defend the principles of the Inter-American Democratic Charter and other fundamental tenets of the organization." Critics of the consensus resolution maintain that there should have been more stringent enforceable conditions regarding Cuba's reentry into the OAS, and that it ignores Cuba's denial of basic freedoms and the repression of its people. Some Members of Congress immediately criticized the consensus resolution for not more strongly linking Cuba's reentry to the principles of the Inter-American Democratic Charter, and contend that the resolution represents a setback for human rights activists in Cuba. Some threatened to withhold U.S. funding to the OAS if Cuba is readmitted as a member. For example, in the House, H.R. 2687 (Mack) would withhold U.S. assessed and voluntary contributions to the OAS if Cuba is allowed full membership or participation in the OAS unless the President certifies that Cuba has satisfied certain conditions. Supporters of the resolution maintain that it removes an irritant in U.S.-Latin American relations, while at the same time offers an avenue for the OAS to start a dialogue with Cuba on a range of issues, including democratic principles. Many Latin American nations lauded the consensus resolution as an important step toward integrating Latin America into the Inter-American system. Argentina's Foreign Minister maintained that the action was an indication of the Obama Administration's move to restore the "values and principles of multilateralism." Honduran President Manuel Zelaya asserted that "the Cold War has ended this day in San Pedro Sula." Before the passage of the resolution, Cuba had not expressed any interest in rejoining the OAS. In a recent visit to Caracas, Cuban Foreign Minister Bruno Rodríguez asserted that Cuba was proud to be outside of the OAS, which he characterized as being an instrument of the United States. In an essay published the day of the OAS vote on the resolution, Fidel Castro referred to the OAS as an organization that opened the gates to the Trojan horse (the United States) that backed "neoliberalism, drug trafficking, military bases, and economic crises" in the region. As noted above, in the aftermath of the OAS vote, Cuba indicated that it would not return to the OAS, largely because it maintains that the organization is dominated by the United States. P.L. 111-8 ( H.R. 1105 ). Omnibus Appropriations Act, 2009. Introduced February 23, 2009; House passed (245-178) February 25, 2009; Senate passed (voice vote) March 10, 2009; signed into law March 11, 2009. Division D, Financial Services and General Government Appropriations Act, 2009, has three provisions intended to ease U.S. sanctions on Cuba. These three provisions, explained below, were identical to provisions in the S. 3260 , the Senate version of the Financial Services and General Government Appropriations Act, 2009, in the 110 th Congress. In addition, the Joint Explanatory Statement to the bill requires the Department of the Treasury to prepare a report within 90 days on the steps that it is taking to assess the Office of Foreign Assets Control's allocation of resources for investigating and penalizing violations of the Cuba embargo with respect to the numerous other sanctions programs it administers. As part of the report, the Treasury Department is directed to provide detailed information on OFAC's Cuba-related licensing on its enforcement of the Cuba embargo. Section 620 of Division D amends the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) to require the Secretary of the Treasury to issue regulations for travel to, from, or within Cuba under a general license for the marketing and sale of agricultural and medical goods, meaning that there would be no requirement to obtain special permission from OFAC. Such travel currently requires a specific license from OFAC, issued on a case by case basis. Section 621 of Division D prohibits funds from being used to administer, implement, or enforce family travel restrictions that were imposed by the Bush Administration in June 2004. Those 2004 restrictions allowed family travel only to visit immediate family (grandparents, grandchildren, parents, siblings, spouses, and children) once every three years for a period not to exceed 14 days. Under the 2004 restrictions, a specific license was required from OFAC for such travel, and the authorized amount that family travelers could spend while in Cuba was limited to $50 a day. Section 622 of Division D prohibits funds in the Act from being used to administer, implement, or enforce an amendment to the Cuban embargo regulations on February 25, 2005, requiring that U.S. agricultural exporters using the "payment of cash in advance'" payment mechanism for selling their goods to Cuba must be paid in cash for their goods before the goods leave U.S. ports. Prior to the February 2005 change, the practice was for U.S. agricultural exporters to be paid in cash for their goods (as required under the TSRA), but before the actual delivery of the goods to Cuba. Division H (Department of State, Foreign Operations, and Related Programs Appropriations Act, 2009) has two provisions related to Cuba. Section 7005 prohibits foreign assistance to the government of Cuba. Section 7015(f) provides that no funds appropriated for foreign assistance shall be obligated or expended for Cuba except as provided through the regular notification procedures of the Committees on Appropriations. P.L. 111-117 ( H.R. 3288 ). Consolidated Appropriations Act, 2010. Introduced July 22, 2009, as the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2010. House passed July 23, 2009. Senate passed with an amendment September 17, 2009. The conference report to the measure, H.Rept. 111-366 filed December 8, 2009, became the vehicle for the Consolidated Appropriations Act, 2010, which consisted of six appropriations bills. The House agreed to the conference on December 10, 2009, while the Senate agreed on December 13, 2009. The President signed the measure into law on December 16, 2009. As signed into law, the measure has several Cuba provisions. Division C, Financial Services and General Government Appropriations Act, 2010, has a clarifying provision in section 619 relating to the issue of "payment of cash in advance" for U.S. exports to Cuba during FY2010 under the Trade Sanctions Reform and Export Enhancement Act of 2000. The provision defines the term to mean "payment before the transfer of title to, and control of, the exported items to the Cuban purchaser." Division F, Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010, has several Cuba provisions. Section 7007 continues the general prohibition against foreign assistance to the government of Cuba. Section 7015(f) continues the requirement that no funds for foreign assistance shall be obligated or expended for Cuba except as provided through the regular notification procedures of the Committees on Appropriations. With regard to Cuba broadcasting, the conference report provides $30.474 million for Radio and TV Martí (almost $2 million less than the Administration's request) with not more than $5.5 million for non-salary and benefits expenses for TV Martí. The conference report also has two reporting requirements on Cuba broadcasting: the first from the BBG within 90 days providing a multi-year strategic plan for broadcasting to Cuba; and the second, from the GAO within 90 days of the submission of the BBG report, providing an assessment of the strategic plan. With regard to Cuba democracy programs, the conference report fully funds the Administration's request for $20 million in ESF. S.Res. 149 (Martinez). Expresses solidarity with the writers, journalists, and librarians of Cuba on World Press Freedom Day and calling for the immediate release of citizens of Cuba imprisoned for exercising rights associated with freedom of the press. Introduced and approved by Unanimous Consent on May 14, 2009. S.Con.Res. 54 (Nelson, Bill). Recognizes the life of Orlando Zapata Tamayo, who died on February 23, 2010, in the custody of the Cuban government, and calls for a continued focus on the promotion of internationally recognized human rights in Cuba. Introduced March 10, 2010. S.Amdt. 3552 (Nelson, Bill), which noted that the Department of State reports that the Cuban government has not granted prison visits to the International Committee of the Red Cross, Amnesty International, or Human Rights Watch since 1988, was agreed to by Unanimous Consent on March 18, 2010. S.Con.Res. 54 subsequently agreed to by Unanimous Consent on March 18, 2010. H.Con.Res. 132 (Tiahrt). Expresses the sense of Congress that with respect to the totalitarian government of Cuba, the United States should pursue a policy that insists upon freedom, democracy, and human rights, including the release of all political prisoners, the legalization of political parties, free speech and a free press, and supervised elections, before increasing U.S. trade and tourism to Cuba. Introduced May 20, 2009; referred to the Committee on Foreign Affairs. H.Con.Res. 251 (McGovern) and H.Con.Res. 252 (Ros-Lehtinen). Recognizes the life of Orlando Zapata Tamayo, who died on February 23, 2010, in the custody of the Cuban government, and calls for a continued focus on the promotion of internationally recognized human rights in Cuba. H.Con.Res. 251 and 252 were both introduced March 11, 2010, and referred to the Committee on Foreign Affairs. H.R. 187 (Serrano). Waives certain prohibitions with respect to nationals of Cuba coming to the United States to play organized professional baseball. Introduced January 6, 2009; referred to the Committees on Foreign Affairs and Judiciary. H.R. 188 (Serrano). Lifts the trade embargo on Cuba by repealing and amending various laws. Introduced January 6, 2009; referred to the Committees on Foreign Affairs, Ways and Means, Energy and Commerce, Judiciary, Financial Services, Oversight and Government Reform, and Agriculture. H.R. 332 (Lee). Provides that no funds made available to the Department of the Treasury may be used to implement, administer, or enforce regulations to require specific licenses for travel-related transactions directly related to educational activities in Cuba. Introduced January 8, 2009; referred to the Committee on Foreign Affairs. H.R. 375 (Ros-Lehtinen). Section 209 of the bill sets forth restrictions on nuclear cooperation with countries assisting the nuclear program of Venezuela or Cuba or transferring advanced conventional weapons to Venezuela or Cuba. Introduced January 9, 2009; referred to the Committee on Foreign Affairs. H.R. 874 (Delahunt)/ S. 428 (Dorgan). Identical bills would prohibit the President from regulating or prohibiting, directly or indirectly, travel to or from Cuba by U.S. citizens or legal residents, or any of the transactions incident to such travel. H.R. 874 was introduced February 4, 2009, and referred to the House Committee on Foreign Affairs. S. 428 was introduced February 12, 2009, and referred to the Senate Committee on Foreign Affairs. H.R. 1103 (Wexler)/ S. 1234 (Lieberman) . Modifies the prohibition on recognition by U.S. courts of certain rights relating to certain marks, trade names, or commercial names. Introduced February 13, 2009; referred to the Committee on the Judiciary. H.R. 1528 (Rangel). Allows travel between the United States and Cuba. Introduced March 16, 2009; referred to the Committee on Foreign Affairs H.R. 1530 (Rangel). Lifts the trade embargo on Cuba by repealing and amending various laws. Introduced March 16, 2009; referred to the Committee on Foreign Affairs, and in addition to the Committees on Ways and Means, Energy and Commerce, the Judiciary, Financial Services, Oversight and Government Reform, and Agriculture. H.R. 1531 (Rangel)/ S. 1089 (Baucus). Promoting American Agricultural and Medical Exports to Cuba Act of 2009. Similar, although not identical, bills facilitate the export of U.S. agricultural products to Cuba as authorized by the Trade Sanctions Reform and Export Enhancement Act of 2000, remove impediments to the export to Cuba of medical devices and medicines, allow travel to Cuba by U.S. legal residents, establish an agricultural export promotion program with respect to Cuba, and repeal the Section 211 trademark sanction. H.R. 1531 introduced March 16, 2009; referred to the Committee on Foreign Affairs, Ways and Means, Judiciary, Agriculture, and Financial Services. S. 1089 introduced May 20, 1989; referred to the Senate Committee on Finance. H.R. 1737 (Moran, Jerry). Agricultural Export Facilitation Act of 2009. Amends the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) to provide that the term "payment of cash in advance" means that the payment by the purchaser of an agricultural commodity or product and the receipt of such payment by the seller occurs prior to 1) the transfer of such commodity or product to the purchaser, and 2) the release of control of such commodity or product to the purchaser. Provides that the President may not restrict direct transfer from a Cuban financial institution to a U.S. financial institution in payment for a product authorized for sale under TSRA. Also amends TSRA to require the Secretary of the Treasury to issue regulations under which, at a minimum, travel-related transactions may be authorized by specific license or general license for travel to, from, or within Cuba in connection with commercial export sales, transportation, and sales and marketing activities of agricultural commodities, medicine, and medical devices pursuant to TSRA. Introduced March 26, 2009; referred to the Committees on Foreign Affairs, Judiciary, Financial Services, and Agriculture. H.R. 1918 (Flake). Permits U.S. companies to participate in the exploration for and the extraction of hyrdrocarbon resources from any portion of a foreign maritime exclusive economic zone that is contiguous to the exclusive economic zone of the United States. Also amends the Trade Sanctions Reform and Export Enhancement Act of 2000 to provide for general license authority for travel to Cuba by persons engaging in hydrocarbon exploration and extraction activities. Introduced April 2, 2009; referred to the Committee on Foreign Affairs. H.R. 2005 (King). Amends the Cuban Liberty and Democratic Solidarity Act of 1996 to require that, in order to determine that a democratically elected government exists in Cuba, the government extradite to the United State convicted felon William Morales and all other individuals who are living in Cuba in order to escape prosecution or confinement for criminal offense committed in the United States. Introduced April 21, 2009; referred to the House Committee on Foreign Affairs. H.R. 2272 (Rush). United States-Cuba Trade Normalization Act of 2009. Lifts the trade embargo on Cuba by amending and repealing various laws. Extends nondiscriminatory trade treatment to Cuba. Removes Cuba from the State Sponsors of Terrorism List. Introduced May 6, 2009; referred to the Committees on Foreign Affairs, Ways and Means, Energy and Commerce, Judiciary, Financial Services, Oversight and Government Reform, and Agriculture. H.R. 2410 (Berman). Foreign Relations Authorization Act, FY2010 and FY2011. Introduced May 14, 2009. Reported by House Committee on Foreign Affairs June 4, 2009 ( H.Rept. 111-136 ). House passed (235-187) June 10, 2009. Authorizes funding for radio and television broadcasting to Cuba within the International Broadcasting Operations account. During June 10, 2009, floor consideration, the House defeated H.Amdt. 182 (Ros-Lehtinen) by a vote of 205-224 that would have required the Secretary of State to withhold funds from the U.S. contribution to the International Atomic Energy Agency (IAEA) an amount equal to nuclear technical cooperation provided by the IAEA in 2007 to Iran, Syria, Sudan, and Cuba. No further action was taken on the measure. H.R. 2475 (Ros-Lehtinen). Foreign Relations Authorization and Reform Act, FY2010 and FY2011. Introduced May 19, 2009; referred to the Committee on Foreign Affairs. Section 501 of the bill would fully fund the Administration's $32.5 million request for Cuba broadcasting for FY2010, and would authorize funds as needed for FY2011. Section 728 of the bill consists of language contained in H.R. 375 that sets forth restrictions on nuclear cooperation with countries assisting the nuclear program of Venezuela or Cuba or transferring advanced conventional weapons to Venezuela or Cuba. H.R. 2647 (Skelton)/ S. 1390 (Levin). National Defense Authorization Act for FY2010. House passed June 25, 2009. Senate passed July 23, 2009, with an amendment substituting the language of S. 1390 . During July 22, 2009, consideration of S. 1390 , the Senate approved S.Amdt. 1535 (Martinez), which required a report from the Director of National Intelligence on potential Cuban activities related to drug trafficking, clandestine activities in the United States, research and development for biological weapons production, and Cuba's relations with Iran, North Korea, Venezuela and several other countries. That provision became Section 1222 of the Senate version of H.R. 2647 . The House version of the bill did not include a similar provision, and the provision was not included in the conference report ( H.Rept. 111-288 ) filed on October 7, 2009. H.R. 2687 (Mack). Withholds U.S. assessed and voluntary contributions to the Organization of American States if Cuba is allowed full membership or participation in the OAS unless the President certifies that Cuba has satisfied certain conditions. Introduced June 3, 2009; referred to the Committee on Foreign Affairs. H.R. 3081 (Lowey)/ S. 1434 (Leahy). FY2010 State Department, Foreign Operations, and Related Programs Appropriations. H.R. 3081 introduced and reported ( H.Rept. 111-187 ) June 26, 2009. House approved July 9, 2009, by a vote of 318-106. S. 1434 introduced and reported ( S.Rept. 111-44 ) July 9, 2009. In both bills, section 7007 would continue the prohibition against direct funding for the government of Cuba, and section 7015(f) would continue the requirement that no assistance shall be obligated or expended for assistance for Cuba except as provided through the regular notification procedures of the Committees on Appropriations. The reports to both bills would also fully fund the Administration's request of $20 million in ESF for Cuba democracy programs. With regard to Cuba broadcasting, H.R. 3081 would fully fund the Administration's request for $32.474 million, while S. 1434 would prohibit funding for TV Martí broadcasts to Cuba and provide just $17.474 million for Cuba broadcasting, $15 million less than the request. The Senate bill, in section 7092(c), would require a report from the Secretary of State within 90 days on various aspects of Cuba broadcasting. With regard to anti-drug cooperation with Cuba, S. 1434 would, in section 7092, provide $1 million in International Narcotics Control and Law Enforcement (INCLE) assistance for preliminary work by the State Department or other entity designated by the Secretary of State to establish cooperation with appropriate agencies of the government of Cuba on counternarcotics matters, including matters relating to cooperation, coordination, and mutual assistance in the interdiction of illicit drugs being transported through Cuban airspace or over Cuba waters. The amount shall not be available if the Secretary of State certifies that Cuba does not have in place appropriate procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs, and there is credible evidence of involvement of the government of Cuba in drug trafficking during the preceding 10 years. H.R. 3081 does not have a similar provision. For final action, see Division F of P.L. 111-117 , the Consolidated Appropriations Act, 2010, described above, which included provisions on foreign aid, Cuba broadcasting, and Cuba democracy funding. The omnibus measure did not include any language on drug cooperation with Cuba. H.R. 3170 (Serrano)/ S. 1432 (Durbin). FY2010 Financial Services and General Government Appropriations. H.R. 3170 introduced and reported ( H.Rept. 111-202 ) July 10, 2009. House approved (219-208) July 16, 2009. S. 1432 introduced and reported ( S.Rept. 111-43 ) July 9, 2009. Both bills have a provision (section 618 in the House bill and section 617 in the Senate bill) that provides that the term "payment of cash in advance" as used in the Trade Sanctions Reform and Export Enhancement Act of 2000 shall be interpreted as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser. For final action, see Division C of P.L. 111-117 , the Consolidated Appropriations Act, 2010, described above, which included the "payment of cash in advance" provision in section 619. H.R. 4645 (Peterson)/ S. 3112 (Klobuchar). Travel Restriction Reform and Export Enhancement Act. Removes obstacles to legal sales of U.S. agricultural commodities to Cuba and ends travel restrictions on all Americans to Cuba. Section 2 would lift all restrictions on travel to Cuba and prohibit the President from regulating or prohibiting such travel except under certain circumstances. Section 3 would define the term "payment of cash in advance" for U.S. agricultural sales to Cuba under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) as the payment by the purchaser and the receipt of such payment by the seller prior to transfer of title of such commodity or product to the purchaser and the release of control of such commodity or product to the purchaser. Section 4 would authorize direct transfers between Cuban and U.S. financial institutions executed in payment for a product authorized for sale under TSRA. H.R. 4645 introduced February 23, 2010; referred to Committee on Foreign Affairs, and in addition to the Committees on Agriculture and Financial Services. House Agriculture Committee ordered reported (25-20) June 30, 2010; reported September 29, 2010 ( H.Rept. 111-653 , Part I). Nor further action was taken on the measure. S. 3112 introduced March 15, 2010; referred to the Committee on Foreign Relations. H.R. 5620 (Ros-Lehtinen). Caribbean Coral Reef Protection Act of 2010. Introduced June 28, 2010; referred to the Committee on the Judiciary, and in addition to the Committees on Foreign Affairs, Financial Services, and Oversight and Government Reform. Amends the Cuban Liberty and Democratic Solidarity Act of 1996 to exclude from the United States aliens who invest $1 million or more that contributes to the enhancement of the ability of Cuba to develop petroleum resources located off its coast. Also provides for the imposition of sanctions and prohibition on facilitation of development of Cuba's petroleum resources. S. 774 (Dorgan), National Energy Security At of 2009. Section 371 authorizes United States persons to engage in any transaction necessary for the exploration for and extraction of hydrocarbon resources from any portion of any foreign exclusive economic zone that is contiguous to the exclusive economic zone of the United States, and to export without license authority all equipment necessary for the exploration for or extraction of these hydrocarbon resources. Section 372 would amend the Trade Sanctions Reform and Export Enhancement Act of 2000 to provide for general license authority for travel by persons engaging in hydrocarbon exploration and extraction activities. Introduced April 1, 2009; referred to the Committee on Finance. S. 1517 (Murkowski). Domestic Energy Security Act of 2009. Section 6 authorizes United States persons to engage in transactions for the exploration for and extraction of hydrocarbon resources from any portion of any foreign exclusive economic zone that is contiguous to the exclusive economic zone of the United States, and to export without license all equipment necessary for these activities. Section 7 would amend the Trade Sanctions Reform and Export Enhancement Act of 2000 to provide for general license authority for travel by persons engaging in hydrocarbon exploration and extraction activities. Introduced July 24, 2009; referred to the Committee on Energy and Natural Resources. S. 1808 (Feingold). Control Spending Now Act. Section 6012 would eliminate Radio and TV Martí by repealing the Radio Broadcasting to Cuba Act ( P.L. 98-111 ) and the Television Broadcasting to Cuba Act (Title II, Part D of P.L. 101-246 ). Introduced October 20, 2009; referred to Committee on Finance. S. 3454 (Levin). National Defense Authorization Act for FY2011. Introduced and reported by the Senate Committee on Armed Services on June 4, 2010 ( S.Rept. 111-201 ). Section 1236 would require a report (in unclassified form, but may include a classified annex) within 180 days from the Secretary of Defense, in consultation with the Director of National Intelligence and the Secretary of State, on: a description of any connections between the government of Cuba and drug trafficking organizations in the Western Hemisphere; a description of any economic, intelligence or other support provided to Cuba by the governments of Bolivia, Ecuador, or Venezuela; a description of any agreements or other arrangements between Cuba and the governments currently on the U.S. list of state sponsors of terrorism; and a description of any activities by Cuba to develop any biological or cyber warfare capabilities, including any collaboration with other countries in the Western Hemisphere. The Senate did not complete action on the bill. The House-passed version of the defense authorization bill, H.R. 5136 (Skelton), did not include a similar provision. S. 3676 (Leahy). FY2011 Department of State, Foreign Operations, and Related Programs Appropriations Act. Introduced and reported by the Senate Committee on Appropriations on July 29, 2010 ( S.Rept. 111-237 ). Section 7007 would continue a general prohibition against direct assistance for Cuba. Section 7015(f) would continue the requirement that no funds for foreign assistance shall be obligated or expended for assistance to Cuba except as provided through the regular notification procedures of the Committees on Appropriations. Section 7034(g)(6) provides that of the ESF appropriated for several countries including Cuba, $12.5 million shall be transferred and merged with funds for the National Endowment for Democracy to be allocated for democracy programs. The committee report clarifies that $2 million in ESF appropriated for Cuba would be transferred to the National Endowment for Democracy. In the report to the bill, the committee also recommends $28.789 million for broadcasting to Cuba ($390,000 less than the request of $29.179 million). In the report, the committee also states that it does not support closing the Greenville Station, expanding TV Martí's transmission on DirecTV, or the request to expand and renovate the TV Martí studio until the Broadcasting Board of Governors submits a multi-year strategic plan for broadcasting to Cuba. The Senate did not complete action on the measure, but Congress approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which ( P.L. 111-322 ) provided funding for federal agencies through March 4, 2011, generally at FY2010 levels and under conditions provided in enacted FY2010 appropriations measures. S. 3677 (Durbin). FY2011 Financial Services and General Government Appropriations Act. Introduced and reported by the Senate Committee on Appropriations on July 29, 2010 ( S.Rept. 111-238 ). Section 621 would continue to define during fiscal year 2011 "payment of cash in advance" under the Trade Sanctions Reform and Export Enhancement Act of 2000 as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser. This would extend a similar provision for fiscal year 2010 that appeared in the FY2010 Consolidated Appropriations Act ( P.L. 111-117 , Division C, Section 619). The Senate did not complete action on the measure, but Congress approved a series of short-term continuing resolutions ( P.L. 111-242 , as amended), the last of which ( P.L. 111-322 ) provided funding for federal agencies through March 4, 2011, generally at FY2010 levels and under conditions provided in enacted FY2010 appropriations measures. P.L. 110-161 ( H.R. 2764 ). FY2008 Consolidated Appropriations Act. H.R. 2764 was originally introduced and reported by the House Committee on Appropriations ( H.Rept. 110-197 ) on June 18, 2007, as the FY2008 State, Foreign Operations, and Related Agencies Appropriations Act. The House passed (241-178) the measure on June 22, 2007. The Senate Appropriations Committee reported the bill on July 10, 2007 ( S.Rept. 110-128 ), and the Senate passed (81-12) it on September 6, 2007. On December 17, 2007, H.R. 2764 subsequently became the vehicle for the FY2008 Consolidated Appropriations Act, which included 11 FY2008 appropriations measures. President Bush signed the measure into law on December 26, 2007. As signed into law, Division J of the Consolidated Appropriations Act covers State Department, Foreign Operations, and Related Agencies appropriations. The law has the following Cuba provisions: Similar to previous years, Section 607 of Division J prohibits direct funding for Cuba. This provision had been included in both the House and Senate versions of the bill. Section 620 of Division J adds Cuba to the list of countries requiring a special notification to the Appropriations Committees for funds obligated or expended under the act. This provision had been included in the Senate version of the bill. Section 691(b) of Division J provides that Cubans who supported an anti-Castro guerrilla group in the 1960s known as the Alzados are eligible for U.S. refugee status. The Senate version of the bill had included this provision. As set forth in the joint explanatory statement, the measure provides $45.7 million in ESF for Cuba democracy programs as requested by the Administration. Both the House- and Senate-passed versions of H.R. 2764 fully funded the Administration's request for $45.7 million in ESF for Cuba democracy programs. The House committee-reported bill would have provided $9 million in ESF for such programs, but during June 21, 2007, floor consideration, the House approved H.Amdt. 351 (Diaz-Balart) by a vote of 254-170 that increased ESF by $36.7 million in order to fully fund the Administration's request. The Senate Appropriations Committee report to the bill would have provided $15 million in ESF for Cuba democracy programs, but during September 6, 2007, floor consideration, the Senate approved S.Amdt. 2694 (Martinez) by voice vote that increased funding for Cuba democracy programs by $30.7 million to fully fund the Administration's request. As set forth in the joint explanatory statement, the measure provides $33.681 million for Radio and TV Marti broadcasting to Cuba, $5.019 million below the Administration's request of $38.7 million and identical to the amount provided for FY2007. Both the House and Senate committee reports to the bill had recommended $33.681 million for Cuba broadcasting. S.Amdt. 2695 (Martinez), which was withdrawn from consideration on September 6, 2007, would have increased funding by $5.019 million to fully fund the Administration's request. The measure does not include contrasting provisions related to counternarcotics assistance for Cuba that were included in the House and Senate versions of the bill. Section 673 of the House bill would have specifically prohibited International Narcotics Control and Law Enforcement (INCLE) assistance to the Cuban government. Section 696 of the Senate bill would have provided $1 million in INCLE assistance for preliminary work by the Department of State, or such other entity as the Secretary of State may designate, to establish cooperation with the Cuban government on counternarcotics matters. The final enacted measure does not include provisions easing Cuba sanctions that had been included in the House and Senate-committee versions of the FY2008 Financial Services and General Government Appropriations Act or the Senate committee-reported version of the FY2008 Agriculture Appropriations bill. P.L. 110-96 ( S. 1612 ). International Emergency Economic Powers Enhancement Act. Introduced and reported by the Committee on Banking, Housing, and Urban Affairs on June 13, 2007 ( S.Rept. 110-82 ). Senate approved, amended, by unanimous consent on June 26, 2007. House approved by voice vote October 2, 2007. As approved, the bill amends the International Emergency Economic Powers Act (IEEPA) to increase the potential civil penalty imposed on any person who commits an unlawful act under the act to not exceed the greater of $250,000 (from $50,000) or an amount that is twice the amount of the transaction. The bill also increases a criminal penalty to not more than $1 million and/or 20 years imprisonment. S.Res. 573 (Martinez). Celebrates Cuba Solidarity Day, recognizes the injustices faced by the Cuban people, and stands in solidarity with the Cuban people as they continue to work towards democratic changes in their homeland. Introduced and passed by the Senate on May 21, 2008, by unanimous consent. The following measures that received consideration contained various provisions on Cuba that would have eased U.S. sanctions, but none of these provisions made it into final enacted measures. For a complete listing of additional legislative initiatives on Cuba in the 110 th Congress, see CRS Report RL33819, Cuba: Issues for the 110 th Congress . H.R. 2419 (Peterson). Farm, Nutrition, and Bioenergy Act of 2007. Introduced May 22, 2007; House passed July 27, 2007. Senate passed December 14, 2007. During House floor consideration on July 27, 2007, the House rejected (182-245) H.Amdt. 707 (Rangel), which would have clarified the meaning of "payment of cash in advance" for the sale of agricultural commodities to Cuba; authorized direct transfer between U.S. and Cuban financial institutions for a product authorized for sale under the Trade Sanctions Reform and Export Enhancement Act of 2000; and would have authorized the issuance of U.S. visas for Cubans to conduct activities, including phytosanitary inspections, related to the export of U.S. agricultural goods to Cuba. In the Senate, S.Amdt. 3660 (Baucus), which would have eased restrictions on U.S. agricultural sales to Cuba, was proposed on December 11, 2007, but subsequently withdrawn the same day. Several amendments regarding Cuba were submitted, but never proposed: S.Amdt. 3668 (Baucus), would have eased restrictions on U.S. agricultural exports to Cuba; S.Amdt. 3796 (Nelson, Bill), would have required a certification of certain human rights conditions in Cuba before restrictions on U.S. agricultural exports to Cuba would be eased; S.Amdt. 3792 (Martinez), would have expressed the sense of the Senate regarding the human rights situation in Cuba; and S.Amdt. 3793 (Martinez), would have prevented the easing of restrictions on U.S. agricultural exports to Cuba as long as the country is identified by the Secretary of State as a "state sponsor of terror." H.R. 2829 (Serrano). FY2008 Financial Services and General Government Appropriations Act. Introduced and reported by House Appropriations Committee ( H.Rept. 110-207 ) June 22, 2007. Reported by Senate Appropriations Committee July 13, 2007 ( S.Rept. 110-129 ). House passed (240-179) June 28, 2007. As approved by the House, Section 903 would have prevented Treasury Department funds from being used to implement a February 2005 regulation that requires the payment of cash in advance prior to the shipment of U.S. agricultural goods to Cuba. The House adopted the provision during June 28, 2007, floor consideration when it approved H.Amdt. 467 (Moran, Kansas) by voice vote. The Senate Appropriations Committee version had a similar provision in Section 619, as well as another provision in Section 620 that would have allowed for travel to Cuba under a general license for the marketing and sale of agricultural and medical goods. The Cuba provisions of both the House and Senate versions of the bill were not included in the final enacted version of the measure, which was included as Division D of the FY2008 Consolidated Appropriations Act ( P.L. 110-161 , H.R. 2764 ). H.R. 3161 (DeLauro)/ S. 1859 (Kohl). FY2008 Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. H.R. 3161 introduced and reported by House Appropriations Committee July 24, 2007; House passed August 2, 2007. S. 1859 introduced and reported by Senate Appropriations Committee July 24, 2007 ( S.Rept. 110-134 ). Section 741 of the Senate bill would authorize travel to Cuba under a general license for the marketing and sale of agricultural and medical goods to Cuba. The Cuba provision in the Senate version was not included in the final enacted version of the measure, which was included as Division A of the FY2008 Consolidated Appropriations Act ( P.L. 110-161 , H.R. 2764 ). H.R. 7323 (Serrano). FY2009 Financial Services and General Government Appropriations bill. Introduced and reported by the House Appropriations Committee on December 10, 2008 ( H.Rept. 110-920 ). The committee had approved a draft version of the bill on June 25, 2008. The bill has several provisions that would have eased Cuba sanctions. Section 621 would have prohibited funds in the Act from being used to administer, implement, or enforce new language in the Cuban embargo regulations added on February 25, 2005 (31CFR Part 515.533), that requires that U.S. agricultural exports to Cuba must be paid for before they leave U.S. ports. Section 622 would have allowed for family travel once a year (instead of the current restriction of once every three years). Section 623 would have expanded family travel to visit an aunt, uncle, niece, nephew, or first cousin (instead of the current restriction limiting such travel to visit a spouse, child, grandchild, parent, grandparent, or sibling). The report to the bill would require the Treasury Department's Office of Foreign Assets Control (OFAC) to provide detailed information on OFAC's Cuba-related licensing and enforcement actions. None of these provisions were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009. S. 3001 (Levin). Duncan Hunter National Defense Authorization Act for FY2009. S.Amdt. 5581 (Dodd), submitted on September 15, 2008, would, for a 180-day period, allow unrestricted family travel; ease restrictions on remittances by removing the limit and allowing any American to send remittances to Cuba; expand the list of allowable items that may be included in gift parcels; and allow for unrestricted U.S. cash sales of food, medicines, and relief supplies to Cuba. The amendment was not considered and therefore not included in the final bill. S. 3260 (Durbin). Financial Services and General Government Appropriations Act, 2009. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110-417 ) on July 14, 2008. Includes provisions easing restrictions on payment terms for the sale of agricultural goods to Cuba (section 618), travel relating to the commercial sale of agricultural and medical goods (section 619), and family travel (section 620). None of these provisions were included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009. S. 3288 (Leahy). Department of State, Foreign Operations, and Related Programs Appropriations Act, 2009. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110-425 ) July 18, 2008. Includes several Cuba provisions: section 706 continues a prohibition on assistance to Cuba, unless the President determines that it is in the national interest of the United States; section 719 continues the provision from FY2008 that requires that any assistance for Cuba go through the regular notification procedures of the Committees on Appropriations; section 779 provides for $1 million for preliminary work by the Department of State, or other entity designated by the Secretary of State, to establish cooperation with appropriate Cuban agencies on counternarcotics matters, although the money would not be available if the Secretary certifies that Cuba (1) does not have in place procedures to protect against the loss of innocent life in the air and on the ground in connection with the interdiction of illegal drugs; and (2) there is credible evidence of involvement of the government of Cuba in drug trafficking during the preceding 10 years. The Senate Appropriations Committee report to the bill recommended full funding for the Administration's requests of $34.392 million for Cuba broadcasting and $20 million in ESF for Cuba democracy programs, and called for the State Department and USAID to conduct regular evaluations to ensure the cost effectiveness of the programs. S. 3289 (Kohl). Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2008. Introduced and reported by Senate Appropriations Committee ( S.Rept. 110-426 ) July 21, 2008. Includes a provision (section 737) that would ease restrictions on travel to Cuba for the sale of agricultural and medical goods. This provision was not included in the Consolidated Appropriations Act for FY2009 ( P.L. 110-329 ) that provided funding until March 6, 2009. Appendix A. Developments in 2009-2010 For more recent entries, see " Recent Developments " above. On July 29, 2010, the Senate Committee on Appropriations reported S. 3676 ( S.Rept. 111-237 ), the FY2011 Department of State, Foreign Operations, and Related Programs Appropriations Act with several Cuba provisions. The measure would continue a general prohibition against direct assistance for Cuba (Section 7007) and continue a requirement that any assistance would only be provided through the regular notification procedures of the Committees on Appropriations (Section 7015(f)). The bill (Section 7034(g)(6)) and the report would transfer $2 million in ESF appropriated for Cuba to the National Endowment for Democracy for democracy programs. The report recommends $28.789 million for Cuba broadcasting, $390,000 less than the request, and requires the Broadcasting Board of Governors to submit a multi-year strategic plan for broadcasting to Cuba. On July 7, 2010, Cuba's Catholic Church announced that Cuban authorities would free 52 political prisoners, with 5 to be released soon and 47 others over the next three to four months. Secretary of State Clinton said that the Church's announcement of the prisoner release was a "positive sign" and that the United States welcomed it. On July 5, 2010, the independent Cuban Commission on Human Rights and National Reconciliation (CCDHRN) documented in its July 5, 2010, report that Cuba held at least 167 political prisoners, down significantly from the 201 prisoners documented in January 2010. The figures reflect a continuing decline from previous years. Despite the reduction in the number of political prisoners, the group maintains that the overall human rights situation has not improved, with the government adopting lower-profile tactics of political repression, including arbitrary short-term detentions and other forms of harassment or intimidation. On June 30, 2010, the House Agriculture Committee reported out (by a vote of 25-20) H.R. 4645 (Peterson). The bill would lift all restrictions on travel to Cuba; define the term "payment of cash in advance" for U.S. agricultural sales to Cuba under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) as the payment by the purchaser prior to the transfer of title, and release of control, of such commodity or product to the purchaser; and authorize direct transfers between Cuban and U.S. financial institutions executed in payment for a product authorized for sale under TSRA. On June 30, 2010, Amnesty International published a report, Restrictions on Freedom of Expression in Cuba , which concluded that the Cuban government "continues to resort to repressive tactics and criminal proceeding to restrict and punish the free expression of opinions." (See the report at http://www.amnesty.org/en/library/info/AMR25/005/2010/en . ) On June 17, 2010, Secretary of State Clinton met with family members of USAID subcontractor Alan Gross, imprisoned in Cuba since December 2009, and issued a statement expressing deep concern about his welfare and poor health. The Secretary maintained that his continued detention "is harming U.S.-Cuba relations." On June 4, 2010, the Senate Committee on Armed Services reported the National Defense Authorization Act for FY2011, S. 3454 ( S.Rept. 111-201 ), with a provision in Section 1236 that would require a report on any connections between Cuba and drug trafficking organizations; any support to Cuba provided by Bolivia, Ecuador, or Venezuela; any agreements between Cuba and countries on the state sponsors of terrorism list; and any activities by Cuba to develop any biological or cyber warfare capabilities. On April 29, 2010, the Senate Foreign Relations Committee majority issued a staff report that concluded that Radio and TV Martí "continue to fail in their efforts to influence Cuban society, politics, and policy." On March 24, 2010, President Obama issued a statement expressing deep concern about the human rights situation in Cuba, including the death of Orlando Zapata Tamayo, the repression of the Ladies in White (Damas de Blanco) human rights organization, and increased harassment of those who dare to express the desires of their fellow Cuban citizens. He asserted that these events underscore that "Cuban authorities continue to respond to the aspirations of the Cuban people with a clenched fist." The President called for the end of repression, the immediate and unconditional release of all political prisoners, and respect for the basic rights of the Cuban people. (See the statement at http://www.whitehouse.gov/the-press-office/statement-president-human-rights-situation-cuba .) On March 18, 2010, the Senate approved S.Con.Res. 54 (Nelson, Bill) by unanimous consent. The resolution recognized the life of Orlando Zapata Tamayo, who died on February 23, 2010, in the custody of the Cuban government, and called for a continued focus on the promotion of internationally recognized human rights in Cuba. On March 16-17, 2010, Cuban security forces and government-orchestrated mobs forcefully broke up protests of the Ladies in White human rights organization consisting of the female relatives of political prisoners. On March 11, 2010, the House Committee on Agriculture held a hearing to review U.S. agricultural sales to Cuba. On March 11, 2010, the State Department released its 2009 human rights report on Cuba, stating that the Cuban government continued to deny its citizens basic human rights and committed numerous and serious abuses. (See http://www.state.gov/g/drl/rls/hrrpt/2009/wha/136108.htm .) On March 3, 2010, the House Committee on the Judiciary held a hearing on the "Domestic and International Trademark Implications of HAVANA CLUB and Section 211 of the Omnibus Appropriations Act of 2009." (See http://judiciary.house.gov/hearings/hear_100303.html .) (See " Trademark Sanction .") On March 1, 2010, the State Department released its 2010 International Narcotics Control Strategy Report (INCSR). The Cuba chapter noted that some of Cuba's interdiction operations were undertaken in coordination with the U.S. Coast Guard Drug Interdiction Specialist at the U.S. Interests Section in Havana. The report stated that "both nations may gain by pressing forward with expanded cooperation, especially considering Cuba's location in the Caribbean, and the potential for the island and its territorial seas to be utilized for drug transshipments to the United States." On February 23, 2010, Cuban political prisoner Orlando Zapata Tamayo died after being on a hunger strike for more than 83 days. Zapata originally was arrested in March 2003 and sentenced in 2004 to three years in prison, but he was subsequently tried on further charges and was serving a total sentence of 36 years. U.S. officials maintained that Zapata's death highlighted the injustice of Cuba's holding of more than 200 political prisoners and called for their immediate release. On February 19, 2010, U.S. and Cuban officials met in Havana to discuss implementation of the 1994 and 1995 migration accords. This was the second round of migration talks since they were resumed in mid-2009. During the talks, U.S. officials had urged Cuban officials to provide political prisoner Orlando Zapata Tamayo all necessary medical care, and also raised the case of U.S. citizen Alan Gross detained in Cuba since early December 2009, calling for his release. On December 16, 2009, President Obama signed into law the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), with several Cuba provisions. These included defining the term "payment of cash in advance" for U.S. agricultural exports to Cuba; providing $30.374 million for Cuba broadcasting (about $2 million less than the request); and fully funding the Administration's request for $20 million in Cuba democracy funding. On December 4, 2009, Cuban authorities arrested an American contractor working for Development Alternatives Inc., a Bethesda-based company that had received a contract from the U.S. Agency for International Development to help support Cuban civil society organizations. After repeated requests, U.S. consular officials were allowed to visit the American on December 28. (For more, see " December 2009 Detainment of American Subcontractor " above.) On November 19, 2009, the House Committee on Foreign Affairs held a hearing on U.S. restrictions on travel to Cuba entitled "Is it Time to Lift the Ban on Travel to Cuba?" that featured former U.S. government officials and other private witnesses. On November 18, 2009, Human Rights Watch issued a report criticizing Cuba's human rights record under the government of Raúl Castro. According to the report, Raúl's government has kept Cuba's repressive machinery in place, with scores of political prisoners languishing in jail and the use of "draconian laws and sham trials to incarcerate scores more who have dared to exercise their fundamental freedoms." (The full report is available at http://www.hrw.org/en/reports/2009/11/18/new-castro-same-cuba . ) On November 6, 2009, Cuban Internet bloggers Yoaní Sánchez, Orlando Luis Pardo, and Claudia Cadelo were intercepted by state security agents while walking to participate in a march against violence. Sánchez and Pardo were beaten in the assault. The Department of State issued a statement deploring the attack, and expressed its deep concern to the Cuban government for the incident. On October 20, 2009, the Cuban government released Nelson Alberto Aguiar Ramírez from prison following a visit to Cuba by Spanish Foreign Minister Miguel Angel Moratinos. Aguiar Ramírez was a member of the "group of 75" imprisoned in Cuba's 2003 crackdown; with his release, 53 of the original 75 remain imprisoned. On September 17, 2009, the United States and Cuba held talks in Havana on resuming direct mail service between the two countries. The Department of State expressed satisfaction with the talks, which included discussion on issues related to the transportation, quality, and security of mail service. According to the State Department, both sides agreed that they would meet again after consultations with their governments. On September 17, 2009, the Government Accountability Office (GAO) issued a report on the U.S. embargo on Cuba that outlined recent Administration changes to the embargo and discussed presidential and congressional authorities to ease the embargo. (U.S. GAO, "U.S. Embargo on Cuba: Recent Regulatory Changes and Potential Presidential or Congressional Action," GAO-09-951R, September 17, 2009, available at http://www.gao.gov/new.items/d09951r.pdf . ) On September 3, 2009, both the Treasury and Commerce Department amended the Cuba embargo regulations to implement President Obama's April 13, 2009, initiative to lift restrictions on family travel and remittances and to increase telecommunications links with Cuba. (See the Treasury Department's fact sheet on the new regulations issued by the Office of Foreign Assets Control, available at http://www.treas.gov/press/releases/tg273.htm , and the Commerce Department's press release on new regulations issued by the Bureau of Industry and Security, available at http://www.bis.doc.gov/news/2009/bis_press09032009.htm . ) On July 31, 2009, Cuba's Communist Party (PCC) indefinitely postponed plans to hold its sixth congress (the last was held in 1997), which was supposed to take place at the end of 2009. Some observers maintain that Cuba's poor economic situation prompted the postponement of the congress, which was supposed to deal with potential economic changes. On July 27, 2009, the State Department acknowledged in its daily press briefing that in June it had turned off the electronic billboard at the U.S. Interests Section in Havana that had been set up in 2006 and had featured news and pro-democracy messages that irked the Cuban government. The Cuban government had taken down anti-U.S. billboards around the U.S. mission earlier this year. On July 26, 2009, President Raúl Castro delivered a Revolutionary Day speech in which he exhorted Cubans to work idle land that is being distributed in order to increase food production and reduce Cuban food imports. On July 22, 2009, the Senate approved S.Amdt. 1535 (Martinez) to the Senate version of the National Defense Authorization Act for FY2010, S. 1390 (Levin). The amendment added a provision to the bill requiring a report from the Director of National Intelligence on potential Cuban activities related to drug trafficking, clandestine activities in the United States, research and development for biological weapons production, and Cuba's relations with Iran, North Korea, Venezuela and several other countries. The provision became Section 1222 of the Senate version of H.R. 2647 (Skelton), which the Senate approved on July 23, substituting the language of S. 1390 as amended. Note: the House bill did not include a similar provision, and the provision was not included in the conference report on the measure. On July 16, 2009, the House approved H.R. 3170 , the FY2010 Financial Services and General Government Appropriations Act, with a provision in section 618 that provides that the term "payment of cash in advance" as used in the Trade Sanctions Reform and Export Enhancement Act of 2000 "shall be interpreted as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser." The Senate version of the bill, S. 1432 , reported out of committee on July 10, 2009 ( S.Rept. 111-43 ), has an identical provision. Note: the provision ultimately was included in Division C (section 619) of the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) enacted in December 2009. On July 16, 2009, about 150 U.S. and Cuban military and civilian personnel took part in an emergency response drill on both sides of the perimeter of the U.S. Naval Station at Guantanamo Bay, Cuba. The annual exercises dates back to 1999. On July 14, 2009, the first U.S.-Cuban migration talks since 2003 were held in New York. On July 9, 2009, the House approved H.R. 3081 , the FY2010 State Department, Foreign Operations, and Related Programs Appropriations Act, with several Cuba provisions. On the same day, the Senate Appropriations Committee reported out its version of the appropriations measure, S. 1434 ( S.Rept. 111-44 ). Both bills would continue a prohibition against direct funding for the government of Cuba, require that any funding for Cuba go through the regular notification procedures of the Committees on Appropriations, and fully fund the Administration's $20 million request for Cuba democracy projects. The House bill would fully fund the Administration's $32.474 million for Cuba broadcasting while the Senate bill would provide $17.474 million, prohibit funding for TV Martí broadcasts to Cuba, and require a report from the Secretary of State on various aspects of Cuba broadcasting. The Senate bill would also provide $1 million for preliminary work on counternarcotics cooperation with Cuba while the House bill does not have a comparable provision. Note: final action was completed in Division F of the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) enacted in December 2009. That law provided $30.474 million for Cuba broadcasting, $20 million for Cuban democracy projects, continued the general prohibition against direct funding for the government of Cuba, and continued the requirement that any assistance for Cuba go through the regular notification procedures of the Committees on Appropriations. On June 17, 2009, the House Subcommittee on International Organizations, Human Rights, and Oversight of the Committee on Foreign Affairs held an oversight hearing on TV Martí. On June 10, 2009, the House approved H.R. 2410 , the FY2010 and FY2011 Foreign Relations Authorization Act, which would continue to authorize funding for radio and television broadcasting to Cuba within the International Broadcasting Operations account. During floor consideration, the House defeated H.Amdt. 182 that would have required the Secretary of State to withhold funds from the U.S. contribution to the International Atomic Energy Agency (IAEA) in an amount equal to nuclear technical cooperation provided by the IAEA in 2007 to Iran, Syria, Sudan, and Cuba. On June 4, 2009, the FBI arrested a retired State Department employee and his wife, Walter Kendall Myers and Gwendolyn Steingraber Myers, for allegedly spying for Cuba for more than two decades. (The Myerses pled guilty to the spying charges in November 2009, and in July 2010 Kendall Myers was sentenced to life in prison while Gwendolyn Myers was sentenced to 81 months.) On June 3, 2009, the Organization of America States (OAS) approved a consensus resolution that overturned the 1962 resolution excluding Cuba from participating in the OAS, and stated that Cuba's participation in the OAS "will be the result of a process of dialogue initiated at the request of the Government of Cuba, and in accordance with the practices, purposes, and principles of the OAS." Cuba subsequently stated that it does not want to rejoin the OAS. In late May 2009, Cuba and the United States agreed to restart the semi-annual migration talks that had been suspended by the United States in 2004 as well as talks on direct postal service between the two countries. On May 14, 2009, the Senate approved S.Res. 149 (Martinez) calling for the immediate release of Cuban citizens imprisoned for exercising rights associated with freedom of the press. On April 29, 2009, the House Subcommittee on National Security and Foreign Affairs of the Committee on Oversight and Government Reform held a hearing on the "National Security Implications of U.S. Policy Toward Cuba." On April 27, 2009, the House Subcommittee on Commerce, Trade and Consumer Protection of the Energy and Commerce Committee held a hearing on "Examining the Status of U.S. Trade with Cuba and Its Impact on Economic Growth." On April 13, 2009, the Obama Administration announced several measures to ease U.S. sanctions on Cuba. Fulfilling a campaign pledge, President Barack Obama directed that all restrictions on family travel and on remittances to family members in Cuba be lifted. The Administration also announced measures to increase telecommunications links with Cuba and to expand the scope of eligible humanitarian donations through gift parcels. (For additional details, see the White House fact sheet available at http://www.whitehouse.gov/the_press_office/Fact-Sheet-Reaching-out-to-the-Cuban-people/ . ) On March 11, 2009, President Obama signed into law the Omnibus Appropriations Act, 2009 ( H.R. 1105 , P.L. 111-8 ), which has three provisions intended to ease U.S. sanctions on Cuba for family travel (Section 621 of Division D), travel related to the marketing and sale of agricultural and medical exports (Section 620 of Division D), and payment terms for U.S. agricultural exports to Cuba (Section 622 of Division D). On March 2, 2009, President Raúl Castro orchestrated a government shake-up, ousting a dozen high-ranking officials, including Foreign Minister Felipe Pérez Roque and Cabinet Secretary Carlos Lage. On February 27, 2009, the State Department issued its 2009 International Narcotics Control Strategy Report (INCSR), which maintained that U.S.-Cuban counter-narcotics cooperation continued in 2008. (See the full INCSR report, available at http://www.state.gov/p/inl/rls/nrcrpt/2009/index.htm . ) On February 25, 2009, the State Department issued its 2008 human rights report on Cuba, which maintained that the Cuban government "continued to deny its citizens their basic human rights and committed numerous, serious abuses." (See the report, available at http://www.state.gov/g/drl/rls/hrrpt/2008/wha/119155.htm . ) On February 2, 2009, the independent Cuban Commission on Human Rights and National Reconciliation (CCDHRN) documented at least 205 political prisoners in Cuba, down from 234 in January 2008. The Commission maintains that the government has resorted to short-term arbitrary detentions to target suspected dissidents, with more than 1,500 such detentions in 2008. On January 22, 2009, the Government Accountability Office (GAO) issued a report citing concerns with Radio and TV Martí's adherence to relevant laws and standards, and maintaining that its audience is small despite its broadcasts to Cuba through multiple methods. (U.S. GAO, "Broadcasting to Cuba, Actions Are Needed to Improve Strategy and Operations," GAO-09-127. January 22, 2009, available at http://www.gao.gov/products/GAO-09-127 . ) On January 22, 2009, Fidel Castro stated that he had reduced the number of his published essays ("Reflections of the Commander") so as not to interfere with the authority of party or government officials, and insisted that they should not feel bound by his occasional essays or even his state of health or death. Castro also maintained that he does not expect to be in such a position to meditate and write about events when Obama's first term has ended. ("Text of Fidel Castro's Online Essay," Associated Press Newswires , January 22, 2009.) On January 15, 2009, during her Senate Foreign Relations Committee confirmation hearing for Secretary of State, Senator Hillary Clinton reiterated President-elect Obama's pledge to lift restrictions on family travel and remittances as well as his position that it is not time to lift the embargo since it provides an important source of leverage for further change in Cuba. Clinton also responded to written questions for the record that the new Administration expected to undertake a review of U.S. policy toward Cuba. On January 15, 2009, Cuba released Varela Project activist Reynaldo Labrada Peña from prison following the completion of his six-year sentence. Peña was one of the "group of 75" political prisoners who have been incarcerated since 2003. Overall, there are more than 200 political prisoners in Cuba. On January 1, 2009, Cuba celebrated the 50 th anniversary of the Cuban Revolution. Appendix B. For Additional Reading Active CRS Reports CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by [author name scrubbed]. CRS Report R40566, Cuban Migration to the United States: Policy and Trends , by [author name scrubbed]. CRS Report R40139, Closing the Guantanamo Detention Center: Legal Issues , by [author name scrubbed] et al. CRS Report R40754, Guantanamo Detention Center: Legislative Activity in the 111th Congress , by [author name scrubbed]. CRS Report R41340, Financial Services and General Government (FSGG): FY2011 Appropriations , coordinated by [author name scrubbed]. CRS Report R40801, Financial Services and General Government (FSGG): FY2010 Appropriations , coordinated by [author name scrubbed]. CRS Report RL34523, Financial Services and General Government (FSGG): FY2009 Appropriations , coordinated by [author name scrubbed]. CRS Report RL32826, The Medical Device Approval Process and Related Legislative Issues , by [author name scrubbed]. CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean , by [author name scrubbed]. CRS Report RL32014, WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases , by [author name scrubbed]. Archived CRS Reports CRS Report RS20450, The Case of Elian Gonzalez: Legal Basics , by [author name scrubbed] (pdf). CRS Report RL33622, Cuba's Future Political Scenarios and U.S. Policy Approaches , by [author name scrubbed]. CRS Report RS22742, Cuba's Political Succession: From Fidel to Raúl Castro , by [author name scrubbed]. CRS Report RL32251, Cuba and the State Sponsors of Terrorism List , by [author name scrubbed]. CRS Report RL33819, Cuba: Issues for the 110 th Congress , by [author name scrubbed]. CRS Report RL32730, Cuba: Issues for the 109 th Congress , by [author name scrubbed]. CRS Report RL31740, Cuba: Issues for the 108 th Congress , by [author name scrubbed]. CRS Report RL30806, Cuba: Issues for the 107 th Congress , by [author name scrubbed] and [author name scrubbed]. CRS Report RL30628, Cuba: Issues and Legislation In the 106 th Congress , by [author name scrubbed] and [author name scrubbed]. CRS Report RL30386, Cuba-U.S. Relations: Chronology of Key Events 1959-1999 , by [author name scrubbed] (pdf). CRS Report RL33499, Exempting Food and Agriculture Products from U.S. Economic Sanctions: Status and Implementation , by [author name scrubbed]. CRS Report RS22094, Lawsuits Against State Supporters of Terrorism: An Overview , by [author name scrubbed]. CRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism , by [author name scrubbed]. CRS Report 94-636, Radio and Television Broadcasting to Cuba: Background and Issues Through 1994 , by [author name scrubbed] and [author name scrubbed] (pdf). CRS Report RS21764, Restricting Trademark Rights of Cubans: WTO Decision and Congressional Response , by [author name scrubbed].

Cuba remains a one-party communist state with a poor record on human rights. The country's political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was characterized by a remarkable degree of stability. The government of Raúl Castro implemented limited economic policy changes in 2008 and 2009, and in September 2010 began a significant series of reforms to reduce the public sector and increase private enterprise. Few observers expect the government to ease its tight control over the political system, although it has reduced the number of political prisoners significantly. Since the early 1960s, U.S. policy has consisted largely of isolating Cuba through economic sanctions. A second policy component has consisted of support measures for the Cuban people, including U.S.-sponsored broadcasting and support for human rights activists. In light of Fidel Castro's departure as head of government, many observers called for a re-examination of U.S. policy. The Obama Administration lifted restrictions on family travel and remittances and restarted talks with the Cuban government. It criticized Cuba's repression of dissidents, but also welcomed the release of political prisoners. The Administration also repeatedly called for the release of a U.S. government subcontractor imprisoned since December 2009. The 111th Congress approved three provisions in the FY2009 omnibus appropriations measure (P.L. 111-8) in March 2009 that eased sanctions on family travel, travel for the marketing of agricultural and medical goods, and payment terms for U.S. agricultural exports. In December 2009, Congress included a provision in the FY2010 omnibus appropriations legislation (P.L. 111-117) that eased payment terms for U.S. agricultural exports to Cuba during FY2010 by defining the term "payment of cash in advance" more broadly. While Congress did not complete action on any of the FY2011 appropriations measures, it did approve a series of short-term continuing resolutions (P.L. 111-242, as amended), the last of which (P.L. 111-322) provided funding for federal agencies through March 4, 2011 under conditions provided in enacted FY2010 appropriations measures. This extended the "payment of cash in advance provision" and also continued Cuba broadcasting and democracy funding. In other legislative action, in May 2009, the Senate approved S.Res. 149, related to freedom of the press, and in March 2010 it approved S.Con.Res. 54, recognizing the death of a Cuban hunger striker. Numerous other initiatives were introduced, but not considered. Several of these would have eased Cuba sanctions: H.R. 188, H.R. 1530, and H.R. 2272 (overall sanctions); H.R. 874/S. 428 and H.R. 1528 (travel); H.R. 332 (educational travel); H.R. 1531/S. 1089 and H.R. 4645/S. 3112 (agricultural exports and travel); H.R. 1737 (agricultural exports); and S. 774, H.R. 1918, and S. 1517 (hydrocarbon resources). H.R. 1103/S. 1234 would have modified a trademark sanction, while several bills cited above would have repealed the sanction. S. 1808 would have eliminated Radio and TV Martí. Measures that would have increased sanctions were: H.R. 2005 (related to fugitives), H.R. 2687 (Organization of American States participation), and H.R. 5620 (Cuba's oil development). H.Con.Res. 132 would have called for the fulfillment of certain democratic conditions before the United States increased trade and tourism to Cuba. This report reflects legislative developments through the 111th Congress and will not be updated. Also see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances, and CRS Report R41522, Cuba's Offshore Oil Development: Background and U.S. Policy Considerations.

The Consolidated Appropriations Act , FY2016. On December 18, 2015, Congress passed an omnibus appropriations law for FY2016 (Consolidated Appropriations Act, 2016; P.L. 114-113 / H.R. 2029 ), and the President signed it the same day. Division K of the law provides $52.83 billion for the Department of State, Foreign Operations, and Related Programs (SFOPS) for FY2016. This amount is 1.7% greater than the FY2015 estimate and 0.2% below the President's FY2016 request. Of the total, $14.90 billion is designated as Overseas Contingency Operations (OCO) funds, as directed by the Bipartisan Budget Act of 2015 (see below). A joint explanatory statement accompanying the legislation provides further congressional directives. The Bipartisan Budget Act of 2015 (BBA). On November 2, 2015, the President signed into law the Bipartisan Budget Act of 2015 ( H.R. 1314 ; P.L. 114-74 ), which was passed by Congress at the end of October. The law raised the overall revised discretionary spending limit that the Budget Control Act ( P.L. 112-25 ) set by $50 billion (from $1.016 trillion to $1.066 trillion) for FY2016 and by another $30 billion (from $1.039 trillion to $1.069 trillion) for FY2017. It increased both security (from $523.1 billion to $548.1 billion) and nonsecurity funding levels (from $493.5 billion to $518.5 billion) and raised OCO funding by $32 billion, divided equally over the two years and between defense and nondefense. It also established minimum OCO funds for both defense and nondefense. For nondefense (SFOPS) OCO, the minimum is $14.9 billion in FY2016 and FY2017. Refugee Supplemental. On October 6, the chairman and ranking member of the Senate SFOPS subcommittee introduced a supplemental appropriations bill ( S. 2145 ) to provide an additional $1 billion in FY2016 emergency funding, through the Migration and Refugee Assistance account, to address the refugee crisis caused by conflict in the Middle East. No action was taken on this legislation. Minibus Legislation. On October 5, 2015, four "minibus" appropriations bills were introduced in the Senate, including S. 2130 , which bundled the Senate FY2016 SFOPS bill ( S. 1725 ) with the Senate FY2016 bills making appropriations for the Department of Defense, Energy and Water Development, Department of Homeland Security, Military Construction, and Department of Veterans Affairs. No action was taken on this legislation. Continuing Resolutions (CR) . On September 30, 2015, the House and Senate approved, and President Obama signed into law, a resolution to provide temporary FY2016 continuing appropriations through December 11, 2015 ( P.L. 114-53 ). The CR covered all of the regular appropriations, including SFOPS, and continued the same authorities and conditions as the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), except Title IX (Ebola Response and Preparedness). Under the CR, most programs and activities were funded at the FY2015 level, minus an across-the-board reduction of 0.2108%. The reduction did not apply to funds designated as OCO. According to CBO's calculations, SFOPS FY2016 discretionary budget authority was estimated to be $40.6 billion, plus an additional $9.3 billion of OCO funds. Anomalies within the CR that affected SFOPS accounts or activities included allowed funding allocated in certain accounts for Ukraine to be obligated at an accelerated rate, if necessary, to sustain assistance to that country (§148); prohibited high rates of funding distribution early in the fiscal year (§109), which undermined the 30-day distribution requirement for Foreign Military Financing aid to Israel; extended the authority of the U.S. Commission on International Freedom from September 30, 2015, to December 11, 2015 (§147); and extended authority for the U.S. Commission on Public Diplomacy beyond October 1, 2015, to December 11, 2015 (§149). Congress passed two more CRs in order to buy time to vote on the final omnibus appropriation. P.L. 114-96 was signed on December 11, 2015, and continued appropriations through December 16, 2015. P.L. 114-100 was signed on December 16, 2015, and continued appropriations through December 22, 2015. Committee Action. On July 9, 2015, the Senate Appropriations Committee approved its FY2016 SFOPS bill ( S. 1725 ) and reported it to the full Senate. Totaling $49.77 billion before rescissions, the Senate committee recommendation was $2.20 billion (4.2%) below the FY2015 appropriated level, which included Ebola supplemental funding, and $4.31 billion (8%) below the President's FY2016 request. Net of rescissions, the Senate bill funding totaled $48.01 billion. On June 11, 2015, the House Appropriations Committee approved an FY2016 SFOPS bill ( H.R. 2772 ) on a voice vote. Totaling $48.19 billion, before rescissions, H.R. 2772 was $3.78 billion (7.3%) below the FY2015 enacted level (including Ebola emergency appropriations) and $5.89 billion (10.9%) below the FY2016 request. Net of rescissions, the House bill funding totaled $47.99 billion. Budget Resolution (302(a) and 302(b) Allocations). On March 25 and 27, respectively, the House and Senate passed budget resolutions for FY2016. In H.Con.Res. 27 , the House recommended an FY2016 budget authority of $38.34 billion for International Affairs, while in S.Con.Res. 11 the Senate recommended $47.79 billion. On April 30, 2015, the House agreed to a conference report that set the FY2016 budget authority for International Affairs enduring funds at $40.20 billion; the Senate agreed to the same on May 5, 2015. While the conference report included $96.287 billion in Overseas Contingency Operations (OCO) topline levels, suballocation levels of OCO were not provided. Hearings. In February and March, Secretary of State John Kerry and Acting USAID Administrator Alfonso Lenhardt testified before the House and Senate Appropriations Committees, as well as the House Foreign Affairs and the Senate Foreign Relations Committees on the FY2016 SFOPS request. Other Administration officials testified regarding various aspects of the international affairs budget request as well. Budget Submitted to Congress. On February 2, 2015, the President submitted his FY2016 budget to Congress. On February 2, 2015, the Obama Administration submitted to Congress its FY2016 budget request, which included $54.08 billion for the State Department, Foreign Operations, and Related Appropriations (SFOPS). Of the total SFOPS request, $17.54 billion was for programs funded through the State operations and related agencies accounts (a 10.9% increase over FY2015 estimates that include emergency Ebola funds), and $36.53 billion was for Foreign Operations accounts (a 1.2% increase from FY2015 estimates that include emergency Ebola funds). About 13% of the request was designated for Overseas Contingency Operations (OCO), compared with 14.6% of the FY2015 SFOPS funding request and 17.8% of enacted FY2015 funding. Figure 1 , above, shows funding for State Operations and Foreign Operations accounts for each of the past 10 years. Figure 2 , below, provides a breakout of the total FY2016 SFOPS budget request by key components. This report provides an overview and highlights of the request, as well as congressional actions. Appendix A offers an account-by-account comparison of the FY2016 request and legislation to the FY2015-estimated funding. Appendix B provides the International Affairs 150 budget function funding levels. This report will continue to be updated to reflect additional congressional action on FY2016 SFOPS appropriations. The Obama Administration announced in early February 2015 that its FY2016 budget request exceeded the discretionary budget caps established by the Budget Control Act of 2011 (BCA, P.L. 112-25 ) that established defense and nondefense discretionary spending limits for FY2012-FY2021. This raised concern about the possibility of sequestration. Should Congress appropriate discretionary funds that exceed the BCA caps, without repealing the BCA or otherwise legislating a change in the caps, an automatic spending reduction process established by the BCA would be triggered, consisting of a combination of sequestration and lower discretionary spending caps. The sequestration process was triggered in FY2013, but avoided in FY2014 and FY2015 when Congress adhered to less stringent spending caps for those years established by the Bipartisan Budget Act (BBA, H.J.Res. 59 , P.L. 113-67 ). For FY2016, the BCA caps were again in effect, creating a potential standoff between the President, who requested raising the budget caps for both defense and nondefense in FY2016, and some in Congress who want to raise the caps only for defense. Enactment in November 2015 of the Bipartisan Budget Act of 2015 ( P.L. 114-74 ), which amended the BCA and raised both the defense and nondefense discretionary spending caps for FY216 and FY2017, averted this conflict and paved the way for the omnibus appropriations agreement. In the FY2016 request, as every year since FY2012, the Administration distinguished between enduring or "core" funding and funding to support "overseas contingency operations" (OCO), described in earlier budget documents as "extraordinary, but temporary, costs of the Department of State and USAID in Iraq, Afghanistan and Pakistan." The OCO designation is particularly significant because the BCA specified that emergency or OCO funds do not count toward the budget caps established by the act. For FY2016, $7.05 billion, or about 13% of the SFOPS request, was designated as OCO. The FY2016 OCO request represented a decline of 23.9% compared with the FY2015-estimated level of $9.26 billion (excluding Ebola Emergency funds) that included funds for the three frontline states, "other areas of unrest," anti-terrorism activities, and operations to counter the Islamic State (IS). (See Table 2 and Figure 3 .) For FY2016, the Administration sought to grow funding for the State Department and Related Accounts category by 10.6% over FY2015-estimated levels, to $17.55 billion. Both "base" (or "enduring") funding and overseas contingency operations (OCO) funding would have grown under the proposal, by 11.6% and 4.6%, respectively. The composition of this portion of the budget request is illustrated in Figure 4 . (A 10-year historical trend line appears in Figure 1 .) Among the top-line accounts, Diplomatic and Consular Programs (D&CP), the department's main operating account, would have grown by 9.6%, to $8.6 billion. Public diplomacy (PD) spending, including exchange programs and international broadcasting, would have seen a 3.2% boost to a total of $1.37 billion under the FY2016 request. The State Department's second-largest administrative account is Embassy Security, Construction and Maintenance (ESCM); the FY2016 proposal called for $2.22 billion, a 4.5% decrease from the FY2015-estimated level (see Table 3 ). Other noteworthy reductions in the proposed budget included significant proposed cuts in the "Related Programs" account, which funds a number of non-governmental institutions. The FY2016 request proposed a 20% lower level for these accounts overall, which would have meant budget reductions to, among other institutions, the East-West Center, the Asia Foundation, and the National Endowment for Democracy (cuts of 35%, 29%, and 23%, respectively). The following sections provide additional information about a number of particularly noteworthy elements within the State Operations accounts. H.R. 2772 would have provided $8.04 billion for Diplomatic and Consular Programs, both enduring and OCO, including $3.4 billion for Worldwide Security Protection. Nevertheless, Section 7077 of the legislation, "Preservation and Transparency of Department of State Records," would have withheld 15% of all non-Worldwide Security Protection funds (an estimated $700 million) from the Diplomatic and Consular Programs account until the Secretary of State certified and reported that the department has updated its procedures, guidance, and training to comply with federal regulations that all employees are properly preserving official records and ensuring their prompt accessibility. In addition, the measure would have required the department to develop and implement a plan to reduce backlog for information requests and improve response time. While the Senate committee measure would not have withheld funds for these purposes, Section 7077 of S. 1725 prohibited funding "to support the use or establishment of email accounts or email servers created outside the .gov domain or not fitted for automated records management as part of a Federal Government records management program." The Senate bill also requested a recurring report on pending congressional committee information requests, as well as a report on reducing the State Department's backlog of Freedom of Information Act (FOIA) requests. While not withholding the amount specified in the House committee bill, Section 7077 of P.L. 114-113 / H.R. 2029 requires a report from the Secretary of State and USAID Administrator to the Committees on Appropriations and to the National Archives and Records Administration that describes policies in place and improvements planned regarding email and record-keeping practices. Until the report is provided, $10 million is withheld from the Capital Investment Fund. The report is to be assessed by the GAO. The measure also prohibits the use of funding to support the use or establishment of email accounts or email servers created outside the .gov domain or not fitted for automated records management. Operations in the challenging environments of the three countries termed "frontline states"—Afghanistan, Pakistan, and Iraq—continue to be a focus of attention by the department. Together, these three countries made up almost 18% of the department's overall request for operational funding. In contrast to its FY2015 request for operations in Afghanistan , which sought funding for facilities in multiple locations (including consulates in Herat and Mazar-e-Sharif, and presence in Kandahar and Jalalabad), the department's FY2016 request of $963 million would have funded a Kabul-only presence and returned 21 direct-hire positions to other priorities at the department, reflecting a more conservative approach in the wake of the ongoing U.S. military drawdown. An increase of 23% in enduring funding over FY2015-estimated levels was requested to enable the Embassy to be self-sustaining. The request for State operations in Pakistan was also impacted by the U.S. military drawdown in Afghanistan. The department sought to continue "normalizing" operations in that country, through an additional 21% increase in requested funding over FY2015 levels to $114 million, to compensate for reduced carryover funding from previous years. FY2016 funding requested for State operations in Iraq— a total of $1.1 billion — would have continued a trend of shifting OCO funding requests to enduring funding, with the latter category growing by 113%, and OCO decreasing by 5% from FY2015 levels. H.R. 2772 would not have provided a specific funding recommendation for operations in the frontline states, and explained in the accompanying report language regarding Afghanistan and Pakistan that this was a natural result of the continuing fluidity of staffing and programmatic requirements in those countries. In S. 1725 , Senate appropriators recommended the full amount of the President's budget request for operations in Afghanistan and Iraq under the Diplomatic and Consular Programs (D&CP) and Embassy Security, Construction, and Maintenance (ESCM) headings. For Afghanistan, the measure included a regular reporting requirement on the number of U.S. personnel in-country under Chief of Mission authority, including locally employed staff and contractors. For Iraq operations, the Senate measure included a limitation prohibiting funding for construction, rehabilitation, or other improvements to U.S diplomatic facilities in Iraq on property for which no land-use agreement exists. P.L. 114-113 / H.R. 2029 does not specify funding levels for the frontline states, although it does designate $2.56 billion in OCO funds within the D&CP account "for the extraordinary costs of operations and security in Afghanistan, Pakistan, Iraq, areas of unrest, and high threat and high risk posts." Of this funding, the measure allocates $595 million for operations. The International Organizations accounts, including both Contributions to International Organizations (CIO) and Contributions for International Peacekeeping Activities (CIPA), would have seen a significant jump in funding under the FY2016 request, to $4.62 billion. Growth of nearly 29% for the two accounts over FY2015-estimated levels would have funded a number of Administration priorities. The CIO account funds the U.S. share of the assessed budgets of 45 international organizations. The FY2016 request sought $1.54 billion under this category, a 5% increase from FY2015-estimated levels that would have boosted funding to the U.N. and Affiliated Agencies, NATO, and other organizations. The CIO request did not include funds for the United Nations Educational, Scientific and Cultural Organization (UNESCO), although Administration officials suggest they will continue to seek a waiver from Congress to fund the organization. The CIPA request jumped 38% from FY2015 levels to $2.93 billion; this account funds a number of U.N. peacekeeping missions and international war crimes tribunals. Reasons for this proposed increase included (1) $380 million to cover projected outstanding assessments remaining from FY2015; (2) differences between the U.N.-assessed U.S. share of peacekeeping costs (28.36%) and the amount recognized by U.S. law (27.14%); and (3) growth in the scope and cost of U.N. peacekeeping missions in the Central African Republic, Somalia, and South Sudan. In addition, the Administration's FY2016 request included a $150 million Peace Operations Response Mechanism, a repeat proposal from the FY2015 request intended to support urgent—but as yet undefined—peacekeeping needs. The OCO funds requested for the Peace Operations Response Mechanism would have allowed State to support contingency operations without taking funds from other peacekeeping efforts in progress or returning to Congress for off-cycle budgetary requests, officials suggest. The proposal was not funded by appropriators in FY2015. House appropriators would not have provided the requested increase for these two accounts in H.R. 2772 , instead funding the CIPA and CIO accounts at the same level as enacted for FY2015 (and not providing any OCO funding). As in FY2015, the committee recommendation did not include an appropriation for a Peace Operations Response Mechanism. Senate appropriators would have provided $1.51 billion for the CIO account (in between the Administration's $1.54 billion request and the House's $1.47 billion), $52 million of which would be OCO funds. S. 1725 would have provided a significant increase from FY2015 for the CIPA account, to $2.75 billion (of which $505 million would be OCO funds), $177 million less than the President's request. As in FY2015, the committee recommendation did not include an appropriation for a Peace Operations Response Mechanism. P.L. 114-113 / H.R. 2029 includes $1.45 billion for the CIO account (of which $102 million are OCO funds) or $94 million less than requested. For the CIPA account, it provides $2.46 billion ($1.8 billion of which is OCO), or $470 million less than requested. Under the measure, 73% of CIPA funding is shifted to OCO from the base budget. As in FY2015, no funds are appropriated for a Peace Operations Response Mechanism. In the wake of the September 11, 2012, attack on U.S. personnel in Benghazi, Libya, congressional and executive branch efforts to better prepare U.S. diplomats and facilities abroad for security threats have continued. In its FY2016 budget, the Administration sought funding to continue to implement the initiatives launched under the FY2013 Increased Security Proposal and meet the post-Benghazi Accountability Review Board's (ARB's) recommendations. The request included approximately $3.4 billion in Worldwide Security Protection (WSP) funds to provide security personnel with technical tools and training, and approximately $1.4 billion in Worldwide Security Upgrades (WSU) funds to upgrade and maintain safe, secure diplomatic facilities. The FY2016 request for Worldwide Security Protection (WSP), which supports the Diplomatic Security Bureau's functions around the world, would have increased account funding by 9% over FY2015-estimated levels to $3.4 billion. Much of the increase in requested funding was for security measures in Iraq, which were funded by carryover funding in previous years. The WSP request also included a new request for $99 million that would have enabled the department to undertake the first phase of construction of the planned Foreign Affairs Security Training Center (FASTC), a new facility intended to consolidate diplomatic security training at Fort Pickett, Virginia. The request also included $50 million for security enhancements at the U.S. Embassy in Tripoli, Libya, which has been under suspended operations since July 26, 2014. Physical security upgrades at diplomatic facilities, which are mostly funded through Worldwide Security Upgrades (WSU) under the Embassy Security, Construction and Maintenance (ESCM) account, are managed by the Bureau of Overseas Building Operations. The WSU request for FY2016 was for $1.4 billion, a 4.5% decrease from FY2015-estimated levels. Within the ESCM request was $1 billion to provide for the Department of State's share of the Capital Security Cost Sharing (CSCS) program, which is an interagency shared funding mechanism designed to ensure each U.S. government agency represented abroad is paying its fair share of construction costs for new and more secure facilities. The amount requested was down from the $1.4 billion appropriated for this purpose for FY2014, a result of higher assessed contributions from other agencies into the common account. Department officials underlined that the CSCS request met the full $2.2 billion level called for by the post-Benghazi Accountability Review Board. Table 4 summarizes recent funding for the three accounts containing the bulk of funding for diplomatic security measures: Worldwide Security Protection (for security programs including a worldwide guard force), Worldwide Security Upgrades funding (for bricks and mortar security needs, including construction of secure new embassy compounds), and Diplomatic Security Bureau D&CP funding. Under H.R. 2772 , House appropriators would have provided the full enduring and OCO amounts requested for the Worldwide Security Protection account (WSP) and the Worldwide Security Upgrades (WSU) account. The bill prohibited the use of funds for the development of FASTC until the training center is specifically authorized by a subsequent act of Congress. Should the authorization not be provided before September 30, 2016, the appropriators allowed requested funds to be used to expand training at existing sites. Senate appropriators would also have provided the full amount requested under Worldwide Security Protection. The bill would have provided $1.3 billion for Worldwide Security Upgrades, meeting the President's request for enduring funding, but not an additional $124 million in requested OCO funding (which the House would provide). In addition, Section 7006 of the act would have provided authority for the Department of State to award local guard contracts globally on the basis of best value as determined by a cost-technical tradeoff analysis (an authority previously extended only to high-risk, high-threat posts), which the committee report stated is "essential to improving security at missions abroad." P.L. 114-113 / H.R. 2029 provides the full $3.40 billion requested for Worldwide Security Protection, although it shifts a greater proportion to OCO funds. It also provides $1.48 billion, or roughly $60 million more than requested, for Worldwide Security Upgrades. The measure funds the requested FASTC, but only after submission of an outside firm's cost-benefit analysis of three different locations under consideration for locating the training facility. The measure, in Section 7006, also expands the previously geographically limited authority for the State Department to award local guard contracts on the basis of best value as determined by a cost-technical tradeoff analysis, while requiring notification for each such instance at a facility not deemed high threat and high risk. With the support of Congress, the Foreign Service grew by almost 20% between FY2008 and FY2012, and the department's Civil Service by 7% over that same time period. The growth was an attempt to address what many observers saw as chronic personnel shortfalls that were worsened by a sudden need to fill large numbers of overseas positions in the frontline states. The Foreign Service is now experiencing a youth bulge, with junior officers hired in these years beginning to move into the mid-levels of the service. The Administration's FY2016 request for Human Resources (under Diplomatic & Consular Programs) was 1% higher than FY2015-enacted levels, at a total of $2.4 billion. The request indicated that the department sought 39 new positions funded by appropriations (12 Foreign Service and 27 Civil Service), although 21 of these would have been realigned from previously existing positions based in Afghanistan. The department also sought funding throughout the request to address what it terms a gap in the pay of Locally Employed Staff at its overseas posts, relative to local salary conditions. State's more than 46,000 local employees make up upwards of 65% of the department's total workforce; the department seeks to ensure that working as part of U.S. diplomatic missions abroad remains an attractive proposition. Among other personnel-related issues, the department's request notably did not include additional funding for Overseas Comparability Pay (OCP) (as it did in recent years, although not in FY2015). OCP adjustment is intended to bring the base pay of Foreign Service personnel posted overseas to levels comparable to their Foreign Service colleagues serving in Washington, DC, who receive locality pay. OCP has long been a priority of the Foreign Service rank-and-file, who argue that the discrepancy affects morale, retention of FSOs, and acts as a financial disincentive to serve overseas, including by its cumulative impact on retirement pay. The department sought $81.4 million in FY2014 funding to provide the third portion of a three-phase adjustment, the first two tranches of which were supported by Congress in previous years. The third OCP phase has not been supported by congressional appropriators to date. H.R. 2772 would have provided a total of $2.32 billion for Department of State human resources, or 4% less than requested. S. 1725 would have provided $2.24 billion for human resources, and did not support funding for new positions other than those explicitly described in report language. P.L. 114-113 / H.R. 2029 allocates $2.18 billion for human resources, and does not provide funds requested for new non-security position other than those explicitly described in the joint explanatory statement . The legislation continues the prohibition on implementation of the third phase of overseas comparability pay. The Foreign Operations budget funds most traditional foreign aid programs, with the exception of food aid. It includes bilateral economic aid, multilateral aid, security assistance, and export promotion programs, as well as USAID administrative accounts. For FY2016, the Administration requested about $36.53 billion for Foreign Operations accounts, 1.2% more than the FY2015 estimate. Within this, about $5.2 billion was requested with the OCO designation. The FY2016 State-Foreign Operations legislation approved by the appropriations committees of both the House and Senate provided less than requested for foreign operations accounts. The legislation approved by the House appropriations committee ( H.R. 2772 ) included $32.22 billion for Foreign Operations accounts, including $5.55 billion designated as OCO. Overall, this was about 12% less than the Administration requested and 11% less than FY2015 estimated funding. The bill passed by Senate appropriators ( S. 1725 ) included a total of $32.92 billion for foreign operations accounts, about 10% less than requested. This included not only $6.82 billion designated as OCO, but an additional $759 million designated as humanitarian and emergency response (a designation, like OCO, which precludes these funds from being counted toward the BCA caps). The enacted legislation ( P.L. 114-113 ; H.R. 2029 ) appropriates $37.53 billion for foreign operations accounts, of which $9.61 billion is designated as OCO and $1.18 billion as emergency funding. This is about 3% more than requested for FY2016 and 4% above FY2015 foreign operations estimates. Figure 5 shows the FY2016 foreign operations request broken out proportionately by the categories typically used in appropriations legislation, while Table 5 shows the funding trend for each category for FY2014, FY2015, the FY2016 request and enacted legislation. (The overall foreign operations 10-year trend line is depicted in Figure 1 .) The House committee bill, H.R. 2772 , matched the Administration's requested security assistance increase, exceeded the humanitarian assistance request by 18%, and would have provided less than the requested amount for all other categories of aid. Multilateral assistance would have been reduced significantly, with a recommended funding level 58% below the request and 48% lower than the current year estimate. The Economic Support Fund (ESF) account would also have been reduced significantly, though it is not clear exactly which programs might have been affected. S. 1725 , the Senate committee bill, would have provided less than the Administration request for every aid category except humanitarian assistance, for which it recommended 8% more than requested, but came closer than the Senate to meeting the requests for bilateral economic assistance and multilateral assistance. Still, the Senate recommendation on multilateral aid was only about 55% of the amount requested, and about 31% less than FY2015 enacted funding, with sharply reduced contributions to international financial institutions reflecting "an austere budget environment," according to the accompanying report. Unlike the House bill, the Senate bill would have provided the requested $295 million for an International Monetary Fund (IMF) quota increase, which was counted in the multilateral totals. The enacted legislation, P.L. 114-113 / H.R. 2029 , provides more than requested, and more than recommended by both the House and Senate committees, for humanitarian assistance, though the enacted funding level is still below the unusually high FY2015 funding level. The legislation also funds security assistance at 4.5% above the FY2015 level, higher than the request and House and Senate proposals. Multilateral funding includes $1.18 billion in emergency funds for an IMF quota increase, bringing the multilateral total far beyond the House and Senate committee levels, but the IMF funds are offset in total budget terms by a rescission of prior year emergency funding. Under the FY2016 request, top foreign assistance recipients would not have differed significantly from FY2014 (complete FY2015 country data are not yet available). Israel would continue to be the top recipient, with a requested $3.1 billion (level with FY2014) in Foreign Military Financing (FMF) funds, followed by Afghanistan, for which $1.5 billion was requested (a 28% increase from FY2014). Egypt would have received $1.5 billion (-3% from FY2014), largely in FMF to support shared security interests, and Jordan would have received $1.0 billion (-1% from FY2014) to promote security and stability in the region as well as address economic and security strains related to the crisis in Syria. Pakistan would have received $804 million (a 10% cut from FY2014), to continue ongoing efforts to increase stability and prosperity in the region. Other top recipients under the request would have included Kenya ($630 million), Nigeria ($608 million), Tanzania ($591 million), and other African nations that are focus countries for HIV/AIDS programs. A new addition to the top recipient list under the request would have been Ukraine, for which $514 million was requested, as discussed further below. Figure 6 shows the proposed FY2016 foreign operations budget allocations by region and country. Funding allocation among regions would have changed slightly under the FY2016 request compared with FY2014 (FY2015 regional data are not yet available), with Europe/Eurasia and the Western Hemisphere increasing their share by 2% each as a result of proposed funding for Ukraine and Central America. Africa's share of aid funding would have declined by about 5% from FY2014 estimates. The House committee-passed bill did not include comprehensive country allocations, but the committee report did specify aid levels for Israel ($3.1 billion) and Jordan (no less than $1 billion) and emphasized the committee's particular support for assisting Ukraine, Afghanistan, Mexico, and Colombia. The report accompanying the Senate-passed legislation, S.Rept. 114-79 , provided unusually detailed account allocation tables. While it did not comprehensively list country allocations, it details funding by account to several countries of particular interest: Israel ($3.100 billion), Afghanistan ($3.168 billion), Jordan ($1.175 billion), Iraq ($335 million), Egypt ($1.456 billion), Lebanon ($201 million), Pakistan ($1.942 billion), Ukraine ($514 million), and West Bank/Gaza ($362 million), among others. The report also recommended up to $675 million to support the U.S. Strategy for Engagement in Central America. Notably, the Senate bill would also have reestablished the Assistance to Europe, Eurasia and Central Asia (AEECA) account, defunct for several years, recommending a total of $853.93 million for regions that have generally seen assistance levels decline over the past decade. The AEECA funding would have incorporated many programs for which the Administration requested funding under the ESF and INCLE accounts. P.L. 114-113 / H.R. 2029 does not include comprehensive regional or country allocations, but does fund a reestablished AEECA account at $930 million (including OCO funds), and states that up to $750 million appropriated in the economic and security assistance accounts may be used to implement the U.S. engagement strategy in Central America, indicating potential growth in foreign assistance to the Europe/Eurasia and the Western Hemisphere in FY2016. As requested, Israel received $3.10 billion in Foreign Military Financing aid. Egypt may receive up to $1.30 billion in FMF, and $150 million in ESF, though a portion of the assistance is conditioned on meeting democracy and human rights requirements. Jordan is to receive no less than $1.275 billion, and Ukraine no less than $658 million in economic and security assistance (not including possible OCO funding). The Obama Administration's four broad foreign assistance initiatives would have continued to play a major role under the FY2016 budget request, accounting for about 30% of the total foreign operations request. House and Senate appropriators expressed different views on these initiatives in their committee-approved FY2016 legislation, fully supporting some, seemingly ignoring others, and asserting their own priorities through suballocation recommendations. Both the House and Senate proposals were notably less supportive than the Administration of the multilateral components of these initiatives. The request for the Global Health Programs account was $8.18 billion, or 6.7% less than the FY2015-estimated funding, including emergency Ebola funding. Excluding the Ebola funds, the request was a 3% decrease from the FY2015 estimate. Requested resources would have been focused on HIV/AIDS treatment and prevention, maternal and child health, and stopping infectious diseases. Of the total requested, $5.43 billion was requested for the State Department, almost all for HIV/AIDS-related activities. The proposed reduction in funding would have come largely from a reduced U.S. contribution to the Global Fund, the multilateral component of the President's Emergency Plan for AIDS Relief (PEPFAR). The Global Fund contribution would have declined by 18%, or $244 million, from FY2015. In contrast, the U.S. contribution to GAVI, the vaccine alliance, would have increased by 18%, or $35 million, reflecting a four-year, $1 billion commitment made by the Administration in 2014. The request would also have provided a slight increase over the FY2015 estimate for family planning and reproductive health programs (+2.7%). The House and Senate committee-approved bills both included more funding for global health programs than requested by the Administration, with the House bill including $8.454 billion (equal to the FY2015 estimate, excluding emergency Ebola funds) and the Senate $8.468 billion. Both committees recommended flat funding for HIV/AIDS programs, rejecting the Administration's proposed reduction in the U.S. contribution to the Global Fund. The House proposal would also have provided more than requested for maternal and child health, nutrition, and vulnerable children, while recommending less than the request for family planning and reproductive health programs. The Senate committee recommendation matched the request for family planning and reproductive health programs; recommended more than requested for nutrition, vulnerable children, and some infectious diseases; and would have provided less than requested for maternal and child health programs. H.R. 2029 / P.L. 114-113 appropriated $8,503.5 million for global health programs, about 3% below the FY2015 estimate. The explanatory statement accompanying the legislation detailed global health suballocations that are very similar to the FY2015 suballocations, but without Ebola emergency funds. Maternal and child health funding increases by $35 million (all of which can be attributed to an increase in the U.S. contribution to the GAVI alliance), nutrition by $10 million, malaria by $4.5 million, and infectious diseases by $3.5 million. Table 6 compares the major suballocations within global health programs for FY2015 with those requested by the Administration and recommended by the House and Senate appropriations committees for FY2016, as well as those enacted in P.L. 114-113 . The Administration's food security initiative, Feed the Future, would have received just over $1 billion in the FY2016 request, an 8% drop from the FY2014 funding level (a FY2015 funding estimate is not yet available), primarily through the Development Assistance (DA) account. The initiative promotes agricultural productivity, expanding markets, improved nutrition, and economic resilience in vulnerable rural communities. Funds requested for FY2016 would have supported programs to build agriculture sector resilience to climate change, promote nutrition-sensitive agriculture, and adapt to recurring shocks such as droughts and floods. The proposal would have shifted funding toward countries for which additional funds are deemed necessary to reach targeted goals, and reduced funding to countries for which prior year funding was expected to remain available. New funding would have been provided for Guinea and Sierra Leone, to accelerate food security programming and build resilience in the wake of the Ebola crisis. The request also included $43 million for the Global Agriculture and Food Security Program (GAFSP), the multilateral component of the initiative, consistent with a pledge to provide $1 for every $2 provided by other donors. In addition, the request included $30 million for the first tranche of funding to replenish the International Fund for Agricultural Development (IFAD). H.R. 2772 included $1.00 billion for bilateral food security and agricultural development activities but would not have directly funded U.S. contributions to the related multilateral programs. The committee report noted, however, that bilateral funds may have been used to provide grants to GAFSP for activities in Feed the Future countries. S. 1725 also allocated $1.00 billion in bilateral assistance for food security and agricultural development. An additional $21.5 million, half the amount requested, was included for a U.S. contribution to the GAFSP. H.R. 2029 / P.L. 114-113 allocates $1.00 billion for bilateral food security and agricultural development activities and an additional $53.0 million for GAFSP and $31.9 million for IFAD. GCCI would have received a major funding boost under the request, increasing 55% from FY2014 funding (a FY2015 funding estimate is not yet available) to $1.29 billion in FY2016. The initiative continues to focus bilateral resources in three areas: adaptation, clean energy, and sustainable landscapes, for which funding would have declined 4% from FY2014 under the request. The increase in total funding was largely attributable to a proposed contribution ($500 million, split between State and Treasury accounts) to a multilateral Green Climate Fund, to which the Administration pledged $3 billion in November 2014. The fund is intended to succeed the multilateral Climate Investment Funds to which the United States will complete a four-year, $2 billion pledge with proposed FY2016 funding. The Administration asserted that the requested contribution was an important demonstration of U.S. leadership and would help leverage contributions from other donors as well as leverage binding emission reduction targets from all countries (e.g., China, India) during the ongoing U.N. Framework Convention on Climate Change negotiations. H.R. 2772 , as passed by the full House Appropriations Committee, made no mention of the GCCI, eliminated funding for the multilateral climate investment funds, and provided no funding for the Green Climate Fund. S. 1725 , as passed by Senate appropriators, did not establish a specific allocation for climate change programs. The report recommended U.S. contributions to the multilateral climate funds at half the requested levels: $85.34 million for the Clean Technology Fund, $29.81 million for the Strategic Climate Fund, and $84.13 for the Global Environment Facility (GEF). The bill did not include a specific allocation for a Green Climate Fund, but the report noted that other funds in the act, or enacted in prior foreign operations appropriations, may have been used for this purpose with proper congressional notification. H.R. 2029 / P.L. 114-113 and the accompanying explanatory statement do not specify a funding level for the global climate change initiative or mention the Green Climate Fund, but allocate $59.62 for the Strategic Climate Fund ($49.9 million in the SCF account, plus $9.72 million to be transferred from ESF), $170.68 million for the Clean Technology Fund, and $168.26 million for the GEF. The Administration requested $77 million in FY2016 for Power Africa, a public-private collaboration launched in 2013 to increase access to power in sub-Saharan Africa. The Administration committed to $300 million in annual funding for the initiative at the 2014 U.S.-African Leaders' Summit where a goal was established to generate 30,000 megawatts of new, cleaner electricity, accessible by at least 60 million households and businesses. Budget documents explained that the $77 million requested through the Development Assistance account would have been supplemented by additional money made available from prior-year funding, as well as funding through agencies such as MCC and the U.S. Africa Development Foundation, to fully meet the U.S. commitment. $47 million was requested for Trade in Africa, though budget documents explain that additional money would be made available from prior-year funding. For the first time, the request also included $110 million for an African Peacekeeping Rapid Response Partnership, which was described as a partnership to increase the capacity of six African countries to rapidly deploy military peacekeepers to address conflict in the region. The request also included $24 million for a new Security Governance Initiative, a joint Department of Defense-State Department program to improve governance and capacity in the security sector of partner countries. H.R. 2772 did not specify funding levels for any of these initiatives. The accompanying report noted that the legislation did support the ongoing Global Peace Operations initiative, which "has a similar mandate" to the African Peacekeeping Raid Response Partnership. S. 1725 included $76.7 million for Power Africa, nearly matching the Administration request, and recommended, from within the Peacekeeping Operations account, $20 million for an African Peacekeeping Rapid Response Partnership and $16.85 million for a Security Governance Initiative. H.R. 2029 / P.L. 114-113 funds Power Africa at $76.7 billion (Development Assistance account) and allocates $55 million for an African Peacekeeping Rapid Response Partnership and $16.85 million for a Security Governance Initiative. Within the FY2016 foreign operations request, $5.2 billion, or about 14.5%, was requested as OCO funding for "extraordinary costs" of assistance in Afghanistan, Pakistan, Syria, Iraq, Jordan, and Ukraine. This was down from 20.8% estimated for FY2015 and 15.1% in FY2014. A significant portion of requested foreign operations OCO funding continued to be for activities in the frontline states of Afghanistan ($1.21 billion), Iraq ($311 million), and Pakistan ($600 million), for which the designation was originally proposed. Unlike State operations, foreign operations country requests did not a show a clear shift of funds in recent years from OCO to base funding in these countries. Humanitarian accounts also made up a large portion of the OCO request, including $810 million within the International Disaster Assistance (IDA) request and $819 million within the Migration and Refugee Assistance (MRA) request. These funds were not requested by country, but the Administration anticipated they would be needed primarily for Syria, South Sudan, the Central African Republic, and Iraq. The request also included OCO funds for opposition support in Syria ($235 million), broad economic and military support activities in Jordan ($327 million), the State Department portion of a proposed new Counterterrorism Partnership Fund ($390 million), for which funding has also been requested through the Defense appropriation, and assistance to Ukraine ($317 million) to support a potential $1 billion loan guarantee and supply military equipment. As reported by committee, H.R. 2772 included $5.55 billion designated as OCO in Foreign Operations accounts, about 7% more than requested and nearly 26% less than the FY2015 estimate. Much of the increase in relation to the request was for the Migration and Refugee Assistance (MRA), International Narcotics Control and Law Enforcement (INCLE), Foreign Military Financing (FMF), and Peacekeeping Operations accounts. In the case of Peacekeeping Operations, the OCO increase would have been largely offset by a reduction in enduring funds. The legislation provided less OCO funding than requested for the Nonproliferation, Antiterrorism, Demining and Related (NADR) account. The Senate committee bill, S. 1725 , designated $6.82 billion, or more than 21% of the foreign operations funds in the bill, as OCO. The increase over the Administration request (+31%) was spread across several accounts, though the bulk was in IDA and MRA, as well as Foreign Military Financing. The Senate bill also would have designated $759 million in additional IDA and MRA assistance as emergency response, a designation, like OCO, which precludes counting it against the BCA caps. With the OCO and emergency funding designations, about 23% of the foreign operations funding proposed in the Senate bill would have been outside the scope of the BCA caps. The enacted legislation, P.L. 114-113 , designates $9.612 billion as OCO within a dozen foreign operations accounts and with few geographic restrictions. This is 85% more than requested and 28% more than FY2015 OCO funding. The notable increase can be attributed to The Bipartisan Budget Act of 2015, passed subsequent to the House and Senate committee action, which provided that a minimum of $14.9 billion be appropriated for OCO within the international affairs budget for FY2016 and FY2017. An additional $1.18 billion, all for an International Monetary Fund quota increase, was designated as emergency funding. The increase in OCO, however, was largely offset in the foreign operations accounts by decreases in the base budget of various accounts, suggesting that the additional OCO and emergency funds were used to free up base budget authority rather than indicate that particular activities or expenditures are considered extraordinary or temporary. The FY2016 foreign operations request would have increased U.S. financial commitments toward responding to the crisis in Syria and fighting the Islamic State (IS). The Administration identified $1.82 billion in its FY2016 request for these purposes, including $255 million for non-humanitarian assistance to support opposition groups within Syria. Of this amount, $65 million was requested from the peacekeeping operations (PKO) account to provide non-lethal assistance to vetted members of the armed Syrian opposition, in parallel to the Department of Defense-led train and equip program, for which the Administration had requested $600 million in defense funding. Most of the requested foreign operations funding would have been used to address the impact of the crisis on Syria's neighbors. The Administration identified its entire $1 billion request for Jordan as helping to counter IS and mitigate Syria-related economic and security concerns. The Administration also requested $335 million to strengthen Iraq's counterterrorism capabilities and $211 million to assist Lebanon in meeting the needs of Syrian refugees and addressing the IS threat. The overall "Syria and Counter-ISIL" request was a 17% increase over FY2014 funding for this purpose (FY2015 funding data are not available). An additional $1.6 billion in U.S. humanitarian assistance was requested for the region to respond to the Syria-Iraq crises in FY2016. The House committee-passed bill, H.R. 2772 , did not specify a funding level for Syria-related activities but did identify $104 million above FY2015 funding to address the issue of foreign fighters, fully funded the International Disaster Assistance request, maintained funding for Migration and Refugee Assistance at the historically high FY2015 level ($3.06 billion, or 25% more than requested), and allocated $100 million in Economic Support Fund money for Syrian refugee host communities, especially in Iraq, Jordan, and Lebanon. The Senate committee report, S.Rept. 114-79 , identified $195 million in the Senate committee bill for non-lethal assistance to Syria, primarily through the Economic Support Fund and Peacekeeping Operations accounts. The bill also included $1.175 billion for Jordan, along with a provision stating that additional funding shall be made available to implement the Jordan Response Plan 2015 for the Syria Crisis, including assistance for host communities in Jordan. The bill's allocation for Iraq, $355.4 million, also came with a provision saying that the funds may have been used to address needs in areas affected by the Syria crisis. In the humanitarian accounts, the Senate bill included $1.895 million for IDA, or 8.8% more than requested, and $2,644 million for MRA, a 7.8% increase over the request. Unlike the request or the House legislation, the Senate bill designated a portion ($298 million of IDA and $461 million of MRA) of the humanitarian funding in the bill as "emergency spending." The Senate committee bill also included a new general provision on countering violent extremism, Section 7073, which recommends not less than $141.152 million be used for this purpose. The provision required that funds be made available to counter the flow of foreign terrorist fighters and to strengthen governance and security in fragile states bordering countries where violent extremist groups operate. The explanatory statement accompanying H.R. 2029 / P.L. 114-113 identifies $100 million in ESF funds and $65 million in PKO funds, to be used for a variety of non-lethal programs aimed at strengthening civil society and representative governance, among other things, in Syria. The legislation also includes a Section 7073 describing ways in which funds in the act may be used to counter foreign fighters and violent extremist movements, but does not allocate a particular level of funding for this purpose. Assistance to Jordan, totaling $1.275 billion, is specifically made available to implement the Jordan Response Plan 2015 for the Syrian crisis. The bulk of assistance related to Syria and IS, as in past years, will likely be humanitarian in nature. The enacted funding level for MRA is $3,059.0 million, level with the FY2015 estimate and almost 25% more than requested. While this funding is not allocated in the legislation by country or crisis, a large portion of the funds will likely be used to address the Syrian refugee crisis. The FY2016 foreign operations request for Afghanistan was $1.514 billion (+28% from FY2014), which was consistent with the 2012 Tokyo Mutual Accountability Framework. The funding was provided primarily though the Economic Support Fund (OCO) account, and intended to support the new Afghan government and continue a trend away from stabilization and infrastructure programs. The request included $804 million for Pakistan (-10% from FY2014) to support regional stability, counterterrorism, and long-term political and economic stability. Stability and prosperity in Pakistan are seen by the Administration as essential to maintaining gains in Afghanistan. The request described funding for both countries as consistent with a responsible glide path, demonstrating that the United States is not abandoning the region even as the U.S. military presence declines. H.R. 2772 did not specify assistance levels for Afghanistan and Pakistan. The committee report ( H.Rept. 114-154 ) stated that funding for these countries would remain under continuous review as circumstances in the region evolve, and the Administration was directed to develop its programming plans for these countries in consultation with the appropriations committees. S. 1725 included $939 million in new foreign operations funds for Afghanistan, largely through the ESF and INCLE accounts, and noted in the report that an additional $3.168 billion in previously appropriated funds were expected to remain available to carry over into FY2016. For Pakistan, the bill recommended $625.8 million in new assistance funds, primarily through ESF and FMF, with the report noting that an additional $1,317 million in previously appropriated but unobligated carryover funds were expected to be available. The committee report noted improved relations between Pakistan and Afghanistan, and encouraged "continued cooperation on issues of mutual interest." P.L. 114-113 and the accompanying report include several provisions to restrict or condition U.S. assistance to Afghanistan and Pakistan, but provide little direction with respect to funding levels. Money in the act is made available for Afghanistan for the purposes of promoting rule of law, protecting the rights of women and girls, expanding linkages between Afghanistan and neighboring countries, and assisting the government with revenue collection and expenditure. With the exception of rule of law programs, for which no less than $50 million is to be made available, no funding levels are specified for these objectives. While funding made available through the ESF and INCLE accounts is specified to be contingent on a number of corruption, human rights and sustainability conditions in Afghanistan, no allocations from these accounts are specified for Afghanistan except for $10 million (and $7.5 million for Pakistan) to assist civilian victims of war. Similarly, an unspecified level of INCLE funds are to be made available for Pakistan to build the capacity of the civilian justice system to conduct counterterrorism investigations and prosecution, while programs for the recruitment and retention of women in Pakistan's security and police forces are to be funded at the FY 2015 level. Nevertheless, the FY2016 enacted legislation has an unprecedented level of OCO-designated foreign operations funds, which may be used in Pakistan and Afghanistan, and for which little guidance is provided in the bill or explanatory statement. The budget request included $639.8 million (+283% from FY2014) in FY2016 to bolster Ukraine, Moldova, and Georgia against "Russian aggression and pressure." Of this, $513.5 million was for Ukraine, primarily from Economic Support Funds, to promote economic reforms, advance democracy and anti-corruption efforts, and support an additional $1 billion loan guarantee if progress was made on IMF reforms. Funding for Moldova ($49.1 million) and Georgia ($77.2 million) would have supported greater security, democracy, and accountability, as well as closer integration with Europe. All three countries would have received Foreign Military Financing funds to address military equipment shortfalls and improve interoperability with NATO and other Western forces. H.R. 2772 , as reported by House appropriators, included $524 million for security and economic stability assistance to the Ukraine, as well as funds to support broadcasting to counter Russian propaganda. Accompanying report language stated that International Disaster Assistance funding in the bill may have been used to assist people displaced by the conflict in Ukraine. The bill also included Foreign Military Financing funds for Ukraine ($47 million), Georgia ($20 million), and Moldova ($12.75 million) as well as $50 million designated as OCO "for European and Eurasian countries facing Russian aggression." The Senate bill, S. 1725 , would have reestablished the Assistance for Europe, Eurasia and Central Asia (AEECA) account, which has not been used in recent years, "to more effectively counter Russian influence and pressure." The committee recommended $853.9 million for the account (of which about $411 million would have been designated as OCO). Within that total, $433 million was for Ukraine, including $275 million to support a loan guarantee. Georgia would have received $54 million in AEECA funds, and Moldova about $35 million. Additional funding from the FMF, NADR, IMET, and Global Health Programs would have brought total Ukraine assistance to $513.5 million. Georgia ($20 million) and Moldova ($12.75 million) would have received FMF funds as well. H.R. 2029 / P.L. 114-113 provides no less than $658 million for assistance to Ukraine and funds the AEECA account at $930 million ($439 designated OCO) to support programs in the region previously funded through ESF. Funds are to be used to support the "Eastern Partnership" countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine) to implement trade agreements with the European Union, reduce their vulnerability to external economic and political pressure from the Russian Federation, and support democracy and the rule of law. The bill also authorizes the use of ESF and AEECA funds to support loan guarantees for Ukraine. A notable shift in regional funding proposed by the Administration for FY2016 was the $1 billion requested for Central America, a region for which funding has generally stagnated in recent years. The request was 225% more than the FY2014 funding level, and would have supported a whole-of-government U.S. Strategy for Engagement in Central America aimed at promoting economic prosperity, security, and good governance in the region as a means of stemming the flow of undocumented migration. The primary recipients of the requested funds would have been El Salvador, Guatemala, and Honduras. Of the total requested, $287 million was allocated for the Central American Regional Security Initiative (CARSI). H.R. 2772 and the committee report ( H.Rept. 114-154 ) noted the committee's particular emphasis on security concerns related to Central America. The bill allocated $296.5 million for CARSI, as well as additional assistance to Mexico for securing that country's southern border. Non-security assistance for El Salvador, Guatemala, and Honduras was not specified. In S.Rept. 114-79 , Senate appropriators detailed $675.3 million in foreign operations funds allocated to implement the Plan of the Alliance for Prosperity in the Northern Triangle of Central America. Specific allocations and conditions attached to the funds were laid out in Section 7045(a) of S. 1725 . Within the total, $231.5 million was allocated for CARSI, about $84 million for other security and military assistance, and approximately $360 million for development and health programs, primarily in El Salvador, Guatemala, and Honduras. H.R. 2029 / P.L. 114-113 provides up to $750 million in assistance from the DA, ESF, FMF, IMET, Global Health, INCLE and NADR accounts to implement the U.S. Strategy for Engagement with Central America, emphasizing that priority should be given to programs addressing the root causes of migration from the Northern Triangle by unaccompanied minors. Of the total, $222 million is allocated for CARSI. A full breakdown of the funding allocated to implement the strategy is in Section 7045 of the explanatory statement. State-Foreign Operations Appropriations, by Account International Affairs (150) Function Funding

On February 2, 2015, the Obama Administration submitted to Congress its budget request for FY2016. The request for State, Foreign Operations, and Related Programs (SFOPS) totals $54.08 billion, or a 4% increase from FY2015-estimated levels. Within that amount $47.04 billion is requested for enduring or core funding and $7.05 billion is designated as Overseas Contingency Operations (OCO) funding, excluding add-ons and rescissions; $17.55 billion of the total request is for State Department Operations and related agencies (10.6% increase over FY2015 estimates); $36.53 billion is for Foreign Operations (1.2% above the FY2015 estimates); excluding the FY2015 Ebola supplemental funding, the State Department Operations FY2016 request is a 10.9% increase over FY2015 estimates, and the Foreign Operations FY2016 request is a 7% increase over FY2015 funding estimates. House and Senate committees held several hearings on various aspects of the international affairs budget in February and March. Both chambers passed FY2016 budget resolutions in late March. The House (on April 30, 2015) and the Senate (on May 5, 2015) reconciled budget resolution funding levels in conference (H.Rept. 114-96); however, OCO suballocations were not established. The House Appropriations Committee reported its FY2016 SFOPS bill out of committee on June 11, 2015. The House committee bill (H.R. 2772; H.Rept. 114-154) recommended $48.19 billion in total funding, excluding rescissions, but including $7.33 billion designated as OCO. The Senate Appropriations Committee reported its FY2016 bill out of committee on July 9, 2015. The Senate committee bill (S. 1725; S.Rept. 114-79) recommended $49.77 billion in total funding, excluding rescissions, but including $9.48 billion designated as OCO and $759 million in emergency funds. On September 30, 2015, the House and Senate approved, and President Obama signed into law, a resolution (P.L. 114-53) to provide temporary FY2016 continuing appropriations through December 11, 2015. On October 5, 2015, the Senate SFOPS bill was incorporated in a national security-related "minibus" bill (S. 2130), one of four minibus bills into which Senate FY2016 appropriations bills were bundled. On October 6, Senate SFOPS leaders introduced supplemental appropriations legislation (S. 2145) to increase FY2016 migration and refugee assistance funding by $1 billion to address the Middle East refugee crisis. On November 2, 2015, the President signed the Bipartisan Budget Act of 2015 (H.R. 1314; P.L. 114-74), which raises the discretionary spending limit by $50 billion for FY2016 and $30 billion for FY2017 (thus increasing spending caps for defense and nondefense for those years), and increases OCO funding by $16 billion for each year, equally divided between DOD and SFOPS. On December 18, 2015, Congress passed an omnibus appropriations law for FY2016 (Consolidated Appropriations Act, 2016; P.L. 114-113/H.R. 2029), and the President signed it the same day. Division K of the law provides $52.83 billion for the Department of State, Foreign Operations, and Related Programs (SFOPS) for FY2016. This amount is 1.7% greater than the FY2015 estimate and 0.2% below the President's FY2016 request. This report provides an overview of the FY2016 SFOPS request, a discussion of key issues and historic context, and account-by-account funding comparisons with FY2014 actuals, available FY2015 estimates, FY2016 proposals and P.L. 114-113. This is the final update of this report, unless supplemental appropriations legislation is considered by Congress during FY2016.

The federal government's role in the mortgage market dates to the Depression, when Fannie Mae (officially the Federal National Mortgage Association) and the Federal Housing Administration (FHA, which is part of the Department of Housing and Urban Development, HUD) were created. Many consider its role to be substantial: Fannie Mae, Freddie Mac (which Congress created as the Federal Home Loan Mortgage Corporation in 1970), and Ginnie Mae (officially, the Government National Mortgage Association and part of HUD) guarantee virtually all of the mortgage-backed securities (MBS) newly issued. In recent years, Fannie Mae and Freddie Mac jointly have been responsible for approximately 45% of residential mortgages outstanding. With slightly less than $10 trillion in mortgages outstanding, the residential mortgage market is of central importance both to households and to lenders. In addition, FHA and Ginnie Mae, the Department of Veterans' Affairs, and the Department of Agriculture's Rural Housing make full faith and credit mortgage guarantees. As government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac have special privileges and obligations, though they are corporate entities with shareholders. Broadly speaking, the GSEs' role is to ensure appropriate availability of mortgages to creditworthy households. By law, the GSEs purchase mortgages from lenders, and either hold the mortgages as investments or pool the mortgages into MBS, which are sold to institutional investors. The GSEs guarantee that investors in these MBS will receive timely payment of principal and interest even if the borrower becomes delinquent. Their congressional charters give them a close relationship to the federal government that is widely (but not universally) viewed as providing an implicit federal guarantee of their bonds and MBS. In September 2008, the GSEs individually agreed with their regulator, the Federal Housing Finance Agency (FHFA), that unexpected mortgage delinquencies and resulting losses jeopardized their solvency. The GSEs agreed to direct government control, known as conservatorship, which is the equivalent of bankruptcy reorganization for financial companies. As part of the agreement to conservatorship, Treasury agreed to provide financial support to keep the GSEs solvent. To date, Treasury has provided $116 billion to keep Fannie Mae solvent and $72 billion to keep Freddie Mac solvent. The agreement has been amended three times. It currently requires Treasury to provide, as needed, up to an additional $125 billion to Fannie Mae and an additional $149 billion to Freddie Mac. In return for this support, Treasury receives senior preferred stock valued at the amount of support provided. At the signing of the support agreements, each GSE gave Treasury $1 billion of senior preferred stock and warrants to purchase 79.9% of the common stock in each. The Treasury and the Federal Reserve together purchased $1.357 billion of MBS under a special program that ended in March of 2010. On December 12, 2012, the Federal Reserve announced a new program to purchase approximately $45 billion of MBS monthly. Holdings of MBS are reduced by scheduled mortgage payments and by refinancing mortgages. At the end of 2012, the Federal Reserve and Treasury held $821 billion of Fannie Mae's and Freddie Mac's MBS. The 113 th Congress continues deliberation started in earlier Congresses as to how and when to unwind the federal control of Fannie Mae and Freddie Mac, and what (if any) is the proper role of the federal government in the nation's mortgage markets. Some proposals called for reducing the government's support of Fannie Mae and Freddie Mac, selling off their assets, and revoking their congressional charters. Other proposals concentrated not so much on unwinding Fannie Mae and Freddie Mac, as on replacing them with new institutions. This report concentrates on the GSEs' and the government's roles in supporting home mortgages. Other reports examine the causes of the GSEs' financial problems, the nature of the GSEs' conservatorship, federal housing programs, and the maximum loan amount on mortgages purchased by the GSEs. As is discussed in more detail below, the GSEs purchase mortgages from lenders, package the mortgages into MBS, and either keep the MBS "in portfolio" or sell them to institutional investors. To finance the MBS that they keep, the GSEs sell bonds to investors. Because of their close connection with the federal government and the implicit government guarantee, the GSEs' bonds have traditionally been considered safer than what is implied by their finances. Because of this perception of safety, the bonds pay interest rates that usually are only slightly more than the federal government pays. This ability to borrow relatively inexpensively allows the GSEs to be more profitable. After years of profitability, the financial turmoil of 2008 caused the market to question the GSEs' financial strength. In September 2008, during extreme financial turmoil and growing concern over financial losses, Fannie Mae and Freddie Mac individually agreed to be placed under voluntary conservatorship with FHFA. For the GSEs, as is the case for most financial companies, conservatorship is roughly the equivalent of bankruptcy reorganization. Under conservatorship, senior executives are replaced and stockholders have no input on management of the company. This happened to the GSEs. By law, the goal of conservatorship is to put the company on a sound financial footing, after which the company is returned to stockholder control. If this cannot be accomplished, the firm is placed in receivership, which is roughly the equivalent of dissolving a bankrupt company. In certain situations their receivership is mandatory and in others receivership is voluntary. From their start, the GSEs have been controversial because of the perceived conflicts between their public purpose and their responsibility to maximize stockholder value. As is discussed in more detail later, the advantages of GSE status has made it difficult for other companies to compete against the GSEs. Congress debated GSE regulatory reform in the 108 th , 109 th , and 110 th Congresses, eventually passing the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ). The GSEs' mission has changed over time. Fannie Mae's and Freddie Mac's current charters contain five purposes: 1. To stabilize the secondary mortgage market for residential mortgages; 2. To respond "appropriately" to the capital market; 3. To increase the liquidity of mortgages (including mortgages for low- and moderate-income families); 4. To promote access to mortgage credit in all areas of the nation (including underserved areas); and 5. To "manage and liquidate federally owned mortgage portfolios in an orderly manner, with a minimum of adverse effect upon the residential mortgage market and minimum loss to the Federal Government." It could be argued that between the time Fannie Mae and Freddie Mac became GSEs and the time that they were placed in conservatorship, they accomplished these goals except, perhaps, for operating with minimum loss to the federal government. Even under conservatorship, they continued (with assistance from the federal government) to fulfill their mission, although it can again be contested that they have operated with minimal loss to the federal government. HERA temporarily authorized greater standby government support for the GSEs, including the Federal Home Loan Banks (FHLBanks), by allowing the Secretary of the Treasury to purchase stock from the GSEs. In addition, HERA created a new, stronger GSE regulator, the Federal Housing Finance Agency (FHFA), to replace the Office of Federal Housing Enterprise Oversight (OFHEO). As mentioned earlier, FHFA and the GSEs agreed to voluntary conservatorship, in which FHFA assumed control of Fannie Mae and Freddie Mac. Each GSE sold to Treasury $1 billion of senior preferred stock and gave Treasury warrants to purchase 79.9% of its common stock. Treasury agreed to purchase a maximum of $100 billion (later raised to $200 billion) additional senior preferred stock to maintain a positive net worth of each GSE. The first amendments to the agreements raised the support to a maximum of $200 billion each. The second amendments provided unlimited support from 2010 to 2012. This support does not count against the $200 billion maximums. The third amendments changed the 10% cash dividend paid to Treasury to have the GSEs pay all of their quarterly profits to Treasury. In the event that there are no profits in a quarter, no dividend is owed. In addition, the Federal Reserve has extended financial assistance to the GSEs by purchasing MBS and bonds. By law, conservatorship will end with their return to stockholder control if the GSEs become safe and solvent or with receivership if they are unable to pay their debts. Provisions in HERA require that a GSE be placed in mandatory receivership and its assets liquidated if (1) the GSE's assets have been less than its liabilities for 60 consecutive days, or (2) the GSE has not been paying its bills (except for debts subject to bona fide dispute) for the past 60 days. Thus far, mandatory receivership has been avoided because of the assistance from Treasury. The remainder of this report discusses alternatives available to Congress for restructuring or replacing Fannie Mae and Freddie Mac. The list is not exhaustive—it probably is impossible to develop a complete list. The options take as a starting point that Fannie Mae and Freddie Mac return to financial health and are able to leave their current conservatorship. Unless modified by Congress or Treasury, the profit-sweep dividend on the senior preferred stock will prevent the GSEs from accumulating additional funds that could be used to return to stockholder control. In debating alternatives for the futures of Fannie Mae and Freddie Mac, Congress might wish to consider whether the five goals are still germane. For example, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ( P.L. 103-328 ) may have made the fourth point in the GSEs' charters (promoting mortgage credit throughout the nation) unnecessary because the act allowed interstate banking and led to more equal access to credit throughout the nation. This section uses Fannie Mae's and Freddie Mac's business models to provide a basis for understanding their roles in the housing finance system and their problems. Fannie Mae's and Freddie Mac's business models have evolved similarly. They both sell bonds to purchase mortgages; purchase single-family mortgages that other companies have originated; guarantee investors that the mortgages will be paid and pool the mortgages to create MBS; charge sellers a fee to guarantee these mortgages; sell the MBS to institutional investors, or keep them in their own investment portfolios. If the GSE decides to keep the MBS, it uses the money raised by selling the bonds to finance these MBS. Otherwise it uses the proceeds from selling the MBS to purchase more mortgages. For many years, the GSEs were very profitable using this business model because they were widely viewed as having a close relationship to the federal government. Some called it an implicit federal guarantee of their bonds and MBS. This allowed the GSEs to guarantee their MBS and to finance their investment portfolios at lower cost than competitors, which had neither GSE charters nor a special relationship with the federal government. GSE profitability was increased by their charter provisions such as those exempting them from state and local income taxes, and by lower capital requirements than their non-GSE competitors. To enhance profits, the GSEs use a variety of techniques, some of which increased the riskiness of the GSEs' finances: Because short-term interest rates are normally lower than longer-term interest rates, the GSEs finance their investment portfolios of MBS by borrowing for short periods of time. This strategy could result in losses if interest rates were higher when this debt was refinanced. The GSEs reduced their vulnerability to increased interest rates by the use of financial derivatives. Having nationwide geographic diversification reduced the GSEs' credit or default risk. Regional declines in home prices—such as the home price decline of approximately 25% between 1985 and 1990 in the "Oil Patch"—were balanced by stable prices in other areas. The GSEs further reduced their risk by purchasing insurance from financial guaranty companies. The GSEs found profitable ways to satisfy the requirement in their charters that mortgages for more than 80% of the value of a house have credit enhancements such as mortgage insurance. For example, one GSE would purchase the first mortgage for 80% of a home's value, and the other GSE would purchase a second mortgage for 5% or even 15% of the same home's value. This resulted in larger mortgages and more fees for the GSEs, but increased the severity of losses when defaults occurred. Tax planning techniques, including purchasing tax-exempt bonds and low-income housing tax credits (LIHTCs), reduced the GSEs' tax liabilities. The risk of these strategies was that if the GSEs' earnings did not meet expectations, the benefits of tax planning expenditures may not be fully realized and could increase losses. Compared with many other types of financial institutions, the GSEs were required to keep less capital as a reserve against possible losses. This increased leverage made possible higher profits, but increased the risk of larger losses or financial failure compared to holding more capital. If FHFA's conservatorship is not able to return the GSEs to financial health, there are at least two approaches that could avoid complete liquidation of the GSEs. First, the "bad bank" approach would mirror one technique used by the Federal Deposit Insurance Corporation (FDIC) to resolve insolvent banks. The FDIC creates a "bad bank" to hold the problem assets, leaving the good assets with the original bank. Without the problem assets, the original bank is financially viable and possibly able to attract new capital. In the case of the GSEs, delinquent mortgages and MBS, with related guarantees, would be transferred to the new entity. The bad bank would need capital to purchase the nonperforming assets from the GSEs. Because the private sector would be unlikely to invest in the bad bank, the capital to purchase the assets would probably come from the federal government. The bad bank could require continuing funds from the government, but might continue in operation in the hope that as housing and financial markets recover, the value of the problem mortgages and MBS would increase to exceed the value of the guarantees. Second, the GSEs' senior preferred stock could be restructured so that dividend payments to Treasury become less of a financial burden to the GSEs. Currently, the GSEs pay all of their profits at the end of each quarter as the required dividend. If there is no profit, no dividend is owed. (Previously, the dividends were payable regardless of whether there was a profit or not. A 12% annual stock dividend could be paid instead of a 10% cash dividend.) The advantage of restructuring the senior preferred stock is that it would allow the GSEs to return to stockholder control, which is discussed in detail below. The disadvantage is that the GSEs and their stockholders would have received significant financial benefits without fully having paid for those benefits. This could lead to the expectation of future government support and encourage the GSEs to assume more risk than they would without this expectation. HERA provides for voluntary and involuntary receivership. As mentioned above, FHFA is required to place a GSE in involuntary receivership if either the GSE's liabilities exceed its assets for 60 days, or if a GSE fails to pay its bills (except for those being disputed) for 60 days. FHFA is authorized by HERA to create a temporary successor. Assuming that one way or another both GSEs return to financial solvency, some of the options to restructure government support for homeownership that Congress might consider are return Fannie Mae and Freddie Mac to their stockholders with little or no change to their congressional charters; eliminate their GSE status and convert Fannie Mae and Freddie Mac into private corporations; eliminate their GSE status and convert Fannie Mae and Freddie Mac into one or more government agencies; or make supplementary changes to support the secondary mortgage market, such as providing government reinsurance of MBS or encouraging the use of covered bonds. Table 1 summarizes these options. This report continues by discussing the advantages and disadvantages of these options and by adding more detail to the options. By law, the GSEs' conservatorship will end if they meet their minimum capital requirements, or when the FHFA director determines that ending conservatorship would be in the public interest. If this occurs, there are a number of options that could be considered that would include maintaining Fannie Mae and Freddie Mac as GSEs. These are returning control to the stockholders with no additional modification, imposing additional regulations on the GSEs, explicitly guaranteeing the GSEs' MBS, imposing utility-type profitability limits on the GSEs, merging Fannie Mae and Freddie Mac into the Federal Home Loan Bank System, and issuing additional GSE charters. Congress could decide to make little or no change to the GSEs' charters. The GSEs would continue to be stockholder-owned companies with special charters and special obligations to support the housing market. If this option were adopted, common stockholders would regain their right to elect the boards of directors, which in turn would appoint senior management. Dividends to preferred stockholders could resume. Dividends on the senior preferred stock owned by the federal government would continue. The GSEs would decide whether to retire the senior preferred stock held by the federal government. The boards of directors could resume common dividends. Bond payments would continue. As required by the contract with Treasury, the GSEs would shrink their portfolios by 15% annually until their portfolios were less than $250 billion. Return to stockholder control implicitly assumes that the GSEs would return to profitability. Since all quarterly profits are paid to Treasury as dividends, the GSEs cannot accumulate funds necessary to leave conservatorship. In agreeing to conservatorship, the GSEs each gave the federal government warrants to purchase 79.9% of their common stock for $0.00001 per share. Before effective control could be returned to common stockholders, the GSEs probably would need to reach some agreement with the federal government over the disposition of these warrants and the senior preferred stock. Based on similar past government intervention such as Chrysler in 1979, Continental Illinois in 1985, and more recently the troubled asset relief program (TARP), alternative dispositions of these warrants include federal government exercise, sale of the warrants through a federal government open market auction (which the GSEs could win), and federal government cancellation of the warrants. In the third quarter of 2013, with its stock trading at approximately $1.20, Fannie Mae had a market capitalization of approximately $2 billion. This would make 80% of the enterprise worth $160 billion. In the third quarter of 2013, Freddie Mac's stock price was $1.10 and its market capitalization was approximately $702 million, making 80% of Freddie Mac worth $561 million. Because the GSEs "have succession until dissolved by Act of Congress," it is not clear what limits there might be on an outside company purchasing the warrants. The main point in favor of the no change option is that by some measures the GSEs have been successes; some argue that since the GSEs became stockholder owned (1968 in the case of Fannie Mae, and 1989 in the case of Freddie Mac), only the recent exceptional housing markets have required government intervention. Arguably, the GSEs have led to many changes in the nation's mortgage markets that have improved efficiency and consumer choice, including standardizing mortgages, which has contributed to economies of scale and lower interest rates for homeowners; automating and standardizing underwriting, which has reduced the cost of obtaining a home mortgage; making widespread certain features such as assumable mortgages and mortgages without prepayment penalties, both of which facilitate refinancing; tapping new sources of funding including pension funds, trusts, and international investors, which has led to lower mortgage interest rates; eliminating state and local mortgage interest rate differentials, which has lowered mortgage rates in some parts of the nation, but possibly increased them in others; innovating in affordable housing and equal housing opportunity; and creating a liquid secondary mortgage market, which has lowered mortgage interest rates. Some might debate whether these innovations have been improvements, and others might claim to have invented them before the GSEs. There are at least three broad arguments against returning the GSEs to their former status. First, the GSEs' history includes previous financial and management problems. In 1982, Fannie Mae was in financial distress, and the government intervened after Congress passed the Miscellaneous Revenue Act of 1982, which provided some tax benefits for Fannie Mae. In the early 2000s, Fannie Mae and Freddie Mac both had serious accounting and management issues that led to consent agreements with the Office of Federal Housing Enterprise Oversight (OFHEO), which then regulated them, and the Securities and Exchange Commission (SEC); and the GSEs' leaderships were replaced. Fannie Mae paid about $400 million in fines, and Freddie Mac paid $125 million in fines. Second, many, if not all, of the changes used as points in favor of returning the GSEs to stockholder control arguably would have occurred without Fannie Mae and Freddie Mac, although possibly not as early. Other large mortgage market participants, such as banks and mortgage insurance companies, could have standardized and automated the lending process. Ginnie Mae, a government agency, issued the first MBS. These changes probably would have been sustained without the GSEs. Prior to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ( P.L. 103-328 ), banks were not allowed to operate in more than one state. Banks in one state might have many deposits relative to the demand for loans, and reduce interest rates, including those on home mortgages, to encourage borrowing. At the same time, banks in another state might have relatively few deposits compared to loan demand and would increase interest rates. Because of the ban on interstate banking, money could not easily flow between states to equalize interest rates. One of the GSEs' roles was to move funds to where demand for home mortgages was greatest. After Riegle-Neal permitted interstate banking, it was arguably inevitable that interest rates and mortgage interest rates would become uniform across the nation. Third, the conservatorship of the GSEs has changed the future financial environment of the GSEs such that returning to the previous system could be impossible. Having previously intervened, the federal government may be perceived as likely to provide any necessary future financial support to the GSEs to pay bonds, despite charter provisions that state that GSE debts are not guaranteed by the federal government. Attracting new common stockholders to recapitalize the GSEs could be difficult because of the federal government's taking control and stopping dividend payments to common stockholders. The burden of the senior preferred dividends and the warrants could make it very difficult to raise additional capital by selling new stock. Attracting new preferred stockholders to recapitalize the GSEs could be difficult since the federal government stopped dividend payments to preferred stockholders. In returning the GSEs to stockholder control, additional statutory and regulatory oversight could reduce risk to the taxpayer. This could include increased minimum capital requirements to provide more of a buffer against future insolvency; limits to executive compensation, which could reduce the incentive to take excessive risks; changed accounting procedures, which could provide a clearer picture of the GSEs' financial status; or portfolio size limits, which could reduce some risks. Regulations arguably could help prevent future financial problems with the GSEs. An argument can be made that if the government were to give the GSEs more explicit or implicit assistance, the GSEs might have to broaden their support of affordable housing. On the one hand, an advantage of returning the GSEs to their stockholders while imposing additional regulation is that it is a return to a familiar model. The GSE support for affordable housing could continue. On the other hand, making changes to GSE regulation has been a very contentious issue whenever Congress debated it in the past; previous regulation failed to prevent the GSEs from going into conservatorship; and the federal government has expended large amounts of money to maintain the GSEs' financial viability. It can be argued that prior to 1992, the implicit guarantee in the GSEs' charters was provided at no cost to the GSEs. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (FHEFSSA, P.L. 102-550 ) authorized HUD to set explicit affordable housing goals for the GSEs. The GSEs were not expected to lose money on mortgages purchased to meet the housing goals, but they were not guaranteed that the housing goals mortgages would be as profitable as other mortgages. Thus the implicit guarantee was provided at an implicit cost. One problem with implicit guarantees and implicit costs is that since their terms are not clearly defined, they are hard to value and hard to limit. A possible solution to this concern would be for the government to make the guarantee explicit and to charge an explicit guarantee fee. The exact terms of the guarantee could be stated. Homebuyers might directly pay this guarantee fee as they now pay the FHA's guarantee fee, or the GSEs could be charged the guarantee fee. In the latter case, the GSEs could decide how much of the fee to pass on to borrowers. By changing the guarantee fee to reflect changes in GSE risk, the federal government could provide an incentive to maintain prudent lending. Instead of guaranteeing the GSEs, the federal government could make the explicit guarantee available on all mortgages that met certain standards. This would be similar in effect to enlarging the FHA's guarantee program to cover more of the mortgage market. The federally guaranteed mortgages could be bundled and securitized. Since they would have a federal guarantee, Ginnie Mae could securitize these mortgages. One issue with this option would be deciding what types of mortgages could be guaranteed and how new types of mortgages could be added to the program. Guarantees for mortgages that would be originated anyway would be an expense to the GSEs and a contingent liability for the government that would not increase homeownership. If a lender were to develop an extremely risky new type of mortgage, should the government guarantee it? Should the government charge an actuarially sound guarantee fee? If so, would not the private sector offer the same guarantee? In what is frequently called the utility model, the federal government could explicitly regulate the GSEs' profit margins much as state utility regulators control utility profits. If a GSE were to earn unusually high profits one year, the government could lower the profit margins—and profit—the next year. Similarly, lower profits in one year could result in higher allowed profit margins the next. The goal of this option is to eliminate the incentive to increase profits with risky actions by eliminating or reducing the ability to gain from the risky actions. The federal government could either explicitly approve new GSE products, or new GSE products could be implicitly regulated by setting guarantee rates. One (or more) federally chartered companies could be eligible for the guarantee. Public utilities' regulation has been justified on the basis that there are economies of scale that can be captured if there is only one utility. By restricting competition, only one water main, telephone line, natural gas pipe, or electrical line needs to be constructed to connect each home and business with the utility. The regulator is charged with balancing the economic interests of consumers against those of the monopoly provider. For example, while Fannie Mae and Freddie Mac have found their retained portfolios of MBS to be profitable, the net value to homeowners is subject to much debate. In the utility model, the retained portfolios might be restricted to simplify regulatory oversight and to reduce risks. Arguably, one of the sources of the GSEs' problems has been that there are only two of them. Economic analysis generally favors competition with many firms. Over time, Fannie Mae and Freddie Mac became virtual twins and essentially divided the conforming U.S. mortgage market between them. The result was, it could be argued, not much different from having a monopolist GSE that could charge high prices and make persistently large profits in the absence of competition. Prior to the financial turmoil that started in 2007, there were dozens of non-GSEs in the relatively small private label MBS market. With many GSEs competing and innovating in different ways, the losses caused by Fannie Mae and Freddie Mac would have been more manageable and perhaps would not have required government intervention. One option to increase competition would be to split the GSEs into many more. If each GSE were split into, say, 10 equal parts (for a total of 20 housing GSEs), each of the 20 resulting GSEs would have mortgage portfolios of one-tenth its parent and have one-tenth of its parent's mortgage guarantees outstanding. Based on recent monthly volume reports, the baby Fannie Maes would each have a retained mortgage portfolio and outstanding guarantees of $320 billion; the baby Freddie Macs would each have a retained mortgage portfolio and outstanding guarantees of $196 billion. It might be that 20 identical GSEs would be under financial stress at the same time. One way to reduce the probability of this would be to split the GSEs in such a way that they were not all the same. To promote diversity among the new GSEs, they could be created with different geographic coverage, or to specialize in certain types of housing such as condominiums or multifamily rental housing. Existing stockholders would receive shares in the new GSEs. On the other hand, this specialization could leave new GSEs more vulnerable to declines affecting only certain types of housing. The GSEs would continue to be regulated. One argument for creating many GSEs is that competition among the GSEs could supplement formal regulatory oversight. A slightly different option would be to incorporate the GSEs into the Federal Home Loan Bank (FHLBank) system. Currently, each regional FHLBank is owned by its member banks; shares of the FHLBanks are not traded on a stock exchange. The 12 regional banks form a collective GSE that raises funds for loans (called advances) to the members, who pledge mortgages and MBS as collateral. The debt is the joint and several liabilities of the individual FHLBanks; if one bank were to become insolvent, the other banks would remain responsible for its debts. Freddie Mac was created as part of the FHLBank system to sell its mortgages on the secondary market and became a publicly traded, stockholder owned company in 1989. The FHLBank system could purchase Fannie Mae and Freddie Mac, which could become a mortgage securitization facility (or facilities) within the FHLBank system. The lenders that are members of the FHLBank system would own the GSEs. Alternatively, Fannie Mae's and Freddie Mac's mortgage portfolios and other assets could be divided among the 12 FHLBanks. Some resources, such as mortgage securitization, could be merged into the FHLBanks' Office of Finance, which provides centralized financial services for the regional banks. The advantage of this approach is that the FHLBank system has never—not even in the Depression—lost money on an advance. The counter argument is that history may not predict the future: FHLBank members are insured by the FDIC. In the event of a member failure, the FHLBank has the mortgages that the member pledged as collateral on its advances. If these are insufficient to meet the member's obligations to the FHLBank, the FHLBank can use its "super lien," which gives it a priority claim over other unsecured creditors. FDIC research suggests that the FHLBanks have no incentive to risk-adjust the interest rate on advances. The FDIC argues that this encourages the FHLBanks to take excessive risks because the bank keeps the profit, but the FDIC gets the risk. In addition, in the event of a member failure, the FHLBank has priority ahead of the FDIC on assets. In addition to modifying the GSEs' charters as discussed previously, another option would be to issue additional, possibly modified GSE charters. Congress could establish the requirements for obtaining these new charters and limit the activities that the new GSEs could undertake. The GSEs could, if Congress so desires, contribute to an insurance fund similar to the FDIC for banks. Either the existing GSE regulator, the FHFA, or a new regulator would oversee the GSEs. Since Fannie Mae and Freddie Mac would retain all of their current assets and liabilities, there arguably would be no need to compensate existing stockholders of Fannie Mae and Freddie Mac, but the stockholders might object to the new competition. The government could charge a fee for the GSE charters. Market competition among the many GSEs could supplement regulatory oversight. Fannie Mae and Freddie Mac are GSEs because of their charters, which were created by enactment of legislation, and legislative action could repeal the charters. In some circumstances, repeal might raise legal and other concerns about financial compensation for current common and preferred stockholders, assumption of responsibility for paying off existing bondholders, guarantees of timely payment of mortgages, and other liabilities. On the other hand, Treasury has warrants to purchase nearly 80% of each GSE's common stock at nominal cost making stockholder approval of a government proposal a certainty. The GSEs could continue with state charters like other financial intermediaries including commercial banks. In the early 1990s, the Student Loan Marketing Association (Sallie Mae) sought to relinquish its GSE status because of the financial burdens that came with its being a GSE and to make loans that it could not as a GSE. In 1996, Congress agreed to allow Sallie Mae to relinquish its congressional charter and give up its GSE status. Sallie Mae became a stockholder-owned company with no special privileges in 2004. If the GSE charters were repealed, Congress might wish to consider whether the GSEs' securitization of mortgages should be continued by a government agency. The GSEs have been able to compete against the government programs (FHA's mortgage insurance, the Veterans' Affairs mortgage guarantees, and the Department of Agriculture's rural housing programs) by creating a broader product than some government programs, and by competing on price. Some research has suggested that the GSEs' biggest competitive advantage against other private sector mortgage lenders derived from the close relationship with the federal government, which allowed the GSEs to borrow funds at lower rates compared to other mortgage lenders. Without GSEs and their funding advantage, investment bankers might securitize conforming mortgages that were formerly securitized by the GSEs. While there is little debate over the ability of the private mortgage market to operate in normal times, it is not clear that the private market would supply mortgage funding in times of stress. Since the GSEs entered conservatorship, there has been one private sector issue of MBS backed by mortgages that were too large for the GSEs to purchase. It could be argued, however, that at certain times a sharp reduction in the volume of new mortgages is an appropriate response to conditions. The impact of the GSEs on mortgage interest rates is much debated. The current spread between conforming and jumbo mortgages is greater than the historical average. A 2006 Federal Reserve study found that the GSEs did not reduce interest rates, but cites other studies that found interest rate reductions of 4 to 35 basis points with older studies finding greater reductions. (One basis point is 0.01%.) This research suggests that there could be a small increase in mortgage interest rates if the GSEs were to cease securitizing mortgages. On the other hand, this research uses the difference between mortgages that the GSEs can purchase and jumbo mortgages that the GSEs cannot buy. Without GSEs, institutional investors might shift some of their money to other securities or other countries. If this were to happen, mortgage interest rates could rise more than this research suggests. Another option would be to make the GSEs a government agency. Ginnie Mae, officially the Government National Mortgage Association, an office within the Department of Housing and Urban Development, purchases and securitizes government-insured and government-guaranteed mortgages in much the same way that the GSEs purchase and securitize conforming mortgages. Ginnie Mae contracts with investment banks on Wall Street to do the actual securitization of their mortgage purchases. This allows Ginnie Mae to function with approximately 60 employees yet be responsible more than $1.3 trillion in Ginnie Mae MBS. Ginnie Mae's contractor purchases government-insured and guaranteed mortgages and pools them into MBS. Ginnie Mae adds the federal government's guarantee that the MBS purchasers will be paid, and the contractor sells the MBS to institutional investors. Until it became stockholder owned in 1968, Fannie Mae was part of Ginnie Mae. If Fannie Mae and Freddie Mac were to become a government agency, it is possible that many of the current staff and directors of the GSEs would find other employment. Potential reasons include duplication of functions, or because the salaries of current GSE employees would be reduced to fit the government pay schedule currently used at FHA and Ginnie Mae. Fully privatized GSEs would no longer have special status from the federal government. They would be owned by investors. GSE stockholders would receive stock in the new companies. The stock of the new companies could trade on one or more stock exchanges. The new companies would assume the assets (retained portfolios) and liabilities (bonds, MBS, and guarantees) of the existing GSEs. The combined Ginnie Mae, Fannie Mae, and Freddie Mac market share was 100% in the third quarter of 2012 compared to 98% at the end of 2011. Some might consider this to be too dominant, and Congress might consider dividing the GSEs into many companies as part of a privatization process. Congress might wish to consider if each of the new non-GSEs should be similar, or if some might specialize in geography or some other factor. This could reduce the probability that multiple mortgage lenders would simultaneously encounter financial difficulty, but would eliminate some of the risk reduction that comes from diversification. As mentioned earlier, the GSEs (but not their private sector competitors) guarantee that investors will receive timely payment of principal and interest even when a homeowner becomes delinquent. Another way to provide this sort of guarantee without GSEs would be to create a co-op to insure MBS. This would be similar to a private Federal Home Loan Bank System and share some features with Lloyd's of London, which also uses a co-op insurance business model. The co-op would create MBS from mortgages purchased from members. Members would be required to buy stock in the co-op proportional to the volume of mortgages sold to the co-op, and part of the proceeds from the mortgage sales would be posted as collateral against losses. The collateral could be released as the mortgages age. The co-op members' stock could be sold if collateral were insufficient to cover losses. Beyond this, members would have no liability. The result would be that individual co-op members would keep their profits and share their losses. The co-op would decide pricing, eligibility requirements, and credit requirements. The government would supervise the co-op for safety and soundness, and it would explicitly bear the risk of catastrophic disaster. In return, the government could charge the co-op a fee for supervision and risk. If the co-op's rules allowed for wide membership, this option could encourage competition in mortgage securitization. Members would have a stake up to the amount of equity in the co-op, in the behavior of other members. A member who used the co-op to insure excessively risky mortgages would be risking all of the members' equity and increasing the probability that the federal government's catastrophic insurance might have to be used. There are at least two supplementary options that could operate independent of any GSE restructuring: government reinsurance and covered bonds. The government could provide catastrophic reinsurance to the secondary mortgage market. This would be similar to the reinsurance provided under the Terrorism Risk Insurance Act of 2002 (TRIA, P.L. 107-297 ). GSEs and others selling MBS in the secondary market would provide primary insurance to purchasers. If the GSEs or others creating MBS experienced losses exceeding a certain limit, the federal government would provide compensation. This would allow many financial institutions to compete in the secondary mortgage market. The terms of this insurance could be determined by statute or by regulation. Some of the factors to be considered would be: how large of a loss (dollars or percentage) would primary insurance incur before the reinsurance became effective? Who should be eligible for the reinsurance program? Would the reinsurance be 100%, or would these losses be shared? How should premiums be determined? Covered bonds are a method of raising funds for mortgages that provides more security to purchasers than non-GSE MBS provide currently. While the GSEs guarantee that the purchasers of their MBS will receive timely payment of principal and interest, the issuers of private-label MBS do not include any such guarantee. If a mortgage borrower defaults, the losses flow to the private label MBS holder as specified in the MBS prospectus. Covered bonds seek to reduce the risk of financial loss to the bond purchaser. Regular bonds are backed by the income of the issuer and have no specific collateral. Covered bonds have collateral and a claim on the income and assets of the issuer. Typically, covered bonds have more collateral than the value of the bonds. If the value of the collateral declines (due to prepayment, default, foreclosure, etc.), the issuer must add additional collateral. In a best practices paper, Treasury said that there should be at least an extra 5% collateral coverage, that only 30-year fixed-rate mortgages should be included, and that the maximum loan-to-value ratio on mortgages included should be 80%. Because covered bonds have a priority claim on the assets of the issuer, the remaining claimants are likely to receive less in the event of bankruptcy or receivership. In the case of an insured depository institution such as a bank or thrift, covered bonds would increase the FDIC's losses. Presently, covered bonds may not exceed 4% of an FDIC-insured institution's liabilities. This limits the ability of insured depository institutions to issue covered bonds. Some have suggested that covered mortgage bonds could be issued using MBS from the GSEs or their successors. Covered bonds are popular in Europe, where the covered bond issuer typically originates the mortgage. Some analysts believe this aligns the interests of originators and bond holders. In Germany, which issued the first covered bonds in 1899, covered bonds reportedly have never defaulted. Covered bonds are attractive to some because they could reduce the risks to purchasers of private label MBS, and increase competition in the secondary mortgage market.

The federal government's role in the mortgage market dates to the Depression and is considered by many to be substantial: Fannie Mae, Freddie Mac, and Ginnie Mae (officially the Government National Mortgage Association, which is part of the Department of Housing and Urban Development) together guarantee virtually all new mortgage-backed securities (MBS). With slightly less than $10 trillion in mortgages outstanding, the residential mortgage market is of central importance both to households and to lenders. As government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac have special privileges and obligations. Their congressional charters give them a close relationship to the federal government that is widely (but not universally) viewed as an implicit federal guarantee of their bonds and MBS. Broadly speaking, their role is to ensure appropriate availability of mortgages to creditworthy households. By law, the GSEs purchase mortgages from lenders, and either hold the mortgages as investments or pool the mortgages into mortgage-backed securities, which are sold to institutional investors. The GSEs guarantee that investors in these MBS will receive timely payment of principal and interest even if the borrower becomes delinquent. In September 2008, the GSEs individually agreed with their regulator, the Federal Housing Finance Agency (FHFA), that unexpected mortgage delinquencies and resulting losses jeopardized their solvency. The GSEs agreed to direct government control, known as voluntary conservatorship, which is the equivalent of bankruptcy reorganization for a financial company. As part of the agreement to conservatorship, Treasury contracted to provide financial support to keep the GSEs solvent. Pursuant to this agreement, which has been amended three times, the federal government has purchased more than $187 billion in special stock from Fannie Mae and Freddie Mac. In addition, the government holds $821 billion in MBS issued by Fannie Mae and Freddie Mac. The agreement requires Treasury to provide up to $274 billion of additional funds, if necessary. In return for this support, Treasury receives special stock and other considerations. The 113th Congress and the Administration are deliberating how and when to unwind the federal control of Fannie Mae and Freddie Mac, and what (if any) is the proper role of the federal government in the nation's mortgage markets. Some proposals have called for reducing the government's support of Fannie Mae and Freddie Mac, selling off their assets, and revoking their congressional charters. Other proposals have concentrated not so much on unwinding Fannie Mae and Freddie Mac, as on replacing them with new institutions. It is not only Fannie Mae and Freddie Mac that have raised issues. At the end of FY2012, the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development, reported the fund backing its insured mortgages had a negative net worth of -1.44%. This report examines options concerning the future of the GSEs and the future government role in residential mortgage markets. Other CRS reports address related issues such as conservatorship, the GSEs' financial condition, residential mortgage markets in other nations, and affordable housing. This report will be updated as warranted.

The genesis of the Religious Freedom Restoration Act (RFRA) lies in the Supreme Court's decision in Employment Division, Oregon Department of Human Resources v. Smith . In that case, decided in 1990, the Court narrowed the scope of the Free Exercise Clause of the First Amendment, which provides that "Congress shall make no law ... prohibiting the free exercise [of religion]." The specific issue before the Court in Smith was whether two Native Americans who had been fired from their jobs as drug counselors after they were discovered to have ingested peyote in a ritual of the Native American Church were eligible for state unemployment benefits. The Court determined that they were not, and in so doing also altered the standard of review generally used for free exercise cases. Before Smith , the Court had generally applied a strict scrutiny test to government action that allegedly burdened the exercise of religion. That test required the government to show that an action burdening religion served a compelling government interest and that no less burdensome course of action was feasible. If the government could not so demonstrate, the test required that the religious practice be exempted from the government regulation or prohibition at issue. In Smith , the Court abandoned the strict scrutiny test and held that religiously neutral laws may be uniformly applied to all persons without regard to any burden or prohibition placed on their exercise of religion. The Free Exercise Clause, the Court said, never "relieves an individual of the obligation to comply with a 'valid and neutral law of general applicability' on the ground the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes)." In the case at hand, that new standard meant that the Free Exercise Clause mandated no religious exemption from Oregon's drug laws for Native American use of peyote in a sacramental ceremony and, consequently, no eligibility for unemployment benefits of the two Native Americans who lost their jobs because of their participation in such a ceremony. More generally, the Court asserted that the question of whether religious practices ought to be accommodated by government was a matter to be resolved by the political process and not by the courts, although it admitted that "leaving accommodation to the political process will place at a relative disadvantage those religious practices that are not widely engaged in...." In 1993, Congress enacted the Religious Freedom Restoration Act (RFRA) to restore the compelling interest test set forth in earlier cases in all circumstances where the freedom of religious exercise is being burdened and to provide a claim for relief when the government substantially burdens the religious exercise. Thus, RFRA granted government the right to substantially burden a person's exercise of religion only if it demonstrates that application of the burden to the person is (1) in furtherance of a compelling governmental interest and (2) the least restrictive means of furthering that compelling governmental interest. O Centro Espirita Beneficente Uniao do Vegetal (UDV) is a religious sect with origins in the Amazon Rainforest in which members of the church receive communion by drinking a sacramental tea containing a hallucinogen ( hoasca ) regulated under the Controlled Substances Act by the federal government. In 1999, federal agents seized a shipment of hoasca from Brazil that was to be used in UDV ceremonies. The church challenged the seizure and requested a preliminary injunction to prevent the further seizure of hoasca or the arrest of any UDV members using the drug. The complaint alleged that the application of the Controlled Substances Act to the church's sacramental use of hoasca violated RFRA. At a hearing on the preliminary injunction, the government conceded that the application of the Controlled Substances Act would substantially burden a sincere exercise of religion by the UDV, but argued that there was no RFRA violation because the application of the Controlled Substances Act was "the least restrictive means of advancing three compelling governmental interests: protecting the health and safety of UDV members, preventing the diversion of hoasca from the church to recreational users, and complying with the 1971 United Nations Convention on Psychotropic Substances, a treaty signed by the United States and implemented by the [Controlled Substances] Act." The district court found that the government had failed to "demonstrate a compelling interest justifying what it acknowledged was a substantial burden on the UDV's sincere religious exercise." The court entered a preliminary injunction prohibiting the government from enforcing the Controlled Substances Act with respect to the UDV's importation and use of hoasca . The injunction required the church to import hoasca pursuant to federal permits, to restrict control of the church's supply of hoasca to persons of church authority, and to warn members of the dangers of hoasca . The government appealed the issuance of the injunction, and a panel of the United States Court of Appeals for the Tenth Circuit affirmed, as did a majority of the Circuit sitting en banc. The government appealed to the Supreme Court. In making its appeal, the government put forth three arguments challenging the lower court's decision. First, it challenged the preliminary injunction itself, alleging that the court used the wrong test for determining whether a preliminary injunction was proper. Second, it argued that enforcement of the Controlled Substances Act precluded any type of waiver for UDV. Third, it argued that compliance with the United Nations Convention on Psychotropic Substances also prevented it from allowing UDV to use hoasca , a substance covered under the convention. The government did not challenge the district court's factual findings or its conclusion that the evidence presented at the hearing regarding health risks and risk of diversion was "in equipoise" and "virtually balanced." Rather, the government challenged the district court's determination that evidence "in equipoise" was sufficient for issuing a preliminary injunction against enforcement of the Controlled Substances Act. On appeal, the government noted "the well-established principle that the party seeking pretrial relief bears the burden of demonstrating a likelihood of success on the merits." The government argued that a "mere tie in the evidentiary record" was insufficient for issuing a preliminary injunction. Along with a majority of the en banc Court of Appeals, the Supreme Court rejected this argument, finding that the government "failed to demonstrate that the application of the burden to the UDV would, more likely than not, be justified by the asserted compelling interest." The Court also rejected the government's contention that the UDV bore the burden of disproving the asserted compelling interests at the hearing on the preliminary injunction, citing another recent case which held that "respondents must be deemed likely to prevail unless the government has shown that respondents' proposed less restrictive alternatives are less effective than [enforcing the Act]." The Court stated that "Congress' express decision to legislate the compelling interest test indicates that RFRA challenges should be adjudicated in the same manner as constitutionally mandated applications of the test, including at the preliminary injunction stage." The government also challenged the district court's determination that it failed to articulate a compelling governmental interest to justify its burden on the UDV's religious practices by arguing that the Controlled Substances Act "precludes any consideration of individualized exceptions such as [those] sought by the UDV." The Supreme Court summarized the government's position, saying that "under the government's view, there is no need to assess the particulars of the UDV's use or weigh the impact of an exemption for that specific use, because the Controlled Substances Act serves a compelling purpose and simply admits of no exceptions." However, the Court rejected the government's assertion that Congress's classification of hoasca as a Schedule I substance "relieves the government of the obligation to shoulder its burden under RFRA." The Court noted that the Controlled Substances Act authorizes the Attorney General to "waive the requirement for registration of certain manufacturers, distributors, or dispensers if he finds it consistent with the public health and safety," and that an exception has been made for the religious use of peyote by the Native American Church and all members of every recognized Indian Tribe. The Court found that "[i]f such use is permitted ... for thousands of Native Americans practicing their faith, it is difficult to see how [the government] can preclude any consideration of a similar exception for the 130 or so American members of the UDV who want to practice theirs." The Court held that the peyote exemption not only undermined the government's contention that the Act admits no exceptions under RFRA, but that it also found that the government failed to provide evidence of how such an exemption has "undercut" the government's ability to enforce the law with respect to nonreligious uses. The Court rejected the government's reliance on other cases where the Court found that the government had a compelling interest in the uniform application of a particular program, finding that in this case the government's claim was not based on the administration of a statutory program, but rather on "slippery-slope concerns that could be invoked in response to an RFRA claim for an exception to a generally applicable law." In so doing, the Court stated that "RFRA operates by mandating consideration, under the compelling interest test, of exceptions to 'rule[s] of general applicability,'" and noted that it had recently reaffirmed "the feasibility of case-by-case consideration of religious exemptions to generally applicable rules." With respect to its obligation to comply with the United Nations Convention on Psychotropic Substances, the Court also rejected the government's contention that compliance with the treaty itself was enough to justify the burden on the UDV's religious exercises. In so doing, the Court stated that it did "not doubt the validity of [the government's] interests [in complying with the treaty], any more than [it] doubt[ed] the general interest in promoting public health and safety by enforcing the Controlled Substances Act, but under RFRA invocation of such general interests, standing alone, is not enough." The Court proceeded to affirm the judgment of the United State Court of Appeals for the Tenth Circuit and remanded the case for further proceedings. Presumably, the remand leaves open the possibility that the government could at some point establish a compelling interest that justifies the burden on the UDV. It should also be noted that the Court did not address the constitutionality of RFRA as it applies to the federal government, as this was not a question presented to it on appeal. The potential impact of the Court's decision is uncertain because the Court focused on the importance of a case-by-case approach with respect to religious exemptions from generally applicable rules. The Court's decision does not establish a broad precedent for religious exemptions from criminal statutes. It does, however, appear to establish a precedent with respect to the type of evidence that must be presented by the government to establish a compelling interest. The Court made it clear that the government could not establish a compelling interest in simply enforcing an existing statute; there must be some other justification for the burden on religious expression.

On February 21, 2006, the Supreme Court issued an opinion in Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal (UDV), a case addressing the use of an hallucinogenic tea in the context of religious ceremonies conducted by a religious sect in New Mexico. In its decision, the Court determined that under the Religious Freedom Restoration Act (RFRA), the federal government could not prohibit the sect's use of the tea absent a compelling government interest in doing so, and that the federal government had failed to establish a compelling interest. This report provides an overview of RFRA and the O Centro Espirita case.

Following the terrorist attacks of 2001, both the Administration and Congress determined that the federal government needed new medical countermeasures (such as diagnostic tests, drugs, vaccines, and other treatments) to respond to an attack using chemical, biological, radiological, or nuclear (CBRN) agents. Representatives of the pharmaceutical industry attributed the paucity of CBRN agent countermeasures to the lack of a significant commercial market. They argued that, because these diseases and conditions occur infrequently, the private sector perceived little economic incentive to invest the millions of dollars required to bring treatments to market. In 2004, Congress passed the Project BioShield Act ( P.L. 108-276 ) to encourage the development of CBRN medical countermeasures. The 108 th Congress also appropriated $5.6 billion to acquire countermeasures through Project BioShield for FY2004 to FY2013. Subsequent Congresses have evaluated implementation of Project BioShield. In response to perceived problems with Project BioShield countermeasure procurement, the 109 th Congress created the Biomedical Advanced Research and Development Authority (BARDA) and the position of Assistant Secretary for Preparedness and Response in the Department of Health and Human Services (HHS) through the Pandemic and All-Hazards Preparedness Act (PAHPA, P.L. 109-417 ). The 112 th Congress is considering several Project BioShield-related policy questions. One question is whether the Project BioShield acquisition mechanism has sufficiently improved national preparedness relative to its costs to merit extension. If so, congressional policymakers may consider whether changes to the funding levels or how Congress provides Project BioShield funds would improve the program's efficiency or performance. Additionally, congressional policymakers are considering whether the federal government sufficiently plans and coordinates its CBRN countermeasure efforts from basic research to distribution. Finally, Congress is considering whether changes to the emergency use authority will improve preparedness and planning. The Pandemic and All-Hazards Preparedness Reauthorization Act of 2011 ( H.R. 2405 , passed the House on December 6, 2011), the Pandemic and All-Hazards Preparedness Act Reauthorization of 2011 ( S. 1855 , passed the Senate on March 7, 2012), the Pandemic and All-Hazards Preparedness Reauthorization Act of 2012 ( H.R. 6672 , passed the House on December 19, 2012), and the WMD Prevention and Preparedness Act of 2011 ( H.R. 2356 , reported by the House Committee on Homeland Security on September 12, 2012) address some of these issues. This report will provide a brief overview of the authorities established by the Project BioShield Act of 2004, discuss the availability of Project BioShield appropriations, identify the medical countermeasures obtained through Project BioShield, review the relationship between Project BioShield and the Biomedical Advanced Research and Development Authority (BARDA), review policy issues and options faced by congressional policymakers, and review current Project BioShield-related legislation. President Bush proposed Project BioShield in his 2003 State of the Union address. The 108 th Congress considered this proposal and passed the Project BioShield Act of 2004 ( P.L. 108-276 , signed into law July 21, 2004). It has three main provisions. The first provision, the one generally referred to as Project BioShield, creates a government-market guarantee by permitting the HHS Secretary to obligate funds to purchase countermeasures while they still need several more years of development. The second main provision establishes a process through which the HHS Secretary may temporarily allow the emergency use of countermeasures that lack Food and Drug Administration (FDA) approval. The third main provision provides HHS with expedited procedures for CBRN terrorism-related spending, including procuring products, hiring experts, and awarding research grants. This law also requires HHS and the Government Accountability Office (GAO) to produce certain reports. When companies decide to develop a new product, its potential economic market value is often a key factor. With new CBRN countermeasures, the U.S. government may be the most economically significant customer. Thus, one difficulty facing potential CBRN developers is knowing whether the federal government would buy their product and, if so, at what price. Companies may find it difficult to justify investing millions of dollars developing new countermeasures without knowing the potential economic value of the government market. Congress designed the Project BioShield Act to guarantee companies that the government will buy new, successfully developed CBRN countermeasures for the Strategic National Stockpile (SNS). The act allows the Secretary of HHS, with the concurrence of the Secretary of Homeland Security and upon the approval of the President, to promise to buy a product up to eight years before it is reasonably expected to be delivered. Such contracts are only available for products designed for use against CBRN agents that the Department of Homeland Security (DHS) has determined pose "a material threat against the United States population sufficient to affect national security." These contracts define the minimum economic value of the market for the company developing the product. The Project BioShield Act, as passed, allowed the HHS to pay a company only on the delivery of a substantial portion of the countermeasure. Such contracts reduce the market risk faced by the developers, but do not mitigate the risk that the product might fail during development or testing and be undeliverable. The Pandemic and All-Hazards Preparedness Act ( P.L. 109-417 ) modified the Project BioShield Act to allow for milestone-based payments of up to half of the total award before delivery. The milestone payments can mitigate the cost to the company of the product failing during development. Thus, HHS can now use Project BioShield contracts to reduce the company's exposure to market risk and development risk. The Project BioShield Act allows HHS to purchase unapproved and unlicensed countermeasures. It requires the HHS Secretary to determine that "sufficient and satisfactory clinical experience or research data ... support a reasonable conclusion that the product will qualify for [FDA] approval or licensing ... within eight years." Because most drugs that begin the approval process fail to become approved treatments, critics of this provision suggest that the government will end up purchasing countermeasures that may never be approved. Some of the countermeasures procured through Project BioShield since 2004 lack FDA approval. To reduce the government's financial risk associated with this provision, the act, as amended, allows HHS to write contracts in which unapproved products may be purchased at lower cost than approved products. Additionally, HHS has included provisions for milestone payments and for payments contingent on FDA approval in Project BioShield contracts. For an overview of those countermeasures obtained through these authorities, see " Acquisitions " below. The FDA designed its standard approval and licensing processes to protect people from ineffective or dangerous treatments. During a military, domestic, or public health emergency, the Project BioShield Act allows the HHS Secretary to temporarily allow the use of medical products that FDA has not approved or licensed. These allowances are known as emergency use authorizations (EUAs). To exercise this authority, the HHS Secretary must conclude that the agent for which the countermeasure is designed can cause serious or life-threatening disease; the product may reasonably be believed to be effective in detecting, diagnosing, treating, or preventing the disease; the known and potential benefits of the product outweigh its known and potential risks; no adequate alternative to the product is approved and available; and any other criteria prescribed in regulation are met. Such EUAs remain in effect for one year unless the Secretary terminates them. The Secretary may renew expiring authorizations. The HHS Secretary has issued several EUAs. The HHS Secretary issued an EUA allowing the vaccination of Department of Defense (DOD) personnel with a specified type of anthrax vaccine. The HHS Secretary issued EUAs to permit use of certain countermeasures during the 2009 H1N1 "swine" influenza outbreak: the antiviral influenza treatments Tamiflu (oseltamivir), Relenza (zanamivir), and Peramivir; N95 respirators; and several diagnostic kits to help identify cases of this disease. Two EUAs remain active. One permits the distribution of antibiotic kits containing doxycycline hyclate to U.S. Postal Service employees volunteering in the National Postal Model emergency countermeasure distribution program. The other active EUA permits distributing doxycycline hyclate before an emergency and its mass dispensing without a prescription during an emergency to prevent inhalational anthrax. The Project BioShield Act relaxed and expedited the Federal Acquisition Regulation procedures HHS must follow when procuring property or services used in performing, administering, or supporting CBRN countermeasure research and development (R&D). These expedited procedures decrease both the amount of paperwork required for these expenditures and the potential for oversight. The act also increases the maximum amount (from $100,000 to $25 million) for contracts awarded under simplified acquisition procedures. According to the Government Accountability Office (GAO), HHS used the simplified acquisitions procedure authority for five contracts. These contracts, all executed in 2004 and 2005 using funds from the National Institutes of Health (NIH), totaled approximately $30 million. The Project BioShield Act authorizes the HHS Secretary to use an expedited peer review award process for grants, contracts, and cooperative agreements related to CBRN countermeasure R&D, if the Secretary deems that a pressing need for an expedited award exists. The act limits this authority to awards worth $1.5 million or less. This expedited award process replaces the normal peer review process. Some scientists have expressed concerns that an expedited review process would reduce research quality. The normal peer review process can provide proposals that have greater scientific merit a higher probability of receiving funding, a factor potentially lost in an expedited process. According to the National Institute of Allergy and Infectious Diseases (NIAID), grants that go through the normal peer review process typically take 9 to 17 months to receive funding. Between 2004 and 2008, NIAID awarded 5 contracts and 55 grants using expedited peer review. NIAID funded these awards between 3 and 9 months after the application deadline. Since 2008, NIAID funded all 7 grants awarded through this review mechanism more than 18 months after the application deadline. In 2011, NIAID did not fund any grants using expedited peer review. The Project BioShield Act of 2004 requires the HHS Secretary to report annually to Congress on the use of some of the authorities granted by this law. The annual reports must summarize each instance that HHS used the expedited procurement and grant procedures and allowed the emergency use of unapproved products. The annual reports must explain why HHS needed to use these authorities. This act also required GAO to assess actions taken under authorities granted by the act, determine the effectiveness of the act, and recommend additional measures to address deficiencies. In July 2009, GAO published two reports in response to this requirement. The first recommended that HHS improve some internal controls for the expedited contracting procedures (see " Expedited Procedures " above). The second report described the manner in which HHS had used Project BioShield to support development and procurement of CBRN medical countermeasures. This report contained no recommendations for improving Project BioShield. The Project BioShield Act did not appropriate any funds. Instead, it authorized the appropriation of up to $5.593 billion for procuring countermeasures from FY2004 through FY2013. The Department of Homeland Security Appropriations Act, 2004 ( P.L. 108-90 ) had previously appropriated this amount into a special reserve fund and provided explicit time windows during which the money could be obligated. The Project BioShield Act specified that the funds in this DHS "Biodefense Countermeasures" account are only for the procurement of CBRN countermeasures using the Project BioShield authorities and may not be used for other purposes, such as countermeasure development grants or program administration. The Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) transferred the Project BioShield account from DHS to HHS. While Congress used the advanced appropriations mechanism to fund the 10-year program, it retains the power to decrease or increase the amount in the special reserve fund through rescission, transfer, or additional appropriation. Congress removed $25 million from this account through rescissions enacted in the Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) and the Consolidated Appropriations Act, 2005 ( P.L. 108-447 ). See Table 1 . Congress has also transferred funds from this account for various purposes. The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) transferred $275 million to fund countermeasure advanced development through the Biomedical Advanced Research and Development Authority (BARDA; see " BioShield and BARDA " below) and $137 million to help respond to and prepare for pandemic influenza. The Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) transferred $305 million to BARDA for countermeasure advanced development and $304 million to fund basic research on biodefense and emerging infectious diseases at NIAID. In FY2011, the Department of Defense and Full-Year Continuing Appropriations Act ( P.L. 112-10 ) transferred $415 million to BARDA for countermeasure advanced development. See Table 1 . The Consolidated Appropriations Act, FY2012 ( P.L. 112-74 ) transferred $415 million to BARDA for countermeasure advanced development and administrative costs. President Obama had requested transferring up to $665 million to BARDA for that purpose and an additional $100 million to establish an independent medical countermeasure strategic investment corporation. Congress did not approve the transfer for the strategic investment corporation. For FY2013, President Obama requested transferring up to $415 million of Project BioShield appropriated funds to BARDA for countermeasure advanced development and administrative costs. The Administration calculates that the combination of this transfer and its planned FY2013 countermeasure acquisitions will exhaust the remaining funds. The Continuing Appropriations Resolution, 2013 ( P.L. 112-175 ) provides for a transfer of up to $202 million to BARDA. This amount represents BARDA funding through March 27, 2013, at its "rate of operations" for FY2012. The HHS awarded Project BioShield contracts for 10 different medical countermeasures. The HHS has used Project BioShield to acquire countermeasures against only a few CBRN threats: anthrax, smallpox, botulinum toxin, and radiological and nuclear threat agents. These countermeasures include vaccines, antibodies, antivirals, and chemical compounds. Table 2 groups the Project BioShield countermeasures by threat and describes some of the details of the contracts. The first Project BioShield contract was announced on November 4, 2004. The HHS contracted with VaxGen, Inc., for delivery of 75 million doses of a new type of anthrax vaccine (recombinant protective antigen or rPA) within three years. This contract had a value of $879 million. See Table 2 . On December 17, 2006, HHS terminated this contract because VaxGen, Inc., failed to meet a contract milestone. Subsequent contracts, grouped by threat agent, include $691 million for 29 million doses of anthrax vaccine adsorbed (AVA), the currently approved anthrax vaccine from Emergent BioSolutions, Inc.; $334 million for 65,000 doses of Raxibacumab (ABthrax), a treatment for anthrax from Human Genome Sciences, Inc. (since acquired by GlaxoSmithKline plc); $144 million for 10,000 doses of Anthrax Immune Globulin, a treatment for anthrax from Cangene Corporation; $505 million for 20 million doses of Modified Vaccinia Ankara (MVA), a new smallpox vaccine from Bavarian Nordic, Inc.; $433 million for 1.7 million doses of ST-246, an antiviral treatment for smallpox from SIGA Technologies, Inc.; $476 million for 200,000 doses of botulinum antitoxin, a treatment for botulinum toxin exposure from Cangene Corporation; $18 million for 5 million doses of a pediatric form of potassium iodide, a treatment for radioactive iodine exposure from Fleming Pharmaceuticals; and $22 million for 395,000 doses of pentetate calcium trisodium (Ca-DTPA) and 80,000 doses of pentetate zinc trisodium (Zn-DTPA), two treatments for internal radioactive particle contamination from Akorn, Inc. Thus, excluding the canceled VaxGen contract, HHS has obligated approximately $2.63 billion to date. In FY2013, HHS plans to use remaining Project BioShield funds to replace expiring anthrax treatments and smallpox vaccine currently in the SNS and to acquire countermeasures against radiological, nuclear, and chemical threat agents. As discussed above, HHS may add products lacking FDA approval to the SNS through Project BioShield. Anthrax Immune Globulin, MVA smallpox vaccine, ST-246, and the botulinum antitoxin acquired through Project BioShield lack FDA approval. At the time of its acquisition, Raxibacumab (ABthrax) lacked approval; however, FDA subsequently approved its use. Congressional policymakers have scrutinized the implementation and effectiveness of the Project BioShield Act since its enactment. In response to perceived problems with medical countermeasure development and acquisition, Congress created the Biomedical Advanced Research and Development Authority (BARDA) through the Pandemic and All-Hazards Preparedness Act ( P.L. 109-417 ) in 2006. Congress created in BARDA a dedicated infrastructure to manage and fund advanced development and commercialization of CBRN countermeasures. As part of the Office of the HHS Assistant Secretary for Preparedness and Response (ASPR), BARDA contracts with companies to develop and commercialize countermeasures. These contracts specify development activities for the company to perform and may extend multiple years. Congress funds this BARDA activity through annual appropriations into the Biodefense Medical Countermeasure Development Fund. The BARDA typically uses these funds to develop countermeasures that it has determined are not yet mature enough for a Project BioShield acquisition contract. The BARDA also manages and executes all Project BioShield acquisition contracts. Thus, BARDA has two separate mechanisms to support countermeasure advanced development and commercialization: countermeasure development contracts and Project BioShield acquisition contracts with developmental milestone payments. In theory, HHS can now contribute to all phases of a countermeasure's development: basic research supported by NIAID, advanced development and commercialization supported by BARDA, and acquisition supported by BARDA and the Strategic National Stockpile (SNS). The Public Health and Emergency Medical Countermeasure Enterprise, an interagency group headed by ASPR, is responsible for coordinating these activities to ensure needs are addressed efficiently. The PHEMCE includes members from FDA, CDC, NIH, DOD, DHS, the Department of Agriculture, and the Department of Veterans Affairs. Several groups, including the Institute of Medicine, the National Biodefense Science Board, and GAO, have evaluated how these changes have affected federal efforts to develop and acquire medical countermeasures. These studies determined that the creation of BARDA and PHEMCE have helped, but that additional changes would further improve federal medical countermeasure development and acquisition. These recommendations are discussed below in " Countermeasure Development and Acquisition Process ." As discussed above, the federal government has successfully used the Project BioShield Act authorities to contribute to national preparedness for a CBRN attack and pandemic influenza. However, questions remain on whether additional modifications to Project BioShield authorities would improve their efficiency or performance and whether expiring authorities merit extension. The 112 th Congress is considering whether to reauthorize and modify the Project BioShield acquisition mechanism, whether to change the countermeasure development and acquisition process, and whether to modify the authority to allow the emergency use of unapproved medical countermeasures. The 10-year time period for which Congress funded Project BioShield acquisitions extends through FY2013. As this date approaches, Congress may consider whether this procurement mechanism merits reauthorization and additional appropriations. Congressional policymakers may determine that the program does not merit additional resources. Alternatively, congressional policymakers may decide to extend the program as is or with modifications. If congressional policymakers decide to extend the program, Congress may also change the amount appropriated for these acquisitions. Congressional policymakers could choose to let Project BioShield lapse for several reasons. One reason could stem from the difficulty in determining how much safer Project BioShield has made the nation. Most experts deem CBRN terrorist attacks as events with high consequences but low probabilities of occurring. Thus, the federal government is unlikely to use medical countermeasures acquired by Project BioShield. The medical countermeasures acquired through Project BioShield to date provide protection against a limited number of all potential CBRN threats. The number of doses acquired limits this potential protection to only a part of the population. Additionally, all of these products expire. Maintaining each product's potential benefit requires regular replacement, which may add significant costs to the SNS budget. Congressional policymakers could deem that the potential benefits provided by Project BioShield do not justify continuing the program. Alternatively, policymakers could deem other, more conventional, countermeasure procurement methods sufficient or more efficient than Project BioShield and let it lapse. Finally, policymakers could decide that those funds could be better used for other federal programs or not spent. Three bills in the 112 th Congress, H.R. 2405 , H.R. 6672 , and S. 1855 , would extend the Project BioShield acquisition authority. Policymakers considering extending the Project BioShield acquisition program will likely consider how much to fund this program and for how long. By using the advanced appropriations mechanism to provide $5.6 billion to Project BioShield for 10 years, Congress anticipated an average annual obligation rate of $560 million. However, through FY2012, HHS obligated these funds at a slower pace, an average of $290 million annually. Additionally, HHS could have purchased some of these products through other funding sources, such as SNS appropriations. These factors might lead policymakers to decrease the average annual appropriation for Project BioShield acquisitions. Alternatively, congressional policymakers might decide to maintain the current level of funding or increase it. Since 2001, HHS has spent more than $15 billion on biodefense-related research and countermeasure development. Congressional policymakers could determine that this investment will soon begin producing more countermeasures eligible for Project BioShield contracts in the near future. A potential increase in eligible countermeasures might lead Congress to maintain or increase the average annual appropriation for Project BioShield acquisitions. In addition to determining the overall level of Project BioShield appropriations, congressional policymakers may consider changing the method of providing appropriations. Previously, Congress chose to advance appropriate funds for 10 years. Potential countermeasure developers considered the establishment of a multiyear, advance-funded account dedicated solely to countermeasure procurement as integral to their ability to develop countermeasures through this program. The advance funding was to help assure developers that payment for successfully developed countermeasures would not depend on future, potentially uncertain appropriations processes. Although providing advance funding to the Project BioShield account may have assured stable funding to developers, these funds have been subject to the annual appropriations process. Subsequent Congresses have rescinded or transferred more than one-third of the advance appropriation for other purposes. See Table 1 . Policymakers may choose to change how Project BioShield funds are appropriated, for example to annual appropriations. However, developers continue to contend that a multiyear advance-funded account devoted to Project BioShield acquisitions remains integral to their ability to develop countermeasures. Additionally, annual appropriations may complicate HHS's long-term countermeasure development and acquisition planning. The inherent uncertainty in the countermeasure development process produces uneven acquisition opportunities and activity. In some years, one or multiple countermeasures may reach a point in development that HHS deems appropriate for a Project BioShield contract. In those years, HHS might obligate hundreds of millions of dollars for countermeasures. However, in years in which no countermeasures reach that point in development, HHS might not obligate any money for Project BioShield contracts. Policymakers may partially address some of these concerns by coupling annual appropriations with allowing funds to remain available until expended. Alternatively, Congress could use the advanced appropriations mechanism to provide funding for multiple years as it did for FY2004-FY2013. This may address the developers' desire for a multiyear appropriation and may help HHS's ability to plan acquisition programs. Developers might prefer advance appropriations for as long a period as possible. However, providing a 10-year advance appropriation for this program during the current fiscal environment may prove more difficult than in 2003. Additionally, increasing the duration of the advance appropriation may make it more likely that future Congresses transfer money out of the account for other purposes. Congressional policymakers may decide to balance these competing pressures by advance-appropriating funds for longer than 2 years but less than 10 years. Project BioShield is a piece of the federal effort to research, develop, and acquire countermeasures for civilian use. Other aspects of this effort include risk assessment, strategic planning, countermeasure prioritization, basic research, countermeasure approval, and countermeasure distribution. Various federal agencies and departments have roles in different parts of this effort. The Institute of Medicine and the National Biodefense Science Board examined the federal government's biodefense efforts and concluded that better coordination and stronger management of the overall process would increase the pace of countermeasure development and acquisition. Their report provided additional recommendations including empowering a single office to have the authority and responsibility to align component agencies' efforts; developing a coordinated budget request for HHS and DOD countermeasure development, approval, and acquisition; developing a common set of prioritized product needs and research goals to support them; and increasing the funding available for countermeasure acquisition and advanced development. In 2009, HHS Secretary Sebelius ordered a comprehensive review of how HHS develops and acquires countermeasures to all public health threats, including CBRN agents. In August 2010, HHS published the results of its review and recommendations. The review recommended creating a private strategic investment corporation to inject capital into small companies developing novel technologies that could support public health needs and medical countermeasure development. The HHS review modeled this corporation after In-Q-Tel, a private corporation founded by the government to serve the needs of the intelligence community. In FY2011 and FY2012, Congress rejected President Obama's requests to use Project BioShield funds to establish such a corporation. For FY2013, President Obama has again requested establishing such a corporation. However, in contrast to previous requests, the corporation would be funded by $50 million in new budget authority, not through using Project BioShield appropriations. The HHS review also recommended changing the medical countermeasure enterprise management. The review determined that the HHS's medical countermeasure decision-making process would be improved by creating a centralized decision-making body and by creating and implementing a "disciplined, metric-driven, systematic" decision-making process. Additionally, the review recommended the creation of a new position, the Medical Countermeasure (MCM) Development Leader, to coordinate and integrate medical countermeasure development efforts throughout the department. The review also determined that HHS should institute a five-year budget-planning system for medical countermeasure development activities. According to GAO, HHS has made some progress implementing the review's recommendations, but challenges remain. In 2012, HHS released an updated five-year strategic plan for its medical countermeasure enterprise that incorporates many of the review's recommendations. The 112 th Congress is considering these and other related policy options in H.R. 2405 , H.R. 2356 , H.R. 6672 , and S. 1855 . The Project BioShield Act provided the HHS Secretary with a mechanism to allow the emergency use of unapproved countermeasures in certain circumstances. As noted above, HHS used this authority several times. However, current legal restrictions on this authority may hinder emergency planning and response. For example, current law states that HHS may issue an EUA on the basis of an actual ongoing public health, military, or domestic emergency, as determined by HHS, DOD, and DHS respectively. However, HHS may also issue EUAs on the basis of potential military or domestic emergencies, but not potential public health emergencies. This creates some uncertainty for stakeholders developing response plans about whether HHS will authorize the use of a particular countermeasure during a particular emergency. The requirement for a declared public health emergency also complicates countermeasure pre-positioning programs. Although HHS has used EUAs to allow two countermeasure prepositioning programs on the basis of a DHS declared potential emergency, the FDA deems the EUA process too unwieldy to apply more broadly. Additionally, many proposed methods of dispensing even FDA approved countermeasures during an emergency would require an EUA. Modifying the EUA authority or specifically allowing emergency dispensing of FDA approved countermeasures without a prescription might ease federal, state, tribal, and local government planning activities and improve response during an emergency. The 112 th Congress is considering several modifications to the emergency use authority in H.R. 2405 , H.R. 6672 , and S. 1855 . The 112 th Congress is considering legislation that would address some of these policy issues. Three bills, the Pandemic and All-Hazards Preparedness Reauthorization Act of 2011 ( H.R. 2405 , passed by the House on December 6, 2011), the Pandemic and All-Hazards Preparedness Act Reauthorization of 2011 ( S. 1855 , passed by the Senate on March 7, 2012), and the Pandemic and All-Hazards Preparedness Reauthorization Act of 2012 ( H.R. 6672 , passed by the House on December 19, 2012) would extend the Project BioShield procurement program, change the countermeasure development and acquisition process, and modify the emergency use authority. A fourth bill, the WMD Prevention and Preparedness Act of 2011 ( H.R. 2356 , reported by the House Committee on Homeland Security on September 12, 2012), would change some aspects of the countermeasure development and acquisition process. The House passed the Pandemic and All-Hazards Preparedness Reauthorization Act of 2011 ( H.R. 2405 ) on December 6, 2011. Some provisions of this bill would affect Project BioShield implementation, address the use of the special reserve fund for purposes other than acquisition, change the countermeasures development and acquisition process, and modify the emergency use authority. This bill would extend the Project BioShield procurement program to FY2018. It would authorize appropriations of $2.8 billion for five fiscal years (FY2014-FY2018), the same average annual appropriations as current law. It would also grant the HHS Secretary the authority to use up to $840 million of Project BioShield appropriations for BARDA countermeasure advanced development activities. The HHS Secretary would have to report to Congress when the special reserve fund available balance dropped below $1.5 billion. H.R. 2405 would reauthorize BARDA and require formal planning activities and reporting. The bill would authorize $415 million in annual appropriations for BARDA countermeasure development activities through FY2016, in addition to any funds transferred from the BioShield special reserve fund. Additionally, it would require the HHS Assistant Secretary for Preparedness and Response (ASPR) to develop a "comprehensive cross-cutting 5-year budget analysis" for its countermeasure advanced research, development, and procurement activities. H.R. 2405 would require the ASPR to develop an annual Countermeasure Implementation Plan that would be provided to Congress. The plan must describe the CBRN threats; describe the efforts to develop countermeasures for each threat; evaluate the progress of all activities to develop, procure, stockpile, deploy, and use countermeasures; identify and prioritize near-term, mid-term, and long-term needs; summarize all advanced development and procurement awards; provide timelines, metrics, and intended uses for each countermeasure under development; evaluate progress on all such awards; report the amount available in the BioShield fund; incorporate stakeholder input; and address the need for pediatric countermeasures. H.R. 2405 would also repeal the reporting requirements section of the Project BioShield Act discussed above (" Reporting Requirements "). H.R. 2405 would modify some aspects of the HHS emergency use authority for medical countermeasures. H.R. 2405 would allow the Secretary to issue an EUA following the determination that a significant potential for a public health emergency exists, making it parallel with the ability to issue an EUA on the basis of potential military or domestic emergencies. Under this bill, all EUAs would expire when the HHS Secretary determines the underlying emergency circumstances no longer exist rather than automatically after one year. H.R. 2405 would also allow the Secretary to modify active EUAs and waive certain manufacturing process requirements for approved products during an emergency. It would allow mass dispensing of approved medical countermeasures during an emergency without an individual prescription (independent of an EUA) and pre-positioning of unapproved medical countermeasures by federal, state, or local governments in anticipation of emergencies. The Senate passed the Pandemic and All-Hazards Preparedness Act Reauthorization of 2011 ( S. 1855 ) on March 7, 2012. Some of the provisions of this bill would affect Project BioShield implementation, address the use of the special reserve fund for purposes other than acquisition, change the countermeasures development and acquisition process, and modify the emergency use authority. This bill would extend the Project BioShield procurement program to FY2018. It would authorize appropriations of $2.8 billion for five fiscal years (FY2014-FY2018), the same average annual appropriations as current law. The HHS Secretary would have to report to Congress when the special reserve fund available balance dropped below $1.5 billion. In contrast to H.R. 2405 , it would not authorize the Secretary to use the Project BioShield special reserve fund to support BARDA countermeasure development activities. It would explicitly allow Project BioShield countermeasure procurement contracts to include development costs. Additionally, it would allow Project BioShield contracts to be signed up to 10 years before the expected delivery date of the countermeasure to the stockpile, rather than eight years under current law. S. 1855 would also reauthorize BARDA and require formal planning activities and reporting. The bill would authorize $415 million in annual appropriations to BARDA for countermeasure development activities through FY2016. The bill would require the ASPR to develop a biennial "Public Health and Emergency Medical Countermeasures Enterprise Strategy and Implementation Plan." This plan must consider and reflect all CBRN-countermeasure-related activities, including basic research, development, procurement, stockpiling, deployment, and distribution; identify and prioritize near-term, mid-term, and long-term needs; identify projected timelines, funding, benchmarks, and milestones for each countermeasure; be informed by National Biodefense Science Board recommendations; report on advanced research and development awards; report on BioShield contracts; identify progress in meeting goals, benchmarks, and milestones; and be publicly available. Additionally, the HHS Secretary would be required to develop and annually update a coordinated five-year budget plan for all activities related to the Public Health and Emergency Medical Countermeasures Enterprise Strategy and Implementation Plan. This plan must identify countermeasure life-cycle costs and include measurable outputs and outcomes to track progress towards meeting needs. This plan would be made available to the appropriate congressional committees. S. 1855 would authorize BARDA to partner with a private non-profit corporation to foster and accelerate the development and innovation of medical countermeasures. This "strategic investor" would use venture capital practices to promote new technologies related to CBRN countermeasures and other public health needs identified by the HHS Secretary. The funding to establish and maintain this partnership would be part of the $415 million authorized for all BARDA countermeasure activities. S. 1855 would modify some aspects of the HHS emergency use authority for medical countermeasures. Similar to H.R. 2405 , S. 1855 would allow the Secretary to issue an EUA following the determination that a significant potential for a public health emergency exists. EUAs would expire when the HHS Secretary determines the underlying emergency circumstances no longer exist rather than automatically after one year as under current law. Also like H.R. 2405 , S. 1855 would allow the Secretary to modify active EUAs; waive certain manufacturing process requirements for approved products during an emergency; and allow pre-positioning of unapproved medical countermeasures by federal, state, or local governments in anticipation of emergencies. However, unlike H.R. 2405 , S. 1855 would also allow the Secretary to issue an EUA for countermeasures against any agents that DHS has determined pose a material threat to national security. As discussed above, a material threat determination is required for all Project BioShield countermeasure acquisitions. Thus, under S. 1855 , the HHS Secretary would be allowed to issue an EUA for all countermeasures acquired through Project BioShield, regardless of whether an emergency or potential emergency exists. Following Senate passage of S. 1855 , the House considered and passed the Pandemic and All-Hazards Preparedness Reauthorization Act of 2012 ( H.R. 6672 ) on December 19, 2012. This bill contains provisions similar to those in H.R. 2405 and S. 1855 that would affect Project BioShield implementation, address the use of the special reserve fund for purposes other than acquisition, change the countermeasures development and acquisition process, and modify the emergency use authority. Similar to both H.R. 2405 and S. 1855 , H.R. 6672 would extend the Project BioShield procurement program to FY2018. It would authorize appropriations of $2.8 billion for five fiscal years (FY2014-FY2018), the same average annual appropriations as current law. This bill would grant the HHS Secretary the authority to use up to $1.4 billion of Project BioShield appropriations for BARDA countermeasure advanced development activities. This is greater than the $840 million that H.R. 2405 would allow for such use. Similar to S. 1855 , H.R. 6672 would explicitly allow Project BioShield countermeasure procurement contracts to include development costs and allow those contracts to be signed up to 10 years before the expected delivery date of the countermeasure to the stockpile. Similar to both H.R. 2405 and S. 1855 , this bill would require the HHS Secretary to report to Congress when the special reserve fund available balance dropped below $1.5 billion. H.R. 6672 would reauthorize BARDA and require formal planning activities and reporting. The bill would authorize $415 million in annual appropriations for BARDA countermeasure development activities through FY2017, in addition to any funds transferred from the BioShield special reserve fund. Additionally, it would require the HHS Assistant Secretary for Preparedness and Response (ASPR) to develop and annually update a coordinated five-year budget plan for its countermeasure advanced research, development, and procurement activities. H.R. 6672 would require the ASPR to develop and provide to Congress an annual Public Health and Emergency Medical Countermeasure Enterprise Strategy and Implementation Plan. The plan must describe the CBRN threats; describe the efforts to develop countermeasures for each threat; evaluate the progress of all activities to research, develop, procure, stockpile, deploy, and use countermeasures; identify and prioritize near-term, mid-term, and long-term countermeasure needs; summarize all advanced development and procurement awards; provide timelines, metrics, and intended uses for each countermeasure under development; evaluate progress on all such awards; report the amount available in the BioShield fund; incorporate stakeholder input; and identify the progress in meeting countermeasure needs for at-risk individuals, including children. H.R. 6672 would require this annual plan to include reporting the use of the authorities granted by the Project BioShield Act while eliminating the requirement for a separate annual Project BioShield report as discussed above (" Reporting Requirements "). H.R. 6672 would modify some aspects of the HHS emergency use authority for medical countermeasures. Similar to H.R. 2405 and S. 1855 , H.R. 6672 would allow the Secretary to issue an EUA following the determination that a significant potential for a public health emergency exists. EUAs would expire when the HHS Secretary determines the underlying emergency circumstances no longer exist rather than automatically after one year as under current law. Also like H.R. 2405 and S. 1855 , H.R. 6672 would allow the Secretary to modify active EUAs; waive certain manufacturing process requirements for approved products during an emergency; and allow pre-positioning of unapproved medical countermeasures by federal, state, or local governments in anticipation of emergencies. H.R. 6672 , similar to S. 1855 , would also allow the Secretary to issue an EUA for countermeasures against any agents that DHS has determined pose a material threat to national security. As discussed above, a material threat determination is required for all Project BioShield countermeasure acquisitions. Thus, under either S. 1855 or H.R. 6672 , the HHS Secretary would be allowed to issue an EUA for all countermeasures acquired through Project BioShield, regardless of whether an emergency or potential emergency exists. Similar to H.R. 2405 , H.R. 6672 would allow mass dispensing of approved medical countermeasures during an emergency without an individual prescription (independent of an EUA) and pre-positioning of unapproved medical countermeasures by federal, state, or local governments in anticipation of emergencies. The WMD Prevention and Preparedness Act of 2011 ( H.R. 2356 ) was introduced June 24, 2011. This bill would change the countermeasure development and acquisition process. This bill was referred to the House Committees on Homeland Security, Energy and Commerce, Transportation and Infrastructure, Foreign Affairs, and Intelligence. The House Committee on Homeland Security reported this bill on September 12, 2012. H.R. 2356 would create a new White House position to coordinate federal biodefense policy and require new formal planning activities and reporting. This bill would require the President to appoint a Special Assistant to the President for Biodefense. This person would be the principal advisor to the President on coordination of federal biodefense policy, be responsible for developing several federal biodefense-related plans, and conduct oversight and evaluation of federal biodefense activities. The Special Assistant to the President for Biodefense would lead the development of a National Biodefense Plan that would include prevention, protection, response, and recovery activities. This plan would identify which biological risks facing the nation should be addressed; delineate the activities to be performed to address these risks; identify biodefense assets and capability gaps; define organizational roles, responsibilities, and coordination of federal, state, local, and tribal authorities; and incorporate input from stakeholders. This report would be delivered to the President and Congress 18 months after enactment and updated as necessary. The Special Assistant to the President for Biodefense would also lead the development of an annual cross-cutting biodefense budget analysis. This submission would include detailed account level amounts for biodefense activities and how these activities support the National Biodefense Plan. This analysis would include biodefense budgets of the Departments of Agriculture, Commerce, Defense, Energy, Health and Human Services, Homeland Security, State, Veterans Affairs, Justice, and the Environmental Protection Agency, National Science Foundation, and the United States Postal Service. H.R. 2356 would require DHS to review the CBRN agents that it previously determined pose a material threat to national security to assess whether they continue to do so. Only countermeasures against CBRN agents DHS determines to pose a material threat are eligible for acquisition using Project BioShield. Thus, DHS reassessment of these agents could result in some countermeasures becoming excluded from Project BioShield.

In 2004, Congress passed the Project BioShield Act (P.L. 108-276) to provide the federal government with new authorities related to the development, procurement, and use of medical countermeasures against chemical, biological, radiological, and nuclear (CBRN) terrorism agents. As the expiration of some of these authorities approaches, Congress is considering whether these authorities have sufficiently contributed to national preparedness to merit extension. The Project BioShield Act provides three main authorities: (1) guaranteeing a federal market for new CBRN medical countermeasures, (2) permitting emergency use of countermeasures that are either unapproved or have not been approved for the intended emergency use, and (3) relaxing regulatory requirements for some CBRN terrorism-related spending. The Department of Health and Human Services (HHS) has used each of these authorities. The HHS obligated approximately $2.625 billion to guarantee a government market for countermeasures against anthrax, botulism, radiation exposure, and smallpox. The HHS allowed the emergency use of several unapproved products, including during the 2009 H1N1 influenza pandemic. The HHS used expedited review authorities to approve contracts and grants related to CBRN countermeasure research and development. The Department of Homeland Security (DHS) Appropriations Act, 2004 (P.L. 108-90) advance-appropriated $5.593 billion to acquire CBRN countermeasures through Project BioShield for FY2004-FY2013. Subsequent Congresses have removed $2.078 billion from this account through rescissions and transfers, more than one-third of the advance appropriation. The transfers from this account supported CBRN medical countermeasure advanced development, pandemic influenza preparedness and response, and basic biomedical research. Since passing the Project BioShield Act, Congress has considered additional measures to further encourage countermeasure development. The Pandemic and All-Hazards Preparedness Act (P.L. 109-417) created the Biomedical Advanced Research and Development Authority (BARDA) in HHS and modified the Project BioShield procurement process. Among other duties, BARDA oversees all of HHS's Project BioShield procurements. The 112th Congress is considering several Project BioShield-related policy questions. One question is whether the Project BioShield acquisition mechanism merits extension based on its relative cost and contribution to national preparedness. If so, congressional policymakers may consider whether changes to the funding levels or how Congress provides Project BioShield funds would improve the program's efficiency or performance. Additionally, congressional policymakers are considering whether the federal government sufficiently plans and coordinates its CBRN countermeasure efforts from basic research to distribution. Finally, Congress is considering whether changes to the emergency use authority will improve preparedness and planning. Four bills in the 112th Congress address some of these Project BioShield-related issues, H.R. 2356, H.R. 2405, H.R. 6672, and S. 1855.

In recent decades, both Congress and the President have increasingly used hybrid organizations for the implementation of public policy functions traditionally assigned to executive departments and agencies. Instead, their preference has often been to assign administrative responsibilities to newly created independent agencies or to hybrid organizations possessing legal characteristics of both the governmental and private sectors. Hybrid organizations attract both support and criticism. There are today, associated with the federal government alone, hundreds of hybrid entities that have collectively been called the "quasi government." The relationship of this burgeoning quasi government to elected and appointed officials is a subject of growing concern, as it touches the very heart of democratic governance: to whom are these hybrids accountable, and how is the public interest being protected over and against the interest of private parties? The scope and consequences of these hybrid organizations have not been extensively studied. Basic definitional issues resist resolution. Even the language to be used in discussing the quasi government is in dispute. Should government management be discussed in the language of law, economic theory, or the business school? The traditional tools for holding executive agencies accountable, such as the budget and general management laws, are inapplicable in most instances, often leaving these hybrids with the freedom to pursue their own institutional interests, which may or may not conform to the public interest as defined by the nation's elected leadership. The current popularity of the quasi government option can be traced to at least five major factors at work in the political realm: (1) the desire to avoid creating another federal "bureaucracy"; (2) the current controls on the federal budget process that encourage agencies to develop new sources of revenues; (3) the desire by advocates of agencies and programs to be exempt from central management laws, especially statutory ceilings on personnel and compensation; (4) the contemporary appeal of generic, economic-focused values as the basis for a "new public management"; and (5) the belief that management flexibility requires entity-specific laws and regulations, even at the cost of less accountability to representative institutions. This report introduces the reader to the quasi government, suggests categories of entities within this sector, and examines their legal characteristics, behavior, and possible policy consequences. The report will be revised and updated as new information and analyses become available. The quasi government, virtually by its name alone and the intentional blurring of the governmental and private sectors, is not easily defined. In general, the term is used in two ways: to refer to entities that have some legal relation or association, however tenuous, to the federal government; or to the terrain that putatively exists between the governmental and private sectors. For the most part, this report will use the term quasi government in the former context, referring to entities with some legal relationship to the federal government. The one common characteristic to this melange of entities in the quasi government is that they are not agencies of the United States as that term is defined in Title 5 of the U.S. Code . If a quasi governmental entity is not an agency of government, what is it? For this report's purposes, it is a hybrid organization that has been assigned by law, or by general practice, some of the legal characteristics of both the governmental and private sectors. While different categories of quasi governmental organizations can be described and found useful as an analytic tool, such categories are artificial, with porous lines of distinction and differentiation, and tend to be imposed upon the disparate entities after the fact. Two rough models suggest themselves as ways of looking at these entities. First, there is the linear spectrum model where the existence of a quasi government between the governmental and private sectors is designated and categories of organizations (e.g., government-sponsored enterprises) and their relationship to the executive branch (and Congress) are described on a descending scale from closest to the most distant. Second, there is the categoric organization model involving, in this instance, the suggestion of four categories: pure government organization; quasi governmental organization ("quago"); quasi nongovernmental organization ("quango"); and pure private. A quago is essentially a government organization that is assigned some, or many, of the attributes normally associated with the private sector. A quango, on the other hand, is essentially a private organization that is assigned some, or many, of the attributes normally associated with the governmental sector. Under this schema, the Legal Services Corporation, for example, would be a quago, while the Red Cross would be a quango. Whatever the value of the quago/quango designations, especially in the comparative international literature on corporate organizations, it shall not be used here. This report follows the linear spectrum approach in describing the elements within the quasi government. It is possible to begin with what are referred to in the U.S. Government Manual as "Quasi Official Agencies," those entities, arguably, closest to the executive branch, and move on to the other end of the spectrum, "congressionally chartered nonprofit organizations," those entities, arguably, the furthest from the executive branch. It was the intent of the framers of the Constitution that the authority and organization of the executive branch be as much as possible unified under the President, and that Congress be the source to which accountability was rendered. This theoretical proposition was put into practice when the first Congress convened in 1789. One of the first orders of business was the establishment of executive departments. Three "organic" statutes were enacted creating three "great" departments; Treasury, State, and War. The heads of these departments were directly responsible to the President and were his agents (and thus the agency chiefs were removable by him), but ultimately accountable for policy purposes to Congress. All the particular functions of the newly created executive branch, save that of delivering the mail, were entrusted to these departments. With respect to fundamental authorities and lines of accountability, however, the executive branch has never been a pristine unity. From the decision in the first Congress to give the comptroller in the Department of the Treasury a substantial degree of legal autonomy within the department, down to the more recent "independent counsels" functioning in an uneasy relationship with the executive branch, not all officers have been directly accountable to the President. These exceptions notwithstanding, the prevailing organizational norm has historically been toward an executive accountable to the President. Reinforcing the hierarchical concept of the accountable executive has been the view that authority ought to be assigned by delegation from the President or department heads to subordinate officers, rather than being assigned directly by Congress to a nondepartment head. The first substantial breaks with this concept did not occur until the creation of the Civil Service Commission in 1883 and the Interstate Commerce Commission in 1887. Subsequently, more independent regulatory commissions would be added. In the 20 th century, an increasing number of "independent" agencies were established, the term "independent" meaning that an agency was not established within a department (e.g., Tennessee Valley Authority; National Aeronautic and Space Administration). Nonetheless, the independent agencies generally remained full government agencies operating under all the general management laws, except where exempted. The view that all government activities should be accountable in some manner to politically responsible officials received its most forceful iteration in the 20 th century in the Hoover Commission report of 1949: [The] organization and administration of the Government ... must establish a clear line of control from the President to these department and agency heads and from them to their subordinates with correlative responsibility from these officials to the President, cutting through the barriers which in many cases made bureaus and agencies partially independent of the Chief Executive. Through the 1950s the organization and management of the executive branch generally followed some basic rules. If an entity was established by Congress to accomplish a public purpose, the probability was that it was an agency of the United States operating under the general management laws enforced by the President. These values, originating with the founding fathers, as reinterpreted by the Progressives, featured the centrality of public law, departmental integration and political accountability. The President was viewed as the chief manager of the administrative system. The governmental and private sectors cooperated, but were kept legally distinct in the interests of protecting citizens' rights against a potentially arbitrary government. These values began to be challenged in the 1960s as evidenced in the establishment of the Communications Satellite Corporation (ComSat) in 1962. Congress, in this instance, created a private, for-profit corporation indicating a more flexible attitude towards organizational innovation. Additional organizations appeared that were intentionally mixed in their legal characteristics. The term "quasi governmental" began to appear in legislation, and unusual structures would be constructed to promote "flexibility," even when flexibility sometimes resulted in less accountability. This was one of the arguments made for creating the Corporation for Public Broadcasting in 1967 (81 Stat. 365; 47 U.S.C. 396). Other factors began to further erode the accountable executive model, such as greater dependence upon third parties, usually private contractors, for the performance of governmental functions. The number of full-time civil servants in the federal government as a percentage of the workforce began what was to become a substantial decline, a decline accelerated in recent years. In the late 1980s, the concept of legally distinctive governmental and private sectors began to be seriously questioned. In its place a "new public management" concept emerged that argued that the governmental and private sectors were essentially alike and subject to the same, economic based, behavioral norms and practices. Internationally, the New Public Management (NPM) movement, coupled with the movement toward privatization of governmental agencies and programs, became the reigning orthodoxy. Many elements of NPM were to be found in Vice President Albert J. Gore's National Performance Review (NPR), which sought to "reinvent" some executive branch units and create corporate style, entrepreneurial structures. The purported, and often realized, strength of entrepreneurial management lies in the flexibility it provides managers to improve the performance of their agencies. Performance in the entrepreneurial context, is usually measured in "output" or "results" terms, rather than in conformance to process regulations. Hence, risk-taking by managers to achieve improved performance is to some degree accepted and encouraged. The evidence thus far available suggests that the new, entrepreneurial management has resulted in improved management in many executive agencies. On the other hand, simply improving performance, as was the case with the Internal Revenue Service in the early 1990s, has occasionally proven politically counterproductive to the agency if the improved performance (in this case increased tax collections) came at the apparent expense of other values, such as due process of law. The rapid ascendency of these "new" values in the United States has not been without challenge and has had consequences with respect to the quasi government, as will be discussed more fully later in the report. Within the quasi government, it is possible to begin with those entities that are, arguably, closest to the executive branch. The United States Government Manual, 200 9 -20 10 , contains a section titled; "Quasi-Official Agencies," listing four entities: Legal Services Corporation; the Smithsonian Institution; State Justice Institute; and the United States Institute of Peace. In prior years, other entities have been accorded this designation, for example, the National Railroad Passenger Corporation (AMTRAK); the National Consumer Cooperative Bank; and the National Academy of Sciences. The category is something of a "catchall" designation to include entities the National Archives and Records Administration (NARA), compilers of the Manual , find difficult to comfortably fit elsewhere. Insofar as NARA provides a defining characteristic for quasi-official agencies, it is that they "are not executive agencies under the definition of 5 U.S.C. 105 but are required by statute to publish certain information on their programs and activities in the Federal Register, " also published by NARA. The issues associated with quasi official agencies tend to be related to their legal status. Because they occupy a realm between the private and the public, a quasi governmental entity may find it in its interest to assert its private or governmental status. Quasi official agencies, like other elements of the quasi government, may exist in what has been called "the twilight zone" between the governmental and private sectors. This status, while presumably permitting considerable autonomy from regular lines of accountability to managerial agencies (e.g., the Government Accountability Office) is not, as is often argued in their defense, protection from "political influences." Quasi-official agencies, like other forms of quasi governmental institutions, may sometimes be highly "political," and subject to pressures not dissimilar to that encountered by regular executive agencies. Distinctions between the governmental and private sectors are especially blurred with respect to a category of organization known as "government-sponsored enterprises" (GSE). There is no established criteria defining standards to be met prior to the establishment of a GSE, nor is there a listing of GSEs in the U.S. Code. Each GSE is created sui generis with its attributes defined by Congress in its enabling legislation. For the purpose of budgetary treatment, Congress defined the term "government-sponsored enterprise" in the Omnibus Reconciliation Act of 1990 to refer to a corporate entity created by a law of the United States that— (A) (i) has a Federal charter authorized by law; (ii) is privately owned, as evidenced by capital stock owned by private entities or individuals; (iii) is under the direction of a board of directors, a majority of which is elected by private owners; (iv) is a financial institution with power to— (I) make loans or loan guarantees for limited purposes such as to provide credit for specific borrowers or one sector; and (II) raise funds by borrowing (which does not carry the full faith and credit of the Federal Government) or to guarantee the debt of others in unlimited amounts; and (B) (i) does not exercise powers that are reserved to the Government as sovereign (such as the power to tax or to regulate interstate commerce); (ii) does not have the power to commit the Government financially (but it may be a recipient of a loan guarantee commitment made by the Government); and (iii) has employees whose salaries and expenses are paid by the enterprise and are not Federal employees subject to title 5. Few scholars of public administration and finance are likely to argue that this definition is incorrect. However, some have argued that the above definition omits an essential characteristic—a GSE "benefits from an implicit federal guarantee to enhance its ability to borrow money." While the details may vary from one instance to the next, GSEs typically have four characteristics: private ownership; implicit federal guarantee of obligations; activities limited by congressional charter; and limited competition. Congress created GSEs to help make credit more readily available to sectors of the economy believed to be disadvantaged in the credit markets. GSEs provide financial services such as issuing capital stock and short- and long-term debt instruments, guaranteeing mortgage-backed securities (MBS), purchasing loans and holding them in their own portfolio, funding activities (e.g., subsidized mortgages in selected areas), and collecting fees for guarantees and other services. GSEs are part of a tradition of mercantilist financial institutions in that the government assigns them benefits and privileges in their charters that are not available to fully private corporations. In return, the government is able to limit the activities and lines of business of GSEs and require them to promote selected public policy objectives. The present GSEs are traceable in concept to several enterprises created during the Great Depression. There are five GSEs. Three of the GSEs—Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Agricultural Mortgage Corporation (Farmer Mac)—were designed to be investor-owned. The two others—the Federal Home Loan Bank System and the Farm Credit System—are owned cooperatively by their borrowers. Advocates of the GSEs and the economic concepts upon which they are based argue that GSEs continue to meet a national need that would not otherwise be met or be met poorly by corporations fully in the private sector. Further, they contend that the current GSEs are generally well managed, financially sound, and assist less-advantaged mortgage borrowers. They maintain that the subsidy retained from the presence of the federal implied guarantee of GSE obligations is passed on to the consumer in the form of lower mortgage rates. Fannie Mae, in a national advertising campaign, suggested that its special GSE status is worth a quarter of a percent in mortgage interest and thus 400,000 families are provided mortgages that would not otherwise be qualified to do so. "At Fannie Mae, we have one job. One mission. One purpose. To do whatever we can to lower the cost of home ownership." The economic rationale for GSEs is the belief that without such a government sponsored institution, a critical area of necessary debt financing would go unserved, or would be serviced at an expensive or inefficient level. Government, according to this rationale, should use some of its sovereign powers (e.g., full faith and credit of the U.S. Treasury) to encourage the development of private financial intermediaries to serve selected markets. In terms of meeting their original congressional objective, that was to liquify the mortgage credit markets on a national rather than regional or state basis, the GSEs have been remarkably successful. However, GSEs have been criticized on two broad fronts. First, there is the matter of accountability. GSE management must respond to both governmental overseers and their shareholders. Not surprisingly, these two masters often have very different wants. Additionally, the great size and wealth of the investor-held GSEs enabled them to afford to spend heavily on congressional lobbying. More than a few media reports have attributed great political influence to Fannie Mae and Freddie Mac. The second criticism of GSEs regards their financial safety and soundness. Due to their ability to borrow money at lower interest rates than private lenders, GSEs can grow very quickly. The combined mortgage portfolios of Fannie Mae and Freddie Mac grew from $136 billion in 1990 to $1.6 trillion in 2003. Congress, critics, and the GSEs' government regulator have expressed concerns about the GSEs' size and the systemic risk to the nation's financial system. Concern over the condition of the GSEs was heightened in 2003 and 2004 when significant accounting irregularities were discovered at both Freddie Mac and Fannie Mae. Both companies had to restate their earnings. In response, the 108 th and 109 th Congresses held hearings and considered legislation that would fundamentally alter the regulations and regulatory agencies for overseeing GSEs. On September 7, 2008, critics' fears materialized—the U.S. Treasury placed the two investor-held GSEs, Fannie Mae and Freddie Mac, into government conservatorship. Then Secretary of the Treasury, Henry M. Paulson, Jr., said this was done to provide stability to financial markets, support the availability of mortgage finance, and protect taxpayers. He stated that policymakers now faced the challenge of resolving "the systemic risk created by the inherent conflict in the GSE structure." Since then, the U.S. Treasury has provided $150 billion in direct support to the GSEs and the Treasury and the Federal Reserve have purchased nearly $1.4 trillion in GSE-issued and guaranteed mortgage-backed securities. Notably, this was not the first time that the GSEs had experienced significant operational turbulence. In 1988, the federal government thought it prudent to authorize $8 billion of financial assistance for one insolvent GSE, the Farm Credit System. Also, Fannie Mae was in trouble in the early 1980s, when its capitalization dropped until the corporation had a negative net worth of $11 billion. One category of organization in the quasi government is largely a World War II and immediate postwar phenomenon, the federally funded research and development center (FFRDC). The FFRDC is a hybrid organization designed to meet a federal need through the use of private organizations. In World War II, there was a national emergency requirement that scientific and engineering talent be rapidly assembled and put to work. National laboratories such as those at Oak Ridge and Los Alamos were created to be government owned, but operated by non-federal organizations which were not fettered by civil service rules or most general management laws. Under wartime conditions, these government-owned, contractor operated (GOCO) facilities worked quite well. Immediately after the war, the new Department of Defense, and particularly the Air Force, was reluctant to part with this talent base they had assembled, and sought ways and means to keep them in service to the government. The decision was to establish some private, nonprofit corporations to do contract work for the armed services. These corporations would be solely or largely dependent upon the federal government contracted projects. The first FFRDC was RAND, created by the Air Force in California in 1947. This pioneer was followed over the years by such well-known FFRDCs as Mitre Corporation, Aerospace, and the Institute for Defense Analyses. According to the National Science Foundation (NSF), there were 39 FFRDCs as of April 2010. Various FFRDCs have ceased to be listed, although not all those unlisted have ceased to exist; in several instances they have been transformed into private organizations. This, though, does not mean that FFRDCs are fading away. In the past decade, a new FFRDC was established by the Internal Revenue Service, and Congress authorized the Department of Homeland Security to establish an FFRDC ( P.L. 107-296 , Title III). Although the Departments of Defense and Energy account for the bulk of the FFRDCs, other federal entities have FFRDCs, including the National Science Foundation, the Federal Aviation Administration, and the Department of Homeland Security, to name just a few. According to the most up-to-date data available, annual federal obligations to FFRDCs were approximately $9.5 billion in FY2009. In past years, critics have complained that FFRDCs provide fertile grounds for activities that inappropriately mix public funds and private interests. Critics see favoritism when FFRDCs receive large contracts without competitive bidding. Critics have also pointed to the interflow of personnel between government agencies, FFRDCs, and companies that work for FFRDCs. Critics say there is a revolving door between these entities and they decry "interlocking directorships" that arise (such as when a former Secretary of Defense took board positions at RAND and General Dynamics Corp.). This latter charge is particularly significant because FFRDCs are supposed to be expertise-based organizations that are to impartially oversee the use of federal funds that are to advance a governmental purpose. The great strength of FFRDCs appears to lie in their flexibility to assemble teams of technical experts on a project basis. High on the list of positive results supporters claim for FFRDCs is their ability to promote technology transfers between the governmental and private sectors. The knowledge base created by the agencies' use of FFRDCs often serves as a foundation for commercially relevant efforts in the private sector. The United States, some contend, is not as effective as other nations in taking the results of basic research and transforming them into commercially viable products to be sold in world markets. FFRDCs are intended to promote and facilitate this transfer and development process. Congress has been interested in FFRDCs almost from their inception. Some in Congress have viewed the FFRDCs as a means to circumvent civil service hiring practices and salary limitations. FFRDCs have an advantage in competing with private firms for contracts: as nonprofit corporations, they are exempt from most taxation; their facilities and equipment are owned or financed, for the most part, by the federal government, and they receive fees for operating expenses without having to assume business risks or costs associated with competing for most federal work. Questions by Congress have led to hearings, warnings, and some changes in law (e.g., Competition in Contracting Act of 1984; 98 Stat. 1175) that reduced the scope of contract work available to FFRDCs, making more outsourced work available to competitive contracting. Also, Congress has limited the power of the Secretaries of Defense, Army, Navy, Airforce, and the heads of some other agencies to create FFRDCs (10 U.S.C. 2367). Unusual and sensitive issues of conflict of interest may be present with FFRDCs, particularly when a FFRDC is an affiliate of a non-FFRDC corporation. FFRDCs often have privileged access to government information, plans, data, employees, and facilities which may be difficult to insulate from private partners involved in for-profit activities. Critics maintain that unbiased advice may also be difficult to provide when the future or fate of the advising FFRDC may be adversely affected. Federal management of FFRDCs is based upon the Federal Acquisition Regulation (FAR, 35.017). FAR provides guidelines to be followed in establishing, organizing, and managing FFRDCs and limits agencies' use of FFRDCs to meet "some long-term research or development need which cannot be met effectively by existing in-house or contractor resources"(FAR, 35.017). The term, "agency-related nonprofit corporations," represents an attempt to classify under one heading a number of different types of organizations that share one characteristic: a legal relationship with a department or agency of the federal government. These relations may differ greatly from one situation and organization to the next. To assist our review, however, nonprofit organizations with legal relationships to departments and agencies will be considered under three categories: (1) adjunct organizations under the control of a department or agency; (2) organizations independent of, but dependent upon, departments and agencies; and (3) nonprofit organizations voluntarily affiliated with departments and agencies. Generally, the latter category of organizations are established under state or District of Columbia law. These three categories are not pure by any means. While these distinctions have an arbitrary character imposed after the fact, there is nonetheless some utility in beginning the review of the agency-related nonprofit organization category within the quasi government as being of three essential types. There are, at this point, an indeterminate number of organizations under the control of a department or agency; this review must therefore be illustrative, rather than comprehensive. Nonetheless, a survey of several such departmental or agency controlled organizations facilitates an understanding of the scope and nature of such organizations. The Department of Agriculture makes extensive use of adjunct organizations. As of 2011, there were 18 agricultural commodity organizations (e.g., National Pork Board, National Dairy Promotion and Research Board). These entities engage in the generic promotion of, research on, and information activities for agricultural commodities, thereby, it is hoped, increasing the total market for a commodity separate from the promotion of any specific brand name of that commodity. The Secretary of Agriculture is assigned varying degrees of authority over these boards individually. In an effort to make uniform the oversight of such boards and the processes for creating additional boards, Congress passed the Commodity Promotion, Research, and Information Act of 1996 ( P.L. 104-127 ; 7 U.S.C. 7411). The law permits the Secretary to establish new commodity organizations (usually referred to as "boards" or councils") under departmental orders. The Commodity Promotion Act of 1996 is similar to a general incorporation act containing specific provisions to be included in the individual charters approved by the Secretary. The provisions in the act respecting the annual activities and budget of the boards illustrate the type and level of secretarial and agency involvement with the boards. SEC. 515 (e) Activities and Budgets— (1) ACTIVITIES—Each [secretarial order to create a board] shall require the board established under the order to submit to the Secretary for approval plans and projects for promotion, research, or information relating to the agricultural commodity covered by the order. (2) BUDGETS— (A) SUBMISSION TO SECRETARY—Each order shall require the board established under the order to submit to the Secretary for approval a budget of its anticipated annual expenses and disbursements to be paid to administer the order. The budget shall be submitted before the beginning of the fiscal year and as frequently as may be necessary after the beginning of the fiscal year. (B) REIMBURSEMENT OF SECRETARY—Each order shall require that the Secretary be reimbursed for all expenses incurred by the Secretary in the implementation, administration, and supervision of the order, including all referenda costs incurred in connection with the order. The concept behind these "independent" boards and councils is to encourage the commodity interests themselves to organize and propose to the Secretary that such an organization be chartered to promote a product (e.g., milk) generically, rather than by brand-name. These boards and councils are authorized by law to finance their activities by collecting "assessments" from members according to a rate structure that has received the approval of the Secretary. Once a producer is in one of the commodity promotion organizations, however, it is difficult to withdraw or ignore the assessments. The element of private influence and ultimate participation in these hybrid organizations resides in an elaborate process of referenda. As a practical matter, the commodity promotion organizations are under the supervision of the Agricultural Marketing Service (AMS), a relatively small unit within the department. The referendum provisions of the 1996 act are detailed. The boards are not established in perpetuity, but must be subject to renewal referenda no later than seven years after assessments first begin. Even the definition of a majority is complex. For instance, the referendum majority provides : "A [secretarial] order may provide for its approval in a referendum—(1) by a majority of those persons voting; (2) by persons voting for approval who represent a majority of the volume of the agricultural commodity; or (3) by a majority of those persons voting for approval who also represent a majority of the volume of the agricultural commodity." Advance registration procedures are spelled out in the law, thereby requiring subsequent changes to also be made by law. Finally, it is the AMS that is charged with helping the boards administer the referendum process. Notwithstanding this mandated oversight, the promotion programs, which cost producers and importers hundreds of millions of dollars a year, have been criticized by policy opponents and media critics for inappropriate spending, lax accounting, and lavish entertainments. One consequence of this publicity was that the Secretary instituted a task force to make recommendations on how the department might better oversee the boards and their programs. The report, issued in December 1999, called for implementation of 21 recommendations, all of which then-Secretary Dan Glickman endorsed. Proposed changes were submitted to the Federal Register for public comment on December 17, 1999, and the deadline for comments was extended on February 7, 2000. However, it is unclear whether these reforms were ever instituted. Some of the agricultural advertising (check-off) programs have also faced court challenges. Small farmers providing "boutique" products have sued the Department of Agriculture, claiming the fees were "government compelled speech"—a violation of the First Amendment of the U.S. Constitution. In some of these cases, the plaintiffs have won. Over the years, departments and agencies have found it useful and advantageous to ask Congress to create, or authorize a department to create, nonprofit organizations to perform functions that the department itself finds difficult to integrate into its regular policy and financial processes. This is true, for example, when a department or agency receives gifts of real property and monetary gifts. The National Park Foundation is the most prominent example of such an organization, but there are others, such as the National Fish and Wildlife Foundation. The Department of the Interior, and especially the National Park Service, received gifts of land and monies from time to time to promote the programs of the department. With respect to the National Park Service (NPS), a National Park Trust Fund was established by Congress in 1935 to receive and hold such gifts. In 1967, the trust was superseded by the National Park Foundation (NPF), established pursuant to law (81 Stat. 656; 16 U.S.C. 19e-19n). The NPF is a congressionally chartered nonprofit corporation organized to accept and administer gifts given to the NPS. The board of the NPF has as its members the Secretary of the Interior, the Director of the NPS, ex-officio , and "no less than six private citizens appointed by the Secretary." In recent years, the board has had more than 20 members. The term for private citizens on the board is six years. The Secretary of the Interior is chairman of the board and the Director of NPS is secretary to the board. The board elects a president of the foundation who serves at its pleasure. Membership on the board is not deemed to be an office of the United States. The NPF has perpetual succession. Funding for the NPF comes from private gifts. One of the main initial purposes of the foundation was to permit the NPS to have a means whereby it might receive gifts and invest these funds in something other than federal government securities. The foundation is not on-budget and its employees are not federal employees. In FY2010, the NPF provided over $22.3 million in program grants and program support to the National Park Service. The foundation is viewed as an adjunct activity of the department and NPS, and is controlled by these agencies. The appointment process to the board is the Secretary's principal insurance that the NPF will adhere to the general policy framework of the department. Finally, the situation of the Securities and Exchange Commission (SEC) and its two adjunct organizations is worth noting. Congress established the Securities Investor Protection Corporation (SIPC) in 1970 (84 Stat. 1636) to assure that cash and securities held in brokerage firms are protected from loss caused by securities firms' failures. The SIPC is a nonprofit corporation under the District of Columbia Nonprofit Act, which provides that it "shall not be an agency or establishment of the United States Government." Of the seven-member board of directors, one is appointed by the Secretary of the Treasury from among the department's officers and employees; one is appointed by members of the Federal Reserve Board from among its officers and employees; five directors are appointed by the President subject to the advice and consent of the Senate. The President designates the chairman, who is also the corporation's chief executive officer. Although the SIPC is a nonprofit corporation under the D.C. law, it is effectively a subsidiary of the SEC. The corporation's bylaws are subject to the SEC's adoption, amendment, or rejection. The hybrid nature of the SIPC is revealed by various legal characteristics. The SIPC is not under any of the general management laws, including the Government Corporation Control Act (31 U.S.C. 9102). However, to the extent that the bylaws and rules of the SIPC are approved or disapproved by the SEC, they are subject to the Administrative Procedure Act (5 U.S.C. 551 et seq.). The corporation also has borrowing authority and a line of credit from the Treasury. Congress, in 2002, established the Public Company Accounting Oversight Board (PCAOB) (116 Stat. 745) to oversee the audit of public companies that are subject to securities laws. The board is also a nonprofit corporation under the DC Nonprofit Corporation Act. Officers of the board are not officers of the United States. Yet the board is required, under supervision of the SEC, to "establish or adopt, or both, by rule, auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports by issuers." The SEC appoints the five members of the full-time board, after consultation with the chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury. The Commission may remove members of the board "for good cause." The rules of the board are subject to the approval of the Commission. Some observers were troubled that at the organizing meeting of this "private" board on January 9, 2003, the board voted themselves annual salaries of $452,000, or $52,000 more than the President of the United States and $207,000 more than the chairman of the SEC. Similar private sector salaries were set for staff. The stories of the SIPC and the PCAOB illustrate how the government can create a hybrid organization, in these instances organizations with predominately private-sector legal characteristics, to implement government policies and regulations. Ultimately, the SPIC and the PCAOB are agents of and accountable to the government through the SEC. The wisdom (and for some the legality) of this practice of delegating governmental functions to ostensibly private parties is a legitimate subject of debate. The Henry M. Jackson Foundation provides an example of an organization independent of, but dependent upon, an agency of the federal government. In 1982, Congress passed legislation to establish a Foundation for the Advancement of Military Medicine ( P.L. 98-36 ; 97 Stat. 200). Five months later, the foundation was renamed the Henry M. Jackson Foundation after a Senator with a long record of support for military medicine. The enabling legislation provided that the foundation shall not for any purpose be an agency or instrumentality of the United States Government. The Foundation shall be subject to the provisions of this section and, to the extent not inconsistent with this section, the Corporations and Associations Act of the State of Maryland. This language indicates there is intended to be legal distance between the nonprofit organization and the United States government. The mission of the foundation, by contrast, emphasizes that a close organizational relationship be established between the foundation and the Uniformed Services University of the Health Sciences (USU) of the Department of Health and Human Services. It shall be the purpose of the Foundation (1) to carry out medical research and education research projects under cooperative agreements with the USU; (2) to serve as a focus for interchange between military and civilian medical personnel, and (3) to encourage the participation of the medical, dental, nursing, veterinary, and other biomedical sciences in the work of the Foundation for the mutual benefit of military and civilian medicine (10 U.S.C. 178). The nine-member board of the foundation includes two current Senators and two Representatives serving in an ex-officio capacity. The foundation works to develop a research infrastructure involving federal military medical personnel and private medical personnel and facilities. It is affiliated with the USU and receives funding from private sources as well as the USU. The foundation provides research and grants management services to military medical researchers; manages clinical trials and develops private-public partnerships; and provides general support for military medical education. The foundation employs 1,600 persons and supports or administers over 1,000 research projects. The question arises: why is such a foundation needed? The foundation has said, "Because government employees cannot accept money or in-kind gifts from private sources, the Foundation serves a vital function by facilitating collaborative relationships between private industry, academia, and military medicine." Similarly, the Department of Veterans Affairs (VA) has a network of nonprofit corporations attached to its medical centers. By law ( P.L. 100-322 ; 102 Stat. 487), the Secretary may authorize the establishment at any VA medical center of a nonprofit research and education corporation (NPC), to be chartered under the resident state law, "to provide a flexible funding mechanism for the conduct of approved research." The law reads: "Except as otherwise required in this subchapter or under regulations prescribed by the Secretary, any such corporation, and its directors and employees, shall be required to comply only with those Federal laws, regulations, and executive orders and directives which apply generally to private nonprofit corporations." (38 U.S.C. 7361(a)). As of 2009, the latest data available, 86 NPCs existed, with at least one in 41 states. They derive their funds from both federal and non-federal sources. In 2009, NPCs reported $240.7 million in revenues, and $241.9 million in expenditures. The Secretary appoints the boards of all corporations, which must in each instance include the director of the medical center, the chief of staff and assistant chief of staff of the medical center, and such other public members as the bylaws of the corporation direct. Each of the corporations has an executive director appointed by the board of directors with the concurrence of the Chief Medical Director of the department. The corporation may employ such employees as it considers necessary and fix their compensation. The corporations come under the jurisdiction of the department's Inspector General. The directors and employees of the corporation "shall be subject to Federal laws and regulations applicable to Federal employees with respect to conflicts of interest in the performance of official functions" (38 U.S.C. 7366(c)(1)). The medical center research organizations concept is not without its critics. Some NPCs have been faulted for expending funds on items not directly related to research (such as gifts and entertainment) and have been cited as in need of improved "accountability and oversight related to the administration of funds." However, GAO also has reported that NPCs, have enhanced VA research efforts. Funds collected by these nonprofits have been used to renovate laboratory space, purchase equipment, maintain VA research libraries, and cover travel expenses to conferences. In turn, the research environment has been able to attract highly qualified physicians, who often provide patient care, as well. There are also nonprofit organizations, chartered under state law, that voluntarily affiliate with a departmental or agency program. This option has recently been reflected in law and applied by the Department of the Interior. As discussed above, the National Park Foundation (NPF) is appropriately viewed as an "adjunct organization under the control of a department or agency," in this case the National Park Service of the Department of the Interior. The NPF was authorized by the National Park Omnibus Management Act of 1998 ( P.L. 105-391 ; 16 U.S.C. 19o) to encourage the creation of nonprofit organizations with state charters to "assist and promote [philanthropy] at the individual national park unit level." The intent of this program is to create a large number ("the greatest number of national park units practicable") of local fund-raising partner organizations ("Park Partners"), each tied to a specific national park or national park program. For purposes of this report, it is worth noting that these Park Partners are to be created by persons within a community under their own state laws. It is intended that the Park Partners will voluntarily "affiliate" with the foundation. The law instructs the foundation to include in its program encouraging the creation of Park Partners: (1) a standard adaptable organizational design format to establish and sustain responsible management of a local nonprofit support organization for support of a national park unit; (2) standard and legally tenable bylaws and recommended money-handling procedures that can easily be adapted as applied to individual national park units; and (3) a standard training curriculum to orient and expand the operating expertise of personnel employed by local nonprofit support organizations. (16 U.S.C. 19o(d)). A number of Park Partner organizations, some in existence prior to the law, are operating today in support of specific parks such as Grand Teton, Glacier, and Sequoia. Since there are over 375 park properties within the system, the number of possible Park Partner nonprofit corporations is considerable. Although the clear intention of the legislation is that the local nonprofit corporations become affiliated with the Park Partner program of the foundation, the ultimate authority and accountability of the corporations remains with the local organization. The law provides: "An affiliation with the Foundation shall be established only at the discretion of the governing board of a nonprofit organization." (16 U.S.C. 19o (f)(2)) Hybrid organizations assigned by Congress to the quasi government perform a wide variety of functions in both the domestic and international arenas. With respect to the latter, the case of "venture capital funds" is especially interesting, a term which encompasses more narrowly defined "enterprise funds" and "investment funds." The fall of Communism in eastern Europe and elsewhere in 1989 prompted interest by the United States, and especially Congress, in assisting those nations committed to a transition from a centrally planned to a market economy. The Support for Eastern European Democracy Act of 1990 (SEED) authorized the establishment of two "enterprise funds," one in Poland and the other in Hungary ( P.L. 101-179 ; 22 U.S.C. 5401). More recently, the desire to promote a transition to democracy in Egypt and Tunisia has prompted the proposal of enterprise funds. The impetus for the enterprise fund concept came about from the belief that a non-governmental entity was needed to implement this kind of program. The intent of Congress in SEED was to create venture capital funds that would be designed along private sector lines, managed by private sector executives, and be free of most government administrative constraints. The enterprise funds were chartered as private nonprofit corporations under the laws of the state of Delaware, but are funded by government appropriations. Their purpose was to develop the respective national private sectors through "loans, grants, equity investments, feasibility studies, technical assistance, training, insurance, guarantees and other measures" (22 U.S.C. 5421(a)(2)). The statute stated that the funds could be "made available to the Polish-American Enterprise Fund and the Hungarian-American Enterprise Fund and used for the purposes of this section notwithstanding any other provision of law" (22. U.S.C. 5421(c)). At the same time as the enterprise funds were being established, the Overseas Private Investment Corporation (OPIC), a wholly owned federal government corporation, was itself becoming involved in promoting private investments through "investment funds" established in the former communist states. OPIC's principal mission is to provide political risk insurance and loan guarantees to U.S. corporations that make investments in selected developing countries. Although OPIC is prohibited from making direct equity investments, it may achieve approximately the same results by guaranteeing loans made to private, profit-seeking corporate investment funds. "OPIC-supported funds are among the largest providers of private equity capital to emerging markets. Since 1987, OPIC has committed (as of FY2005) over $2.6 billion in funding to 32 private equity funds." In the case of both the enterprise funds and OPIC's investment funds, the intent was to have a pool of money to be assigned by a private management team to promising new or existing ventures. It is not the intent of this report to evaluate the programmatic success or failure of these investment programs, that is best found elsewhere. Principal attention here is directed to some of the organizational characteristics of these venture capital funds and how they relate to the executive and legislative branches. With respect to enterprise funds, it was the intention of Congress that executive branch oversight of the funds be limited, a "hands off" policy. Initially, State Department and AID oversight of the enterprise funds consisted principally of an annual review by the AID IG, audits performed by certified public accounting firms selected by the enterprises, monthly reports on grant cash balances, semiannual reviews of the investment portfolios, and brief visits to both the U.S. and overseas fund offices. Various news accounts of alleged excesses and failures of the funds prompted both Congress and the executive branch, however, to subsequently strengthen the oversight of AID, although the funds retained most of their autonomy. The enterprise funds were chartered as nonprofit corporations under the laws of the state of Delaware and governed by a board of directors "designated" by the President of the United States and elected by the existing board members. Their directors are not "officers" of the United States and hence are not subject to Senate confirmation. The OPIC investment funds are not in the business of directly providing capital themselves, rather they provide guarantees to private lenders who, in turn, lend money to recipients. OPIC is a government corporation enumerated in the Government Corporation Control Act and, as such, is a regular agency of the United States subject to the general management laws, except where exempted. It is governed by a 15-member board of directors, a number that includes in an ex officio capacity various senior presidential appointees, as well as seven direct presidential appointees (22 U.S.C. 2193(b)). The board is chaired by the Administrator of AID. It is the President who appoints OPIC's president, subject to Senate confirmation. Congress requires OPIC to undergo annual budgetary review, and the office is sometimes criticized on the basis that its insurance programs amount to a subsidy to some prosperous American corporations at taxpayers' expense. OPIC has been able to keep relatively close oversight of its investment funds through its active role in selecting fund management and in negotiating terms of the loan guaranty agreements, terms that generally provide for favorable returns to OPIC. The objective of OPIC's investment fund oversight is to insure compliance with the loan agreement, not necessarily to review or evaluate the fund's investments in terms of good economic returns. Thus, compliance, rather than performance, is the primary focus of OPIC's fund oversight. In reviewing the comparative experience of enterprise and investment funds as part of a larger national venture capital promotion exercise, Koppell concludes that the federal government has the best opportunity to maintain a modicum of accountability over these institutions through enforcement of regulatory practices, rather than attempting to run these quasi governmental bodies through direct administrative means. Koppel does not award the board of directors concept high marks as an effective method to promote accountability. The issue of tenure is pertinent to venture capital funds. Are they intended to be permanent or temporary? Although Congress did not address this question directly with respect to enterprise funds, arguably they were designed to serve as temporary entities set-up to aid nations in their transitions to market-based economies. Accordingly, in September 2001, the Polish-American Enterprise Fund (PAEF) returned $120 million of its assets to the U.S. Treasury and transferred $180 million of its assets to the newly created Polish American Freedom Foundation—an entity which had previously received $80 million from PAEF. The funds are to be used to provide grants to promote economic reform, leadership development among Polish citizens, a stronger civil society, improved local government, and more. Similarly, the Hungarian-American Enterprise Fund has said that it would liquidate itself and return funds to the U.S. Treasury. Venture capital funds are not exhausted by discussion of international enterprise and investment funds. In the past decade, venture capital funds have been established to fund research into technology. The first of these was "In-Q-Tel." The announced purpose of In-Q-Tel is to permit the Central Intelligence Agency (CIA) to invest in, and thereby encourage, corporations producing technology the agency believes it will need to perform its mission in the future. Capitalized by $150 million in government funds, this nonprofit corporation is expected to be self-sufficient. On the board of directors are private corporate executives from firms such as Lockheed Martin. In the words of Gilman Louie, In-Q-Tel's former CEO: The best thing about In-Q-Tel, to me, is that it's risky. The CIA and the rest of the government need to catch the entrepreneurial, risk-taking spirit that's driving the Silicon Valley technology revolution. The CIA's new venture may fall flat, but so what. Washington has been a zero-defect culture for too long. If we want a CIA that performs better, we'll need to take more risks—and give our government freedom to fail. In-Q-Tel is not the only domestic entity of this type. In January 2002, Congress authorized the Department of the Army to create a "non-profit venture capital corporation" ( P.L. 107-117 , sec. 8150). The Army subsequently established OnPoint Technologies. The National Aeronautics and Space Administration has hatched its own venture capital fund, Red Planet Capital. One of the organizers of this latter entity explained, "We will invest with others in companies making products that aren't being made elsewhere and that NASA might be able to use." Initially, it was reported that Red Planet Capital's ultimate objective was to produce technologies that may be developed further by NASA and be used to explore Mars. However, the current status of Red Planet Capital and its goals are unclear. It now calls itself Astrolabe Ventures and its website states that it "will consist of two venture funds (one based in Europe, the other in the United States) investing in companies that target strong commercial markets with technologies that are relevant to aerospace and related industries such as transportation and manufacturing." Venture capital funds in which the federal government participates, either as the only party, or in cooperation with other parties, are often controversial. This is so because such funds require the government to participate in the private equity market and, in the eyes of some, to pick "winners." Within the quasi government, a category of entities can be collectively identified as "congressionally chartered nonprofit organizations," also referred to popularly as "title 36 corporations." The chartering by Congress of private organizations with a patriotic, charitable, historical, or educational purpose is essentially a 20 th century practice. There were nearly 100 organizations listed under Subtitle II, "Patriotic and National Organizations." Typical among these chartered organizations is the Agricultural Hall of Fame; Big Brothers and Sisters of America; and the American Legion. Congress has authority to establish organizations within both the governmental and private sectors. In the governmental sector, the authority and responsibility to establish all agencies and all offices to be filled by appointed officers of the United States is clear. The actions of all agencies and officers of the United States are determined by public law. Congress also has authority to charter (establish) new private corporations, both for-profit and nonprofit. While Congress has exercised its prerogatives to charter for-profit corporations infrequently, there have nevertheless been several important instances, such as the establishment of the fully private, stockholder-owned Communications Satellite Corporation (ComSat) in 1962 (76 Stat. 419; 47 U.S.C. 701). Much more frequently, Congress has chartered nonprofit organizations, either in the first instance, or as a rechartering of an existing state chartered nonprofit organization. Title 36 corporations can, and generally do, function simultaneously under both federal and state charters. Indeed, in most instances, organizations were chartered and functioned under state laws before, often long before, receiving federal charters. Congressional authority with respect to organizations functioning essentially under state law, however, has not been free of controversy. The basis of the controversy often comes down to fundamental issues of managerial accountability, fiduciary responsibility, and rights that inhere to governmental organizations, but not to private organizations, such as the right to the full faith and credit of the United States treasury. In chartering patriotic, charitable, and professional organizations under Subtitle II, such as the National Academy of Public Administration (36 U.S.C. 1501), Congress does not make these organizations "agencies of the United States," nor does it confer any powers of a governmental character, or assign any benefits. These organizations do not receive direct appropriations, they exercise no federal powers, their debts are not covered by the full faith and credit of the United States, and they do not enjoy original jurisdiction in the federal courts. In effect, the federal chartering process usually is honorific in character. This honorific character may be misleading to the public, however, when such organizations feature statements or display logos that they are "chartered by Congress," thus implying a direct relationship to the federal government that often does not exist. In addition, there may be an implication that Congress approves of the organizations and is somehow overseeing their activities. Recently, the non-agency character of Title 36 corporations may have been breached. The "privatization" of the Defense Department's Civilian Marksmanship Program and its assignment to a newly created Title 36 corporation, the Corporation for the Promotion of Rifle Practice and Firearms Safety (36 U.S.C. 407), raises questions about the limits, if any, to Congress's authority to assign a "private" label to functions of a governmental character. While this corporation has some admittedly governmental attributes (e.g., upon the dissolution of the corporation, its assets would be sold and the proceeds revert to the U.S. Treasury), Congress has declared in its enabling statute that "the corporation is a private corporation, not a department, agency, or instrumentality of the United States Government." Furthermore, the law provides that "an officer or employee of the corporation is not an officer or employee of the Government." Whether Congress has the constitutional authority to establish an entity "private," when in fact it has "governmental" attributes, has been subject to debate and judicial opinion. Private, nonprofit organizations seeking federal charters under Title 36 presumably perceive value behind such charters, and indeed, such may be the case. Less apparent, however, are possible risks that might result from private, nonprofit organizations of having such a charter. A chartered private organization may lose some of its private rights and be made subject to management laws and regulations generally applicable only to agencies of the United States. Such a situation came about in 1997 when Congress amended the Federal Advisory Committee Act (5 U.S.C. Appendix; 86 Stat. 700) so as to include two Title 36 corporations, the National Academy of Public Administration and the National Academy of Sciences, under specific provisions involving the appointment, permissible activities, and reports of corporation committees doing work for executive agencies ( P.L. 105-153 ). This is the first instance in which Congress has made Title 36, Subtitle II corporations subject to the provisions of a general management law, and, while the action may be supportable on public policy grounds, it does, to the extent of applicable provisions, diminish the private character of the affected organizations. As such, it constitutes a precedent with implications. Congress and the President have raised questions in the past about the consequences of granting charters to private organizations. In vetoing a corporate charter in 1965, the President raised several questions about the wisdom of continuing to grant charters on a case-by-case basis "without the benefit of clearly established criteria as to eligibility." Congress, in 1969, responded to this presidential concern by setting out five "minimum standards" to be met by a private organization seeking a federal charter from Congress. These standards, however, did not resolve all of the questions concern the process of granting a charter, or of overseeing nonprofit organizations. At present, federal supervision of congressionally chartered nonprofit organizations is limited. All "private corporations established under federal law," as defined and listed in Subtitle II, are required to have independent audits annually, and to have the reports of the audits submitted to Congress (36 U.S.C. 10101). In practice, these audit reports tend to be received by the House Subcommittee on Citizenship, Refugees, Border Security, and International Law. All received audits are sent to the Government Accountability Office for review. Public access to the records and reports of Title 36 corporations varies. For example, the charter of the National Ski Patrol (36 U.S.C 1527) requires that its annual report be submitted each year to Congress but forbids the public printing of it. The Senate Judiciary Committee has tended to defer to the House committee on these matters. Neither the Judiciary Committees of Congress nor the Government Accountability Office tend to look over the shoulder of these organizations, or to conduct audits on their own authority. In April 1992, House Subcommittee on Immigration and Claims Chairman Barney Frank announced that the subcommittee would no longer consider requests for charters. The reason, Frank reportedly said, was that the charters were "a nuisance," a meaningless act; granting charters implied that Congress was exercising some sort of supervision over the groups and it was not. "When I first raised the issue, 'What is a federal charter?' The answer was, a federal charter is a federal charter is a federal charter.... You could make up an organization for the preservation of Albert De Salvo, the Boston Strangler. We'd have no way of checking into it." In the 104 th Congress, the House subcommittee issued an internal policy directive that it would no longer consider any legislation to grant new federal charters because such charters were unnecessary for the operations of any charitable, nonprofit organization and falsely implied to the public that a chartered organization and its activities somehow enjoyed congressional approval. The moratorium was continued in the 105 th through 111 th Congresses. It is unclear whether the moratorium has been or will be renewed in the 112 th Congress. This subcommittee moratorium did not, however, stop all requests for new federal charters from becoming law. Notably, it remains possible for another committee, or for the full Congress in its plenary capacity, to "charter" nonprofit organizations and have them listed in Title 36. Most recently, during the 110 th Congress a federal charter was given to the Korean War Veterans Association, Incorporated ( P.L. 110-254 ). Not all the hybrid organizations fit into categories within the quasi government. Some organizations are sui generis while others partake of so many varied characteristics that they are best viewed and considered separately. Illustrative of quasi governmental entities are three examples that arguably merit discrete review. (1) American Institute in Taiwan (2) National Endowment for Democracy (3) United States Investigation Services In December 1978, President Jimmy Carter decided to establish full diplomatic relations with the People's Republic of China, and did so effective January 1, 1979; the two countries exchanged ambassadors on March 1, 1979. As part of the arrangement, the President agreed to end the 1954 mutual defense treaty with Taiwan and close the U.S. embassy in Taipei, the capital of the Republic of China (Taiwan). This decision was strongly objected to by a number of Senators, who maintained that treaties could not be terminated unilaterally by the President. Congress, presented with a presidential fait accompli, prepared legislation that would permit a continuing relationship with Taiwan (Republic of China) without the relationship being officially diplomatic in character. The decision was to establish a hybrid body that would provide a de facto rather than de jure representation. Congress enacted the Taiwan Relations Act ( P.L. 96-8 ; 22U.S.C. 3301), signed by the President on April 10, 1979, a key provision of which was the establishment of the American Institute in Taiwan (Institute) as a private, nonprofit corporation under the laws of the District of Columbia. The institute, to be principally located in Taiwan, was nonetheless directed to maintain its headquarters in the United States. The officers and employees of the institute are officers and employees of the United States who are "separated" from their agency during the specified period of employment within the Institute. As a practical matter, most employees are Foreign Service officers "separated" from the Department of State, who remain entitled to governmental benefits during the separation period. It was anticipated that Taiwan would establish a similar organization to the institute, which it did. In subsequent years, political relations between the United States and the Peoples Republic of China have had their ups and downs, a situation with tangential impact on United States-Taiwan relations. These political strains have, to all appearances, not adversely impacted the functioning of the institute. The institute has generally provided an effective channel for government to government relations. Although the legal status of the institute remains intentionally ambiguous, this has not yet resulted in any major public conflicts. In 1983, the Reagan Administration requested Congress to pass legislation for "Project Democracy" to promote and support the building of democratic institutions abroad, especially in countries newly emergent from totalitarian or dictatorial rule. Although the specific Administration proposal was not adopted, Congress did enact legislation that included approval for creating a National Endowment for Democracy (NED, or Endowment). The NED proposal was included in Title V of the State Department Authorization Act, FY1984 and FY1985 ( P.L. 98-164 ; 22 U.S.C. 4411). The National Endowment for Democracy Act reads: "The Congress finds that there has been established in the District of Columbia a private, nonprofit corporation known as the National Endowment for Democracy, which is not an agency or establishment of the United States." (4411(a)). The purpose of NED is to encourage the development of free and democratic institutions throughout the world using the two major American political parties and labor and business organizations as the tools for promoting this policy. Although the law did not specify the creation of grantee organizations, it was generally understood at the time that four "core organizations" representing the two major political parties, American labor organizations, and American business organizations would be created as private, nonprofit organizations. The NED would not conduct democracy programs itself but would rely on core grantees. Grantees include the National Democratic Institute of International Affairs (NDI); the International Republican Institute (IRI); the American Center for International Labor Solidarity (ACILS); and the Center for International Private Enterprise (CIPE), which is affiliated with the U.S. Chamber of Commerce. The rationale given for creating a hybrid status for the endowment was that for NED to support democracy building programs, especially in inhospitable countries (countries where the United States is banned by law from providing direct foreign aid, such as the People's Republic of China and Myanmar (Burma)), it must not be viewed as an arm of the U.S. government. Additionally, the core grantee organizations are one step further removed from the government, and thus provide a fourth-party administration of the infrastructure promotion system. The endowment was envisioned principally as a conduit for funds to the grantee organizations, but has developed on its own a network for funding of other private organizations. Under the by-laws of the organization as registered in the District of Columbia, the NED has a board of officers and directors, which has ranged over time between 13 and 30 members. The directors elect the president of the NED and fill vacancies among their own number. The NED board is not subject to extensive government oversight and has retained the same individual, Carl Gershman, as president since the inception of the endowment in 1983. The current chairman of the board of directors is Richard A. Gephardt, a former Member of Congress. Funding of the NED is provided by an appropriation in the Commerce, Justice, State Appropriations Act to the Department of State to award to the NED. The total NED appropriation for FY2011 was $117.8 million ( P.L. 112-10 ). While the NED considers itself to be private, it must be managed under requirements of several general management laws. For instance, the endowment must comply with the provisions of the Freedom of Information Act. Also, while the accounts of the endowment are audited by independent firms, they are subject to review, and may be audited, by the GAO. There has been debate in Congress over whether the United States government should be funding these types of organizations to "promote democracy." The arguments pro and con necessarily impact the NED as well as its core grantee organizations. From the perspective of the quasi government, the NED is a classic example of a hybrid organization functioning under both private and public law. There is a range of opinion as to whether such a hybrid arrangement is necessary to achieve the results intended by the lawmakers. Furthermore, critics have accused ther NED of mission creep and asserted that NED has been associated with efforts to influence the outcomes of ostensibly democratic elections. As part of Vice President Gore's "reinvention" program, a substantial downsizing of the civil service was ordered. Agencies were expected to be "creative" in making sure the work continued to be done, but with less personnel and less funds. Cuts in the mission, capacity, funding, and personnel of the central management agencies (i.e., Office of Management and Budget; General Services Administration; and Office of Personnel Management) were particularly significant. At OPM, the security and investigations unit of the agency was a potential target for downsizing because its securities clearance workload was declining due to the end of the Cold War and because there were fewer new hires generally throughout the executive branch. The Director of OPM, James King, created a first, the establishment by the government of a private corporation whose employees would be persons transferred from a federal agency, the Federal Investigations Division of OPM, to a private firm to be eventually owned by its employees in what is known as a Employee Stock-Owned Plan (ESOP). The stated rationale was that it would save the jobs of the approximately 700 investigators who would no longer be needed and that it would save the federal government money by contracting with this new corporate body the investigations formerly performed in-house. Director King of OPM let a contract to ESOP Advisors, Inc. for a feasibility study of the concept, a study that reported that the privatization process culminating in an ESOP was feasible. King then announced his intention to move forward rapidly. Two hearings were held by congressional committees. The principal points argued by the opposition dealt with civil rights and privacy issues associated with private parties conducting and storing sensitive investigatory reports, and the propriety and legality of having government agencies creating privately owned corporations with special, financially advantageous relations, with the sponsoring agency. To the surprise of some, OPM, however, determined to move on its own initiative and without explicit statutory authority. To launch the corporation, OPM chose American Capital Strategies (ACS) to develop a business plan. ACS selected Marine Midland Bank of New York as a financial trustee and, together with Washington law firm Arnold and Porter, began to recruit a management team. They selected, with King's agreement, Philip Harper, a former security industry official, to take the first step, incorporating the company to be known as the U.S. Investigation Service (USIS) under the laws of the state of Delaware in April 1996. The corporation at this point had a single share and a single employee—Harper. The corporation was reincorporated in August 1996, at which time the 700 former Office of Federal Investigations employees were separated from the government and became private employees. In April 1997, it was reported: [The] 700 employee-shareholders own about 91 percent of a company valued at $28.2 million. Harper and the other 11 company officers, who together put up an initial seven-figure investment, hold the remaining shares. Under the terms of its corporate charter, USIS is governed by a nine-member board of directors. The board's five "inside" members include Harper and two others elected by employees; the three of them in turn nominate the two remaining members. However, as with most private companies, the board's role is limited. It does not run USIS—that's Harper's job, along with his immediate staff—instead concerning itself strictly with 'ownership issues' like oversight. For example, it ensures that company resources are allocated in the best interests of employee shareholders, and it also approves key strategic decisions. Of course, such issues are made easy when you begin a business with the federal government as a guaranteed customer. OPM then awarded the USIS a noncompetitive three-year contract under a "public interest" exemption in federal contracting law. It was reported that the OPM employees would not have moved to the new private corporation without a guaranteed, sole-source contract providing a modicum of security. The USIS has free access to government computer databases not otherwise available to the public or possible competing corporations. By any account, this government-sponsored, private corporation was given advantages and incentives not available to other private start-up corporations. Critics of the USIS and the privatization process followed in its creation tend to argue that background investigations are an inherently governmental function to be conducted by regular federal employees operating under all government management and security protection laws. They believe that legal accountability should be direct up through the agency, departmental and central management agency line to the President, and through the President to Congress. From their point of view, policy considerations, such as seeking to find jobs for otherwise underutilized or redundant employees, seeking lower unit costs, and the desirability of "profitability" for governmental activities, while of academic and political interest, are essentially not relevant as justifications for creating and supporting this hybrid organization. The critics argue that not all personnel investigations are alike and assert that the needs and requirements of the government (and indirectly of the public giving information to the government) are distinctive in legal terms from those applicable in the private sector. In their view, the issues are not economic in their fundamentals, but constitutional and legal. Moreover, the question arises: if OPM is free to transfer a portion of its workload and employees to the private sector, may other agencies do likewise? The Clinton Administration and supporters of OPM's decision to "privatize" this activity, saw, on the other hand, in the USIS experience, a creative response to a changing situation regarding a government agency and its activities. This perspective views USIS as a successful exercise, one with lessons to be applied in other situations. The USIS's moves into the private sector market, including extensive contracts with the casino industry, were seen as the logical progression of a generic activity: personnel investigations. The more recent activities of the USIS have raised new questions as to the appropriateness of the privatization process and the mixing of the governmental and private sectors. Exactly which assets were transferred to the USIS in the first place is not clear, but whatever they were was deemed to be worth $28 million. The inadequacy of this figure became apparent as the Carlyle Group soon was able to purchase a substantial block of shares. Its purchase of shares in the USIS appears to have been wise, timely, and fortuitous because the now private corporation underwent an incredible surge in business. In 1999 alone, the share value increased 702%. In January 2003, venture capital firm, Welsh, Carson, Anderson, and Stowe, purchased the stock owned by original ESOP employees for a reported $545 million. This brief description of theUSIS, concludes this selective review of entities within the quasi government. Each category and entry has certain general characteristics worth noting as well as distinctive features. What is evident from this review is that certain basic philosophical issues are being debated, occasionally in direct terms but more often indirectly through the process of reorganization of the executive branch. This process is taking two forms: the reorganization of departments into agencies with agency-specific management laws, and the assignment of agencies and functions, both new and existing, to entities outside the executive branch, to the quasi government discussed in this report. This process has not been without its consequences for both the institutional presidency and Congress. Many observers believe that the underlying attraction of the quasi government organizational option can be traced to an innate desire of organizational leadership, both governmental and private sector, to seek maximum autonomy in matters of policy and operations. With respect to the governmental sector, however, this natural centrifugal thrust of organizational management has been historically held in check by a set of strong counter or centralizing forces. The constitutional paradigm (model) of management was, and remains, based on laws and accountability structures. The President is chief manager of the executive branch and manages through the appointment of officers, the administration of general management laws, and the budgetary process. The highest value in this public law model of management is political accountability for the exercise of governmental power, not efficiency or some other value. A unified executive structure, coupled with hierarchical lines of authority and accountability, was a theoretical product of the founding fathers. The President was viewed as the chief manager of the administrative system. The governmental and private sector cooperated, but were kept legally distinct in the interests of protecting citizens' rights against a potentially arbitrary government. Institutions not in the executive branch, but partaking of the attributes of governmental status were looked upon with suspicion as aberrations breaching the constitutional wall between the governmental and private sectors. These management values, however, were challenged in the 1960s by a new management theory (public choice theory) emanating from academia, and found expression in the election of political leaders, here and abroad, committed to market principles. The underlying premise of the entrepreneurial management paradigm is that the governmental and private sectors are essentially alike in the fundamentals, and thus subject to many of the same economically derived behavioral norms. The supporters of this position promoted their values and concepts of management internationally under the rubric of New Public Management (NPM) and domestically as part of the National Performance Review (NPR). Skeptics of the new entrepreneurial management paradigm say the centrality of public law is displaced by the centrality of economic axioms; the focus of management, once the citizen, is now the customer; and departmental integration as the norm is replaced by agency dispersion and managerial autonomy. They see political accountability and due process being superseded by the primacy of performance and results, however defined. Critics believe that the historic wall between the governmental and private sectors is being breached not merely as a managerial convenience, but as a matter of policy; so rather than a wall, government entrepreneurs are forging a web of public/private partnerships. Given the great differences between the basic premises guiding the two schools of thought, those favoring traditional public law principles versus those favoring entrepreneurial approaches, it is not surprising that their attitudes towards the quasi government are also at odds. Those advocating entrepreneurial management tend to place high value on managerial flexibility and the setting of numerical performance standards. Many are opposed in principle to hierarchical leadership structures and emphasize the desirability of change and managerial risk-taking. This set of values with respect to governmental management makes the hybrid organization within the quasi government an attractive option. Those favoring the public law approach to management, on the other hand, argue that the purpose of government management is to implement the laws passed by Congress, not necessarily to maximize performance or to satisfy customers. While accountability and effective performance are generally compatible objectives, in those unusual instances where these values come into conflict, they believe that the democratic value of political accountability should take precedence over the managerial value of maximizing efficiency and outcomes. Many of the public law advocates, not unexpectedly, tend to see quasi governmental entities as instruments of relatively small constituencies whose interests are promoted over the interests of the whole people as represented in their democratic institutions. Thus, they often oppose such quasi governmental hybrid entities as GSEs because they believe those who benefit (shareholders and management) are separate and apart from those who stand at risk (the taxpayers). Supporters of performance based criteria for government management stress the need for flexibility, competition, and performance as desirable goals. The pre-eminence of these values, in their view, provides the critical elements in developing creative and successful management. In this respect, therefore, many believe that the quasi government is where much of the future lies, away from what they characterize as the stultifying impact of alleged micromanagement, both congressional and executive, general management laws (e.g., personnel regulations), and budgetary constraints. In the quasi government, some argue, management can do whatever is not forbidden to do by law, thus providing the basis for innovation and partnerships. Accountability will be for performance, however it may be defined and measured, rather than to strict conformance to law. In the new entrepreneurial management paradigm, success, proponents say, will be measured by polling the customers on their trust and satisfaction of the delivery of governmental services. Thus, the emergence and growth of the quasi government can be viewed as either a symptom of a decline in our democratic system of governance or as a harbinger of a new, creative management era where the principles of market behavior are harnessed for the general well-being of the nation. One thing is for sure, however: debate between the competing management paradigms is over important issues, such as the legitimacy and utility of the quasi government, and is likely to continue into the foreseeable future.

To assist Congress in its oversight, this report provides an overview of federally related entities that possess legal characteristics of both the governmental and private sectors. These hybrid organizations (e.g., Fannie Mae, National Park Foundation, In-Q-Tel), collectively referred to in this report as the "quasi government," have grown in number, size, and importance in recent decades. A brief review of executive branch organizational history is followed by a description of entities with ties to the executive branch, although they are not "agencies" of the United States as defined in Title 5 of the U.S. Code. Several categories of quasi governmental entities are defined and discussed: (1) quasi official agencies; (2) government-sponsored enterprises (GSE); (3) federally funded research and development corporations; (4) agency-related nonprofit organizations; (5) venture capital funds; (6) congressionally chartered nonprofit organizations; and (7) instrumentalities of indeterminate character. The quasi government, not surprisingly, is a controversial subject. To supporters of this trend toward greater reliance upon hybrid organizations, the proper objective of governmental management is to maximize performance and results, however defined. In their view, the private and governmental sectors are alike in their essentials, and thus subject to the same economically derived behavioral norms. They tend to welcome this trend toward greater use of quasi governmental entities. Critics of the quasi government, on the other hand, tend to view hybrid organizations as contributing to a weakened capacity of government to perform its fundamental constitutional duties, and to an erosion in political accountability, a crucial element in democratic governance. They tend to consider the governmental and private sectors as being legally distinct, with relatively little overlap in behavioral norms. There is nothing modest about the size, scope, and impact of the quasi government. Quasi governmental entities run the gamut, from not-for-profit organizations that raise funds for the upkeep of parks to venture capital entities that fund the development of new technologies of use by federal agencies. This report will be updated in the event of a significant development.

S ection 401 of Federal Food, Drug and Cosmetic Act (FFDCA) grants the Food and Drug Administration (FDA) the authority to promulgate regulations that create "standards of identity" for certain foods. These standards establish the composition of the food, including mandatory and optional ingredients. Industry participants who do not follow the standard of identity for a particular food may be liable for misbranding under the FFDCA, which could lead to FDA enforcement action. FDA creates standards of identity through the administrative rulemaking process, with opportunity for public notice and comment. While Congress has not modified FDA's authority for promulgating standards of identity, it has called for FDA to promulgate specific standards for certain foods. For example, the proposed Trade Facilitation and Trade Enforcement Act of 2015 ( H.R. 644 ) includes a provision that would encourage a standard of identity for honey. This report discusses various legal issues related to food standards of identity. These issues include the legal authority for the FDA to promulgate regulations creating standards of identity, FDA's administrative rulemaking process to create standards of identity, and FDA's enforcement of these standards. This report also provides an overview of related legislation in the 114 th Congress. A standard of identity establishes the composition of a food, including mandatory and optional ingredients, and fixes the amounts or relative proportions of each ingredient or a specific method of manufacture. Congress intended that standards of identity would resemble "recipes" for specific foods. These standards of identity seek to prohibit economic adulteration and mislabeling of food by providing consumers with the "assurance that they will get what they may reasonably expect to receive." Section 401 of the FFDCA provides the primary statutory authority for the FDA to promulgate standards of identity for food via regulation. The provision states that [w]henever in the judgment of the Secretary such action will promote honesty and fair dealing in the interest of consumers, he shall promulgate regulations fixing and establishing for any food, under its common or usual name so far as practicable, a reasonable definition and standard of identity, a reasonable standard of quality, and/or reasonable standards of fill of container. Thus, an appropriate standard of identity for a particular food is one that "will promote honesty and fair dealing in the interest of consumers." Once the FDA creates a standard of identity, no product that fails to meet the composition requirements of that standard may be marketed under the name the FDA has appropriated to that particular standard. Section 403(g) of the FFDCA states that the FDA shall deem a food misbranded if "it purports to be or is represented as" a food for which the FDA has established a standard of identity and whose composition deviates from the standard. After the enactment of the Nutrition Labeling and Education Act (NLEA), the FDA promulgated regulations that allow for the addition of safe and suitable ingredients to a "standardized" food. Under these regulations, a manufacturer may refer to the adapted standardized food by the nutrient content claim and the original standardized food term. For example, under FDA regulations, a manufacturer may use safe and suitable artificial sweeteners that are not expressly listed in a particular standard of identity. According to the FDA, these regulations "assist consumers in maintaining healthy dietary practices by providing for a modified version of a traditional standardized food to achieve a nutritional goal ... [while maintaining] a descriptive name that is meaningful to consumers." The FDA relies on concepts like "safe and suitable" when regulating food to allow for technological flexibility with food development. Permitting such flexibility, according to the FDA, encourages oversight of food "without adversely affecting the characteristics of food" and "minimizes any future amendment of the standards for additional specific ingredients." The FDA also adopts food standards established by the Codex Alimentarius Commission, formed by the World Health Organization and the Food and Agriculture Organization of the United Nations. The Codex Alimentarius is a collection of international recognized food standards and guidelines promoting food safety. The FDA publishes these food standards in the Federal Register for public review and comment before accepting the standard with or without any changes. Congress first authorized the promulgation of standards of identity for foods with the Federal Food, Drug, and Cosmetic Act of 1938. The Pure Food and Drugs Act of 1906, the predecessor of the 1938 act, did not provide the legal authority for the government to promulgate such food standards, leaving the federal government with limited oversight of "imitation" products. During the 1920s and 1930s, the U.S. government brought adulteration and misbranding claims under the 1906 act against a product called "Bred Spred," a fruit product containing 20% fruit. The government claimed that consumers regarded the product as jam, but the product did not have the 45% fruit content generally associated with jam. The manufacturer argued that Bred Spred was not misbranded as it did not purport to be jam. The courts agreed with the manufacturer, holding that the product was not misbranded under the 1906 act because the government did not offer any evidence of false or misleading statements on the label. For the court, the imitation of a product was not sufficient evidence of misbranding under the act. Leading up to the passage of the 1938 act, Congress faced concerns about products such as Bred Spred and the potential fraud and the subsequent loss of consumer confidence that may follow from the purchase of similar foods. According to the legislative history of the 1938 act, Congress primarily authorized the creation of standards of identity as a regulatory tool "under which the integrity of food products can be effectively maintained." During the passage of the 1938 act, Congress acknowledged that "one great weakness in the present food and drugs law [1906 Act] is the absence of authoritative definitions and standards of identity." Referring to the Bred Spred cases, the House report for the 1938 act stated that "the government repeatedly has had difficulty in holding such articles as commercial jams and preserves and many other foods to the time-honored standards employed by housewives and reputable manufacturers." The report also claimed that the government lost these cases because the courts held that these "home" standards are not legally binding under existing law. Thus, Congress intended that the authorization of standards of identity would "meet[] the demands of legitimate industry[,]... [would] effectively prevent the chiseling operations of the small minority of manufacturers, [would] in many cases expand the market for agricultural products, particularly for fruits, and finally [would] insure fair dealing in the interest of the consumer." The Supreme Court has interpreted this legislative history as Congress's recognition of the inability of consumers to determine the relative merits of similar products solely on the basis of the labeling information. The FDA promulgates standards of identity for food through the rulemaking process. The formal rulemaking procedure followed by the FDA in adopting a standard of identity can be organized into three stages. First, the FDA or any "interested person" via a citizen petition may propose a standard of identity for adoption. A private petitioner must state "reasonable grounds" for the proposal in order for the FDA to publish the order and proceed with the process. Thus, a successful petition must assert provable facts demonstrating that the proposal, if adopted, "would promote honesty and fair dealing in the interest of consumers." The petitioner must also assert that he commits himself to substantiate the information in the petition with additional evidence in a public hearing, if such a hearing becomes necessary. If the proposal satisfies this requirement, the FDA publishes the proposal in the Federal Register as a "Notice of Proposed Rulemaking," and all interested persons are invited to file comments orally or in writing. After the agency studies the public comments submitted, the agency can decide to reject the proposal or to accept the proposal by publishing an order. The agency is not bound to issue the order within a specific timeframe after the comment period. Generally, the order, which establishes the standard of identity, is effective on the date specified in the order. Within 30 days of the order's publication, the agency begins the second stage of the rulemaking process. During this stage, all persons adversely affected by the order may submit objections and demand a public evidentiary hearing to resolve disputed factual issues that the objections have raised. The filing of such objections serves as a stay of the disputed provisions in the order, until the FDA takes final action. The public hearing is open to all interested persons and is on the record. The participants of the hearing may present documentary evidence and oral testimony and have the ability to cross-examine the witnesses. Following the hearing, the final stage of the process involves the agency issuing a tentative order, including detailed findings of fact and conclusions upon which the order is based. Any party of record may object to this proposed order and request an oral argument before the FDA. The FDA then publishes the final order setting forth the standard of identity. The FDA's final standard of identity constitutes a final agency action that is eligible for judicial review. A party adversely affected by the standard of identity order may seek judicial review in the U.S. Court of Appeals for the circuit in which the party resides or has a principal place of business. An adverse effect that is too remote or indirect generally does not provide a petitioner sufficient standing to petition a review of the order. Upon such a petition for judicial review, the court then has jurisdiction to affirm the order, or to set the order aside in whole or in part, temporarily or permanently. In reaching such a decision, the court considers whether the FDA's findings regarding the standard of identity order are supported by substantial evidence. According to the FFDCA, the FDA's findings of fact relating to the particular standard up for review "if supported by substantial evidence ... shall be conclusive." According to the Supreme Court, this scope of judicial review is appropriate for the review of "regulations of general application adopted by an administrative agency under its rulemaking power in carrying out the policy of a statute with whose enforcement it is charged." The Supreme Court reviewed the FDA's authority to promulgate regulations fixing standards of identity in Federal Security Administrator v. Quaker Oats Co. In this case, the Quaker Oats Company petitioned for review of the standards of identity for farina, enriched farina, and other flour mill products. The U.S. Court of Appeals for the Seventh Circuit set aside the standards of identity for these products, holding that the evidence on which the standards were based was "entirely speculative and conjectural" and would not justify the conclusion that such regulations would "promote honesty and fair dealing in the interest of consumers." Furthermore, the Court of Appeals held that there was no evidence of consumer confusion to justify the particular standards for farina and enriched farina. The Supreme Court disagreed and upheld the standards of identity. The Court stated that the FFDCA does not permit courts to "substitute their own judgment" for that of the agency promulgating the standards, but Section 401 instead emphasizes that the standards of identity are based on the "judgment of the Administrator." Thus, deferring to the Administrator promulgating the standards, the Court concluded that there was sufficient evidence "to support the Administrator's judgment that, in the absence of appropriate standards of identity, consumer confusion would ensue." Thus, the Supreme Court has concluded that the agency's determination, "if based on substantial evidence of record, and if within statutory and constitutional limitations, is controlling even though the reviewing court on the same record might have arrived at a different conclusion." In order to amend or to remove an existing standard of identity, the agency follows the same formal rulemaking procedures as it does when creating a new standard of identity. Amendments may include allowing a new ingredient or method of manufacture. The amendment process begins with the FDA or an interested person filing a petition to amend or to revoke the standard of identity. Like the test for promulgating standard of identity regulations, a revocation or amendment of a standard must also promote honesty and fair dealing in the interest of consumers. The FDA enforces standards of identity through the misbranding provision in the FFDCA (Section 403). Once the agency deems a food to be misbranded under this provision, then the agency can exercise various enforcement options against the manufacturer or other industry representatives. A food is deemed misbranded "[i]f it purports to be or is represented as a food for which a definition and standard of identity has been prescribed ... unless (1) it conforms to such definition and standard, and (2) its label bears the name of the food specified in the definition and standard, and, insofar as may be required by such regulations, the common names of optional ingredients (other than spices, flavoring, and coloring) present in such food." The FDA has not provided any formal guidance on when a product "purports to be" a food for which there is a standard of identity. In the past, the agency has read the "purports to be or is represented as" language broadly to challenge in a judicial enforcement action food that resembles in appearance, packaging, or taste, a food for which there is a standard of identity. Courts have relied upon the ordinary meaning of "purport" as "to convey, imply, or press outwardly ... to have the appearance... of being, intending, claiming" when interpreting this statutory language. A court generally does not require evidence of consumer deception under this misbranding provision. For example, the U.S. government took enforcement action against food sold as "tomato catsup with preservative." The product did not conform to the standard of identity for catsup because it contained sodium benzoate. The Second Circuit concluded that the product at issue "purports to be tomato catsup" even though the manufacturer added "mere words of qualification or description." For the court, the fact that this was "a product that looks, tastes, and smells like catsup, which caters to the market for catsup, which dealers bought, sold, ordered, and invoiced as catsup, without reference to the preservative, and which substituted for catsup on the tables of low priced restaurants" was sufficient evidence that the product violates the standard of identity for catsup, and thus was misbranded. The court dismissed an alternate inquiry into "whether the ultimate purchaser will be misled" as an unnecessary approach in standards of identity cases. The FDA may exercise discretion in its enforcement of the misbranding provision for standards of identity, Section 403(g). Thus, when the FDA finds that a food qualifies as misbranded under the FFDCA, the agency may then pursue several different enforcement options. First, the FDA may issue a warning letter to alleged violators of the misbranding provision. FDA warning letters are informal and advisory. A warning letter may communicate the FDA position on a certain issue, but does not commit the agency to take any further enforcement action. Thus, the FDA has concluded that a warning letter does not qualify as a final agency action subject to judicial review under the Administrative Procedure Act. The FDA may issue a warning letter for "minor violations of this [act] whenever [the agency] believes that the public interest [would] be adequately served by a suitable written notice or warning." These warning letters give the recipients, such as manufacturers or other industry representatives, an opportunity to take voluntary corrective actions before the FDA initiates a more formal enforcement action. The agency may favor a warning letter over other types of enforcement action as a more efficient enforcement option if the agency reasonably expects that the responsible firm or persons would take prompt corrective action after receiving such a letter. Under Section 304(a)(1) of the FFDCA, the government may also seize a misbranded article of food in interstate commerce. A seizure is a civil action used by the federal government when the removal of misbranded goods from interstate commerce is necessary to reduce consumer accessibility to those goods in order to protect public health. Generally, a seizure includes two steps: the U.S. government's physical seizure of the adulterated or misbranded articles of food followed by the judicial condemnation proceeding. The U.S. district court where the article is found has jurisdiction over the seizure proceeding. After a hearing on a seizure action, a district court may decree the "condemnation" of seized articles of food and order the destruction, sale, reconditioning, or export of such food. While Congress has not amended the FDA's legal authority to create standards of identity, Congress has introduced legislation in the past to encourage FDA's promulgation of specific standards of identity. For example, the Trade Facilitation and Trade Enforcement Act of 2015 includes a provision declaring that it "is the sense of Congress that the Commissioner of Food and Drugs should promptly establish a national standard of identity for honey for the Commissioner responsible for U.S. Customs and Border Protection to use to ensure that imports of honey are (1) classified accurately and for purposes of assessing duties; and (2) denied entry into the United States if such imports pose a threat to the health or safety of consumers in the United States." In support of this provision, Senator Gillibrand has stated the United States should adopt a national standard of identity for honey in order to protect consumers and to safeguard the integrity of honey products by preventing unscrupulous importers from flooding the market with misbranded honey products. If such a provision becomes law, the FDA may then promulgate a standard of identity for honey through the administrative rulemaking process.

Standards of identity for foods overseen by the Food and Drug Administration (FDA) generally define the composition of a food, prescribing both mandatory and optional ingredients and fixing the relative proportions of each ingredient. This report addresses the following legal issues associated with the promulgation and enforcement of standards of identity for foods. Section 401 of the Federal Food, Drug, and Cosmetic Act (FFDCA) establishes the legal authority for the FDA to promulgate standards of identity for food. According to this statutory authority, a standard of identity for a particular food is necessary if such a standard would "promote honesty and fair dealing in the interest of consumers." Congress first authorized the promulgation of standards of identity for foods in 1938 in response to the failure of the federal government's enforcement actions to regulate "imitation" foods. The FDA creates standards of identity for food through the rulemaking process. The FDA or an interested person via a citizen petition may propose a standard of identity for adoption. After the FDA publishes the proposed standard of identity in the Federal Register, members of the public may submit objections and demand a public hearing. The standard of identity is effective once the FDA publishes the final order in the Federal Register. The FDA's promulgation of a final standard of identity constitutes a final agency action that is eligible for judicial review. The FDA enforces standards of identity through the misbranding provision in the FFDCA, which states that a food is misbranded if "it purports to be or is represented as" a food for which the FDA has established a standard of identity and deviates from that standard. Once the agency deems a food to be misbranded under this provision, then the agency can exercise various enforcement options. Congress generally has not modified FDA's authority for promulgating standards of identity. However, Congress has introduced legislation calling for the FDA to promulgate standards for specific foods. For example, the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644, S. 1269) of the 114th Congress includes a provision to encourage a standard of identity for honey.

In March 2015, the Supreme Court heard oral arguments in King v. Burwell , a case addressing an important issue of implementation of the Patient Protection and Affordable Care Act (ACA). The lawsuit involves the provision of premium tax credits, which became available in 2014 and are intended to help certain individuals pay their premiums for private health insurance plans offered through insurance "exchanges" established under ACA. At issue in King and other similar legal challenges is whether the statutory language of ACA allows the IRS to provide these credits to residents of states that declined to establish health insurance exchanges, where the state's exchange is instead facilitated by the federal government. The issue is considered a significant one, given that the majority of states have a federally facilitated exchange, and millions of individuals receive these credits in order to assist with the purchase of health insurance. This report provides background on relevant provisions of ACA. It then answers questions concerning the litigation and potential implications of the Court's decision in King . As part of ACA's intended goal of improving accessibility to health coverage, the act provides for the establishment of "exchanges," structured marketplaces for the sale and purchase of health insurance. Section 1311 of ACA specifies that each state must establish an American Health Benefit exchange that is either a state governmental agency or a nonprofit entity, in order to provide health coverage to qualified individuals and employers. However, a separate section of ACA, Section 1321, generally provides that if a state does not elect to establish an exchange, or if the Secretary of Health and Human Services (HHS) determines that an electing state will not have an operational exchange, or has not taken certain specified actions, the Secretary must establish and operate such exchange within the state. In order to assist individuals in purchasing health insurance in an exchange, Section 36B of the Internal Revenue Code, created by ACA, provides that certain lower and moderate-income taxpayers may receive a refundable tax credit that is intended to help pay the cost of the health insurance premium. A taxpayer may claim the credit at the end of the year when filing an income tax return or claim an estimated credit during the year in the form of advance payments made directly to the insurer and applied towards the premium. In general, there are two principal factors that affect whether a taxpayer will be eligible for a premium tax credit: (1) whether the taxpayer meets the income and other requirements for the credit; and (2) whether any months during the taxable year qualify as "coverage months" for the taxpayer. With respect to this second requirement, in order for a taxpayer to receive a health insurance premium credit under ACA, at least one month in the year must qualify as a coverage month for the taxpayer. The term "coverage month" in Section 36B means the following: [W]ith respect to an applicable taxpayer, any month if— (i) as of the first day of such month the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer is covered by a qualified health plan … enrolled in through an exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act … In addition, the amount of the premium tax credit is equal to the sum of the "premium assistance credit amount" for each coverage month the taxpayer experiences during the taxable year. The premium assistance credit amount is defined as the amount equal to the lesser of (A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent … of the taxpayer and which were enrolled in through an exchange established by the State under 1311 of the Patient Protection and Affordable Care Act , or (B) the excess (if any) of— (i) the adjusted monthly premium for such month for the applicable second lowest cost silver plan with respect to the taxpayer, over (ii) an amount equal to 1/12 of the product of the applicable percentage and the taxpayer's household income for the taxable year. Following passage of ACA, it was argued that, based on this language in Section 36B (i.e., "an exchange established by the State under section 1311 of [ACA],") premium tax credits are not available to taxpayers in exchanges created by the federal government. In May 2012, the Internal Revenue Service (IRS) issued final regulations related to the premium tax credit that make the credits available to taxpayers who obtain coverage in both state and federally facilitated exchanges. The preamble to the regulations explains the IRS's position that the statutory language of Section 36B supports this interpretation, and states that "the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State exchanges," and that this reading of the language of Section 36B "is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole." After issuance of the regulations, at least four lawsuits were filed against the Administration, claiming the IRS overstepped its authority when it made these credits available to individuals in states that have the federal government run their exchanges. In order to understand some key aspects of the King case and other litigation, it is helpful to look at how ACA's individual and employer mandates interact with the premium tax credit. Under ACA, beginning in 2014, certain individuals must have "minimum essential" health coverage or be subject to a tax penalty. This is known as the individual mandate. There is an exemption for individuals whose contribution to health coverage is more than 8% of their household income. ACA specifies that this contribution is calculated for certain individuals as the annual premium for the lowest cost plan available on an exchange in the state, minus any allowable premium tax credit. Accordingly, if an individual is not allowed the premium credit, coverage becomes more expensive and the unaffordability exemption may kick in, meaning that the individual does not have to obtain coverage under the individual mandate. ACA also includes shared responsibility requirements for employers, commonly referred to as the employer mandate. The employer mandate imposes a tax on "large employers" that do not offer health insurance to their employees or offer coverage that fails to meet certain affordability and adequacy standards. ACA specifies that liability for the tax is generally triggered when at least one of an employer's full-time employees is allowed a premium tax credit through a health insurance exchange. Accordingly, if credits are not available in states with federally run exchanges, large employers may not be subject to penalties if they fail to offer affordable coverage to employees. Challengers of the IRS regulations and certain legal commentators primarily argue that the plain language of ACA is clear: receipt of a premium tax credit under ACA depends upon whether a taxpayer was enrolled "through an exchange established by the State under section 1311 of the [ACA]." According to the litigants, the federal government is not a "state," and therefore, the IRS cannot extend these credits to individuals participating in federally facilitated exchanges. Further, it has been asserted that if this phrase is interpreted to encompass both state and federally facilitated exchanges, the words "established by the state" serve no purpose, and this violates a basic principle of statutory interpretation that statutes should be construed to give effect "to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.... " Challengers also assert that the federal government's authority to establish exchanges comes from Section 1321 of ACA, not Section 1311. Had Congress wanted to provide premium tax credits to state and federally established exchanges, they argue, it could have clearly said so by referencing this section of the act. Challengers and commentators also contend that it is at least "plausible" that Congress intended to limit premium tax credits to state-run exchanges. It is claimed that in passing ACA, Congress wanted states to create their own exchanges, but that it could not compel states to do so without violating federalism principles under the Tenth Amendment. Accordingly, Congress used a carrot and stick approach: it incentivized the states to take action by conditioning the availability of credits upon whether a state established an exchange. Conversely, the Administration and others have argued that the challengers rely on the phrase, "an exchange established by the State," in isolation, and this leads to a flawed interpretation of the act. According to the government, the text of ACA as a whole makes clear that premium tax credits are available on all exchanges. For example, the government notes that ACA defines the term "exchange" to mean "an American Health Benefit exchange under section 1311 of ACA." When this definition is plugged into the text of Section 1321 of ACA, this provision compels the Secretary of HHS to establish an "American Health Benefit exchange established under [Section 1311 of the ACA] within the State." In other words, it is suggested that when HHS establishes an exchange, it is one that is "established under 1311," and therefore, credits may be offered in the exchange. Additionally, Section 1321 of ACA provides that if a state does not establish an exchange, the federal government is required to "establish and operate such exchange within the State.... " The government argues that the word "such" demonstrates that the exchange the Secretary must establish is the one that the state declined to establish, conveying the idea that state and federally run exchanges are one and the same, and that when the federal government steps in to operate a state's exchange on behalf of the state, "it does so standing in the state's shoes." Explained another way, the government contends that the phrase "exchange established by the State under section 1311 of ACA" is, in essence, "a statutorily created term of art that includes federally-facilitated exchanges." The government further argues that to limit premium tax credits to state-run exchanges is in stark contrast to the act's goal of expanding access to affordable health insurance and maintaining stable insurance markets. It is asserted that if premium tax credits were unavailable in federally facilitated exchanges, core provisions of ACA would not function properly. In addition, it is claimed that millions of individuals would no longer be able to afford health insurance, and the loss of these consumers would have an extremely detrimental impact on the insurance markets in the affected states. This result, it is claimed, would defeat the main purpose of establishing exchanges and credits in the first place. Also, according to the Administration, it is unreasonable to think that Congress would have designed a statutory scheme that would potentially jeopardize the effectiveness of the act and threaten insurance market security. As noted above, following issuance of the IRS regulations, at least four lawsuits were filed claiming the agency overstepped its authority when it interpreted the statute to allow premium tax credits to individuals participating in federally facilitated exchanges. In Halbig v. Burwell , a group of individuals and employers residing in states that did not establish exchanges filed suit against the Departments of HHS and Treasury, claiming the IRS regulations violate the plain language of the ACA, which only permits credits to be available in "an exchange established by the State." In July 2014, the Court of Appeals for the D.C. Circuit reversed the district court, holding that ACA "unambiguously restricts" the availability of premium tax credits to health insurance purchased on state-established exchanges. Relying upon the judicial test articulated by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, the appeals court examined whether Congress had spoken to the issue at hand and found that the statutory language of ACA clearly distinguishes between the creation of state and federally created exchanges for purposes of the credit. The court also rejected the government's contention that such construction of ACA would lead to illogical results under the act. Finally, the court examined the legislative history accompanying ACA and concluded that there was nothing demonstrating that Congress intended a different result. The Halbig opinion was later vacated pending review by the full appeals court of the D.C. Circuit, but the court subsequently placed a hold on the case pending the Supreme Court's decision in King . Conversely, in King v. Burwell , the Court of Appeals for the Fourth Circuit upheld the IRS regulations as a valid exercise of agency discretion. In King , Virginia residents filed suit challenging the validity of the IRS rule, claiming that the IRS's interpretation regarding the availability of premium tax credits is contrary to the statutory language of ACA. On the same day that the D.C. Circuit issued its decision in Halbig , the Court of Appeals for the Fourth Circuit held that the relevant statutory language of ACA is ambiguous and subject to multiple interpretations. Similar to Halbig , the court performed a Chevron analysis to determine whether the IRS's actions were authorized by ACA. First, the Fourth Circuit examined ACA's statutory language and found merit in both the plaintiff and defendant's arguments. But the court concluded that it could not conclusively determine what Congress intended with respect to this issue, and that "nothing in the legislative history of the Act provides compelling support for either side's position." The appeals court then found the IRS interpretation to be a reasonable exercise of agency discretion, in concert with the overall goals of the ACA, and it deferred to the rule. The plaintiffs in King appealed their case directly to the Supreme Court. In November 2014, the High Court agreed to review the case. In addition to Halbig and King , two other cases addressing this issue are currently pending. In Oklahoma ex rel. Pruitt v. Burwell , a district court in Oklahoma concluded, similar to Halbig , that the plain text of ACA is clear that premium tax credits are only available in exchanges established by a state. It noted that "as [ACA] presently stands, 'vague notions of a statute's basic purpose are nonetheless inadequate to overcome the words of its text regarding the specific issue under consideration.'" The district court ordered the IRS rule to be vacated, but stayed the decision pending an appeal. While the case is currently on hold at the Court of Appeals for the Tenth Circuit, the State of Oklahoma petitioned the Supreme Court to review its case together with King . In January 2015, the Supreme Court denied Oklahoma's petition. In a fourth case, Indiana v. IRS , the state of Indiana and 39 of the state's school districts filed suit challenging the validity of the IRS regulations. The district court found that the state and the school districts had standing to challenge the IRS regulation, and it denied the Administration's motion to dismiss the case. The district court in Indiana later stayed the proceedings in this case, pending the Supreme Court's decision in King . In all of the court decisions thus far, the taxpayers were found to have standing to sue even though it is atypical for someone to have standing to challenge a tax credit on the grounds that the IRS took an overly permissible interpretation of the statute. The government has not raised the issue of standing before the Supreme Court in King . Standing is an integral part of the "case or controversy" requirement in Article III of the Constitution, and it reflects the idea that the role of the judiciary is limited under the separation of powers principle upon which the government is founded. The standing requirement is generally understood to require the plaintiff show a "personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." It is usually the case that a taxpayer who is eligible to receive a tax credit due to an IRS's interpretation of a statute would not be injured since the government is interpreting the statutory language in a way that is favorable to the taxpayer. Furthermore, no one else would generally have standing either (e.g., taxpayers generally do not have standing solely because of their taxpayer status to challenge an expenditure of government funds). So, how did the taxpayers get standing to challenge the IRS regulation? Courts found standing based on the relationship between the premium tax credit and the individual and employer mandates. In King and Halbig , the courts determined that the plaintiffs faced an economic injury in that they would have to buy insurance or pay the individual mandate's penalty since their eligibility for the premium tax credit under the IRS regulation meant they would not qualify for the mandate's unaffordability exemption. Similarly, the courts in Pruitt and Indiana found that the states had standing to challenge the regulation because, as employers, they would face compliance costs and other expenses due to the employer mandate. These costs were attributable to the IRS regulation because the states would only be subject to the employer mandate if a state employee was allowed the premium tax credit, which, since the states had federally run exchanges, could only occur due to the IRS' interpretation of the statute. While the government did not raise the issue of standing before the Supreme Court in King, media reports have suggested that at least some King plaintiffs may not have standing—for example, because they may qualify for veterans benefits that would constitute minimum essential coverage for purposes of the individual mandate. Justice Ginsburg inquired about the issue of their standing at the beginning of oral arguments, and the plaintiffs' attorney asserted that at least one individual does meet the standing requirement. In general, taxpayers who want to challenge the application of a federal tax law must do so through a tax refund suit. This rule reflects a fundamental principle that tax laws can generally only be challenged after the taxes are paid, at which point the taxpayer may sue for a refund. As discussed above, the courts in these cases, however, generally found that the taxpayers were not required to go through the tax refund process in order to challenge the IRS's Section 36B regulation. First, the Anti-Injunction Act (AIA) generally prohibits courts from hearing suits for the purpose of restraining the assessment or collection of any tax. If the AIA applied here, it would mean that the plaintiffs could only bring their cases as a tax refund suit. However, in the 2012 case NFIB v. Sebelius , the Supreme Court, while upholding the individual mandate as a valid exercise of Congress's taxing power, also held that the individual mandate is a penalty, not a tax, for AIA purposes and thus fell outside the act's scope. Key to the Court's analysis was that Congress had labeled the mandate as a "penalty" in the relevant statute and had not otherwise provided it should be treated as a tax for purposes of the AIA. It appears that due to the Court's decision in NFIB , the government did not raise the AIA issue in the premium tax credit litigation when the individual mandate provided the basis for the plaintiffs' standing. However, the government did argue that the AIA prevented the plaintiffs' lawsuits when the employer mandate was the basis for standing. As such, three courts looked at this issue, and they reached different results. The Pruitt court, using the Court's analysis in NFIB , found that the statute's reference to the employer mandate as an "assessable payment" evidenced congressional intent for it not to be treated as a tax for AIA purposes. The Indiana court determined the AIA did not apply due to binding precedent in the Seventh Circuit. However, the district court in Halbig held that the employer mandate was a tax for purposes of the AIA and therefore dismissed the claims of the employers in the suit (the appellate court did not address this issue). The district court reasoned that Congress used the term "assessable payment" interchangeably with "tax" and intended them to have the same meaning. Distinct from the AIA issue but conceptually related, is the question of whether any of these plaintiffs were otherwise required to bring their challenges to the Section 36B regulation as a tax refund suit. Across the four cases, the government argued several different theories as to why other provisions of law required a tax refund suit. For example, the Administrative Procedure Act (APA) allows challenges to final agency actions "for which there is no other adequate remedy in a court," and the government argued that a tax refund suit was an adequate remedy since the taxpayer could receive any overpayment plus interest. The courts rejected these arguments for various reasons. For example, courts rejected the APA argument, reasoning that a tax refund suit was inadequate since it did not provide the same type of prospective relief as that provided under the APA. Under the APA, a party aggrieved by an agency's action may bring suit if he believes the agency has acted beyond its scope of authority. A court would review such a challenge by employing the test established by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council . The Chevron test proceeds in two parts to determine whether an agency has acted within its statutory authority. First, if Congress has spoken clearly on an issue, then the agency and the courts "must give effect to the unambiguously expressed intent of Congress." However, if the statute is ambiguous or silent, the court must determine whether the agency's construction of the statute is "permissible." The second part of the test is a deferential standard for judicial review. A reviewing court shall not determine whether the agency's construction is the most obvious or the best interpretation of the statute in question, but, instead, must yield to the agency's construction if it is merely a "permissible" reading of the statute. The federal appellate courts—the Fourth Circuit and the D.C. Circuit (prior to the decision being vacated)—that evaluated the premium tax credit regulation both employed the Chevron test to determine whether tax credits were available in states that operate under a federal exchange. Because the second step of the test provides the agency with considerable deference, often cases involving a Chevron analysis will turn on whether a court determines the statutory text to be ambiguous. This is precisely what happened in the cases involving the premium tax credits. For example, in Halbig , the D.C. Circuit stated, "Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on exchanges 'established by the State,' we ... vacate the IRS's regulation." Since the court found the text to be clear, the court did not have to proceed to step two, and the D.C. Circuit determined that the IRS regulation could not stand. As previously discussed, however, the D.C. Circuit vacated the Halbig decision pending an en banc review. However, the Fourth Circuit, when reading the same provision of law, stated in King , "[W]e find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS's determination, however, we uphold the rule as a permissible exercise of the agency's discretion." The Fourth Circuit, because it found the text to be ambiguous, proceeded to the highly deferential second step of the Chevron test and upheld the agency action. The Supreme Court, in a footnote, established that courts should use the "traditional tools of statutory construction" in order to ascertain whether "Congress had an intention on the precise question at issue." Courts often will use the structure of a statute to determine whether other sections of an act inform how the statutory provision in question should be evaluated. In addition, courts routinely use dictionaries to help ascertain the meaning of statutory language. The purpose of the legislation can also be helpful in determining whether Congress has spoken clearly on an issue. It is worth noting that the use of legislative history as a means of statutory interpretation has been a controversial subject. The debate over the use of legislative history during Chevron step one stems from a much broader doctrinal debate between judges who believe legislative intent should be used to interpret statutes (commonly referred to as "intentionalist" judges) and judges who believe that the text of a statute is the only reliable means of determining a statute's meaning (commonly referred to as "textualist" judges). Although the Chevron test has become a foundational principle of administrative law, judicial disagreement on whether a statute is ambiguous is not uncommon. Even the Justices of the Supreme Court often find themselves divided on whether Congress has spoken clearly on a specific issue. In numerous cases, including Chemical Manufacturers Association v. Natural Resources Defense Council and FDA v. Brown & Williamson Tobacco Corp. , the Supreme Court has split 5-4 on the issue of whether Congress has "directly spoken to the precise question at issue." Many issues at step one of the test appear to arise from a particular judge's willingness to look beyond the plain text of the statute to the intent of Congress in order to determine whether the provision is ambiguous—that is, whether a judge is a "textualist" or an "intentionalist." A textualist judge tends to believe that a stricter reading of the text should control when determining the meaning of a statute, while an intentionalist judge tends to be willing to look at the broader purpose of the statute and legislative intent when interpreting a law. The Court may perform a Chevron analysis to determine whether IRS's interpretation of the statute is permissible. As discussed above, it is not uncommon even for the Justices of the Supreme Court to disagree on whether a statute is clear or ambiguous. Ultimately, the outcome of the decision could largely depend on the Court's analysis under step one of the Chevron test. In addition to determining whether the premium tax credits are available in states with a federal exchange, it is also possible that the Supreme Court's decision could help clarify how the first step of the Chevron test should be applied. At oral argument for King , some of the Justices addressed broader federalism considerations that might inform their statutory interpretation of the availability of premium tax credits. Justices Sotomayor and Kennedy , for instance, suggested that this case could be influenced by the canon of constitutional avoidance , because the ACA might be read to raise federalism issues under the Tenth Amendment. Under modern Tenth Amendment doctrine, Congress may not directly compel or "commandeer" state legislatures or state executive branch officials to implement federal programs, and in South Dakota v. Dole , the Court held that indirect "coercion" of states by withdrawal of federal grant funds may also violate this amendment. The suggestion has been made that, i f premium tax credits were not available in states with federally facilitated exchanges, there might not be a viable marketplace for insurance companies in th ose state s , and affordable insurance would not be available in the individual market. Thus, according to Justices Sotomayor and Kennedy, if the ACA were interpreted to make tax credits available to individuals enrolled in exchanges established by states, while denying such credits to individuals enrolled in federally facilitated exchanges, then states might be indirectly coerced to establish exchanges. If this reasoning holds, the canon of constitutional avoidance might counsel preferring a fair interpretation of the ACA that does not implicate possible Tenth Amendment problems. The comments by Justices Sotomayor and Kennedy suggest a concern that states might be indirectly coerced to set up state exchanges by a threat of significant negative economic impact on individuals and businesses in those states. Neither party to the case, however, had raised the argument before the Court, and in response to a question from Justice Alito regarding this argument, Solicitor General Verrilli suggested that this was a "novel" constitutional issue. Thus, the issue raised by the two Justices in King would appear to be whether a state can be constitutionally persuaded to exercise regulatory authority in order to avoid the application of a federal regulatory regime that could impose negative economic consequences on its individuals and businesses. The Supreme Court has previously considered situations where a state is given the opportunity to establish a regulatory program with the understanding that failure to do so will result in the federal government stepping in to regulate. This legislative regime has been called " cooperative federalism " by the Court and is used in many different regulatory areas, especially environmental law. It does not appear that the Supreme Court has suggested that placing new burdens on individuals and businesses under federal regulation effectively coerces states to act in violation of the Tenth Amendment. For instance, in New York v. United States , the Court considered a regime where states may either regulate the disposal of radioactive waste according to federal standards by attaining local or regional self-sufficiency, or their residents who produce radioactive waste would be subject to federal regulation authorizing states and regions to deny access to their disposal sites. The Court rejected a Tenth Amendment challenge to this regime, noting that "affected States are not compelled by Congress to regulate, because any burden caused by a State's refusal to regulate will fall on those who generate waste and find no outlet for its disposal, rather than on the State as a sovereign." As in New York , the King case involves provision to states of the opportunity to establish their own regulatory regime in order to avoid the establishment of a federal regulatory regime. It is unclear, however, how the Court might apply the reasoning of New York to the King case. The implication of New York is that burdens that fall on individuals and businesses are not considered as part of a coercion analysis, yet Justices Sotomayor and Kennedy's questions could potentially suggest that such a burden might be important. It may be arguable that the purposes and structure of the ACA are sufficiently different from the statute at issue in New York , and the regime of cooperative federalism sufficiently distinct, for the Court to adopt a different look at whether adverse economic effects on private entities might raise Tenth Amendment issues in the context of ACA. Additional federalism concerns were discussed at oral argument when Justice Alito considered the government's argument that, under cases such as Pennhurst State School & Hospital v. Halderman , Congress must give clear notice of its intentions before imposing potentially onerous conditions on states. Justice Alito offered that if the Court found that premium tax credits were not available to taxpayers in federally facilitated exchanges, states might choose to establish their own exchanges, thus reducing the potential for economic harm. Further, Justice Alito suggested that the Court could delay the implementation of the plaintiffs' interpretation till the end of the tax year, again reducing potentially disruptive economic consequences. Finally, Justice Scalia proposed that Congress might also act to avoid any serious consequences to states arising from the Court's decision. Although there are other statutory considerations that may ultimately be more important to the resolution of the King case, the discussion by some of the Justices at oral argument potentially suggests that federalism may play a role in the resolution of this statutory interpretation case. Assuming the Supreme Court finds that premium tax credits are unavailable in exchanges that are not established by a state, the question of which exchanges fall into this category may be considered. In 2015, there are 27 states in which exchanges are established and run entirely by the federal government. Seven more states maintain "partnership exchanges," which HHS considers to be federally facilitated. While HHS maintains authority over these partnership exchanges, a state can administer and operate certain exchange activities. There are also three states that have "federally supported state-based exchanges." It appears these three states received (at least conditional) approval from HHS to run their own exchange and perform all exchange functions, but the states rely on the federally facilitated exchange IT platform (i.e., http://www.healthcare.gov ). In 2014, there appeared to be some disagreement over how many exchanges were run by the federal government. While the D.C. Circuit in Halbig indicated in dicta that there were 36 federal exchanges, the Fourth Circuit in King noted there were 34. Presumably, the discrepancy is based on the two federally supported state-based exchanges operating last year. Nevertheless, it may be noted that the Supreme Court briefs filed by both petitioners and respondents in the King case seem to agree that there are 34 federally facilitated exchanges. This number would appear to include the 27 federally facilitated exchanges and the 7 state-partnership exchanges, and exclude states with a federally supported state-based exchange. The Supreme Court could address what states must do in order to "establish an exchange" for purposes of the premium tax credits under ACA. Alternatively, the Court may render a decision without answering this question, and regulations issued by IRS and HHS could potentially address this issue. If the Supreme Court finds that the IRS regulations at issue in King are valid, it may be presumed that the agency would not need to amend the regulations or take any other action, and that premium tax credits would remain available for individuals participating in state and federally run exchanges in every state and the District of Columbia. However, such a holding may not preclude the IRS from amending the regulations at a future date. Assuming that the Court performs a Chevron analysis and finds that the statutory language of ACA is ambiguous and subject to multiple interpretations, the agency would remain free to amend the regulations, so long as the amendments are consistent with the statute. Thus, it is possible that if the Supreme Court in King decides to defer to the IRS's interpretation of ACA, an administration could potentially later amend the regulations in a manner that affects the provision of premium tax credits in federal and state-run exchanges. The Court's opinion in the King case may address this scenario. If the Supreme Court finds that the IRS regulation at issue in King is invalid so that individuals participating in federally run exchanges would no longer be eligible for the credit, then several things might happen. The IRS would presumably act to address the problematic aspects of the Section 36B regulations. Additionally, the agency (and HHS) might determine that additional rulemaking or guidance is appropriate to address possible issues arising from the interaction between the premium tax credit and other parts of the IRC and ACA (discussed in the next question). The IRS, affected taxpayers, and insurance companies might also confront issues due to the timing of the Court's decision. It is likely the decision will be released late in the Court's term, after April 15, 2015, but before the end of June. By that time, taxpayers claiming the credit for tax year 2014 will have generally done so. Additionally, some taxpayers will be receiving the credit for tax year 2015 in the form of advanced payments made directly to their insurance companies. Thus, in addition to raising questions about whether taxpayers who received the credit would be required to pay it back (see below), it seems possible the timing of the Court's decision might present issues with respect to the advanced payments being made for 2015 insurance contracts. During the King oral arguments, Justice Alito raised the issue of whether the Court could stay its decision until the end of the year. One point to note is that while the Court's decision may result in some taxpayers losing their eligibility for the premium tax credit, it would not impact their ability to claim other tax benefits. Thus, for example, affected taxpayers who purchased insurance would be able to deduct their premiums as an itemized deduction to the extent their total medical expenses exceed 10% of adjusted gross income. If premium tax credits cannot be offered in health insurance exchanges run by the federal government, many believe there could be a profound effect upon the operation and implementation of ACA as a whole because certain central provisions of the act depend upon the availability of premium tax credits. As noted above, ACA contains certain interconnected provisions that are designed to increase accessibility to health insurance. Among these provisions, ACA contains certain market reforms that, among other things, require health insurers to accept every individual who applies for coverage, prevent them from imposing exclusions from coverage based on preexisting conditions, and restrict insurers from charging higher premiums based on an individual's health status. Based on these requirements, it is argued that in order to prevent an "adverse selection" scenario, where individuals wait to purchase health insurance until they need care, ACA compels individuals to purchase insurance through the individual mandate. In order to make this required coverage affordable, ACA provides for premium tax credits and other subsidies. It has been argued that eliminating premium tax credits would be detrimental to this scheme, as these provisions "work in tandem to achieve the Act's fundamental goals of expanding health-insurance coverage and promoting a functioning individual insurance market in each State." Relatedly, it is also expected that if premium tax credits are unavailable to individuals enrolled in a federally run exchange, fewer individuals will be required to have health insurance under ACA's individual mandate . As discussed in the " I. Background " section, there is an exemption from the individual mandate for individuals whose contribution to health coverage is more than 8% of household income. ACA specifies that this contribution is calculated for certain individuals as the annual premium for the lowest cost plan available on an exchange in the state, minus any allowable premium tax credit . Accordingly, if an individual is not allowed the premium credit, coverage becomes more expensive, and the unaffordability exemption may kick in, meaning that the individual does not have to obtain coverage under the individual mandate. It has been predicted that eliminating the premium tax credits in states with federally run exchanges would exempt more individuals from the individual mandate, and would make coverage unaffordable for many of these individuals. Commentators have also noted that if the Supreme Court invalidates the IRS rule, this could have a debilitating effect on the federally run exchanges. The idea is that absent these credits, many healthy people would not purchase health coverage. However, individuals with more serious health conditions would probably remain in the market. Thus, it is argued that the population in these plans could become skewed toward sicker, more expensive enrollees, and this may lead to a rise in premiums in affected exchanges. The absence of premium tax credits in states with a federally facilitated exchange could also affect the application of the employer mandate. As discussed in the " I. Background " section, ACA specifies that liability for the excise tax under the employer mandate is generally triggered when one or more of an employer's full-time employees is allowed a premium tax credit through a health insurance exchange. Accordingly, if credits are not available in states with federally run exchanges, large employers may not be subject to penalties if they fail to offer affordable coverage to employees. If the Court finds that premium tax credits are not available in federally run exchanges, the question arises what states would have to do to in order for their exchange to be "established by the state under section 1311" for purposes of the credit. Current law and regulations articulate what steps a state must take in order for the federal government not to set up an exchange within the state. Section 1311 of ACA specifies that a state "shall" establish an exchange that meets certain specified requirements. This section provides that an exchange must be "a governmental agency or nonprofit entity that is established by a State." Additionally, under this section, among other things, an exchange must implement procedures related to the certification of health plans; provide for the operation of a telephone hotline; maintain a website under which current and prospective plan enrollees may obtain plan information; assign ratings to qualified health plans in the exchange, in accordance with criteria developed by the Secretary of HHS; use a standard format for presenting health benefit plan options in the exchange; and inform individuals of their eligibility for public programs such as Medicaid and assist with this enrollment. Current regulations also set forth numerous requirements that a state must meet in order for its exchange to be approved by HHS. As described above, if a state does not have this approval (or conditional approval) by a certain deadline, HHS will establish and operate the state's exchange. While the circumstances under which the federal government will assist with establishing an exchange within the state are thus well described in current law and regulations, the question of what it means to have "an exchange established by the state under 1311" could arguably be somewhat different than whether the federal government has chosen to assist with establishing an exchange within the state. Questions have been raised, for example, regarding whether states could qualify as having state-established exchanges while retaining a certain degree of federal marketplace infrastructure (e.g., certain state-based exchanges utilize healthcare.gov). The Supreme Court may address what states must do in order to "establish an exchange" so that premium credits are available. Alternatively, the Court may render a decision without answering this question. In that case, the answer may ultimately require administrative action by IRS and HHS, or further litigation to be resolved. As mentioned, taxpayers are allowed to claim the credit when they file their taxes at the end of the year or may choose to receive an estimated credit paid in advance to their insurance company. For both sets of taxpayers, it is not clear that any who claimed the credit might be required to pay it back if the Court were to strike down the regulation. On the one hand, as a general rule, taxpayers who improperly claim tax credits must pay them back and, in the case of taxpayers receiving an estimated premium tax credit in advance, pay back any excess. Further, the IRS is generally able to go back to the previous three tax years in order to reclaim erroneously paid refunds, even when the agency was at fault for the overpayment. And in some situations, courts have recognized that the IRS occasionally gets the law wrong and it is the taxpayer's responsibility to get it right. As such, if the Court were to strike the regulation so that taxpayers who purchased insurance in federally facilitated exchanges were not allowed the credit, it might be argued that taxpayers could be required to pay back any claimed credit to the IRS. On the other hand, these taxpayers claimed the credit due to their reliance on an unambiguous IRS-promulgated regulation. As such, it is arguably unfair to require them to pay back any claimed credit, perhaps particularly so if they were not party to the litigation resulting in their denial of the credit. Further, the situations where courts have not reacted sympathetically to taxpayers who relied on erroneous IRS information can be distinguished since those taxpayers were relying on guidance less formal than a regulation. In light of all this, even if there might be a legal basis for concluding that taxpayers might have to pay back the credit, it seems possible the Court, Congress, or IRS would take mitigating actions. For example, if the Court were to strike down the regulation, the Court could conceivably limit its holding so that taxpayers who had received the credit (whether through the advance payment or end-of-year filing) would not be affected. Similarly, the IRS might have the authority to provide that taxpayers who had already claimed the credit would not have to pay it back or to take no action to assess and collect the amounts from them. It is also possible that Congress could address the issue by legislation. CRS is not aware of any example of where a court struck a credit or other tax benefit and the taxpayers who had already received the benefit were required to pay it back; however, it should be noted that this issue rarely arises because, as discussed above, no one typically has standing to bring this type of suit. A consideration in assessing whether King may have implications for tax law generally is recognizing that the situation presented is uncommon. The plaintiffs are challenging an IRS regulation that interprets a statute so that they are eligible for a credit. Normally, a taxpayer would not want to sue arguing the IRS had impermissibly broadened a statute to benefit them, and in any case, would not have standing to do so. Here, the plaintiffs' concerns and standing are based on the interaction between the premium tax credit and the individual mandate. This type of interaction between a tax benefit and obligation is rare. Thus, due to the atypical facts present here, it is not clear whether King , regardless of how the Court rules, will have broad implications for impact tax law generally. King and the other cases nonetheless might provide two procedural issues in which Congress might be interested—the applicability of the AIA and the relationship between the APA and tax refund suits (note that neither issue has been appealed to the Court). This is not to suggest that the lower courts necessarily got these issues wrong. Rather, these cases might be of interest because, as discussed above, it is generally the rule that taxpayers challenging a federal tax law must do so through a tax refund suit, and while the government argued these taxpayers needed to do the same, the courts rejected this. Regardless of which side it agrees with, Congress might be interested in looking at these decisions to see if statutory clarification is needed. First, as discussed above, the AIA generally prohibits suits that restrain the collection and assessment of federal taxes. While the Supreme Court in NFIB found that the individual mandate was not a tax for purposes of the AIA because Congress labeled it as a penalty, Congress's motivation in using the term "penalty" appears open to debate. In light of the Court's holding and its application to the cases here, as well as potential extension to other excise taxes, it might be of interest to Congress to look at these cases to ensure their reasoning is consistent with the congressional intent behind the AIA and, if so, how other excise taxes might be affected. Similarly, the issue of whether a tax refund suit is an "adequate remedy" under the APA does not frequently arise, and it might be of interest to Congress to look at how the courts in these cases interpreted the interaction between the two acts.

Legal challenges that may have a substantial impact on the implementation and operation of the Patient Protection and Affordable Care Act (ACA) concern whether premium tax credits are available for millions of individuals participating in federally administered health insurance exchanges. These credits, which became available in 2014, are intended to help individuals pay the premiums for private health plans offered through the insurance exchanges established under the act. In addressing who may receive this credit, ACA refers to individuals who are "enrolled in [a plan] through an exchange established by the State" under ACA. Following the issuance of IRS regulations that allow for these credits to be available in both state and federally run exchanges, lawsuits were filed claiming that the language of ACA prohibits the credits from being available to individuals who obtain coverage in federally run exchanges. The Supreme Court is currently reviewing this issue in King v. Burwell . The Court heard oral arguments in the King case on March 4, 2015, and a decision is expected by the end of the Court's term in June 2015 at the latest. This report provides background on provisions of ACA relevant to this issue. It then answers questions concerning the legal challenges and potential implications of the Court's decision in King .

Since the late 1990s, the United Nations (U.N.) organization has increasingly recognized violence against women (hereinafter VAW) as a global health concern and violation of human rights. Ongoing U.N. system efforts to address VAW range from large-scale interagency initiatives to smaller grants and programs implemented by non-governmental organizations (NGOs), national governments, and individual U.N. agencies. A number of U.N. system activities address VAW directly; however, many are also implemented in the context of broader issues such as humanitarian aid, peacekeeping, global health, and human rights. Most U.N. entities do not specifically track the cost of programs or activities with anti-VAW components. Therefore, it is unclear how much the U.N. system, including individual U.N. agencies and programs, spends annually on programs to combat violence against women. U.N. member states collectively address VAW through the work of U.N. principal organs such as the General Assembly, Security Council, and Economic and Social Council (ECOSOC). Members of these bodies have adopted resolutions and decisions addressing VAW in general, and more specifically violence against women migrant workers; honor crimes against women and girls; trafficking in women and girls; sexual violence in conflict; VAW prevention; and women, peace, and security. Many U.N. member states have also ratified international treaties that address violence against women, including the U.N. Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children; the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW); and the Convention on the Rights of the Child (CRC). In addition, members of the U.N. Human Rights Council support the work of the U.N. Special Rapporteur on Violence Against Women, its Causes and Consequences. U.N. member states also make voluntary contributions to U.N. funds and other mechanisms that address violence against women. Since 2005, at the direction of U.N. member states, former U.N. Secretary-General Kofi Annan and current Secretary-General Ban Ki-moon have worked to coordinate and enhance anti-VAW activities among various U.N. entities. In late 2005, for example, as part of then-Secretary-General Annan's In-Depth Study on All Forms of Violence Against Women , the U.N. Secretariat's then-Division for the Advancement of Women (which is now part of the U.N. Entity for Gender Equality and the Empowerment of Women, referred to as "UN Women") compiled an inventory of U.N. system activities that address violence against women. The inventory, which was last updated in February 2011, identifies 36 U.N. entities that work to combat VAW on a global, national, or local level. In February 2008, Secretary-General Ban Ki-moon launched a U.N. system-wide public awareness campaign to end violence against women. This report provides examples of recent U.N. system efforts to address VAW, including the Trust Fund to Eliminate Violence Against Women, anti-VAW initiatives of past and current U.N. Secretaries-General, and interagency activities. It also discusses selected U.N. agreements, mechanisms, agencies, funds, and programs that—either in whole or in part—work to eliminate violence against women. It does not assess the scope of U.N. anti-VAW activities or evaluate a U.N. entity's progress in achieving its goal. This report supplements CRS Report RL34438, International Violence Against Women: U.S. Response and Policy Issues . When considering U.S. efforts to address violence against women internationally, Members of the 112 th Congress may wish to take into account ongoing U.N. efforts to address the issue. Were Congress to decide to use U.N. mechanisms to combat VAW, a number of policy issues and U.N. system activities might be considered. Some experts argue that providing financial or technical support to international organizations that address VAW is an effective use of U.S. resources. They maintain that such assistance benefits the United States because it allows the U.S. government to share anti-VAW costs and resources with other governments and organizations. Moreover, some maintain that U.S. support of U.N. anti-VAW activities may prevent duplication of anti-VAW programs. Others argue that the U.S. government should focus on its own anti-VAW activities, and emphasize that U.N. anti-VAW activities may not always align with U.S. foreign assistance priorities. Moreover, some policymakers may contend that U.S. contributions to multilateral anti-VAW efforts be reduced in light of the global economic downturn, economic recession, and subsequent calls to reduce the U.S. budget deficit. Some maintain that the U.S. government should increase its contributions to U.N. programs and mechanisms that combat violence against women—particularly the U.N. Trust Fund in Support of Actions to Eliminate Violence Against Women. The Trust Fund is a multilateral U.N. mechanism that provides governments and NGOs with money specifically to address violence against women. It relies on voluntary contributions from U.N. member states, including the United States, which first contributed in FY2005. Policymakers, including some Members of Congress, have recognized the fund as a possible tool for addressing international violence against women. Proposed legislation in the 110 th and 111 th Congresses, for example, would have increased U.S. contributions to the fund. A number of other U.N. agencies, funds, and programs work to eliminate violence against women. These include offices and departments funded through the U.N. Regular Budget, such as the Department of Peacekeeping Operations and the Division for the Advancement of Women (DAW), which is now part of UN Women. U.N. specialized agencies such as the World Health Organization (WHO) and International Labor Organization (ILO) also support anti-VAW activities through their regular budgets. Other U.N. programs and funds rely primarily on voluntary contributions from member states to support anti-VAW activities. These include the U.N. Development Program (UNDP), UN Women, and U.N. High Commissioner for Refugees (UNHCR). The United States may address VAW through several U.N. mechanisms, including multilateral treaties that focus on types or circumstances of violence against women. The Senate, for example, has provided its advice and consent for ratification of the U.N. Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children (Trafficking Protocol). Other multilateral treaties that address VAW include the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and the U.N. Convention on the Rights of the Child (CRC). The United States has not ratified CEDAW or CRC, however, because of concerns related to U.S. sovereignty. The United States may also address VAW by promoting or advocating resolutions and decisions in U.N. fora such as the General Assembly, Security Council, and ECOSOC. In March 2007, for example, the U.S. government drafted a resolution on forced and early marriage during the 51 st Session on the Commission on the Status of Women. In October 2007, U.S. representatives to the United Nations advocated the adoption of a General Assembly resolution condemning the use of rape as an instrument of state policy. In 2000, 2008, and 2009, the United States led in the adoption of U.N. Security Council resolutions 1325, 1820, 1888, and 1889 respectively, addressing women, peace, and security. More recently, in October 2010, the United States played a lead role in the adoption of Human Rights Council resolution 15/23 on the elimination of discrimination against women, which established a working group comprised of five independent experts to address discrimination against women in law and in practice. On September 14, 2009, the U.N. General Assembly adopted a resolution that sought to establish a new U.N. entity to address the well-being of women. In the resolution, member states "strongly supported" the consolidation of four existing U.N. entities addressing women's issues into one entity, taking into account their existing mandates. The four entities include the Office of the Special Adviser on Gender Issues and the Advancement of Women (OSAGI), the Division for the Advancement of Women (DAW), the U.N. Development Fund for Women (UNIFEM), and the U.N. International Research and Training Institute for the Advancement of Women (INSTRAW). In July 2010, the U.N. General Assembly unanimously adopted a second resolution that transferred the mandates and functions of DAW, UNIFEM, OSAGI, and INSTRAW into a newly established "United Nations Entity for Gender Equality and the Empowerment of Women," referred to as UN Women. On September 14, 2010, Secretary-General Ban appointed Michelle Bachelet, former president of Chile, as the Executive Director and Under Secretary-General of the organization. Bachelet is a member of all senior U.N. decision-making bodies and reports directly to the Secretary-General. Her appointment was met with general approval by many policymakers, including some Members of Congress. UN Women is headquartered in New York and became operational on January 1, 2011. The full scope and extent of UN Women's impact on U.N. system-wide efforts to address violence against women remains to be seen. It is likely that the entity's role in addressing VAW will continue to evolve as its operations move forward. UN Women has identified violence against women as one of its main priorities areas, and has taken on most of the VAW-related responsibilities of DAW, INSTRAW, OSAGI, and UNIFEM. For example, it plays an active role in the Secretary-General's UNITE to End Violence Against Women Campaign and administers the U.N. Trust Fund to Eliminate Violence Against Women, which was previously managed by UNIFEM. The U.N. General Assembly was the first international body to agree on a definition of violence against women. On December 20, 1993, the General Assembly adopted the Declaration on the Elimination of Violence Against Women (DEVAW). The Declaration, which was supported by the U.S. government, describes VAW as "any act of gender-based violence that results in, or is likely to result in, physical, sexual, or psychological harm or suffering to women, including threats of such acts, coercion or arbitrary deprivation of liberty, whether occurring in public or private life." Though non-binding, DEVAW provides a standard for U.N. agencies and NGOs urging national governments to strengthen their efforts to combat VAW, and for governments encouraging other nations to combat violence against women. Specifically, the Declaration calls on countries to take responsibility for combating VAW, emphasizing that "states should condemn violence against women and should not invoke any custom, tradition or religious consideration to avoid their obligations with respect to its elimination. States should pursue by all appropriate means and without delay a policy of eliminating violence against women." Despite the international adoption of DEVAW, governments, organizations, and cultures continue to define VAW in a number of ways, taking into account unique factors and circumstances. How VAW is defined has implications for policymakers because the definition may determine the types of violence that are measured and addressed. The current Secretary-General and his predecessors have sought to combat violence against women by supporting various studies and initiatives addressing the issue. Two such efforts—the U.N. Study on Violence Against Women, and the Secretary-General's UNITE to End Violence Against Women campaign—are discussed in the following sections. On July 6, 2006, then-U.N. Secretary-General Kofi Annan published an In-depth Study on All Forms of Violence Against Women . The study provided a statistical overview of types of VAW, including information on its causes and consequences. It also examined U.N. system efforts to address VAW, identifying 32 U.N. entities that work to combat types and circumstances of VAW on a global, national, or local level. (In February 2011, an updated inventory of U.N. system anti-VAW activities identified 36 U.N. entities addressing the issue.) The study discussed gaps and challenges in U.N. system anti-VAW activities, including (1) implementation of legal and policy frameworks that guide U.N. system efforts to eliminate VAW, (2) data collection and research, (3) awareness raising and dissemination of best practices, (4) resource mobilization, and (5) coordination mechanisms at the international level. To address these issues, the study recommended that U.N. resources addressing VAW should be "increased significantly," and highlighted the need to provide countries with technical support that promotes best practices for VAW data collection and research. The study also urged national governments to establish national action plans on combating violence against women. On December 19, 2006, in response to the Secretary-General's study, the U.N. General Assembly adopted resolution 61/143, which calls on U.N. member states and the Secretary-General to intensify efforts to eliminate all forms of violence against women. The study and the subsequent resolution have contributed to recent U.N. efforts to enhance current U.N. anti-VAW efforts and develop new strategies to address the issue. On February 25, 2008, Secretary-General Ban Ki-moon announced the launch of the UNITE to End Violence Against Women Campaign to raise public awareness of VAW and to ensure that policymakers at the highest level work to prevent and eradicate violence against women. The campaign, which runs from 2008 to 2015, focuses on three key areas: global advocacy; U.N. leadership; and regional, national, and international partnerships. It builds on the momentum created by recent General Assembly and Security Council actions on all forms of violence against women, as well as the work of women activists, NGOs, and other civil society organizations. The Campaign has five key outcomes to be achieved by all countries by 2015: adopting and enforcing national legislation aligned with international human rights standards; adopting and implementing multi-sectoral national action plans; establishing data collection and analysis systems; creating awareness-raising campaigns; and working to address sexual violence in conflict. U.N. funds and programs are engaged in several interagency activities that address specific types and circumstances of VAW directly, or include combating VAW as part of a broader agenda. The U.N. Trust Fund in Support of Actions to Eliminate Violence Against Women (the Trust Fund) is the only multilateral mechanism that specifically focuses on government and NGO efforts to combat VAW on regional, national, and local levels. The Trust Fund is administered by UN Women and relies on voluntary contributions from national governments, the non-profit and private sectors, and individuals. Top government donors include Australia, Austria, Denmark, Finland, Iceland, Ireland, Italy, Japan, the Netherlands, Norway, Spain, Switzerland, the United Kingdom, and the United States. Since it became operational in 1997, the Trust Fund has distributed approximately $60 million in small grants to over 317 anti-VAW initiatives in approximately 124 countries and territories. Money from the Trust Fund is distributed primarily to non-profit organizations and, more recently, to U.N. country teams. In 2010, the Trust Fund awarded $10.1 million in grants to 13 groups in 18 countries, with an average project grant size of $776,000. The majority of grantees were women's organizations (31%), followed by U.N. Country Teams (23%), development or youth organizations (15%), and governmental and human right organizations (8%). The largest number of grants went to Africa (29%), followed by Asia and the Pacific (26%), and Latin America and the Caribbean (20%). Trust Fund grantees in 2010 included the Women's Union in Jordan, Women United Together in the Marshall Islands, the U.N. Country Team in Sri Lanka, and the Ministry of Human Rights in Burundi. Recognizing the relatively small amount of money administered by the Trust Fund, the Secretary-General's 2006 study on violence against women recommended that U.N. member states and other international donors "increase significantly the financial support for work on violence against women in the United Nations ... including the United Nations Trust Fund to End Violence Against Women." UN Women reports that since 2008 the Trust Fund's resource base has increased. This shift to larger and longer-term grants has allowed the Trust Fund to support larger-scale projects, many of which span three years. Despite this apparent progress, the Trust Fund met just 2.4% ($20.5 million) of the total amount requested by applicants ($857 million) during its 14 th cycle (2009-2010). The U.S. government has contributed to the Trust Fund since 2005, with funding levels ranging from $990,000 in FY2005 to $3.0 million in FY2010 (see Table 1 ). The Bush Administration did not request funding for the Trust Fund from FY2005 through FY2009, and the Obama Administration did not request funding from FY2010 through FY2012. Congress typically allocates money during the appropriations process. Funding for the Trust Fund is drawn from the International Organizations and Programs account and generally supplements U.S. voluntary contributions to UN Women (formerly UNIFEM). IANWGE is a network of designated gender focal points from U.N. agencies, offices, funds, and programs. It comprises 60 members representing 25 entities of the U.N. system. IANGWE, which is chaired by UN Women, supports a Task Force on Violence Against Women that aims to strengthen U.N. system-wide anti-VAW efforts. The Task Force is leading pilot projects in 10 countries to implement joint programming on violence against women. Under the projects, U.N. country teams work with national governments to develop individual work plans that aim to increase national capacity to prepare, implement, monitor, and evaluate national efforts to end violence against women. IASC is the primary U.N. mechanism for interagency coordination of humanitarian assistance. Participants include U.N. entities, international organizations, and NGOs. IASC supports a Task Force on Gender and Humanitarian Assistance that, among other things, works to carry out programs that prevent and respond to gender-based violence. In 2005, the Task Force published a manual, Guidelines on Gender-Based Violence in Humanitarian Settings , to assist communities, governments, and humanitarian organizations (including U.N. entities) in establishing and coordinating interventions to prevent and respond to sexual violence during the early phases of emergencies. The Task Force meets every four to six weeks and includes representatives from over 20 U.N. entities and related NGOs. U.N. Action draws 13 U.N. entities together to improve and better coordinate the U.N. system response to sexual violence before and after conflict. It operates through existing coordination mechanisms, including the Inter-Agency Standing Committee, and focuses on building capacity and training advisers in anti-VAW programming at the country level. It aims to strengthen medical and legal services to survivors and, in the long term, address gender imbalances. It also works to raise public awareness of sexual violence and urges governments to address the issues. This section discusses selected U.N. conferences, agreements, resolutions, and multilateral treaties that address VAW, either in whole or in part. It does not assess U.N. member state compliance with or implementation of these mechanisms. Since 1974, the United Nations has held four World Conferences on Women. Recognition of VAW as an international human rights issue, however, was first achieved at the Third World Conference on Women in Nairobi, Kenya, in 1985, and reaffirmed at the Fourth World Conference in Beijing in 1995. The Nairobi Conference's main outcome document, negotiated and adopted by 152 U.N. member states—including the United States—laid the groundwork for future international anti-VAW initiatives. It noted that VAW was a "major obstacle to the achievement of peace and the other objectives of the [U.N. Women's] Decade and should be given special attention," and stated that member states should formulate legal measures to assist victims and establish national mechanisms to address VAW within families and society. At the Fourth World Conference in Beijing, U.N. member states (including the United States) identified violence against women as one of the "12 critical areas of concern" for women, and also agreed that VAW "constitutes a violation of basic human rights and is an obstacle to the achievement of the objectives of [Women's] equality, development, and peace." CEDAW is the only multilateral treaty that specifically focuses on the comprehensive rights of women. It calls for parties to eliminate discrimination against women in all areas of life, including healthcare, education, employment, domestic relations, law, and political participation. The Convention entered into force in 1981, and to date 187 U.N. member states are party to the treaty. The United States led the drafting of CEDAW but is one of seven U.N. member states that has not ratified the Convention. The Carter Administration signed CEDAW in 1980 and transmitted it to the Senate Foreign Relations Committee, but the full Senate has not considered the treaty for advice and consent to ratification because of concerns that it may undermine U.S. sovereignty. Though the Convention text does not directly address VAW, its implementing body, the CEDAW committee, adopted a general recommendation affirming that gender-based violence is a form of gender discrimination. The committee defined gender-based violence as "violence that is directed against a woman because she is a woman or that affects women disproportionately." CRC is an international treaty that requires parties to ensure that all children have certain rights, regardless of sex. Article 19 of CRC specifically addresses violence against children, stating that parties shall "protect the child from all forms of physical or mental violence, injury or abuse, neglect or negligent treatment, maltreatment or exploitation, including sexual abuse, while in the care of parent(s), legal guardian(s) or any other person who has the care of the child." CRC was unanimously adopted by the U.N. General Assembly on November 20, 1989, and entered into force on September 2, 1990. The United States was an active participant in the Convention's drafting. It joined in the General Assembly consensus adopting the Convention, and signed the treaty on February 16, 1995. Successive Administrations have chosen not to transmit CRC to the Senate for its advice and consent. To date, 193 parties have ratified the Convention—only the United States and Somalia have not ratified the treaty. In 1999, U.N. member states drafted the Protocol to Prevent, Suppress, and Punish Trafficking in Persons, especially Women and Children. On November 15, 2000, the U.N. General Assembly adopted the Convention on Transnational Crime, which includes the Protocol on Trafficking. The Convention and its three Protocols were designed to enable countries to work together more closely against criminals engaged in cross-border crimes, including trafficking in women and girls. The Trafficking Protocol commits countries to enforce relevant laws against traffickers, provide some assistance and protect trafficking victims, and share intelligence and increase border security cooperation with other countries. The Protocol entered into force on December 25, 2003. The United States signed the treaty in December 2000, and the Senate gave its advice and consent to ratification on October 7, 2005. The United States became party to the Protocol on December 3, 2005. At present, 146 countries are party to the agreement. Since 2000, the U.N. Security Council has adopted several resolutions that address issues related to women, peace, and security. On October 31, 2000, the Security Council adopted resolution 1325 , which addresses the impact of war and conflict on women and highlights the need for protection of women and girls from human rights abuses. The resolution, which was strongly supported by the United States, calls on all parties to armed conflict to "take special measures to protect women and girls from gender-based violence, particularly rape and other forms of sexual abuse, and all other forms of violence in situations of armed conflict." It also urges U.N. member states and the U.N. Secretary-General to work toward increased representation and participation of women in all decision-making levels in national, regional, and international institutions that address conflict resolution, management, and prevention. U.N. efforts in this area have intensified since 2003 and 2004, following media reports on sexual abuse and exploitation of vulnerable civilians by U.N. peacekeeping personnel. In June 2008, when the United States served as president of the Security Council, then-Secretary of State Condoleezza Rice participated in an open thematic debate on "women, peace, and security: sexual violence in situations of armed conflict." After the debate, Security Council members unanimously adopted resolution 1820 , marking the first time the Security Council adopted a resolution on women and violence since resolution 1325. Resolution 1820 "demands the immediate and complete cessation by all parties to armed conflict in all acts of sexual violence against civilians with immediate effect." It reaffirms commitment to resolution 1325, and notes that rape and other forms of sexual violence can constitute a war crime, a crime against humanity, or a constitutive act with respect to genocide. It further requests that the U.N. Secretary-General establish training programs for all peacekeeping and humanitarian personnel deployed by the United Nations, and encourages troop and police contributing countries to take steps to heighten awareness of and prevent sexual violence in conflict and post-conflict situations. On September 30, 2009, the U.N. Security Council adopted resolution 1888 , which demands that all parties to armed conflict "take appropriate measures to protect civilians, including women and children, from all forms of sexual violence." It reaffirms that sexual violence, when used as a tactic of war or as part of a widespread attack against civilian populations, can exacerbate armed conflict situations and may impede the restoration of international peace and security. The resolution calls on the U.N. Secretary-General to appoint a Special Representative to provide leadership to address sexual violence in armed conflict, and to rapidly deploy a team of experts to situations of particular concern. The United States, which served as Security Council President for September, strongly supported the adoption of the resolution, with U.S. Secretary of State Hillary Clinton serving as Chair of the Council meeting when the resolution was adopted. On October 5, 2009, the Security Council adopted resolution 1889, which addresses obstacles to women's involvement in peace processes, peacekeeping, and peacebuilding. It urges U.N. member states and international and regional organizations to take further measures to improve women's participation during all stages of the peace process, and strongly condemns all violations of international law committed against women and girls in armed and post-conflict situations. Specifically, it emphasizes "the responsibility of all States to end impunity and prosecute those responsible for all forms of violence committed against girls and women in armed conflict, including rape and other sexual violence." As with previous resolutions on women, peace, and security, the United States strongly supported and played a key role in the adoption of the resolution. This section highlights selected U.N. bodies that—either in whole or in part—address international violence against women, and provides examples of VAW-related activities. It does not measure the extent to which VAW is directly addressed or is part of a larger initiative or program. CSW, a functional Commission under the U.N. Economic and Social Council (ECOSOC), is the principal intergovernmental policymaking body on women's issues in the United Nations. It meets annually at U.N. Headquarters and is composed of 45 member state representatives elected by ECOSOC members (other non-member states may serve as observers). CSW observes, monitors, and implements measures for the advancement of women, including those that address violence against women. It also reviews and supports the mainstreaming of gender perspectives into the U.N. system. DPKO prepares and manages U.N. peacekeeping operations. It focuses on all types and circumstances of VAW, particularly sexual exploitation and abuse of vulnerable women and girls by peacekeeping personnel. In order to prevent and address such abuses, each peacekeeping mission has a gender unit that supports regional and international initiatives addressing violence against women. The gender units support legal reform processes in particular countries and serve as resources for national authorities and law reform organizations. Gender units also encourage collaboration among law enforcement, victim support organizations, and the judiciary, and work to ensure that women's NGOs are included in national efforts to end violence against women. Moreover, several peacekeeping units—including those in the Democratic Republic of the Congo, Sierra Leone, and Timor-Leste—have conducted training activities for peacekeeping personnel on preventing and responding to violence against women. Gender advisers and focal points within nine peacekeeping operations also work to guarantee that gender policies are taken seriously and integrated into every mission. UN Women is the lead U.N. entity addressing women's empowerment and gender equality. The organization, which became operational in January 2011, was established by U.N. member states amid concerns that the way in which the U.N. system addressed gender issues was fragmented, weak, and under-resourced. It is composed of four previous U.N. entities that addressed women's issues—the Office of the Special Adviser on Gender Issues and the Advancement of Women (OSAGI), the Division for the Advancement of Women (DAW), the U.N. Development Fund for Women (UNIFEM), and the U.N. International Research and Training Institute for the Advancement of Women (INSTRAW). Under the General Assembly resolutions establishing UN Women, the mandates and functions of OSAGI, DAW, UNIFEM and INSTRAW were transferred to the new entity. Their activities related to VAW are expected to continue. Examples include: raising awareness of VAW in local and national governments—particularly among law enforcement, parliamentarians, government ministries, and the judiciary (formerly UNIFEM); strengthening anti-VAW legislation and policies related to domestic violence, trafficking, and forced marriage, and assisting governments and organizations in implementing such efforts (formerly UNIFEM); supporting data collection and research on international violence against women (formerly UNIFEM, DAW, and INSTRAW); supporting and servicing agenda items and discussions for U.N. intergovernmental bodies that promote gender equality, including the General Assembly, ECOSOC, and CSW (formerly DAW); conducting research and compiling reports for the Secretary-General on violence against women, including the Secretary-General's In-Depth Study on All Forms of Violence Against Women and its updates (formerly DAW); supporting the U.N. Special Adviser on Gender Issues, promoting interagency collaboration to eliminate VAW, and developing new strategies, programs, and policies to address gender equality in the U.N. system (formerly OSAGI); and coordinating and implementing outcomes and follow-up to the 1995 Beijing Declaration and Platform of Action, and U.N. Security Council 1325 resolution on Women, Peace, and Security, both of which address violence against women (formerly OSAGI). UN Women is also the designated coordinator of the Secretary-General's UNITE to End Violence Against Women Campaign. OHCHR, which works to promote and protect human rights established under the U.N. Charter and international human rights instruments, supports research and operational activities that address violence against women. OHCHR commissions research and analyze access to justice for victims of sexual violence, with a focus on the prosecution of rape under international humanitarian and human rights law. OHCHR field operations work to reduce or eliminate VAW at the national and regional level, providing technical assistance in law reform and government monitoring, and organizing training activities for governments and members of civil society. OHCHR also supports U.N. Human Rights Council country and thematic rapporteurs who address types and circumstances of violence against women and girls. This includes the position of Special Rapporteur on Violence Against Women, its Causes and Consequences, which was established in 1994 by a U.N. Economic and Social Council (ECOSOC) resolution. Other rapporteurs who address aspects of VAW include the Special Rapporteurs on Trafficking in Persons; the Sale of Children; and Extrajudicial, Summary or Arbitrary Executions. The WHO addresses VAW through various activities, including policy formulation, program guidance, advocacy, and research. Specifically, it has developed a series of VAW norms and guidelines and conducted studies on VAW prevalence. It also leads a research initiative to develop a network of researchers, policymakers, and activists to ensure VAW is addressed from a variety of disciplines. It develops training programs and provides technical support on sexual violence for healthcare providers in conflict areas, and works with partners to develop a framework for integrating HIV prevention activities into intimate partner and sexual violence programs. WHO also works to raise public awareness of VAW, particularly in the context of HIV/AIDS. Such activities include VAW sensitization programs for civil servants, journalists, healthcare providers, and policymakers. UNDP addresses VAW through programs and activities that involve trafficking, HIV/AIDS, and disaster, conflict, and post-conflict situations. It works with governments to develop national strategies to protect victims of intimate partner violence, and aims to incorporate gender perspectives into crises prevention and recovery in conflict situations. UNDP also promotes VAW awareness through national and local campaigns, including the "16 Days of Activism Against Gender-Based Violence" campaign and the International Day for the Elimination of Violence Against Women. In addition, UNDP works on a national level to disseminate knowledge and awareness of VAW through radio, television, and posters. It also supports a website, GenderNet, which facilitates discussions on gender and violence against women. UNICEF works to protect children's rights, provide for their basic needs, and expand their opportunities. The majority of UNICEF's violence against girls programs focus on capacity building, with an emphasis on awareness-raising and research. On a global level, UNICEF has developed policies to protect women and girls from sexual abuse by U.N. staff and other aid workers. On a country level, it addresses different manifestations of VAW, which vary depending by country or region. National UNICEF programs address female genital cutting, early marriage, trafficking, domestic violence, school-related violence, and violence in armed conflict. UNICEF also assists governments in drafting anti-VAW legislation, and works to raise VAW awareness among teachers, police, and the judiciary. UNHCR's mandate is to provide protection to refugees and other populations of concern. Since 2003, it has promoted and encouraged prevention and treatment guidelines in field operations to address the prevalence of sexual and gender-based violence. In March 2008, UNHCR published the UNHCR Handbook on the Protection of Displaced Women and Girls , to distribute to UNHCR staff and partners. In addition, UNHCR (along with nine other U.N. agencies) signed an interagency statement to address female genital mutilation. It has sponsored regional and country-level training programs on VAW prevention and response for its staff and implementing partners. It also works to establish standard operating procedures for the prevention of and response to VAW in each country operation. UNOCHA coordinates humanitarian response, policy development, and humanitarian advocacy among U.N. agencies and national and international actors. It serves as the co-chair of the Inter-Agency Standing Committee's Task Force on Gender and Humanitarian Assistance, providing support for the development and implementation of Inter-Agency Standing Committee (IASC) guidelines for gender-based violence interventions in humanitarian settings. UNOCHA also implements a confidential complaints mechanism on gender-based violence, and works to raise public awareness of the issue. The organization's Integrated Regional Information Network (IRIN), for example, has produced several publications and videos on VAW in conflict and female genital cutting. UNFPA aims to help countries improve reproductive health and expand access to family planning services. It addresses VAW through a combination of research-based and operational activities. On a global level, UNFPA has undertaken studies on the socio-cultural context of VAW, and hosts workshops and meetings on sexual violence. It develops guidelines and tools to combat VAW, and supports sensitivity training for medical professionals. On a national level, UNFPA works with governments to develop national strategies to address VAW prevention and protection, and provides counseling to girls who experience FGC or forced marriage. UNFPA also supports basic services to VAW victims, including legal and counseling services and access to shelter. UNODC is the guardian of the U.N. Trafficking Protocol. Its Global Program Against Trafficking in Human Beings assists member states to implement the Trafficking Protocol and prevent human trafficking. It also aims to address domestic violence and human trafficking by developing policies to support women victims of violence, particularly those in prison. Specifically, it works to integrate VAW and gender perspectives into its efforts to build the capacity of criminal justice systems. In October 2010, for example, UNODC developed an assessment tool which addresses the treatment of women victims of violence in prisons and criminal justice systems as a whole. The ILO promotes internationally recognized human and labor rights. It supports a number of programs that combat trafficking and forced and bonded labor, many of which include gender-specific components. Through the International Program to Eliminate Child Labor (IPEC) for instance, ILO works with participating governments to (1) prevent children from becoming child laborers; (2) remove children from hazardous work, including exploitative work like forced prostitution; and (3) offer children and their families education, income and employment opportunities. The ILO Conditions of Work and Employment Program researches violence in the workplace, including violence against women. The ILO Labor Standards Department also conducts research on violence against migrant workers, particularly women, as well as violence against indigenous and tribal women workers. UNAIDS works with international partners to identify and address the possible links between HIV/AIDS and violence against women. It promotes education and awareness of HIV within international peacekeeping operations, and national uniformed services through training and distribution of peer education kits, which include sections on gender issues and sexual violence. UNAIDS has also worked in Southern and Eastern Africa to determine how to improve health services for women who have experienced violence. It also supports regional task forces on VAW in emergency settings, collaborates with WHO to improve clinic services on sexual violence, and works with experts to develop cost estimates for integrating VAW awareness, prevention, and treatment into AIDS programs. In addition, the UNAIDS Global Coalition on Women and AIDS raises public awareness of HIV/AIDS and VAW linkages.

The United Nations (U.N.) system supports a number of programs that address international violence against women (VAW). These activities, which are implemented by 36 U.N. entities, range from large-scale interagency initiatives to smaller grants and programs that are implemented by a range of partners, including non-governmental organizations (NGOs), national governments, and individual U.N. agencies. U.N. member states, including the United States, address VAW by ratifying multilateral treaties, adopting resolutions and decisions, and supporting U.N. mechanisms and bodies that focus on the issue. Many U.N. activities and mechanisms address VAW directly, while others focus on it in the context of broader issues such as humanitarian assistance, U.N. peacekeeping, and global health. U.N. entities do not specifically track the cost of programs or activities with anti-VAW components. As a result, it is unclear how much the U.N. system, including individual U.N. agencies, funds, and programs, spends annually on programs to combat violence against women. The U.S. government supports many activities that, either in whole or in part, work to combat international violence against women. Some experts argue that when considering the most effective ways to address VAW on an international scale, the United States should take into account the efforts of international organizations such as the United Nations. Were the 112th Congress to decide to use U.N. mechanisms to combat VAW, a number of programs and options might be considered. Congress has appropriated funds to the U.N. Trust Fund in Support of Actions to Eliminate Violence Against Women, for example, as well as to U.N. agencies, funds, and programs that address types or circumstances of violence against women and girls. These include the U.N. Entity for Gender Equality and the Empowerment of Women (UN Women), World Health Organization (WHO), U.N. Development Program (UNDP), U.N. Office of the High Commissioner for Human Rights (OHCHR), and U.N. High Commissioner for Refugees (UNHCR). The Senate has also provided its advice and consent to U.S. ratification of treaties that address international violence against women and girls—including the Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children. At the same time, however, some policymakers contend that U.N. anti-VAW activities may not always align with U.S. foreign assistance priorities. They emphasize that rather than focusing on multilateral efforts, the U.S. government should focus on its own anti-VAW activities. Additionally, others may suggest that the U.S. government reconsider its efforts to combat international VAW in light of the global economic crisis, economic recession, and consequent calls to lower the U.S. budget deficit. This report provides an overview of recent U.N. efforts to address VAW and highlights key U.N. interagency efforts. It also discusses selected U.N. funds, programs, and agencies that address international violence against women. It does not assess the extent to which VAW is directly addressed or is part of a larger initiative or program. For information on international violence against women, including its causes, consequences, and U.S. policy, see CRS Report RL34438, International Violence Against Women: U.S. Response and Policy Issues. This report will be updated as events warrant.

In FY2017, the federal government obligated approximately $500 billion to procure goods and services. Federal procurement statutes and regulations—notably the Competition in Contracting Act of 1984 (CICA) and the Federal Acquisition Regulation (FAR), the government-wide regulation that generally applies to acquisitions by executive branch agencies—establish largely uniform policies and procedur es for how federal executive agencies acquire goods and services. The purpose of these standards is to guide the acquisition system "to deliver on a timely basis the best value product or service to the [government], while maintaining the public's trust and fulfilling public policy objectives," such as the promotion of competition. In an effort to advance the transparency, fairness, and integrity of the procurement system, federal law provides mechanisms for contractors to "protest" (i.e., object to) contract awards and solicitations for failing to comply with federal law. However, empowering contractors to protest procurement decisions has the potential to delay agency acquisitions of goods and services. In recent years, Congress has paid increasing attention to achieving and maintaining the appropriate balance between these competing interests, particularly regarding defense acquisition. For example, the FY2017 National Defense Authorization Act (NDAA) required the Department of Defense (DOD) to contract for a comprehensive study on the impact of bid protests on acquisitions, which was released in December 2017. Congress authorizes bid protests in three separate forums: (1) the procuring agency, (2) the Government Accountability Office (GAO), or (3) the U.S. Court of Federal Claims (COFC). This report briefly analyzes the varying legal procedures applicable to bid protests under each forum, which may be relevant to Congress as it assesses potential reforms to the bid protest process. First, the report provides an overview of bid protests generally and the legal procedures applicable to bid protests made in each forum. Next, the report analyzes the legal distinctions among these forums. Finally, the report discusses recent legislative developments affecting bid protest procedures and potential considerations for Congress. Generally, a bid protest is a written objection to the conduct of a government agency in acquiring supplies and services for its direct use or benefit. Among other things, this conduct can include violations of law or regulation in the way in which an agency solicits offers for a contract, cancels such a solicitation, awards a contract, or cancels a contract. As previously mentioned, bid protests can be filed with the procuring agency, GAO, or the COFC. The three forums share some common features. For example, they each utilize the same definition of "interested party" to govern who may file a valid protest. However, as discussed in more detail below, the applicable legal procedures and available remedies vary considerably under each forum. Parties generally consider these distinctions when choosing the forum or forums in which to file a protest, and as a result, often begin a protest in one of the nonjudicial forums. In addition, contractors may request, and for certain procurements procuring agencies must provide, pre-award and post-award "debriefings" through which the contractor may acquire certain information about how the agency decided to make an award or to eliminate the contractor from competition for a contract prior to the award decision. Debriefings can help inform an interested party's decision on whether to initiate a protest and through which forum or forums to raise claims. Although there are scant reliable data on the number of protests filed with procuring agencies, public data demonstrate that substantially more protests are filed with GAO on average each year than with the COFC. Parties that disagree with the outcome of a bid protest before a procuring agency or GAO often can still bring claims before the COFC, but the reverse route (filing a protest with a procuring agency or GAO after an adverse COFC decision) is generally not permitted . For example, GAO generally dismisses protests that are currently pending before or have been previously resolved by the COFC. Provisions of the FAR, which were implemented pursuant to a 1995 Executive Order and several broad procurement-related statutory authorities, require executive branch procuring agencies to "provide for inexpensive, informal, procedurally simple, and expeditious resolution of protests." There are no comprehensive publicly available data on protests before procuring agencies; agency protest decisions are not published; and the relevant FAR provisions, which stress speed and simplicity, provide limited guidance for how agencies are expected to implement these "informal" protest procedures. Given the dearth of publicly available data, it is difficult to draw firm conclusions regarding the consistencies and differences of procuring agency protest processes across the government. The relevant FAR provisions provide some standard procedures applicable to agencies hearing a bid protest. For example, only an "interested party" may file a valid protest with a procuring agency. The term "interested party" is defined as an "actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract." Interested parties that file a protest with a procuring agency generally do not have a legal right to compel discovery from the procuring agency, although agencies could voluntarily share certain information. In addition, agencies are expected to resolve a protest within 35 days of its receipt. When a procuring agency receives a protest from an interested party, the agency must halt (i.e., "stay") the award or implementation of the relevant contract until the protest is resolved, unless the agency concludes that there are "urgent and compelling reasons" or where moving forward with the contract is "in the best interest of the Government." The purpose of this "automatic stay" is to ensure that agencies have sufficient opportunity to remedy legal violations before the contract moves forward. Procuring agencies are expected to provide parties a "well-reasoned" explanation of the agency's protest decision. Procuring agencies may provide the same relief that GAO is authorized by law to recommend, which, as discussed below, includes canceling or reissuing a contract or solicitation. The primary recourse for parties that are unsatisfied with how the procuring agency resolved the protest generally is to file a protest with either GAO or the COFC. Under certain limited circumstances, protests also can be filed with specialized agencies. For example, small business size certification determinations can be protested with the Small Business Administration. GAO has been a forum for resolving protests for nearly a century and is the only agency with the authority to hear protests from across the federal government. Federal law, primarily through CICA, authorizes "interested parties" to file a protest with GAO regarding a federal agency's procurement contract solicitation or award. More specifically, federal law provides that these parties can argue that a federal agency violated a statute or regulation in the way in which the agency defined who may be eligible for a contract in the solicitation, canceled a contract solicitation, or determined who is awarded a contract. The term "interested party" has the same meaning for the purposes of a GAO bid protest as it does for a protest before the procuring agency, i.e., the contractor must be "an actual or prospective bidder" with "a direct economic interest" in the challenged procurement action. Thus, contractors who simply desire to bid for a contract can qualify as an "interested party" when they challenge a pre-award solicitation. However, GAO often will limit post-award protests to parties that both bid on the contract and were next in line to win the contract, unless the challenging party raises a claim that, if ultimately successful, would allow it to jump ahead of multiple parties. Additionally, potential subcontractors generally do not qualify as interested parties because they are not "actual or prospective bidder[s] or offeror[s]." Federal law generally requires protests before GAO to be "inexpensive and expeditious" and establishes time limits for filings by the parties and for rulings by GAO that are shorter than those that are applicable to a typical judicial process, but longer than those applicable to protests before a procuring agency. GAO protests normally must be filed within 10 days of the time in which the violation "is known or should have been known." Absent extenuating circumstances, GAO dismisses untimely protests. GAO also must inform the relevant agency of a protest within one day of the protest being filed. This notice typically triggers a 30-day window for the procuring agency to respond, unless GAO provides an extension. The procuring agency generally must provide GAO and the protestor all documents "relevant" to the protest for GAO's consideration. GAO generally has 100 days from the day on which the protest was originally filed to issue a recommendation in a matter, although GAO may also consider protests pursuant to an "express" proceeding for cases that GAO determines may be feasibly resolved within 65 days. Upon receiving notice from GAO, the procuring agency typically must implement an automatic stay , thus halting the award or performance of a contract until GAO issues a recommendation on the protest. By statute, the procuring agency generally may only lift, or "override," the automatic stay prior to GAO's recommendation for a limited number of reasons, such as if "performance of the contract is in the best interests of the United States" or there are "urgent and compelling circumstances which significantly affect interests of the United States [that] will not permit waiting for the decision of [GAO]." Agencies that override an automatic stay must justify the decision in writing and provide notice to GAO. GAO does not have legal authority to reverse an automatic stay override or to review the decision. However, the COFC, upon a motion from an interested party, can review an agency's decision to override the stay. The COFC may reverse the agency's decision to override the stay through the issuance of a temporary restraining order or preliminary injunction that requires an agency to halt performance of the contract. After considering the legal basis for the protest, GAO may issue a decision either denying the protest and recommending that the agency move forward with the award or performance of the contract, or sustaining the protest and recommending further action by the procuring agency. In the latter scenario, GAO may recommend that agencies reissue a solicitation, rebid a contract, cancel a contract, or take certain other steps outlined in Section 3554(b) of Title 31. If GAO concludes that an agency failed to comply with a procurement law or regulation, GAO may recommend that the agency pay the challenging party's attorneys' fees and certain other costs associated with filing the protest. Although GAO recommendations are explicitly established by statute as nonlegally binding on the procuring agency, GAO must "promptly" inform Congress of any instance in which a federal agency does not comply with a GAO bid protest recommendation. GAO must further advise Congress whether it believes the noncompliance warrants a congressional investigation or some other legislative response "in order to correct an inequity or to preserve the integrity of the procurement process." In practice, executive agencies almost always implement GAO recommendations, and the COFC, while not bound by GAO interpretations of law, "gives due weight and deference to GAO recommendations" when assessing challenges from parties unhappy with the outcome of a GAO bid protest. The COFC is the only judicial forum authorized by Congress to hear bid protests. Parties to protests filed with the COFC must comply with the court's rules of practice (Rules of the Court of Federal Claims (RCFC)), which are modeled after the Federal Rules of Civil Procedure. Additionally, the challenging party must demonstrate that it qualifies as an "interested party." The COFC and its appellate court, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), have interpreted the term "interested party" consistent with the CICA definition of the term discussed above. The COFC reviews final agency procurement actions in accordance with the Administrative Procedure Act (APA) and will only set aside an agency's action if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." The COFC generally requires the procuring agency to provide the full administrative record associated with the protested procurement, including all of the agency's correspondence with the protestor and the contractor that won the procurement contract as well as internal evaluations of contract offers. The COFC "may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs." COFC-issued remedies are legally binding and may be enforced through contempt of court, among other legal powers. Parties may file bid protest lawsuits with the COFC before or after filing protests with the procuring agency or GAO. In contrast to the processes applicable to the two nonjudicial forums, parties that initiate a bid protest through the COFC do not gain the benefit of an automatic stay. Instead, parties may request that the procuring agency voluntarily impose a stay, or they may petition the court to issue a preliminary injunction or temporary restraining order. These "extraordinary remed[ies]" generally enjoin or restrain a party from taking certain actions, and, thus, can provide similar protections as an automatic stay. Nevertheless, the COFC will only issue these remedies "in extremely limited circumstances" where a petitioner is able to meet exacting standards, including demonstrating that the petitioner will likely suffer irreparable harm in the absence of such relief and succeed on the merits of its claims. Subsequent to a 2007 opinion of the Federal Circuit Court of Appeals, the COFC generally reviews protests based on solicitations in the same time frame as that applicable to GAO. However, in contrast to the 10-day filing deadlines applicable to GAO post-award protests discussed above, post-award protests at the COFC generally are not subject to specific initial filing deadlines other than potentially the general six-year statute of limitations applicable to claims against the federal government. In practice, however, procurement decisions typically are made well before the end of this six-year period, and the COFC can bar claims on equitable grounds (e.g., laches, equitable estoppel) when, for instance, a "protester's delay in filing was unreasonable and prejudicial to the agency or other parties." COFC bid protest opinions also do not have to be issued within a specific time frame like those before the procuring agency and GAO. Consequently, the COFC often takes longer to issue a ruling on the merits of a protest than the procuring agency and GAO. COFC rulings, like TROs and similar remedies discussed above, are legally enforceable, and they may be appealed to the Federal Circuit. As the foregoing indicates, although the three bid protest forums share some common features, the legal processes applicable to and remedies available under the forums vary considerably. These distinctions arguably seek to further Congress's desire to maintain balance between an efficient and timely, yet fair and transparent, procurement system. Congress may consider the unique aspects of each forum and how each contributes to that balance when evaluating potential reforms to the bid protest process. Generally, protests before the procuring agency and GAO tend to be resolved faster and less expensively than challenges before the COFC because they are subject to specific resolution timetables and less formal procedures. Additionally, parties that file a protest with either the procuring agency or GAO generally gain the benefit of an automatic stay that bars an agency from awarding or implementing a contract while a protest is pending. In contrast, while filing a protest with the COFC is frequently more time-consuming and expensive and does not trigger an automatic stay, protests before the COFC have the potential to result in legally binding and conclusive judicial decisions and orders. Procuring agency decisions and GAO bid protest recommendations, on the other hand, are not legally binding. Furthermore, interested parties that disagree with GAO or procuring agency decisions generally can still bring claims before the COFC, whereas the reverse route is generally not permitted. Another important distinction among the forums is that the scope of discovery is potentially broader in a protest before the COFC because the court generally reviews the entire administrative record of a procurement. In contrast, procuring agencies generally are not compelled to produce documents, and GAO typically reviews only those documents that are relevant to the particular protest. Furthermore, while GAO and the procuring agency are limited to a finite list of statutorily authorized remedies, the COFC may "award any relief that the court considers proper" with the exception of certain monetary relief. Congress likely intended to further a number of objectives by statutorily authorizing contractors to challenge federal procurement solicitations and awards through the bid protest process described above. Allowing protests can help ensure that procuring agencies comply with federal law and, consequently, advance congressional prerogatives. The bid protest system also can help promote fairness and transparency in the procurement process, which arguably encourages participation and increases competition for federal procurement awards. This, in turn, has the potential to improve the quality and reduce the costs of goods and services purchased by the government. Similarly, the absence of a protest system might undermine public confidence that contract award decisions are based on merit and in compliance with the law, which could discourage participation by qualified and reputable parties and result in wasteful government spending. Although few are likely to argue with these general benefits, protests arguably may impede the timely acquisition of goods and services, at least in certain circumstances. In particular, some commentators have expressed concern that contractors are filing protests that are highly unlikely to be successful, if not entirely baseless, as a way to harm competitors or extend the performance of existing contracts. Even if these protests ultimately prove to be unsuccessful, they often force procuring agencies to expend time and money defending their actions and can hold up the agency's ability to acquire goods and services needed to implement their congressionally mandated operations. Furthermore, the expectation of protests might drive up the administrative costs of soliciting and awarding contracts as agencies defensively go beyond their legal requirements to ensure that their procurement decisions are sufficiently documented and justified. According to a congressionally mandated report, some stakeholders believe that, while the potential for a bid protest generally does not have a significant effect on an agency's overall operations, it could cause an agency to fail to meet programmatic deadlines, which might lead to a loss of appropriations. Some have also noted that the fear of a potential protest can impact an agency's procurement contract decision making by, for instance, causing acquisition personnel to prioritize price over quality. In light of the competing interests discussed above, some in Congress have expressed a need for procurement reform, generally, and bid protest procedural reform, specifically. In recent years, Congress has passed several provisions intended to address concerns with the bid protest process, which largely have been focused on increasing Congress's understanding of how legislative amendments to bid protest procedures could enhance the efficiency of the procurement process, discourage unwarranted protests, and generally improve procurement outcomes for the federal government. Most of these recently enacted procurement protest reform provisions have been related specifically to defense acquisition enacted through annual NDAAs. For example, Section 822 of the FY2019 NDAA requires DOD to study and report on (1) the establishment of "an expedited bid protest process" for defense procurement contracts valued under $100,000; and (2) "the frequency and effects of bid protests involving the same contract award or proposed award that have been filed at both [GAO and COFC]." The FY2018 NDAA established a three-year pilot program, to begin in December 2019, to assess and issue a report on "the effectiveness of requiring [certain] contractors to reimburse the Department of Defense for costs incurred in processing covered protests" that are denied by GAO. Additionally, Section 818 of FY2018 NDAA enhanced debriefing rights for prospective DOD contractors by allowing them to submit debriefing questions and receive written responses to those questions from the procuring agency. Section 818 also authorizes prospective DOD contractors to file bid protests with GAO up to five days after they receive DOD's written responses to submitted debriefing questions. Of relevance to the procurement system, generally, a provision of the FY2013 NDAA requires GAO to include in its annual report to Congress a summary of the most common grounds for sustaining protests during the year. GAO has included this information in each annual report it has submitted to Congress beginning in FY2013. Congress might utilize the information gained from these studies, reports, and pilot programs to inform its consideration of substantive legislative reforms to the bid protest system. For instance, reforms could include implementation of certain recommendations in the RAND report or making permanent, expanding, or eliminating the pilot program that requires certain contractors to reimburse the government for the costs associated with adjudicating unsuccessful protests.

In FY2017, the federal government obligated approximately $500 billion to procure goods and services. Federal procurement statutes and regulations—notably the Competition in Contracting Act of 1984 (CICA) and the Federal Acquisition Regulation (FAR), the government-wide regulation that generally applies to acquisitions by executive branch agencies—establish largely uniform policies and procedures for how federal executive agencies acquire goods and services. The purpose of these standards is to guide the acquisition system "to deliver on a timely basis the best value product or service to the [government], while maintaining the public's trust and fulfilling public policy objectives," such as the promotion of competition. In an effort to advance the transparency, fairness, and integrity of the procurement system, federal law provides mechanisms for contractors to "protest" (i.e., object to) contract awards and solicitations for failing to comply with federal law. Generally, a bid protest is a written objection to the conduct of a government agency in acquiring supplies and services for its direct use or benefit. Among other things, the challenged conduct can include violations of law or regulation in the way in which an agency solicits offers for a contract, cancels such a solicitation, awards a contract, or cancels a contract. Congress authorizes bid protests in three separate forums: (1) the procuring agency, (2) the Government Accountability Office (GAO), or (3) the U.S. Court of Federal Claims (COFC). The three forums share some common features. For example, they each utilize the same definition of "interested party" to govern who may file a valid protest. However, the applicable legal procedures and available remedies vary considerably under each forum. Parties generally consider these distinctions when choosing the forum or forums in which to file a protest. These distinctions arguably seek to further Congress's desire to maintain balance between an efficient and timely, yet fair and transparent, procurement system. Generally, protests before the procuring agency and GAO tend to be resolved faster and less expensively than challenges before the COFC because they are subject to specific resolution timetables and less formal procedures. Additionally, parties that file a protest with either the procuring agency or GAO generally gain the benefit of an "automatic stay" that bars an agency from awarding or implementing a contract while a protest is pending. In contrast, while filing a protest with the COFC is frequently more time-consuming and expensive and does not trigger an automatic stay, protests before the COFC have the potential to result in legally binding and conclusive judicial decisions and orders. Procuring agency decisions and GAO bid protest recommendations, on the other hand, are not legally binding. Furthermore, interested parties that disagree with GAO or procuring agency decisions generally can still bring claims before the COFC, whereas the reverse route is generally not permitted. Another important distinction among the forums is that the scope of discovery is potentially broader in a protest before the COFC because the court generally reviews the entire administrative record of a procurement. In contrast, neither GAO nor the procuring agency hearing a bid protest typically compels a procuring agency to produce documents, and GAO typically reviews only those documents that are relevant to the particular protest. Furthermore, while GAO and the procuring agency are limited to a finite list of statutorily authorized remedies, the COFC may "award any relief that the court considers proper" with the exception of certain monetary relief. Some in Congress have expressed a need for procurement reform, generally, and bid protest procedural reform, specifically. In recent years, Congress has passed several provisions intended to address concerns with the bid protest process, such as Section 822 of the FY2019 John S. McCain National Defense Authorization Act (NDAA), which largely have been focused on increasing Congress's understanding of how legislative amendments to bid protest procedures could enhance the efficiency of the procurement process, discourage unwarranted protests, and generally improve procurement outcomes for the federal government.

In 2008—and again in 2012—the Canadian company TransCanada submitted to the U.S. Department of State an application for a Presidential Permit authorizing construction and operation of pipeline facilities to import crude oil across the U.S.-Canada border. The proposed Keystone XL Pipeline project (the project) would transport crude oil derived from Canadian oil sands deposits in Alberta, as well as crude oil produced from the Bakken region in North Dakota and Montana, to a market hub in Nebraska for further delivery to U.S. Gulf Coast refineries. A decision to issue or deny any Presidential Permit for a pipeline project that would cross a U.S. border is conditioned on the State Department's determination that the proposal would serve the national interest. Whether or not a proposal would be deemed to serve the national interest depends on numerous factors. For the project, the State Department had indicated that it would look specifically at factors related to energy security; foreign policy; and environmental, social, and economic impacts, as well as whether the project, as proposed, would comply with relevant federal regulations. With regard specifically to the assessment of the project's potential environmental impacts, the State Department prepared an environmental impact statement (EIS) as required under the National Environmental Policy Act (NEPA). A draft EIS (DEIS) was released for public comment on March 1, 2013, followed by a final EIS (FEIS) on January 31, 2014. The FEIS identifies anticipated direct and indirect impacts of the project, as proposed by TransCanada, as well as various project alternatives, including a "no action" alternative (i.e., impacts associated with denying TransCanada's permit application). Among the various environmental impacts identified in the FEIS are those involving greenhouse gas (GHG) emissions. On June 25, 2013, President Obama announced a national "Climate Action Plan" to reduce emissions of carbon dioxide (CO 2 ) and other GHG, as well as to encourage adaptation to climate change. During his speech, the President made reference to the proposed Keystone XL Pipeline, and stated that an evaluation of the project's impact on climate change would factor into the State Department's national interest determination: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. On November 6, 2015, the Obama Administration rejected TransCanada's application for a Presidential Permit. In a Record of Decision and National Interest Determination (2015 Determination), then-Secretary of State John Kerry wrote that granting a permit to the Canadian company would not serve the national interest for several reasons, including that it "would undermine U.S. climate leadership and thereby have an adverse impact on encouraging other states to combat climate change and work to achieve and implement a robust and meaningful global climate agreement." On January 24, 2017, the Trump Administration signed executive actions to revisit TransCanada's application for the border facilities of the proposed Keystone XL Pipeline. On March 23, 2017, the State Department issued a Presidential Permit for the project, having determined that issuing the permit "would serve the national interest." The Department announced that the Record of Decision and National Interest Determination (2017 Determination) for the Presidential Permit "is informed by" the 2014 FEIS. It cites no new documentation aside from fresh communications with the Canadian pipeline company. The Determination states: The [F]EIS reflects the expected environmental impacts of the proposed Project. Certain topics examined therein such as greenhouse gas (GHG) emissions analysis and market analysis are dynamic, although ... the [F]EIS continues to inform the Department's national interest determination in respect to these topics. Further, in answer to the statement in the 2015 Determination that approval of the project would undercut the credibility and influence of the United States in urging countries to address climate change, the 2017 Determination states: Since then, there have been numerous developments related to global action to address climate change, including announcements by many countries of their plans to do so. In this changed global context, a decision to approve this proposed Project at this time would not undermine U.S. objectives in this area. As the 2017 Determination does not add new data or analysis to the 2014 FEIS, this report examines the findings of the 2014 FEIS with respect to GHG emissions assessments of the proposed Keystone XL Pipeline project. The effects of the proposed Keystone XL Pipeline project on climate change may be analyzed, in part, by an assessment of the GHG emissions attributable to the project. Such an analysis could encompass a variety of activities and implications relative to the project, including the GHG emissions associated with the proposed pipeline's construction and operation. A broader scope could include an analysis of the GHG emissions attributable to the production and use of the crude oils that would be transported through the pipeline. Any assessment would depend on many factors, most notably the availability and quality of GHG emissions data for the industry, the scope of industry activities included within the assessment, and the assumptions made about how to model these activities. Many secondary considerations—for which projections have even greater uncertainty—may also impact an assessment. These include projections regarding global crude oil markets, refinery inputs and outputs, transport options, policy considerations, and the end-use consumption of petroleum products. Different values attached to these varying factors return different estimates for the GHG emissions attributable to the operation of the project, as well as the production and use of the crude oils transported through it. A number of publicly available studies have attempted to assess the GHG emissions attributable to the production and use of crude oils derived from Canadian oil sands deposits. The State Department, in the FEIS for the Keystone XL Pipeline project, has produced one such assessment. For a detailed analysis of these assessments, see CRS Report R42537, Canadian Oil Sands: Life-Cycle Assessments of Greenhouse Gas Emissions . In addition to a general assessment of the oil sands resource, the FEIS includes an analysis of (1) the GHG emissions associated with the construction and operation of the proposed Keystone XL Pipeline (i.e., the impacts of issuing a Presidential Permit); (2) the GHG emissions associated with using other transport options (i.e., impacts of denying the permit application); and (3) the GHG emissions attributable to the production and use of the oil sands crudes that would be transported to market, regardless of the transport option assumed. The State Department characterizes the GHG emissions attributable to the construction and operation of the project (as well as the alternatives to the project) as "direct and indirect GHG emissions." These values are generated by calculating GHGs emitted during fugitive releases, land use changes, and fuel use for construction, maintenance, and inspection vehicles (direct emissions), as well as off-site electricity generation for power purposes (indirect emissions). Further, the State Department defines the GHG emissions attributable to the production and use of the oil sands crudes that would be transported through the project as "indirect life-cycle GHG emissions." This value is generated by examining the full GHG emissions profile of oil sands crudes (i.e., the aggregate GHG emissions released by all activities from the extraction of the resource to the refining, transportation, and end-use combustion of refined fuels). In addition, the FEIS reports estimates for the "incremental indirect life-cycle GHG emissions" of the oil sands crudes. This value is generated by comparing the emissions profile of the oil sands crudes to those of other comparable crudes it may displace in U.S. refineries, and then estimating the difference between a scenario where the project is constructed and a scenario where it is not. Based on a review of the available GHG emissions data, as well as an analysis of North American crude oil transport infrastructure and global crude oil markets, the FEIS concludes the following: 1. The project would emit approximately 0.24 million metric tons of carbon dioxide (CO 2 ) equivalents (MMTCO 2 e) during the construction period and 1.44 MMTCO 2 e per year during normal operations. 2. The total life-cycle GHG emissions attributable to the production, refining, and combustion of 830,000 barrels per day (bpd) of oil sands crude transported through the proposed pipeline are approximately 147 to 168 MMTCO 2 e per year. 3. The range of incremental life-cycle GHG emissions attributable to the oil sands crudes that would be transported through the proposed pipeline is estimated to be 1.3 to 27.4 MMTCO 2 e per year over and above the life-cycle GHG emissions attributable to the crude oils expected to be displaced in U.S. refineries. 4. As projected in the market analysis, "approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios." Overall, the reported findings in the FEIS are similar to those given in the DEIS released in March 2013. There are, however, a few changes in the methodology, the presentation of the data, and the emphasis on the key findings. For a detailed review of the DEIS, see CRS Report R43180, Keystone XL: Greenhouse Gas Emissions Assessments in the Draft Environmental Impact Statement . The range of incremental GHG emissions for crude oil that would be transported by the proposed project is estimated to be 1.3 to 27.4 MMTCO2e annually ... How does the State Department calculate this estimate, and what does it say about the climate change impacts of the project? Life-cycle a ssessments . The State Department calculates the GHG emissions attributable to the production and use of the oil sands crudes transported through the proposed pipeline by developing a "life-cycle assessment" of the Canadian oil sands resource. Life-cycle assessment (LCA) is an analytic method used for evaluating and comparing the environmental impacts associated with supplying a useful product (in this case, the climate change implications of a petroleum resource). LCAs can be used in this way to identify, quantify, and track emissions of carbon dioxide and other GHG emissions arising from the entire life-cycle of the resource (i.e., from extraction through combustion), and to express them in a single, universal metric of carbon dioxide equivalent (CO 2 e) GHG emissions per unit of fuel or fuel use. This figure is commonly referred to as the "emissions intensity" of the fuel. Emissions intensity of the oil sands . The State Department employs the results of a number of publicly available studies that have attempted to assess the life-cycle GHG emissions intensity of oil sands crudes, including four primary LCAs: Jacobs Consultancy 2009, TIAX LLC 2009, U.S. Department of Energy, National Energy Technology Laboratory (NETL) 2008, and NETL 2009. These four studies report generally that (1) oil sands are heavier and more viscous than lighter crude oil types on average, and thus require more energy- and resource-intensive activities to extract, and (2) oil sands are chemically deficient in hydrogen and have a higher carbon, sulfur, and heavy metal content than lighter crude oil types on average, and thus require more processing to yield consumable fuels by U.S. standards. However, the four studies use different design parameters, input assumptions, and industry data to model the GHG emissions intensities from the production and use of oil sands crudes. Thus, each returns different estimates. As one example, the U.S. Department of Energy's assessment (NETL 2009) looks at both oil sands mining and in situ production techniques, and examines the GHG emissions profiles for the extraction, transportation, refining, and use of these crudes into gasoline, diesel, and jet fuel products. NETL reports the average GHG emissions intensity of oil sands crudes to be equivalent to 106.3 grams of carbon dioxide equivalent for each megajoule of energy released by its combustion as gasoline (gCO 2 e/MJ LHV gasoline). NETL compares this result to a baseline value of 91 gCO 2 e/MJ LHV gasoline, which it reports as "the weighted average of transportation fuels sold or distributed in the United States in 2005." Overall, the four LCAs return emissions estimates for several different types of oil sands production techniques in the range of 101-120 gCO 2 e/MJ LHV gasoline. The State Department uses these results to report that oil sands crudes "are generally more GHG intensive than other heavy crudes they would replace or displace in U.S. refineries, and emit an estimated 17 percent more GHGs on a lifecycle basis than the average barrel of crude oil refined in the United States in 2005." Figure 1 presents one estimate of the incremental GHG emissions attributable to oil sands crudes over emissions from a comparable reference crude. Total emissions through the proposed pipeline . Using the emissions estimates from the four LCAs (with some additional calculations), the FEIS determines a value for the total, or "gross," GHG emissions that would be attributable to the crude oils transported through the proposed pipeline. The FEIS reports that "the total life-cycle emissions attributable to the production, refining, and combustion of 830,000 [barrels per day] of oil sands crude ... is approximately 147 to 168 MMTCO 2 e per year." Incremental emissions through the proposed pipeline . Assuming a scenario wherein the oil sands crudes transported through the proposed pipeline would displace an equivalent volume of other crude oils currently processed at the Gulf Coast refineries, the FEIS uses the emissions estimates from the four LCAs to compare the profiles of Canadian oil sands crudes against three reference crudes available to Gulf Coast refineries: Venezuelan Bachaquero, Mexican Maya, and Middle Eastern Sour. In each case, the GHG emissions profile for oil sands crudes is higher than that of the reference crude. Based on the data, the FEIS reports that "the range of incremental GHG emissions attributable to the oil sands crude that would be transported through the proposed pipeline is estimated to be 1.3 to 27.4 MMTCO 2 e per year" over and above the GHG emissions attributable to the crude oils expected to be displaced in U.S. refineries. GHG equivalencies of the incremental emissions . The FEIS reports that the incremental emissions are equivalent to "annual GHG emissions from combusting fuels in approximately 270,833 to 5,708,333 passenger vehicles, the CO 2 emissions from combusting fuels used to provide the energy consumed by approximately 64,935 to 1,368,631 homes for one year, or the annual CO 2 emissions of 0.37 to 7.8 coal-fired power plants." EPA reports total domestic GHG emissions for all sectors in 2012 to be 6,502 MMTCO 2 e, thus making the incremental emissions attributable to the project comparable to 0.02%-0.4% of U.S. annual emissions. Market analysis . The FEIS notes that the reported emissions do not consider the effects of market dynamics, stating that "the incremental emissions estimate represents the potential increase in GHG emissions attributable to the proposed pipeline if it is assumed that approval or denial of the proposed pipeline would directly result in a change in production of 830,000 bpd of oil sands crudes in Canada ... However, such a change is not likely to occur under expected market conditions." The FEIS examines several market scenarios and concludes that under the most likely conditions, "approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States." Operational emissions . The FEIS also calculates GHG emissions resulting from the construction and the annual operation of the project. It reports construction emissions of 0.24 MMTCO 2 e (due to land use changes, electricity use, and fuels for construction vehicles) and pipeline operation emissions of 1.44 MMTCO 2 e/year (due to electricity for pumping stations, fuels for maintenance and inspection vehicles, and fugitive emissions). Operational estimates are commonly included in many life-cycle assessments (including those referenced in the FEIS); thus, the State Department does not incorporate these reported values into the value for the total life-cycle GHG emissions for the project. However, given that the State Department investigates the potential impacts for various project alternatives—including a "no action" alternative—the FEIS compares the operational GHG emissions from the project to various transportation alternatives such as rail, rail and pipeline, and rail and tanker. The FEIS reports the annual operational emissions attributed to the no action alternatives to range from 28%-42% greater than for the proposed project. Both the GHG emissions assessment and the crude oil market analysis in the FEIS are models. Each model must consider many variables and uncertainties in available data to arrive at an estimate. A review of some of these uncertainties is provided below. Oil Sands Assessment . The State Department references third-party sources for the raw data on the GHG emissions intensities of oil sands crudes. Thus, the FEIS is less an independent and original assessment than a comparative analysis of multiple other studies, each presenting significant variations in both reported findings and input assumptions. Life-cycle assessment has emerged as an influential methodology for collecting, analyzing, and comparing the GHG emissions and climate change implications of various hydrocarbon resources. However, because of the complex life-cycle of fuels and the large number of analytical design features that are needed to model their emissions, LCAs retain many uncertainties. The NETL 2009 LCA—from which the State Department sources many of the estimates for oil sands crudes—has very specific design parameters and input assumptions. The LCA dates from 2009 and utilizes certain data that date from 2005 (e.g., GHG emissions intensities of the oil sands crudes are compared against a 2005 U.S. baseline). Opponents to the Keystone XL Pipeline are critical of many of the exclusions in the NETL 2009 LCA, including the tightly delimited system boundaries and the omission of co-product emissions (e.g., petroleum coke). The FEIS attempts to correct for some technical aspects to the NETL 2009 and other LCAs, but data gaps remain. Conversely, proponents of the Keystone XL Pipeline point to the many recent advances in energy efficiency and GHG mitigation technologies that Canadian oil sands producers have made. They note also that the government of Alberta has implemented policies to help mitigate and reduce the GHG emissions associated with oil sands production. These include (1) a mandatory GHG intensity reduction program for large industrial emitters, (2) a fund for clean energy investment that is capitalized by the reduction program, and (3) dedicated funding for the construction of large-scale carbon capture and sequestration (CCS) facilities. Proponents suggest that these and other advances may make the GHG emissions intensity of oil sands crudes more in line with other reference crudes going forward. Reference Crudes Assessment . Similarly, assessing the life-cycle GHG emissions intensities of the reference crudes requires calculations similar to those performed on the oil sands, and thus harbors many of the same uncertainties. Complicating this analysis, the quality of the data and the transparency in presentation for many of the global reference crudes are not as robust as data on the oil sands. Some, even, have yet to be fully modeled (e.g., Bakken tight oil). This is primarily a function of changing conditions as well as the difficulty in accessing necessary data from the field. A lack of equivalence can impede the ability to make meaningful comparisons. Comparisons are also complicated by the fact that emissions factors for Canadian oil sands crudes and reference crudes will change over time, and it is not clear how these changes will impact their respective GHG emissions. On one hand, secondary and tertiary recovery techniques will become more common in conventional oil, increasing the GHG emissions of reference crudes. In contrast, oil sands surface mining is expected to have a relatively constant energy intensity for a long period of time, and in situ techniques may be expected to become more efficient. Exploration for new oil reservoirs will also continue (with the possibility of commercializing both greater and lesser emissions-intensive resources), while the location and extent of Canadian oil sands is generally well understood. Displacement A nalysis . A determination of which reference crudes would be displaced at Gulf Coast refineries is left open by the State Department's analysis, as the FEIS reports a range of values for several different scenarios. Different LCAs make different assumptions regarding the effects of Canadian oil sands development on the production of other global crudes. For example, NETL 2009 assumes that resources from Venezuela or Mexico may likely be the first displaced by Canadian oil sands crudes at U.S. refineries. However, to the extent that a crude like Saudi Light (i.e., Middle Eastern Sour) is the world's balancing crude, NETL also suggests that it may ultimately be the resource backed out of the global market by increased Canadian oil sands production. Many factors—from economics to geopolitics to trade issues—could influence the balance of global petroleum production. Incremental global GHG emissions would vary greatly depending upon this calculus. The FEIS references several third-party market forecasts for current and future market conditions. These include analyses from the U.S. Department of Energy, Energy Information Administration (EIA), the Canadian Association of Petroleum Producers (CAPP), Canada's National Energy Board (NEB), and the International Energy Agency (IEA). Analysis focuses on crude oil prices, production volumes, refinery inputs, and consumer demand, and assesses how changes in these variables may impact oil sands development. The forecasts reach out to the period 2035-2040. In each, the "business-as-usual" scenario for Canadian oil sands producers is one in which "the industry and market react based on normal commercial incentives." Thus, each forecast generally assumes that projects currently proposed, approved, and under construction will go forward, and that adequate takeaway capacity (e.g., the proposed Keystone XL Pipeline project) will be available to oil sands producers over time . Estimating the effects of not constructing adequate pipeline takeaway capacity becomes the "counterfactual" scenario the FEIS must calculate. Thus, instead of modeling how the construction of the proposed pipeline might affect the short- to medium-term growth of the industry, the State Department models instead how industry and market forces may react to the denial of the project over the long term. Using this approach, the FEIS models 16 different scenarios that combine various supply-demand assumptions and pipeline constraints, including ones wherein there is a potential higher-than-expected U.S. supply, lower-than-expected U.S. demand, and higher-than-expected oil production in Latin America. The FEIS finds generally that the most likely scenario for oil sands crudes is one of steady to rising global oil prices, diminishing transportation constraints, decreasing production costs, and continued demand in U.S. Gulf Coast refineries. With this analysis, the FEIS concludes that if the proposed pipeline is denied, the rate of development in the oil sands is unlikely to be substantially impacted because the market would respond by adding broadly comparable transport capacity over time. The State Department bases this conclusion on three projections: (1) the crude oil input mix at Gulf Coast refineries remains constant, (2) rail and other non-pipeline transport options would fully accommodate all projected growth in oil sands production, and (3) at no point would the global price of oil fall—or the marginal cost of production increase—such that investment in new oil sands projects would be deemed uneconomical (i.e., below the breakeven price for production). The Demand Argument . The FEIS reports that "approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact ... the continued demand for heavy crude oil at refineries in the United States." The State Department supports this analysis with several projections, including (1) no new capacity would be added or installed on the Gulf Coast to refine additional crude oils made available by increased North American supply, (2) oil refineries optimized for heavy crudes would process only heavy crudes, (3) oil sands imports would displace only other heavy imports, and (4) any growing domestic light oil production from tight oil plays—in the Bakken, the Eagle Ford, or others—would displace only light crude imports. Further, the FEIS determines that the projected drop-off in U.S. tight oil production by the mid-2020s would dissuade Gulf Coast refiners optimized for processing heavier crudes from switching. Other analysts argue that increased transport of oil sands crudes out of Canada would not simply displace other crudes but could serve to optimize operating capacity at Gulf Coast refineries or even encourage an expansion in investments. They maintain that any additional production capacity (of oil sands crudes or others) would not simply substitute for current levels, but add to them, increasing the incremental, or "net," GHG emissions attributable to the proposed pipeline. Similarly, some commentators have pointed to recent reports that suggest that domestic light oil production (e.g., Bakken, Eagle Ford) is not only backing out imported light crudes but also displacing the market for heavier crudes. Further, this displacement may traverse the entire supply chain for North American petroleum infrastructure, from refinery inputs to transport capacity to investment in production facilities. They contend that this switch, even in the short to medium term, could have substantial impacts on the use of oil sands crudes in U.S. refineries and the GHG emissions attributable to the sector. The Capacity Argument . The State Department reports that while no new pipeline capacity has been added from Canada into the United States since 2011, a number of projects are proposed or in development, specifically those entailing modifications and/or use of existing rights-of-way (e.g., Enbridge's Alberta Clipper expansion). Further, the FEIS points out that many interstate pipelines that do not cross international borders face less regulatory review (e.g., the Enbridge Flanagan South and Trunkline conversion, among others), and that their development "would directly support the export of [oil sands] crudes and/or move [oil sands] and Bakken crudes to destination markets." Nevertheless, for the purposes of its analysis, the State Department examines scenarios for transporting all new production of oil sands crudes by rail and other non-pipeline transport options. It surmises that scaling up transport is logistically and economically feasible, based on past and present evidence in the Powder River Basin and the Bakken, as well as the oil sands region itself. Given the identified commercial demand for oil sands crudes in Gulf Coast refineries, the FEIS concludes that "rail will likely be able to accommodate new production if new pipelines are delayed or not constructed." Other analysts, however, are skeptical of rail's ability to accommodate all new production in the oil sands. They contend that expansion would require significant infrastructure development, including loading and unloading facilities, rail network capacity, and specialized tank car availability. The International Energy Agency (IEA) has reported that the failure to build needed oil sands pipelines—particularly Keystone XL—could result in "persistent price discounts and slow expansion of the sector." A similar short- to medium-term reduction is supported by other market analyses of the oil sands (e.g., CIBC, TD Economics, and Goldman Sachs). Most of the third-party market analyses do not report conditions for the medium to long term, as some assume that transport logistics would be worked out by the market in the long term, and others do not speculate. The Cost Argument . To assess the potential impact of increased supply costs on the oil sands production (whether transportation costs or others), the State Department reviews information regarding "breakeven prices" for different types of oil sands projects. The "breakeven price" is often expressed as the lowest price of a benchmark crude that is necessary to enable a potential oil sands project to cover all its costs and earn a commercial rate of return on capital employed—typically 10%-15%. A long-term increase in supply costs acts as an increase in the breakeven price for producers. The State Department posits that if the supply costs for new oil sands projects were to rise above the benchmark price for an extended period of time, conditions would lend themselves to a potential decrease in oil sands production and a dampening of future investment. To assess the likelihood of this scenario, the State Department references a range of third-party reports for new oil sands projects. The FEIS harmonizes these data, conjoins them with existing project costs, and reports supply costs at $65-$70 per barrel for in situ crude; $80-$85 per barrel for mining (without upgrader); and $90-$100 per barrel for mining (with upgrading). Comparing these supply costs to price projections of benchmark crudes, the State Department reports the following: Above approximately $75 per barrel (West Texas Intermediate [WTI]-equivalent), revenues to oil sands producers are likely to remain above the long-run supply costs of most projects responsible for expected levels of oil sands production growth. Transport penalties could reduce the returns to producers and, as with any increase in supply costs, potentially affect investment decisions about individual projects on the margins. However, at these prices, enough relatively low-cost in situ projects are under development that baseline production projections would likely be met even with constraints on new pipeline capacity. Other analysts have argued that significantly increased supply costs, decreased oil prices, or changes to other market variables could have impacts on both oil sands development and GHG emissions. In recognition of these uncertainties, the FEIS models 16 different scenarios that combine various supply-demand assumptions and pipeline constraints. Certain scenarios show that delays in rail development could impact system capacity in the short term. Other scenarios indicate that pipeline constraints could reduce the prices received by oil sands producers by up to $8 per barrel. A final scenario estimates that benchmark crude oil prices of around $65-$75 per barrel, coupled with heightened transportation costs, "could have a substantial impact on oil sands production levels." In regard to these reported alternative scenarios, the spot price for WTI crude oil on January 31, 2014 (the date of the release of the FEIS), was $97.55 per barrel. On March 27, 2017 (the most current date reported by EIA at the publication of this report), the spot price for WTI crude oil was $47.02 per barrel. Several sources have forecasted a continued downward pressure on crude oil prices over the near term. The market analysis in the FEIS is presented separately from the GHG emissions assessment. Thus, the FEIS does not report numerical estimates for GHG emissions based on any of the examined market scenarios. By concluding that the most likely scenario is one in which oil sands production would be unaffected at expected market conditions, the FEIS implies that the incremental life-cycle GHG emissions attributable to the oil sands crudes transported through the proposed pipeline are negligible. In this scenario, the only differences in GHG emissions would arise from the choice of transportation (e.g., emissions attributable to the annual operation of pipelines, railways, trucks, or tankers). The FEIS reports that the annual operational emissions for the "no action" alternatives range are 28%-42% greater than for the proposed project. By comparison, the March 2013 DEIS reported numerical estimates for its competing scenarios, estimating the incremental cost of rail over pipeline as $5 per barrel, with a 2%-4% decrease in oil sands production levels, and an incremental GHG emission reduction of up to 5.3 MMTCO 2 e annually. Perhaps not since the Trans-Alaska Pipeline System debate during the Nixon Administration has international attention focused so heavily on the construction of a petroleum pipeline in the United States. In the case of the Keystone XL Pipeline, however, the debate has extended well beyond the direct environmental impacts of the project (e.g., spills, habitat, and, in this instance, the GHG emissions attributable to the construction and operation of a pipeline). For many, the impact of the proposed pipeline is tied explicitly to its effect on the rate of development of the Canadian oil sands, as well as the precedent its approval or denial may set for U.S. energy policy. Assessing these various perspectives involves complex technical analysis, which is complicated by an inherent uncertainty in future market projections. The FEIS analyzes the incremental life-cycle GHG emissions attributable to the production and use of the oil sands crudes to be transported through the proposed Keystone XL Pipeline, and estimates them to be up to 27.4 MMTCO 2 e per year more than the crudes they are expected to replace in U.S. refineries (i.e., equivalent to the annual emissions from up to 5.7 million passenger vehicles or 7.8 coal-fired power plants). The FEIS also analyzes a variety of future market projections for oil sands crudes, and finds the most likely scenario to be one of stable to rising global oil prices, diminishing transportation constraints, decreasing production costs, and continued demand for heavy crudes in U.S. Gulf Coast refineries. Under this scenario, the FEIS concludes that approval or denial of the proposed pipeline is unlikely to have a substantial impact on the rate of development in the Canadian oil sands, as other transport options would fully accommodate all projected growth. This market scenario makes the technical GHG assessment in the FEIS less relevant, as the life-cycle GHG emissions from the production and consumption of oil sands crudes would occur regardless of the transportation method used to bring the crudes to market. While this view of market inevitability recognizes significant uncertainty, it concludes that no combination of reasonable market outcomes would be sufficient to cause delays or decreases in oil sands production. The only question regarding climate change impacts, in this view, is whether the alternative transportation methods (e.g., rail, truck, tanker) would contribute greater or lesser amounts of GHG emissions during operation. Some analysts disagree with the FEIS assessment and argue that there is nothing presumed or inevitable about the rate of expansion for the Canadian oil sands. This skepticism arises from the observation that oil sands projects face a challenging financial environment, with upfront production costs and price differentials comparatively higher than for other crudes, making new investment sensitive to changes in market fundamentals. They stress that oil market projections and transportation options are rife with uncertainty, and that the proposed Keystone XL Pipeline could have a much more significant impact on expansion if a number of key variables differ from the State Department's projections. These variables include (a) lower global oil prices than projected; (b) higher rail costs than projected; (c) higher new project costs than expected; (d) greater competition from shale oil and tight oil plays; and (e) future carbon pricing or procurement policies in the United States or Canada. They note that several of these variables have already moved against the predictions in the FEIS, most notably a continued period of lower oil prices. They contend that any decrease or delay in development could significantly impact the rate of growth in global GHG emissions by allowing more time for the development of energy-efficiency strategies, the promulgation of climate policies, and the deployment of lower-carbon energy technologies. Beyond the debate about the proposed Keystone XL Pipeline's impacts on oil sands production, some stakeholders have expressed a broader concern about whether the approval or denial of the project could set a precedent for U.S. energy policy. They argue that while many of the decisions that may affect the development of the oil sands will ultimately be made by the market and the national and provincial governments of Canada, the choice of whether or not to approve the permit for the project is an opportunity for the U.S. government to signal its future direction. Some stakeholders have pushed for a national energy policy that moves the United States away from a reliance on fossil fuels. They see the decision to build the proposed pipeline as a 50-year-long commitment to a carbon-based economy and its resulting GHG emissions. Some observers contend that with meaningful action on climate policy slowed or stalled in Congress, the courts, and, to some extent, the regulatory agencies (i.e., local, state, and federal environmental and land-use agencies), the sole remaining outlet to leverage a low-carbon energy policy is single-action initiatives on such items as infrastructure permits. Many have actively opposed the permit for the project, believing that it may set a precedent; for if the pipeline is allowed to go forward, they contend, it may be the case that no future infrastructure project would be held accountable for its incremental contribution to cumulative GHG emissions. Others recognize that the project could affect U.S. energy policy by setting a precedent and sending a signal, but they reach a different conclusion. Many regard the project as one element of a revitalized energy production sector in North America, and urge that U.S. policy should support investment in such infrastructure for economic and national security reasons. They endorse decisions and policies that help encourage U.S. "energy security," or at least shift U.S. supply to reliable allies and partners like Canada rather than unreliable sources in the Middle East and Venezuela. In this view, since Canadian oil sands will be developed regardless of the transportation mode used, the public policy interest lies in supporting North American energy suppliers rather than those overseas. Members of Congress remain divided on the merits of the project, as many have expressed support for the potential energy security and economic benefits, while others have reservations about its potential health and environmental impacts. Though Congress, to date, has had no direct role in permitting the pipeline's construction, it has oversight stemming from federal environmental statutes that govern the review.

On March 23, 2017, the State Department issued a Presidential Permit for the border facilities of the proposed Keystone XL Pipeline, having determined that issuing the permit "would serve the national interest." The Department announced that the Record of Decision and National Interest Determination for the Presidential Permit "is informed by" the 2014 Final Environmental Impact Statement (FEIS). It cites no new documentation aside from fresh communications with the Canadian pipeline company. State Department Assessment The State Department released the FEIS on January 31, 2014, to inform the project's national interest determination. Among the various environmental impacts analyzed, the FEIS estimates GHG emissions that would be attributable to both the approval and the denial of the permit application for the project. The FEIS finds that the direct and indirect GHG emissions released during the construction period for the project would be approximately 0.24 million metric tons of carbon dioxide (CO2) equivalents (MMTCO2e) due to land use changes, electricity use, and fuels for construction vehicles (this estimate is comparable to 0.004% of U.S. annual GHG emissions); the direct and indirect GHG emissions released during normal operations would be approximately 1.44 MMTCO2e/year due to electricity use for pumping stations, fuels for maintenance and inspection vehicles, and fugitive emissions (this estimate is comparable to 0.02% of U.S. annual GHG emissions); the total, or "gross," life-cycle GHG emissions (i.e., the aggregate GHG emissions released by all activities from the extraction of the resource to the refining, transportation, and end-use combustion of refined fuels) attributable to the oil sands crudes transported through the proposed pipeline would be approximately 147 to 168 MMTCO2e per year (this estimate is comparable to 2.2%-2.6% of U.S. annual GHG emissions); the incremental, or "net," life-cycle GHG emissions (i.e., life-cycle GHG emissions over and above those from the crude oils expected to be displaced in U.S. refineries) are estimated to be 1.3 to 27.4 MMTCO2e per year (this estimate is comparable to 0.02%-0.4% of U.S. annual GHG emissions); but according to the State Department's market analysis, "approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios." Many oil industry stakeholders, the Canadian and Albertan governments, and proponents of the project have supported the analysis as presented in the FEIS. They contend that the demand for the oil sands resource, as well as the economic incentives for producers and the Canadian governments, is too significant to dampen production. However, other stakeholders have questioned several of the conclusions in the FEIS and argue that the project may have greater climate change impacts than projected, depending upon the assumptions selected from the range of scenarios considered in the FEIS. These assumptions include projections for global market conditions, crude oil prices, rail transport costs, new project costs, refinery inputs, and carbon regulatory policies in the United States or Canada. Congressional Attention Members of Congress remain divided on the merits of the project, as many have expressed support for the potential energy security and economic benefits, while others have reservations about its potential health and environmental impacts. Though Congress, to date, has had no direct role in permitting the pipeline's construction, it has oversight stemming from federal environmental statutes that govern the review.

In June 2009, the House passed H.R. 2454 , the American Clean Energy and Security Act of 2009. In November 2009, Chairwoman Boxer of the Senate Committee on Environment and Public Works completed markup of S. 1733 , the Clean Energy Jobs and American Power Act, by approving a "Manager's Amendment" as a substitute, and ordered S. 1733 reported. Both the House-passed ( H.R. 2454 ) and the Senate-reported ( S. 1733 ) bills would establish a cap-and-trade system to regulate greenhouse gas (GHG) emissions, as well as to address energy efficiency, renewable energy, and other energy topics. Among other provisions, both bills would require major reductions in GHG emissions from entities comprising roughly 85% of current U.S. GHG emissions. Covered sectors would include electricity production, natural gas distribution, petroleum refining, and industrial sectors. These and related bills and issues are currently being debated in Congress. For more detailed information, see CRS Report R40896, Climate Change: Comparison of the Cap-and-Trade Provisions in H.R. 2454 and S. 1733 . The climate provisions in the House-passed and the Senate-reported bills would not require GHG emission reductions in the agriculture and forestry sectors. However, if enacted, provisions in these bills could potentially raise farm input costs for fossil fuels, fertilizers, energy, and other production inputs. These higher costs could potentially be alleviated by possible farm revenue increases should farmers participate in carbon offset and renewable energy provisions that are part of these bills. This report provides a background on the energy and climate debate and pending legislation as it pertains to the U.S. agriculture and forestry sectors. It provides a brief overview of how the agricultural and forestry sectors could be affected by the proposed cap-and-trade programs in climate titles of these bills. Also included in the proposed cap-and-trade programs are provisions that address which industries are to be considered sources of GHG emissions thus requiring emission reductions; which industries are to be considered as eligible sources of carbon allowances; and what types of domestic and international carbon storage and emission reduction activities might become eligible under a carbon offset credit program. This report also describes some of the carbon energy and biomass provisions pertaining to the domestic agricultural and forestry sectors in the energy titles of these bills. Finally, the report describes other related initiatives involving the U.S. agricultural sectors, including updates on related activities being addressed by the U.S. Environmental Protection Agency (EPA). During the 110 th Congress, several GHG bills were debated that would have explicitly allowed for the use of carbon offsets, including agricultural activities and other land-based practices, under a cap-and-trade framework. This builds on the concept, also expressed in the 110 th Congress by the House Energy and Commerce Committee, that emissions reductions and carbon sequestration by the agricultural sector may provide an appropriate source of credits or offsets within a cap-and-trade program. However, in the 110 th Congress, some proposed bills did not allow for offsets, but would have set aside a percentage of allowances for various purposes, including biological sequestration. Participating farmers and landowners who receive these allowances for sequestration and/or emission reduction activities could sell them to facilities that could become covered by a cap-and-trade program. For example, one 110th Congress bill, S. 3036 (Boxer; formerly S. 2191 (Leiberman/Warner)), contained several agriculture- and forestry-based provisions. The cap-and-trade framework outlined in S. 3036 established a tradeable allowance system that included a combination of auctions and free allocation of tradeable allowances. As part of this overall framework, S. 3036 included three design mechanisms that could provide financial incentives to encourage land-based agricultural and forestry activities: carbon offsets, set-aside allowances, and auction proceeds. S. 3036 provided for a range of agriculture and forestry offset projects, including agricultural and rangeland sequestration and management practices, land use change and forestry activities, manure management and disposal, and other terrestrial offset practices. S. 3036 also would have directly allocated 5% of the overall emissions allowances to domestic agriculture and forestry entities, and allocated a set percentage of available auction proceeds to carry out a cellulosic biomass ethanol technology deployment program. Both the distribution of allowances to support agricultural and forestry activities and an offset program could provide opportunities to some farmers and landowners by allowing them to directly participate in and potentially gain a significant part of this emerging carbon market. The offset and allowance provisions could allow farmers and landowners to participate in this market by granting them the use of allowances and credits for sequestration and/or emission reduction activities. These allowances and credits could be sold to regulated facilities (e.g., power plants) covered by a cap-and-trade program to meet their emission reduction obligations. Proceeds from the sale of these allowances, credits, and auctions could be used to further promote and support activities in these sectors that reduce, avoid, or sequester emissions. For more information on the agriculture and forestry provisions in S. 3036 , see CRS Report RS22834, Agriculture and Forestry Provisions in Climate Change Bills in the 110th Congress . Also during Senate floor debate of S. 3036 in the 110 th Congress, Senator Stabenow introduced an amendment to the bill that sought to replace the offset provisions in S. 3036 with an even more expansive version of the agriculture and forestry offset program provisions. This amendment was not adopted, but the general provisions of this proposed amendment continue to be promoted by the farm community as a desired option for establishing an offset program as part of a cap-and-trade program. In May 2008, these and other issues and concerns were raised at a 110 th Congress Senate subcommittee hearing on the role of agriculture and forestry activities under a cap-and-trade program. Congress has continued to consider legislation in the 111 th Congress to impose or permit some form of market-based controls on GHG emissions. However, with respect to the agriculture and forestry sectors, this legislation differs from that debated in the 110 th Congress. Although the climate provisions in both the House-passed ( H.R. 2454 ) and the Senate-reported ( S. 1733 ) bills do not specifically include agricultural operations among its "covered entities" under a mandatory emissions cap, the extent to which the agricultural and forestry sectors are granted tradeable allowances and opportunities under a carbon offset program is more limited compared to some legislation debated in the 110 th Congress. For more general background information about these two bills, see CRS Report R40896, Climate Change: Comparison of the Cap-and-Trade Provisions in H.R. 2454 and S. 1733 . Prior to House passage of H.R. 2454 , the extent to which the agricultural and forestry sectors could be allowed to participate in an offset and allowance program was actively debated in Congress. In fact, the version of H.R. 2454 that passed the House was substantially different than the version that was reported by the House Committee on Energy and Commerce. Although H.R. 2454 set the aggregate number of submitted offsets at two billion tons annually, it initially did not identify whether agriculture and forestry activities would be eligible as offsets and did not include a separate title covering domestic agriculture and forestry carbon offsets. Instead eligible domestic offset types would be determined through the EPA rulemaking process. This caused concern among stakeholders in the agricultural community who wanted the U.S. Department of Agriculture (USDA) to be the lead agency administering the offset program for domestic agricultural and forestry offsets. In addition, many in the agricultural community were concerned that the committee-reported bill did not include an explicit list of offset practices. Just prior to the floor debate, following negotiations between the Chairmen of the House Energy and Commerce Committee and the House Agriculture Committee, the so-called "Peterson Amendment" was added to H.R. 2454 . The Energy Committee's June 26, 2009 "Manager's Amendment" included a new Title V to H.R. 2454 —"Agriculture and Forestry Related Offsets." Among other provisions, the Peterson Amendment allowed for certain agricultural and forestry activities to become eligible to participate in a carbon offset program, established that this program would be implemented by USDA (rather than EPA), addressed concerns in the agricultural community about existing and evolving renewable energy and certain biomass requirements, and also recognized certain early actions that have already been taken by farmers and landowners to reduce emissions and sequester carbon. The inclusion of provisions that allow for agricultural and forestry offsets as part of a cap-and-trade scheme is generally supported by a broad farm industry coalition. Initially this coalition consists of agricultural groups representing federally-supported crops (such as grains and cotton), livestock and dairy, the American Farm Bureau Federation, the National Farmers Union, the American Farmland Trust, and other agriculture support and utility companies. Former Senators and Majority Leaders Bob Dole and Tom Daschle have also advocated on behalf of the Bipartisan Policy Center that farmers be fully integrated into any cap-and-trade program. Most groups, including many within the environmental community, generally support the inclusion of carbon offset projects within a cap-and-trade scheme since this is likely to help contain overall costs of a carbon reduction program. More recently, however, several farm groups are tending to oppose any climate legislation because of concerns that it will raise production and input costs to farmers. In March 2009, the House Agriculture Committee issued a climate change questionnaire, which was distributed to more than 400 organizations, to solicit input on proposals to reduce GHG emissions. The published survey responses are available on the committee's website and highlight some concerns, as well as the potential market opportunities for farmers and landowners. These and other issues were discussed during House Agriculture Committee hearings in June and December 2009. After the House passed H.R. 2454 many in the Senate and in the agriculture community regarded that effort as a "good starting point" that still needed additional work to satisfy those in Congress with major agriculture constituencies. These and other issues and concerns were raised at a series of Senate Agriculture Committee hearings in July and September 2009, as part of the committee's review of pending climate legislation. In September 2009, Senator Kerry introduced S. 1733 , which was referred to the Senate Committee on Environment and Public Works (EPW). The committee held hearings on the bill starting October 2009, and began markup in November. On November 5, the committee approved Senator Boxer's "Manager's Amendment" as a substitute, and ordered S. 1733 reported. Although S. 1733 allows for agriculture and forestry offsets as part of a cap-and-trade scheme, and it does not specifically include agricultural operations among its "covered entities" under a mandatory emissions cap, many of the principle issues and concerns of the U.S. agriculture community were not included in the bill. Specifically, S. 1733 would delegate domestic program authority to the President and international program authority to EPA. S. 1733 also differed in terms of the types of projects and activities allowed, the total allowable quantity of domestic versus international offsets, and agency administration of the program, among other differences. Many in the agricultural community, however, consider S. 1733 as a placeholder bill that will include more detailed agricultural provisions that have been introduced in other Senate bills or that might be addressed during Senate floor debate. For example, some in the agricultural community have continued to support the ongoing efforts of Senator Stabenow, who continued to work on a proposal (often referred to as the "Stabenow Amendment") that would expand on the agricultural and forestry carbon offset provisions in these climate bills and also allow for certain other provisions benefitting U.S. farmers and landowners. These provisions were included in a bill, the Clean Energy Partnerships Act of 2009 ( S. 2729 ), introduced by Senator Stabenow shortly after the Senate EPW Committee completed work on S. 1733 . However, Senator Stabenow's bill is not comprehensive and does not address other concerns in the agricultural community, such as other energy and offset issues, and the role and use by EPA of its indirect land-use models (as will be discussed later in this report). Some in the agricultural community continue to support efforts to expand upon provisions in the House-passed bill, including provisions outlined in S. 2729 . Supporters of S. 2729 include the National Farmers Union and National Corn Growers Association. Other in the agricultural community, however, including Chairwoman Lincoln of the Senate Agriculture Committee and the American Farm Bureau Federation, continue to voice concerns about climate legislation and how this legislation could affect national and local farming communities, and U.S. economic competitiveness. Historically, climate-related legislative initiatives have not specifically required emissions reductions in the agricultural sector. In part, this may reflect the general consensus that "emissions from the agricultural sector generally do not lend themselves to regulation under a cap-and-trade program," given the "large number of sources with small individual emissions that would be impractical to measure." In general, the current legislative proposals have not included the agricultural sector as a covered industry, and therefore do not require farmers and landowners to reduce emissions associated with climate change. For example, neither the House-passed bill ( H.R. 2454 ) nor the Senate-reported bill ( S. 1733 ) specifically includes agricultural operations among its "covered entities" under a mandatory emissions cap. However, some interest groups continue to question whether certain types of agricultural operations could or should eventually be brought in under some proposals. Some of the bills introduced in the 110 th Congress would have provided authority to EPA to determine covered entities by applying cost-effective criteria to reduction options; other 110 th Congress bills would have covered biogenic emissions resulting from biological processes, which some interpret as potentially including animal agriculture facilities. Although these bills would not require GHG emission reductions in the agriculture and forestry sectors, if enacted, provisions in these bills could potentially raise farm input costs for energy, fertilizers, and other production inputs. As a result, many in the farm community are worried that U.S. farmers could be adversely affected by anticipated climate legislation through generally increasing energy and production input costs. EPA has conducted a review and study of the potential economic costs of the energy and climate legislation being considered by Congress, including effects to the U.S. agriculture and forestry sectors. In addition, USDA has conducted analyses of the effects to agricultural producers from possible higher production and input costs under pending climate legislation. The Congressional Budget Office (CBO) also conducted an economy-wide analysis of H.R. 2454 . These analyses show that the overall costs of legislation to the agricultural community will be "modest." USDA and EPA's studies further suggest that farm revenues from carbon offsets could result in net economic gains for the U.S. agricultural sectors. Several other groups, including land grant universities, non-governmental organizations, industry groups, and advocacy groups also have published studies and estimates, many that focus specifically on the economic effects on the agricultural and forestry sectors. Overviews of the available cost studies have been compiled by the Agricultural Carbon Market Working Group, the 25x25 Carbon Work Group, and researchers at Kansas State University. Other studies have been conducted by Duke University's Nicolas Institute for Environmental Policy Solutions, the Food and Agriculture Policy Research Institute (FAPRI), Texas A&M University, Iowa State University, and University of Tennessee, the American Farm Bureau Federation, a study commissioned by the Fertilizer Institute, Brookings Institution, and CRA International, among others. The publicly available studies from various organizations on the economic impacts of cap-and-trade legislation on the U.S. agricultural sector span a wide range of possible effects, often with conflicting conclusions. Almost all of the studies predict that energy costs will rise, though the estimated magnitude of these potential economic effects vary widely. Study results also differ in how higher energy prices will affect farm income. Most of the studies do not provide a complete analysis of the legislation and potentially offsetting cost effects. Most studies only consider the effects of the legislation on energy costs; they do not consider the possible impacts on farm input usage, shifts in crop production and practices, farm-based adjustments and management changes, changes in food prices, as well as farm revenue from biofuel and biomass production, carbon credits and carbon offset activities, or tradeable allowances and/or auction proceeds. Many studies also highlight that higher potential production and farm input costs might be offset by policies that reduce costs (such as allowance provisions that may provide transitional assistance to fertilizer manufacturers and rural energy providers) and/or farm revenue increases should farmers participate in carbon offset and renewable energy provisions in these bills. However, few studies are able to provide quantitative estimates or to precisely predict how such policies and programs might lessen the overall potential economic effects to farms and landowners. Several studies also describe the potential negative effects on the U.S. agriculture sectors from climate change, absent policy changes designed to mitigate such effects, with some studies examining the possible economy-wide economic benefits of climate change legislation. Among these are large-scale studies by the Intergovernmental Panel on Climate Change (IPCC), USDA, and Massachusetts Institute of Technology, as well as reports by New York University's School of Law and others. Both H.R. 2454 and S. 1733 specifically incorporate the agricultural and forestry sectors as a possible source of carbon offset credits and also as a limited recipient of set-aside allowances (targeting certain segments of the agricultural community). In the context of these legislative proposals, a carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO 2 ) or other GHG emission, expressed in carbon-equivalent terms. A set-aside allowance refers to a set percentage of available allowances under the overall emissions cap that is allocated to non-regulated entities, in this case domestic agriculture and forestry entities to support various policy objectives (e.g., biological sequestration). Both H.R. 2454 and S. 1733 would allocate allowances or auction revenue to support various purposes. Recipients of direct allocations include entities covered by the cap-and-trade program, such as petroleum refineries, and entities not covered by the program, such as states and other groups. In the case of non-covered entities, those entities may only use the value generated from the sale of their allowances for specific purposes. For example, electricity and natural gas local distribution companies (LDCs) must use the value to mitigate the energy cost impacts of the cap-and-trade program on their customers (either through rebates or through investment in energy efficiency), while states must use the funds for energy efficiency, renewable energy, or other projects. An allowance under a cap-and-trade system is effectively a permit to emit one ton of CO 2 or its equivalent and may be sold in the emissions trading market. Allowances may either be in the form of a directly allocated allowance or government revenue, in the case of auctioned allowances. Few allowance categories are allocated directly to the agriculture sectors. Both H.R. 2454 and S. 1733 provide for three categories of allowances that, broadly defined, are applicable to the agricultural sectors. These include : allowances for small electricity local distribution companies or LDCs, under which some rural electric cooperatives would qualify (starting at 0.5% of total allocated allowances (from 2012-2025), phasing down to 0.1% by 2029); allowances for various "energy-intensive and trade-exposed" industries or EITEs, under which a few agriculture-related industries (notably, the nitrogen fertilizer industry) may be eligible (percentages across all eligible industries differ somewhat between the two bills, ranging from about 12-13% of total allocated allowances annually); and allowances for supplemental activities—including, depending on the bill, agriculture, abandoned mine land, renewable energy, and forestry —that provide financial assistance from auction proceeds for projects that reduce GHGs and store carbon not covered under offset programs (intended to reward certain early adopters, such as farmers that practice conservation tillage and other land management techniques, providing 1% of total allocated allowances annually from 2012-2050). H.R. 2454 also includes a late-added provision that would provide a one-time (2012) allowance of 1% for "early action offset credits." This provision was promoted in press reports as helping agriculture by guaranteeing money for early carbon reduction activities. This provision is not in S. 1733 . The agriculture community and some in Congress have expressed the desire to expand allowances available to the farming sectors. Specifically, they would like to increase the allowances for early action offset credits. Some also have indicated the desire to expand eligibility under the "energy-intensive and trade-exposed" industries. According to a study by an industry working group, three agriculture-related industries likely would be eligible for the EITE subsidy: nitrogenous fertilizer manufacturers, wet corn millers, and beet sugar producers. This assessment is based on the working group's examination of available energy and trade data, and its eligibility assessment assuming established thresholds, including an energy-intensity threshold of 5% and a trade-exposure threshold of 15%. H.R. 2454 and S. 1733 provide for a carbon offset program involving agricultural and forestry activities. However, the agricultural and forestry carbon offset programs outlined in these bills differ in terms of the types of projects and activities allowed, how eligible types would be determined, the total allowable quantity of domestic versus international offsets, and agency administration of the program, among other differences. Appendix A compares the carbon offset programs that would be established by the House-passed bill, H.R. 2454 , and Senator Stabenow's bill, S. 2729 . The table does not include a comparison of offset program provisions in S. 1733 , since that bill specifies that implementation of the offsets program would be delegated to the President, with only a few specific duties delegated to particular agencies. The comparison in the table is not exhaustive, but meant to highlight key differences between the programs, with a particular focus on the differing roles and responsibilities of EPA and USDA regarding agricultural and forestry offsets within the various programs that would be established by these two bills. Both H.R. 2454 and S. 1733 would allow covered entities, in aggregate, to submit 2 billion tons of offsets each year. However, each covered entity is restricted to a percentage of emission reductions that can be met through carbon offsets. The House and Senate programs specify different formulas for determining the annual percentage of offsets that each covered entity could use to meet its compliance obligation. The House and Senate bills also differ in their allowable proportions of domestic and international offsets. Under the House bill, 50% of a covered entity's allowable offset submission could come from domestic projects, and 50% from international projects. Under the Senate bill, the ratio is 75% from domestic projects and 25% from international projects. Both bills provide conditional authority for EPA to increase (on an annual basis) the percentage of international offsets allowed; the annual volume of international offsets could reach up to 1.5 billion tons in H.R. 2454 , but could not exceed 1.25 billion tons in S. 1733 . H.R. 2454 and S. 1733 authorize different agencies to implement their respective offset programs. The Senate bill would delegate domestic program authority to the President. The House bill would effectively create two offset programs: a domestic agriculture and forestry program implemented by USDA (Title V); other domestic projects and all international projects would be under the primary authority of EPA (Title III). Aside from differences in implementing agencies, the provisions in Title III and Title V are similar. The separate offset jurisdictions between EPA and USDA are created by the revised definitions of "domestic offset credit" and "offset credit." These terms now have different meanings between Part C and Part D of Title III. In effect, these changes allow (domestic) offset credits generated under Title V (agricultural and forestry offsets) to be used for compliance per Title III, Part C (i.e., the emissions cap obligations), but would separate the implementation of offsets generated under Title III (Part D) and Title V between EPA and USDA. This could raise questions about whether the Title V offsets may be used for compliance under Title III, Part C. Initially, H.R. 2454 , as reported, did not specifically include certain agricultural and forestry offset projects, and Title III offset program did not include an explicit list of offset practices. Title V in the House-passed bill, however, includes an explicit list of offset practices. This "initial list" includes eligible agricultural and forestry offset project types that USDA will consider : "At a minimum, the list prepared under this section shall include those practices that avoid or reduce greenhouse gas emissions or sequester greenhouse gases, such as ... " ( Sec. 503(b)). What remains in question is whether H.R. 2454 's use of the phrase, "such as," merely refers to projects that USDA should consider (among other types of projects) or whether USDA would be required to specifically include the types of projects listed in Sec. 503(b). Appendix B provides a listing of the types of agricultural and forestry offset projects that USDA would consider. Under either the Title III or the Title V programs of H.R. 2454 , the process would be roughly as follows: the implementing agency would establish a list of eligible project types and associated methodologies through a rulemaking process; the offset project developers would submit a petition to the implementing agency; the implementing agency would approve or reject the petition; third-party verifiers would inspect the project, validating the emission reductions projected in the petition, and submit a report to the relevant agency; and the relevant agency would distribute offset credits based on the verification report (i.e., after the emission reduction or sequestration has occurred). S. 1733 includes a list of specific agricultural and forestry offset projects; however, the Senate bill would delegate domestic program authority to the President. In general, the agriculture community is supporting replacing the agriculture and forestry carbon offset program provisions in S. 1733 with the offset provisions in S. 2729 . This bill includes a different "initial list" ( Sec. 104(b)) and places primary authority for administrating of the agricultural and forestry offsets program with USDA ( Appendix B ). S. 2729 also includes include a list of specific agricultural and forestry offset projects; however, S. 2729 differs from H.R. 2454 in that it seems to identify agricultural and forestry projects that are to be included: USDA "shall include on the list ... , at a minimum, activities that provide emission reductions and meet the requirement" as identified in the "initial list" of projects ( Sec. 104(b)), including various non-agricultural projects under EPA's lead. The table in Appendix B compares the "initial list" of eligible agricultural and forestry carbon offset projects, among other types of offset projects, as identified either for consideration and/or for inclusion as part of the proposed carbon offset program. This comparison is based on identified offset projects in H.R. 2454 , S. 2729 , and S. 1733 . In general, the types of conservation and farmland management practices that reduce GHG emissions and/or sequester carbon included in all three bills are among existing agricultural and forestry programs that are administered at both the federal and state levels. Many of these practices are provided for as part of existing conservation, forestry, energy, and rural development programs under the U.S. farm policy programs, including the most recent omnibus bill, the 2008 "farm bill" ( P.L. 110-246 , Food, Conservation, and Energy Act of 2008). These include conservation programs provided for in Title II of the farm bill, such as the Conservation Reserve Program, the Grasslands Reserve Program, the Environmental Quality Incentives Program, and the Conservation Stewardship Program, among others. These programs provide technical assistance and either cost-sharing or easement payments that, in addition to accomplishing other environmental objectives, generally encourage land retirement or the types of agricultural practices that can reduce GHG emissions and/or sequester carbon. Other 2008 farm bill programs in the Energy (Title IX) and Rural Development (Title VI) titles authorize loans, loan guarantees, and grants for energy efficiency and renewable energy systems, including anaerobic digesters. However, the list of agricultural and forestry practices that reduce GHG emissions and/or sequester carbon can be extensive and may include a wide possible range of activities (see, for example, text box). This generally differs from what is actually happening within some of the active or emerging climate change initiatives throughout the United States, such as the Regional Greenhouse Gas Initiative, the Western Climate Initiative, and California's climate change statute. These programs have tended to limit the types of agricultural and forestry activities that are allowed under their programs, and tend to focus mostly on a more limited range of activities, such as afforestation/reforestation and manure management. All three bills contain provisions for "early offset supply" or allowances for early offset credits for projects that are already approved and registered with existing carbon offset credit programs meeting certain conditions and criteria. Such provisions are important to the U.S. agricultural sectors, given the sectors' ongoing participation in voluntary carbon market programs, and are often regarded as a way to reward "early actors" who have been involved in agricultural or forestry practices that offset GHG emissions. In general, all three bills allow for eligible activities under an offset project that started after January 1, 2001. However, both H.R. 2454 and S. 1733 give sole authority to EPA to approve existing offset programs, whereas S. 2729 , gives authority to EPA, in conjunction with USDA, to approve existing programs. S. 2729 would also provide for greater flexibility to approve existing programs, among other differences. S. 2729 provides for additional flexibility in designing carbon offset standards, compared to H.R. 2454 and S. 1733 , by specifically addressing concerns about "stackability." In biologicial sequestration offset projects, such as those in the agricultural and forestry sectors, the concept of "stackability" refers to the ability of certain practices and activities to decrease atmospheric concentrations of GHGs, as well as to provide other non-climate-related ecosystem services, such as improved water quality and enhanced wildlife habitat. Proponents of "stackability" generally argue that offset project developers should be able to market these services separately and earn distinct financial benefits for each ecosystem service (assuming a funding source exists that would support each service). Accordingly, the financial rewards for different ecosystem services would be "stackable," and the receipt of funding from one source (e.g., buyers in the offset marketplace) would not preclude the receipt of funding from another source (e.g., a government grant). USDA has recognized the potential credits generated by these conservation programs and has removed any claim on the credits through recent changes to many of the program rules. However, allowing an offset project to accrue stackable benefits may raise concerns of additionality. If non-climate-related incentive programs or ecosystem service markets could provide financial support for a particular offset project, observers may question whether the project would have happened anyway. In some situations, an additionality assessment may be relatively straightforward. If the non-climate-related incentives stimulate activities that would mitigate GHG emissions (as a secondary effect) without the support of the offset market, the activity would not likely qualify as additional in terms of carbon offsets. On the other hand, some offset projects may not be economically viable without multiple sources of funding—combining a payment from the offset market with grants from non-climate-related government programs. Thus, in some situations a determination of additionality may entail a degree of subjectivity. GHG emissions from covered sources (e.g., power plants) will remain in the atmosphere for a relatively permanent basis (at least in the context of human lifetimes). Arguably, credible offsets should maintain a degree of permanence on par with their counterpart emissions (from capped sources). Indeed, many of the recent cap-and-trade proposals (e.g., H.R. 2454 and S. 1733 ) have required that offsets be permanent. Although sound as an offset principle, this requirement would likely present implementation challenges (as with many offset projects, permanence may be more difficult to monitor at international projects). With some offset projects there may be a concern that the emission offsets will be subsequently negated by human activity—change in land use—or a natural occurrence—forest fire, disease, or pestilence. In offsets parlance, such occurrences are described as reversals. Reversals are most pertinent to biological sequestration projects, specifically forestry activities. Recent cap-and-trade proposals have directed the implementing agency to account for reversals by establishing an offsets reserve (or insurance or other appropriate mechanism). Before offset credits would be issued, the relevant agency would place in the reserve a portion of the offsets to be issued: the number of credits set-aside would be based on the project's risk of reversal. If an unintentional reversal occurred, the agency would cover the loss from reserve credits, and the project developer would likely be required to replenish some portion of the used reserve credits. An offset program would likely have more stringent provisions for intentional reversals. Another approach to address permanence concerns is to allow offset projects to generate temporary offset credits. Under this approach, offset credits would expire at the end of their term, and need to be replaced with emission allowances or unexpired offset credits. This option may allow more opportunities for projects that would have had trouble guaranteeing permanence. However, the degree to which covered entities would utilize this option is uncertain, considering that emission allowances and offset credits would likely be more expensive when the term credit expired. Other provisions in Senator Stabenow's bill, S. 2729 , include a provision to create the Carbon Conservation Program (Title II) for farmers to engage in new approaches to GHG reductions and sequestration, and a provision to provide funding to support climate-related research in agriculture, including research on adaptation to changing weather patterns (Title IV). The bill's Carbon Conservation Program would be established by USDA and jointly administered with the Department of the Interior. The program would promote GHG emissions reduction or carbon sequestration by providing incentives for projects or activities that reduce GHG emissions or sequester carbon but that may not be eligible as carbon offsets. Project types might include longer-term conservation easements, sequestration contracts, or timber harvest or grazing contracts. Funding for the program would be made available through a newly established Carbon Conservation Fund. The bill would also provide funding for research and demonstration projects, including quantification techniques, from activities or new approaches to sequester carbon through agricultural, grazing, and forestry practices; reduce methane and nitrous oxide emissions associated with agricultural production; assist with adaptation of agricultural and forestry practices to the effects of climate change; assist specialty crop producers to reduce net GHG emissions or sequester carbon; and reduce uncertainties in estimating GHG emission reductions and carbon sequestration through agricultural and forestry activities. Both the House-passed bill ( H.R. 2454 ) and the Senate-reported bill ( S. 1733 ) contain provisions addressing deforestation. Tropical deforestation is estimated to contribute about 17% of all GHG emissions, and many see reducing emissions from deforestation and forest degradation (REDD) as critical to ameliorating global climate change. The two bills generally address international forest protection in two ways: allowances and REDD offsets. Both contain allowances, which can be used (1) to build capacity in developing nations to protect their forests and to make REDD offsets feasible, and (2) to supplement U.S. emissions reductions by directly reducing tropical deforestation. Both also allow REDD offsets, within limits, to be purchased by covered U.S. entities to achieve their emissions reduction targets. H.R. 2454 uses the U.S. Environmental Protection Agency to implement the international forestry provisions, while S. 1733 uses the U.S. Agency for International Development. Both bills contain provisions on eligibility of developing countries and on implementation of REDD offsets and for supplemental emissions reductions; H.R. 2454 generally contains more details on such provisions than does S. 1733 . Concerns persist about the REDD allowances and offsets in the bills. Many developing countries do not have the capacity (including personnel and equipment) to measure, monitor, and enforce forest carbon sequestration. While both bills permit allowances to be used for capacity building, neither defines acceptable capacity-building activities nor specifies the allowance allocation between capacity building and supplemental emissions reductions or among developing nations. Concerns about REDD offsets include general issues over offsets—their verification (measuring, monitoring, and reporting carbon sequestration), their additionality (activities not already occurring or required), their permanence, and leakage (shifting deforestation to other locations). In addition, some are concerned that allowing REDD offsets will inhibit the development of technologies and strategies to reduce domestic carbon emissions and may prevent developing countries from committing to GHG reductions and from growing low-carbon economies. For additional information, see CRS Report R40990, International Forestry Issues in Climate Change Bills: Comparison of Provisions of S. 1733 and H.R. 2454 . Both H.R. 2454 and S. 1733 provide for renewable biomass and biofuels feedstock provisions involving agriculture and forestry activities. However, the provisions outlined in these bills differ in terms of eligibility, according to the biomass definition in these bills. These provisions relate to other actions by EPA to revise the Renewable Fuel Standard (RFS) program, as required by the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ). In May 2009, EPA announced its proposal to revise the RFS program, as required by EISA. The revised statutory requirements establish new specific volume standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must be used in transportation fuel each year. These revised requirements include new definitions and criteria for both renewable fuels and the feedstocks used to produce them, and also new GHG thresholds for renewable fuels. These RFS requirements will apply to domestic and foreign producers and importers of renewable fuel. Two areas of the proposed EPA rulemaking have caused concerns among those in the U.S. agricultural sector: (1) the EISA biomass definition and (2) the requirement that EPA consider "indirect land use" effects when calculating GHG emissions associated with advanced biofuels. To address these issues, in May 2009, the Chairman of the House Committee on Agriculture introduced legislation ( H.R. 2409 ) seeking changes to these requirements. These and related issues were discussed at a House Agriculture Committee hearing in June 2009 as part of its review of pending climate change legislation. In addition, H.R. 2454 contains language intended to partly address these issues; similar language has also been added to S. 1733 . Regarding the renewable biomass definition, the agriculture component of the EISA definition limits acreage eligibility to produce biomass feedstock to "planted crops and crop residue harvested from agricultural land cleared or cultivated at any time prior to the enactment." Initially this same definition was included in H.R. 2454 . The House Agriculture Committee proposed a more expansive biomass definition in law, such as the 2008 farm bill definition. H.R. 2409 proposes to change the EISA definition to the 2008 farm bill definition. Both H.R. 2454 and S. 1733 include yet other alternate definitions of renewable biomass. For more information, see CRS Report R40529, Biomass: Comparison of Definitions in Legislation . Regarding indirect land use and life-cycle analysis when calculating GHG emissions associated with advanced biofuels, the Chairman of the House Agriculture Committee has argued that, currently, "there is no reliable method to predict accurately how biofuel production will affect land use in the United States or internationally," and is concerned that this requirement could limit the availability and development of new feedstocks for biofuels and make it difficult to meet the RFS mandates set forth in EISA. These and related issues were discussed at a House Agriculture Committee hearing in June 2009 as part of its review of pending climate change legislation. Both H.R. 2454 and S. 1733 include a provision that would require studies to determine whether models exist or can be developed to adequately predict international indirect land use change from biofuels. For more information, see CRS Report R40155, Selected Issues Related to an Expansion of the Renewable Fuel Standard (RFS) and CRS Report R40460, Calculation of Lifecycle Greenhouse Gas Emissions for the Renewable Fuel Standard (RFS) . Senator Stabenow's bill ( S. 2729 , Title III, Rural Clean Energy Resources) also addresses production and use of biofuels and bioenergy, and expands upon certain existing bioenergy programs in the Food, Conservation, and Energy Act of 2008 ("Farm Bill," 7 U.S.C. 8701 et seq.). Funding for these existing and expanded programs would be through a newly created fund, called the "Rural Clean Energy Resources Fund," which would also be used to fund other carbon mitigation programs in S. 2729 . Various other potential regulatory and legislative initiatives related to the climate change debate could affect U.S. agriculture. The most significant and immediate are two EPA rulemakings: (1) a final rule mandating GHG emissions reporting from selected sectors and (2) a solicitation for comment on how EPA should respond to GHGs under the Clean Air Act. In some cases, the House and Senate energy and climate bills contain provisions that address some of these issues. On September 22, 2009, EPA announced its final rule to require mandatory reporting of GHG emissions from large sources in the United States to collect emissions data to inform future policy decisions. Both H.R. 2454 and S. 1733 contain provisions that would require climate registries to "collect high-quality greenhouse gas emission data from facilities, corporations, and other organizations to support various GHG emission reporting and reduction policies." These bills do not specifically identify the extent to which the U.S. agriculture sector would be affected. EPA's final reporting rule does not require control of GHGs; rather it requires only that sources above certain threshold emission levels monitor and report emissions. EPA estimates that the rule will cover about 85% of the nation's GHG emissions and apply to roughly 10,000 facilities. The only farm-level production category subject to EPA's final rule are livestock facilities with a manure management system. Affected operations are those that meet or exceed the reporting threshold of 25,000 metric tons of CO 2 -equivalent, based on the following animal population thresholds: 29,300 head of beef cows, 3,200 dairy cows, 34,100 hogs, 723,600 layers, 38,160,000 broilers, and 7,710,000 turkeys. EPA estimated that there will be approximately 107 livestock facilities that will need to report under the rule. These operations will be required to report aggregate methane (CH 4 ) and nitrous oxide (N 2 O) emissions from certain manure management system components. Operations that use anaerobic digesters will be required to report CH 4 generated and destroyed, and any CH 4 leakage at the digester. The final rule excludes other agricultural categories that are known to contribute to GHG emissions, including "enteric fermentation" (livestock digestion), rice cultivation, field burning of agricultural residues, composting (except when associated with manure management), agricultural soils, settlements, forestland or other land uses and land-use changes, or emissions associated with deforestation, and carbon storage in living biomass or harvested wood products. At this time, EPA's final rule does not address emissions from certain food processing sectors. EPA claims that "the sources of GHG emissions at food processing facilities that were to be reported under the proposed rule were stationary fuel combustion, onsite landfills, and onsite wastewater treatment;" however, the agency has decided not to finalize the portion of the rule covering landfills and wastewater treatment. Facilities subject to reporting would report annually, starting in 2011. For more information, see EPA's preamble, fact sheets, and cost analysis. Also see CRS Report RL32948, Air Quality Issues and Animal Agriculture: A Primer and CRS Report R40585, Climate Change: Potential Regulation of Stationary Greenhouse Gas Sources Under the Clean Air Act . In December 2009, EPA published its final determination that the combined GHG emissions from new motor vehicles in the United States contribute to an "endangerment" from climate change. More precisely, EPA found that such emissions, in the words of Clean Air Act section 202(a) (42 U.S.C. Sec. 7521(a)), "cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare." Many in the agricultural sectors are concerned that this action may set the stage for a series of rules to regulate GHG emissions in other sectors, including the U.S. agricultural sectors. EPA's endangerment finding follows action taken by EPA in 2008 when it issued an Advance Notice of Proposed Rulemaking (ANPR). Since that time, there has been confusion about the extent that U.S. agriculture would be affected by that proposed rule. Some farm groups believed that, as part of the notice, EPA was proposing to impose a "cow tax" on livestock operations. However, the ANPR did not recommend the use of any particular CAA authority to regulate any emissions, nor did it commit to specific next steps to deal with GHGs, and it did not include a formal proposal to regulate GHGs. Among the options discussed in the ANPR was the potential to use the CAA's permitting program (in Title V) to regulate sources of GHG emissions. Agricultural sources were not singled out or highlighted in this discussion. The ANPR did mention the agricultural sectors, but only as background discussion as a source of GHGs, similar to that for other sectors, such as electric utilities. The Title V permit program does require regulated sources to pay permit fees to states, which could be the source of concern among some that, if EPA were to use the permitting program in the CAA to regulate GHGs, which some claim would automatically result in mandatory fees. EPA noted in its ANPR that the CAA allows considerable flexibility in setting fee schedules. EPA also stated that in the event of future regulation, it would be appropriate for permitting agencies to use that flexibility in setting any permit fees (by lowering fees for GHGs, compared with other pollutants, or setting lower fees for smaller sources, or other means). Some of these same issues and concerns have persisted regarding EPA's endangerment finding. However, it remains unclear whether this action will trigger other obligations by EPA that could affect the U.S. agricultural sectors. In March 2009, Senator Thune and Representative Lucas introduced bills ( S. 527 and H.R. 1426 , respectively) that would prevent EPA from imposing Title V operating permits for controlling GHGs resulting from biological processes associated with livestock production. The House Interior, Environment, and Related Agencies appropriations bill ( H.R. 2996 , Sec. 420) includes a similar provision prohibiting the use of available funds to promulgate or implement any regulation requiring the issuance of permits under Title V of the Clean Air Act "for carbon dioxide, nitrous oxide, water vapor, or methane emissions resulting from biological processes associated with livestock production." In October 2009, the FY2010 interim appropriations conference agreement included an amendment to block EPA efforts to require permits for GHGs emitted by livestock. Appendix A. Selected Differences in Offset Provisions: H.R. 2454 and S. 2729 Appendix B. Comparison of Carbon Offset Project Types Identified in Legislation

In June 2009, the House passed H.R. 2454, the American Clean Energy and Security Act of 2009. In September 2009, Senator Kerry introduced S. 1733, the Clean Energy Jobs and American Power Act, which was referred to the Senate Committee on Environment and Public Works. The committee completed markup of the bill on November 5, 2009, by approving Senator Boxer's "Manager's Amendment" as a substitute, and ordered S. 1733 reported. Both the House and Senate bills would establish a cap-and-trade system to regulate greenhouse gas (GHG) emissions, as well as address energy efficiency, renewable energy, and other energy topics. Among other provisions, both bills would require major reductions in GHG emissions from entities comprising roughly 85% of current U.S. GHG emissions. Covered sectors would include electricity production, natural gas distribution, petroleum refining, and industrial sectors. These and related bills and issues are currently being debated in Congress. Although the leading House and Senate climate proposals would not require GHG emission reductions in the agriculture and forestry sectors, provisions in these bills could potentially raise farm input costs for energy, fertilizers, and other production inputs. However, higher production costs could potentially be alleviated by possible farm revenue increases from other provisions that are part of these bills. For example, the cap-and-trade proposals in these bills would distribute tradeable allowances at no cost to certain agricultural industries, such as fertilizer manufacturers. These "free" allowances could also dampen the impact of the cap-and-trade system that would otherwise occur. Higher costs might also be dampened by possible farm revenue increases should farmers participate in carbon offset programs for domestic farm- and land-based carbon storage activities. The renewable energy provisions contained in these bills could potentially expand the market for farm-based biofuels, biomass residues, and dedicated energy crops. Both bills also provide incentives for international forestry and related land-based activities. Other provisions in these bills might also affect the U.S. agriculture sectors. These include provisions that would establish a GHG registry for reporting emissions, which might affect certain larger livestock operations, and provisions to implement certain biomass and bioenergy requirements. This report describes some of the agriculture and forestry provisions that are included in major energy and climate legislation in the 111th Congress, comparing provisions in the House-passed bill (H.R. 2454) and the Senate-reported bill (S. 1733). Initially, when the House passed H.R. 2454 many in the Senate and in the agriculture community regarded that effort as a "good starting point" that still needed additional work to satisfy those in Congress with major agriculture constituencies. In particular, other ongoing efforts in the Senate, such as a bill introduced by Senator Stabenow (Clean Energy Partnerships Act of 2009, S. 2729), would provide for expanded carbon offset provisions benefitting U.S. farmers and landowners, among other provisions. This Senate bill is supported by many in the agricultural community. However, others (including Chairwoman Lincoln of the Senate Agriculture Committee) continue to question this legislation and cite concerns about how this legislation could affect national and local farming communities.

In 1986, when introducing the Electronic Communications Privacy Act (ECPA), Senator Patrick Leahy observed that the nation's then-existing electronic communications privacy laws were "hopelessly out of date." The Senate Judiciary Committee agreed that the law had "not kept pace with the development of communication and computer technology ... [n]or [had] it kept pace with changes in the structure of the telecommunications industry." Later that year, Congress enacted ECPA, which, at over 25 years old, remains the primary law governing government and private actor access to our stored online communications. It governs, for instance, when the government can demand that Google turn over emails; when social media sites like Facebook must provide private posts; when video-sharing sites like YouTube must provide stored videos; and when cell phone companies must turn over cell location information. In recent years, ECPA has faced increased criticism from both the technology and privacy communities that it has outlived its usefulness in the digital era and does not provide adequate privacy safeguards for individuals' electronic communications. In light of these concerns, various reform bills have been introduced in the past several Congresses, with three major reform bills pending in the 114 th Congress. The Electronic Communications Privacy Act Amendments Act of 2015 ( S. 356 ) and the Email Privacy Act ( H.R. 699 ), almost identical in text, would, among other things, place both ECSs and RCSs under the same legal requirement; eliminate the current 180-day rule found in the Stored Communications Act (SCA) and require a warrant for emails no matter how long they have been stored or whether they have been opened; and eliminate the reliance on the definition of "electronic storage," which has confused the lower courts. Additionally, the Online Communications and Geolocation Privacy Act ( H.R. 656 ) would make similar changes to the SCA. Some federal agencies, most prominently the Securities and Exchange Commission (SEC), which currently rely on their subpoena authority to access electronic communications, have argued that these bills would stymie their ability to conduct investigations as they lack legal authority to obtain a warrant. In response to this concern, both the Email Privacy Act and the ECPA Amendments Act include a rule of construction providing that nothing in these bills should be read to preclude the SEC or any other federal agency from seeking these records directly from a party to the communication, rather than the target's third-party service provider. Finally, there has been ongoing litigation in the lower federal courts as to ECPA's extraterritorial reach. The Law Enforcement Access to DATA Stored Abroad (LEADS) Act would require third-party service providers to disclose the contents of U.S persons' electronic communications held overseas upon issuance of a warrant based on probable cause. This report provides an overview of ECPA reform. It will first outline the background and history of the legal environment prior to ECPA and the problem precipitating ECPA's passage. It will then survey the current legal framework for accessing electronic communications and other non-content information from providers, and describe specific types of data accessible under ECPA. Finally, it will explore the various bills that would amend ECPA, including selected legal issues raised by these measures. Before passage of ECPA in 1986, government access to private electronic communications was governed primarily by the Fourth Amendment and the federal wiretap law. In 1967, the Supreme Court issued two landmark Fourth Amendment cases. In Katz v. United States , the Court held that the Fourth Amendment's prohibition against "unreasonable searches and seizures" entitles individuals to a reasonable expectation of privacy in their private communications. In Berger v. New York , the Court struck down a New York wiretap law that failed to include adequate safeguards for the privacy interests of those whose communications were being "tapped." One year later, in an effort to regulate wiretapping while also giving law enforcement a lawful means for intercepting telephone conversations, Congress enacted the "Wiretap Act" as Title III of the Omnibus Crime Control and Safe Streets Act of 1968. Title III prohibits the unauthorized interception of wire or oral communications, while simultaneously providing a procedure for law enforcement to conduct such interceptions upon judicial approval. However, Title III only covered the "aural" interception of wire or oral communications—the interception of actual sounds—that are interpreted by hearing, and not sight. This left largely unregulated the transfer of digital communications. This legal uncertainty as to whether new digital forms of communication would be covered by Title III or other federal law prompted the introduction of the original version of ECPA in 1985. Foreshadowing arguments made by proponents of ECPA reform today, the Senate Judiciary Committee observed at the time that this gap in coverage could stifle American technological innovation, expose law enforcement to liability, allow the erosion of American privacy rights, and jeopardize the admissibility of probative evidence in criminal prosecutions. One year later Congress enacted ECPA. ECPA contains three main titles. Title I updated the Wiretap Act to include not only the interception of oral and wire communications, but also electronic communications. Title III created new rules regulating the use of a pen register, a device that allows users to capture the routing information associated with communications, such as telephone numbers dialed or the to/from address in an email. Title II added Chapter 121 to the United States Code entitled "Stored Wire and Electronic Communications and Transactional Records Access," commonly referred to as the Stored Communications Act (SCA). As technology has developed, law enforcement has relied less frequently on real-time interception authorized under the Wiretap Act, and has instead relied on its authority under the SCA—accessing stored electronic communications, such as emails directly from a service provider. This shift explains why reform of ECPA has centered almost entirely on the SCA. The scope of the SCA is determined largely by the entities to which it applies. First, it does not apply to personal users, but only to providers of an "electronic communication service" (ECS) and a "remote computing service" (RCS). A provider of ECS allows its customers "to send or receive wire or electronic communications." A provider of RCS provides "computer storage or processing services by means of an electronic communication system." Although these definitions can be confusing in the abstract, they make more sense when applied. The SCA has two core components: (1) a broad prohibition against providers voluntarily sharing customers' communications with the government or others, subject to certain enumerated exceptions, and (2) procedures permitting the government to require the disclosure of customers' communications or records. As to the first component, under 18 U.S.C. § 2702(a)(1), a provider of ECS to the public "shall not knowingly divulge to any person or entity the contents of a communication while in electronic storage." The importance of the definition of "electronic storage" will be discussed below. Section 2702(a)(2) states that a provider of RCS to the public shall not knowingly disclose the contents of a communication which is carried or maintained by that service. There are two other conditions that must be met in order for a communication to remain protected under subsection (a)(2). First, the communication must be maintained "on behalf of, and received by means of electronic transmission from (or created by means of computer processing of communications received by means of electronic transmission from), a subscriber or customer of such service." Second, the communication must be maintained "solely for the purpose of providing storage or computer processing services to such subscriber or customer, if the provider is not authorized to access the contents of any such communications for purposes of providing any services other than storage or computer processing." Although there appears to be little case law interpreting this second condition, it would appear that an RCS which is permitted to access the contents of a communication for purposes other than storage or computer processing—for example, advertising—would not be subject to the prohibition on disclosing the contents of communications. In essence, it acts as an additional exception to nondisclosure. Section 2702(a)(3) prohibits a provider of ECS or RCS to the public from disclosing a "record or other information pertaining to a subscriber to or customer of such service (not including the contents of a communication covered by paragraph (1) or (2)) to any governmental entity." Note that this rule, which concerns non-content or "metadata," does not apply to nongovernmental, private entities. This permits companies to share non-content information with other private entities, insofar as the SCA is concerned. There may be other federal or state laws, however, which prohibit disclosure of particular classes of information. Section 2702(b) provides exceptions to the permissible disclosure of the content of communications covered by the prohibitions in subsection (a), including: to an addressee or intended recipient of a communication, as authorized under Section 2703; as may be necessary incident to the rendition of the service or the protection of the rights of property of the provider of that service; or to a governmental entity, if the provider, in good faith, believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without delay of communications relating to the emergency. Section 2702(c) provides similar exceptions for the disclosure of non-content information, including as authorized under Section 2703; with the lawful consent of the customer or subscriber; and to any person other than a governmental entity. The second major component of the SCA is the rules concerning required disclosure of customer communications and records. Section 2703 sets up a tiered system with different standards that apply depending on whether an ECS or RCS is holding the record, whether the data sought is content or non-content, whether the email has been opened, and whether advanced notice has been given to the customer. An interesting aspect of this tiered system is that the government may use greater process when lesser process would satisfy the statute—for instance, the government may use a warrant when a subpoena would suffice. At the highest level, Section 2703(a) requires the government to obtain a warrant if it seeks access to the  content  of a communication from an ECS provider that has been in "electronic storage" for 180 days or less. Moving down a tier, if the communication has been stored for longer than 180 days, or if it is being "held or maintained" by an RCS "solely for the purpose of providing storage or computer processing services," the government can use a subpoena or a court order under Section 2703(d) so long as notice is provided to the customer at some point. Section 2703(d) orders require the applicant to prove "specific and articulable facts, showing that there are reasonable grounds to believe that the contents of a[n] ... electronic communication ... are relevant and material to an ongoing criminal investigation." While Section 2703 facially permits government access to the contents of emails stored more than 180 days or those no longer in electronic storage, a 2010 ruling from the Sixth Circuit Court of Appeals calls into question the constitutional validity of this provision. In United States v. Warshak , the government accessed 27,000 emails directly from the suspect's Internet service provider (ISP) with a subpoena under Section 2703(b) and an ex parte order under Section 2703(d). The Sixth Circuit held that such access was unlawful under the Fourth Amendment as subscribers enjoy "a reasonable expectation of privacy in the contents of emails 'that are stored with, or sent or received through, a commercial ISP'" and "to the extent that the SCA purports to permit the government to obtain such emails warrantlessly, the SCA is unconstitutional." In addition to the content of communications, the SCA permits access to non-content information with a warrant, but the government may also use a subpoena or a Section 2703(d) order without having to provide the customer notice. To access basic subscriber information, including the customer's name, address, phone number, length of service, and means of payment (including bank account numbers), the government may follow the more stringent requirements for obtaining a warrant or a Section 2703(d) order, but can also use an administrative subpoena, which requires no prior authorization by a judicial officer. With forced government disclosures under Section 2703, much hinges on whether a communication is held in "electronic storage." "Electronic storage" is defined as "(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication." Emails that are pending delivery or have not been opened are considered to be in "temporary, immediate storage," thus, are considered in "electronic storage." Once emails are opened, however, they are no longer in "temporary, intermediate storage." Lower federal courts have taken different approaches in determining whether opened emails could be considered stored for "backup purposes" as provided in subsection (B). Some courts have held that opened emails can never fall within the definition of "electronic storage," as the term "backup protection" in subsection (B) was only intended to cover the protection of communications in the event the email system crashed before transmission was complete. The district court in United States v. Weaver provided a more nuanced analysis when addressing whether opened emails left solely on a Hotmail account, a "web-based email system[]," could nonetheless be considered stored for "backup purposes." The district court observed that because the emails were never downloaded by the user, but instead were solely stored on Microsoft's servers, Microsoft could not be considered as storing them for backup purposes. Instead, Microsoft was "maintaining the messages 'solely for the purpose of providing storage or computer processing services to such subscriber or customer.'" In contrast, the Ninth Circuit Court of Appeals held in Theofel v. Farey-Jones that emails left on a service provider's server after users downloaded them through their workplace email program could be considered stored for "backup purposes." The rationale was that the email left on the server after delivery provided a "second copy" in case the customer needed to download it again. However, the court noted that "prior access" to the emails was "irrelevant," and that the appropriate inquiry is whether "the underlying message has expired in the normal course." This seemingly fact-intensive inquiry has been called into question as "quite implausible and hard to square with the statutory text." In any event, several of the major ECPA reform proposals would expand ECPA's reach and rely less on the definition of "electronic storage" for determining which statutory safeguards would apply. The lower federal courts have held that the SCA applies to the disclosure of various electronic communications and associated data, including Emails Text messages Social media private messages, wall postings, and comments Private YouTube videos Historical cell site location information While access to these various categories of electronic data is subject to the SCA, the protections accorded to each differs depending on how long the data has been stored; whether the communication has been accessed by the user; and whether the data is considered content or non-content. For instance, in Quon v. Arch Wireless Operating Co., Inc. , the Ninth Circuit held that the provider of text messaging services was operating as an ECS and that text messages stored by the company were in "electronic storage." Under this reading, a warrant would be required to access text messages stored 180 days or less, and lesser process would be required if the messages were stored longer than 180 days. On the other hand, in Viacom Intern. v. YouTube Inc. , YouTube was considered an RCS with respect to private videos stored on its site, and therefore would be subject to the lower "specific and articulable facts" standard found in Section 2703(d). To a certain extent, the various ECPA reform bills attempt to eliminate some of these distinctions and would generally require a warrant to access any electronic communications. Finally, ECPA outlines when the government must provide notice to customers when their communications have been disclosed to the government. If the government seeks the contents of an electronic communication stored by an ECS, notice must be provided as required under Federal Rule of Criminal Procedure 41. If the government seeks access to the contents of electronic communications from an RCS under a Section 2703(d) order or an administrative subpoena, prior notice must be given to the customer. Additionally, the government can seek delayed notice under 18 U.S.C. § 2705. In recent years, ECPA has faced increased criticism from both the technology and privacy communities that it has outlived its usefulness in the digital era and does not provide adequate privacy safeguards for individuals' electronic communications. In March 2010, a group of technology companies, privacy advocates, and academics urged Senator Leahy, then-chairman of the Senate Judiciary Committee, to introduce legislation to bring federal electronic communications privacy laws into the digital era. In light of these and other concerns, ECPA reform has seen increased legislative attention in the past few Congresses. In May 2011, Senator Leahy filed the Electronic Communications Privacy Act Amendments Act of 2011 ( S. 1011 ), which would have, among other things, required law enforcement to obtain a warrant before accessing the content of any electronic communication, no matter how long it had been stored or whether it had been retrieved by the recipient. The following year, Senator Leahy offered this part of his ECPA bill as an amendment to a video privacy protection bill ( H.R. 2471 ) that was being reported out of the Senate Judiciary Committee. These provisions were ultimately removed from the bill and were never enacted. Representative Yoder's Email Privacy Act ( H.R. 1852 ), introduced in the 113 th Congress and nearly identical to Senator Leahy's reform bill, obtained a majority of the Members of the House as co-sponsors (272), but was not acted on by the full House. In the spring of 2013, the Senate Judiciary Committee favorably reported Senators Leahy and Lee's ECPA Amendments Act of 2013 ( S. 607 ) to the full Senate, but it was never taken up by the full body. The ECPA Amendments Act of 2015 ( S. 356 , H.R. 283 ) and the Email Privacy Act ( H.R. 699 ) were re-introduced in the 114 th Congress. Similar to the past Congress, the Email Privacy Act has obtained a majority of the Members of the House as co-sponsors (261). The Online Communication and Geolocation Protection Act, which would make similar amendments to ECPA, was introduced in the 113 th ( H.R. 983 ) and 114 th ( H.R. 656 ) Congresses. A competing bill, the Law Enforcement Access to Data Stored Abroad (LEADS) Act ( S. 512 , H.R. 1174 ), which covers, among other things, the extraterritorial reach of ECPA orders, was first introduced in the 113 th Congress and has been re-introduced in the 114 th Congress. Section 2 of S. 356 , H.R. 283 , and H.R. 699 would amend Section 2702(a)(3) of ECPA to provide that both an ECS and an RCS would be prohibited from voluntarily disclosing to a governmental entity the content of any communication and any non-content information such as subscriber information or other communications metadata. This blanket prohibition is subject to various exceptions under existing law, including required disclosure to the government under Section 2703. Section 3 of these bills contains three major reforms to accessing the content of communications under ECPA. First, it would place both an ECS and RCS under the same legal requirements. Second, they would eliminate the current 180-day rule found in Section 2703(a). Again, under Section 2703(a) as currently written, emails stored for 180 days or less are subject to the warrant requirement; while emails either opened or stored for more than 180 days are subject to less stringent process. These bills would eliminate this temporal requirement; thus, access to emails would require a warrant no matter how long they have been stored. Third, this section would remove the interpretive difficulty of determining whether a particular communication is in "electronic storage." Recall that federal courts have disagreed whether an opened email was being held in "electronic storage." This bill expands the scope of protection to include not only messages in "electronic storage," but also those "stored, held, or maintained by the provider." This would appear to bring any opened emails under the warrant umbrella. As under existing law, the government would be authorized to access non-content information, described as a "record or other information pertaining to a subscriber or customer," with a warrant, a Section 2703(d) order, consent of the subscriber, or upon a formal written request if the crime being investigated is telemarketing fraud. The government would be authorized to access basic subscriber information—such as name, address, local and long distance telephone records, and means and source of payment—with a warrant, a Section 2703(d) order, or with lesser process such as a federal or state administrative subpoena, a grand jury, a trial, or a civil discovery subpoena. The authorization to use a civil discovery subpoena is the only new authority that this subsection would add to current law. These bills would also alter when notice must be provided to a customer whose communications are disclosed to the government. Under the current system, customers need not be notified when the government uses a warrant to access the content of their communications from an ECS. To require the disclosure of an email that has been opened or stored for more than 180 days, the government can use lesser process than a warrant, but must provide notice to the customer. Under the proposed legislation, the government would be required to provide the customer notice if it accesses the contents of electronic communication from either an RCS or an ECS no matter if it has been stored for more than 180 days or has been opened. If the government entity accessing the information is law enforcement, it would have 10 days to give notice; all other governmental entities would have 3 days. These bills also include a provision permitting applicants for a disclosure order to request that notification be delayed. If the government entity accessing the information is law enforcement, it can request a delay of not more than 180 days; all other governmental entities can request a delay of not more than 90 days. Like the Email Privacy Act and the ECPA Amendments Act, the Online Communication and Geolocation Protection Act ( H.R. 656 ) would eliminate the different legal treatment given to information held by an RCS and ECS; would eliminate the 180-day rule provided under current law; and would expand the scope from communications held in "electronic storage" to those "stored, held, or maintained by that service." There are, however, differences between the other reform bills and H.R. 656 . First, H.R. 656 would require that any governmental entity receiving the contents of a communication provide notice to the customer within three days of receiving such information. The Email Privacy Act and ECPA Amendments Act, on the other hand, give a law enforcement agency 10 days and any other governmental entity 3 days to provide notice. (Note that delayed notice would still be permitted under Section 2705.) Second, unlike the other reform bills, H.R. 656 would not extend access to non-content information under Section 2703(c) with a civil discovery subpoena. Third, H.R. 656 does not include a "rule of construction" that is included in the other reform bills, which states that nothing in the bills should be construed to prohibit the government from seeking electronic communication records directly from a target of an investigation as opposed to a service provider. While the various ECPA reform bills discussed above appear to enjoy broad support among technology, civil liberty, and government constituencies, some federal agencies have argued that passage of these bills would significantly curtail their ability to conduct investigations. In an apparent effort to assuage these concerns, the Email Privacy Act, the ECPA Amendments Act, and the LEADS Act include a "rule of construction" noting that these agencies could still seek electronic communications directly from the target of their investigation. Currently, many federal agencies possess subpoena authority which allows them to compel the production of documents from providers without prior approval of a court. Pursuant to Section 2703(b), federal agencies have issued subpoenas to service providers to obtain subscriber information about individuals, including their names, telephone numbers, email addresses, and physical addresses, and have indicated that they have used this authority to obtain the content of emails held by service providers for more than 180 days. Administrative subpoenas are subject to a lower evidentiary standard than the probable cause threshold required to obtain a warrant. Courts reviewing such subpoenas, whether in response to a motion to quash the subpoena or at the behest of the agency seeking to enforce the subpoena in court, do so under the Fourth Amendment's general protection against unreasonableness. The Supreme Court has explained that in order for such subpoenas to be upheld: (1) the investigation must be for a legitimate purpose; (2) the materials sought must be relevant to the purpose; (3) the agency must not already possess the information; and (4) the agency must have followed the proper procedural steps. The Court has also indicated that information sought must be "reasonably relevant" to the investigation, and "sufficiently limited in scope, relevant in purpose, and specific in directive so that compliance will not be unreasonably burdensome." The relevancy standard is a relatively low evidentiary threshold. In the grand jury context, the Court has observed that a subpoena will be quashed on relevancy grounds only when a court finds that there is "no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject" of the investigation. Generally, federal district courts have a duty to enforce proper subpoenas and may not restrict their scope unless they are "plainly incompetent or irrelevant to any lawful administrative purpose." The Supreme Court has made clear that agencies are not required by the Constitution to notify the target of an investigation when subpoenaing information from third parties. In response to a subpoena, a recipient may raise privileges to protect information from disclosure, such as the attorney-client and work-product privileges. All of the major ECPA reform bills would require a warrant to obtain the contents of electronic communications held by service providers, whether held for more or less than 180 days. One result of this provision would be that administrative subpoenas—subject to a lower standard of proof than warrants—would no longer be sufficient to compel service providers to produce the contents of electronic communications. However, because most federal agencies—other than the Department of Justice (DOJ)—do not possess independent authority to seek a warrant from a magistrate judge, such legislation would appear to preclude agencies conducting an investigation to obtain the contents of electronic communications held by service providers directly from the provider itself. Instead, in order to do so, agencies would presumably need to rely on the DOJ to seek a warrant, whose authority is limited to doing so in criminal investigations. However, the Email Privacy Act, the ECPA Amendments Act, and the LEADS Act specify a "rule of construction" that would clarify that agencies may use subpoenas to obtain the contents of electronic communications from an "originator, addressee, or intended recipient." While agencies thus could not use a subpoena to obtain the contents of electronic communications directly from service providers, they might still do so from the individuals who sent or received certain messages. In addition, the rule of construction would make clear that administrative agencies might seek the contents of electronic communications from corporations where the emails were from officers or employees of the corporation and the corporation was serving "as an electronic communications service provider for its own internal email system." So, if Company X provided in-house email services to its employees, the government could seek those communications directly from the company under the SCA. Legislation requiring a warrant to access the contents of electronic communications held by service providers appears to codify the requirements announced by the U.S. Court of Appeals for the Sixth Circuit in U.S. v Warshak . In that case, the DOJ obtained a subpoena under Section 2703(b) compelling the target of a criminal investigation's ISP to turn over the contents of his emails to the government. The Sixth Circuit held that because subscribers have a reasonable expectation of privacy in the content of email "stored with, or sent or received through, a commercial ISP," the government must obtain a warrant based on probable cause to access them. Nevertheless, at least one federal agency has claimed that the new warrant requirement contained in the reform bills would unduly restrict its investigative authority. The Securities and Exchange Commission (SEC), in a letter to the Senate Judiciary Committee, noted that the targets of agency investigations do not always "retain copies of their incriminating communications or may choose not to provide the e-mails in response to Commission subpoenas." Accordingly, the letter argued, the SEC has historically relied on authority under Section 2703(b) to obtain the contents of electronic communications from service providers during its investigations. The legislation would foreclose the SEC from doing so in the future, thereby weakening its investigative authority. The letter argued that if the individuals under investigation knew that the SEC cannot go directly to the service providers to obtain the contents of emails, then those individuals would be less likely to be forthcoming in response to subpoenas issued directly to them. The letter concluded by suggesting that the legislation be amended by inserting a provision that would allow a federal civil agency to seek the contents of electronic communications from service providers subject to a standard similar to that governing the issuance of criminal search warrants. However, various civil liberties groups pushed back against this position. In a letter to the SEC, a collection of privacy advocates questioned the necessity of obtaining the contents of electronic communications directly from service providers. First, the letter argued that the agency had not done so since the Sixth Circuit Court of Appeals' 2010 decision in Warshak , and had rarely done so prior to that case. Second, the letter pointed to alternative methods of obtaining the contents of email, such as seeking to enforce a subpoena directly on the individual who is the target of an investigation in federal court. In addition, the letter argued that the authority sought by the SEC could lead to abuse. Information obtained via subpoena could be shared with the DOJ in a parallel criminal investigation, thus avoiding the warrant requirement. The attorney-client privilege could be violated in the collection of personal emails if the target of such a subpoena was not permitted to filter the emails for privileged material. The letter proposed its own amendment to potential legislation, which would clarify that administrative agencies could use subpoenas to require individuals to obtain and disclose information held by a third party. Like the Email Privacy Act, the ECPA Amendments Act, and the Online Communication and Geolocation Privacy Act, the Law Enforcement Access to Data Stored Abroad Act (LEADS Act) would require a warrant based on probable cause to obtain the contents of communications from both an ECS and RCS and eliminate the 180-day rule. In fact, the LEADS Act would provide all the other amendments to ECPA contained in both the Email Privacy Act and the ECPA Amendments Act (e.g., notice requirements, the "rule of construction," and authority to use civil discovery subpoenas for non-content information). In addition to these changes, the LEADS Act would authorize the government to obtain the contents of electronic communications regardless of where those contents are stored if the account holder is a U.S. person. This perceived need to extend ECPA's reach extraterritorially has been prompted, in part, by two facets of the Internet. The first is the fact that service providers can store customer data in fragmented form in multiple locations including overseas. The second is that data is not always stored in the same country as the user. The LEADS Act would partially address an issue currently being litigated in federal court—whether, under ECPA, the government can compel third-party service providers to produce the contents of electronic communications held overseas. In a pending case in the U.S. Court of Appeals for the Second Circuit, the United States sought and received a warrant from a federal magistrate judge under Section 2703(a) of ECPA for the contents of emails and subscriber information for an email account operated by Microsoft Corporation. Microsoft complied with the portion of the warrant seeking non-content information, which was stored on servers located inside the United States. However, Microsoft determined that the content information sought by the warrant was located in servers hosted in Dublin, Ireland and moved to quash that aspect of the warrant. In its challenge, Microsoft argued that because federal courts generally lack authority to issue warrants for the search and seizure of items located outside of the United States, the warrant issued here was therefore unauthorized. The magistrate judge—and, subsequently, the district court judge—rejected this argument and upheld the warrant. The court reasoned that Section 2703(a) warrants were not traditional warrants but hybrids, with aspects similar to both subpoenas and traditional warrants. In contrast to traditional warrants, subpoenas require the disclosure of information within a recipient's control, regardless of location (even if overseas). In addition, when executing Section 2703(a) warrants, government officials do not view any information until it arrives in the United States, so no extraterritorial search occurs While resolution of this question, at least in the Second Circuit, awaits the court's decision, the LEADS Act would at least partially clarify the government's authority in this area. The act would require third-party service providers to disclose the contents of U.S. persons' electronic communications held overseas upon issuance of a warrant based on probable cause. However, the legislation contains an exception: courts issuing such warrants shall modify or vacate the warrant if, upon a motion by the service provider, the court finds that disclosure would force the service provider to violate the laws of a foreign country. Given the variety of legal privacy regimes in other countries and the relative ease with which major service providers can relocate and store data around the world, it is unclear precisely how these provisions of the LEADS Act would affect email privacy. In addition, while the bill specifically would authorize the government to compel the disclosure of the contents of communications held by third-party service providers overseas if the account holder is a U.S. person, it is silent as to non-U.S. persons. Were the LEADS Act to become law, this omission would raise the question whether the government would be barred from issuing a warrant or a subpoena to require a service provider to disclose the contents of communications of non-U.S. persons held overseas. For example, assuming law enforcement was investigating criminal activity involving a U.S. person in concert with a non-U.S. person visiting the United States—would the government be permitted to compel the disclosure of the emails held overseas of the U.S. person, but not the non-U.S. person? One interpretation of this omission is that the broad privacy protections contained in Section 2702 would bar providers from disclosing the contents of communications of non-U.S. persons held overseas, and because Section 2703, under existing law or as amended by the LEADS act, does not specifically authorize the government to obtain a warrant compelling a service provider that stores information overseas to disclose them, the government is precluded under Section 2702 from obtaining them. Relying on the canon of statutory interpretation expressio unius est exclusio alterius ("expressing one item of an associated group or series excludes another left unmentioned"), it might be argued that the LEADS Act's express inclusion of U.S. persons could be interpreted to mean that the communications of non-U.S. persons were not intended to fall within the reach of this new rule. However, an alternative view would be that while the LEADS Act appears to lack any authorization for the government to obtain a warrant to compel the disclosure of the contents of communications of non-U.S. persons held overseas, the privacy protections of Section 2702 are simply inapplicable to such contents and do not bar the government from seeking them by other means. The "presumption against extraterritorial application" of U.S. law teaches that if a statute "gives no clear indication of an extraterritorial application, it has none." And even "when a statute provides for some extraterritorial application, the presumption ... operates to limit that provision to its terms." If one considers an ECPA warrant compelling a service provider to disclose the contents of communications held overseas to authorize a law enforcement seizure abroad, rather than simply directing an entity to act within the United States—a question currently under litigation in the Second Circuit Court of Appeals —then the presumption against extraterritorial application of U.S. law would presumably apply. In that case, the statute must clearly indicate that the privacy protections of Section 2702 apply abroad. Failing that, the relevant provisions of Section 2702 would not protect the contents of communications of non-U.S. persons held abroad, and the government could conceivably rely on alternative authorities to compel disclosure, such as a traditional subpoena. This issue, as well as other interpretive questions raised by ECPA reform, would likely have to be resolved through litigation.

In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA) to both protect the privacy of an individual's electronic communications and provide the government with a means for accessing these communications and related records. Although passed at the infancy of the Internet, the Stored Communications Act (SCA), which is part of ECPA, has been interpreted over the years to cover the content of emails, private Facebook messages, YouTube videos, and so-called metadata, or non-content information, connected to our Internet transactions (e.g., websites visited, to/from and time/date stamps on emails). The scope of the SCA is determined largely by the entities to which it applies, "electronic communication service" (ECS) providers and "remote computing service" (RCS) providers, as defined in the statute. It does not apply to government access to records held by a party to the communication. The SCA has two core components. First, it creates a broad bar against service providers voluntarily disclosing a customer's communications to the government or others, subject to various exceptions, and second, it establishes procedures under which the government can require a provider to disclose customers' communications or records. As to government access, ECPA utilizes a tiered system with different levels of evidence required depending on whether the provider is an ECS or RCS; whether the data sought is content or non-content; whether the email has been opened; and whether advance notice has been given to the customer. In recent years, ECPA has faced increased criticism from both the technology and privacy communities that it has outlived its usefulness in the digital era and does not provide adequate privacy safeguards for individuals' electronic communications. In light of these concerns, various reform bills have been introduced in the past several Congresses, with three major reform bills pending in the 114th Congress. The Electronic Communications Privacy Act Amendments Act of 2015 (S. 356, H.R. 283) and the Email Privacy Act (H.R. 699), almost identical in text, would, among other things, place both ECS and RCS providers under the same legal requirement; eliminate the current 180-day rule found in the SCA and require a warrant for emails no matter how long they have been stored or whether they have been opened; and remove the reliance on the definition of "electronic storage," which has confused the lower courts. Additionally, the Online Communications and Geolocation Privacy Act (H.R. 656) would make similar changes to the SCA. Some federal agencies, most prominently the Securities and Exchange Commission (SEC), which currently rely on their subpoena authority to access electronic communications, have argued that these bills would stymie their ability to conduct investigations as they have no legal authority to obtain a warrant. In response to this concern, both the Email Privacy Act and the ECPA Amendments Act include a rule of construction providing that nothing in these bills should be read to preclude the SEC or any other federal agency from seeking these records directly from a party to the communication, rather than the target's service provider. Finally, there has been ongoing litigation in the lower federal courts as to ECPA's extraterritorial reach. The Law Enforcement Access to Data Stored Abroad (LEADS) Act (S. 512, H.R. 1174) would require third-party service providers to disclose the contents of U.S persons' electronic communications held overseas upon issuance of a warrant based on probable cause.

American Indians in general are victims of violent crimes at a rate much higher than the general population. This trend carries over to domestic violence: American Indian women are victims of domestic and dating violence at more than twice the rate of non-Indian women. It is reported that most of this violence involves an offender of a different race. This fact creates a jurisdictional problem because tribal courts do not have criminal jurisdiction over crimes committed within the tribe's jurisdiction by non-Indians. States generally do not have jurisdiction over such crimes either. Although such crimes are subject to federal jurisdiction, frequently overburdened federal prosecutors are not able to prosecute them. Thus, it appears that American Indian women are left with a higher risk of domestic violence and less protection than non-Indian women. In the 112 th Congress, the Senate passed S. 1925 , which included proposed amendments to the Violence Against Women Act (VAWA) aimed at remedying this practical jurisdictional void. S. 47 and H.R. 11 , the Violence Against Women Reauthorization Act (VAWA Reauthorization) are nearly identical to S. 1925 and have been introduced in the 113 th Congress. Section IX of these bills would, among other things, expand the inherent jurisdiction of tribal courts to include non-Indian-on-Indian crimes of domestic and dating violence committed within the tribes' jurisdictions. Opponents of the proposed amendments in S. 1925 were concerned that, under current law, tribal courts are not required to provide the identical constitutional protections to criminal defendants as state and federal courts. The VAWA Reauthorization would provide that courts exercising special domestic violence criminal jurisdiction shall provide to defendants "all other rights whose protection is necessary under the Constitution of the United States in order for Congress to recognize and affirm the inherent power of the participating tribe to exercise criminal jurisdiction over the defendant." As discussed below, it is not clear what protections the tribes must provide to exercise this power. Criminal jurisdiction in Indian country is complex. Indian country is defined by 18 U.S.C. Section 1151 as Indian reservations, dependent Indian communities, and allotments. Depending on the crime and the identities of the victim and the perpetrator, there can be exclusive tribal jurisdiction, exclusive federal jurisdiction, concurrent tribal and federal jurisdiction, or exclusive state jurisdiction. The following chart sets forth which governments have jurisdiction over crimes in Indian country. In cases of dating and domestic violence where the offender is non-Indian and the victim is Indian, which appear to constitute the greatest percentage of domestic and dating violence involving Indians, tribal and most state courts do not have jurisdiction. Federal jurisdiction is exclusive, unless a state has criminal jurisdiction under P.L. 280. As a practical matter, there is a jurisdictional void for domestic and dating violence between non-Indians and Indians because federal prosecutors frequently cannot make such crimes a priority for prosecution on account of the demands of their workload and the difficulty of investigating such crimes, which usually occur far away from federal investigators. Therefore, it is argued that domestic violence between non-Indian perpetrators and Indian victims frequently goes unprosecuted and unpunished, and the victims of such violence go unprotected. To address the jurisdictional issue concerning domestic and dating violence involving non-Indians and Indians, the VAWA Reauthorization would give tribal courts jurisdiction over domestic and dating violence between non-Indians and Indians that occur within the tribes' jurisdiction, provided there are sufficient ties to the Indian tribes. Special domestic violence criminal jurisdiction would be limited to "act[s] of domestic or dating violence that occur[] in the Indian country of the participating tribe" and violations of protection orders. The VAWA Reauthorization does not purport to delegate federal authority to the tribes. Rather, it would declare that the tribes' "powers of self-government ... include the inherent power of that tribe, which is hereby recognized and affirmed, to exercise special domestic violence criminal jurisdiction over all persons." The Senate Report on S. 1925 explains that this special domestic violence criminal jurisdiction would apply "in a very narrow set of cases over non-Indians who voluntarily and knowingly established significant ties to the tribe." In an effort to ensure that this is the case, the VAWA Reauthorization, like S. 1925 , provides that Indian tribes may not exercise special domestic violence jurisdiction if both the victim and the defendant are non-Indians or the defendant lacks sufficient ties to the Indian tribe. A tribe may exercise special domestic violence jurisdiction only if the defendant lives in the Indian country of the tribe; is employed in the Indian country of the tribe; or is a spouse or intimate partner of a member of the tribe or an Indian residing within the tribe's territory. Therefore, the tribes' special domestic violence criminal jurisdiction would be limited to domestic and dating violence occurring within a tribe's jurisdiction by a non-Indian against an Indian when the non-Indian lives or works in the tribe's Indian country or the non-Indian is married to, or in an intimate relationship with, a tribal member or other Indian residing within the tribe's jurisdiction. Additionally, the VAWA Reauthorization would purport to give tribes criminal jurisdiction over domestic violence committed by non-Indians if the tribes provide to the defendant "all other rights whose protection is necessary under the Constitution of the United States in order for Congress to recognize and affirm the inherent power of the participating tribe to exercise special domestic violence criminal jurisdiction over the defendant." The meaning of this phrase is not clear, but there are two plausible interpretations. The Senate Committee on the Judiciary proposed in the VAWA Reauthorization Report that this provision would require tribes to "to protect effectively the same Constitutional rights as guaranteed in State court criminal proceedings." Stepping back for a moment, as originally conceived, the federal Bill of Rights did not apply against the states. It was not until passage of the Fourteenth Amendment, and subsequent incorporation by the Supreme Court, that protections in the Bill of Rights were applied against the states. To determine which rights should be "incorporated," the Court asks whether the right is "implicit in the concept of ordered liberty" or required to ensure the "fundamental fairness essential to the very concept of justice." Under incorporation, all criminal procedure safeguards contained in the Bill of Rights have been applied against the states except for the grand jury clause of the Fifth Amendment. It is plausible that the above phrase from the VAWA Reauthorization was intended to encompass this same set of rights. If so, Indian tribes would be required to guarantee all the rights contained in the Bill of Rights except for a grand jury. This would mean the addition of several protections not currently accorded all defendants in tribal court prosecutions. Alternatively, this "recognize and affirm" provision may merely require tribes to provide those protections that are currently available under the Indian Civil Rights Act and the Tribal Law and Order Act. The Senate Report states that these statutes "protect individual liberties and constrain the power of tribal governments in much the same ways that the Constitution limits the powers of Federal and State governments." This could mean that all the rights in these two statutes are deemed sufficient to permit Congress to "recognize and affirm the inherent power" of the tribes to exercise criminal jurisdiction over non-Indians. As discussed below, this could hinder several protections accorded under the U.S. Constitution as applied against the states. As mentioned above, the VAWA Reauthorization would extend the tribes' inherent sovereignty to include criminal jurisdiction over non-Indians committing domestic or dating violence against Indians. "The powers of Indian tribes are, in general, inherent powers of a limited sovereignty which has never been extinguished. Before the coming of the Europeans, the tribes were self-governing sovereign political communities." The Supreme Court has recognized that "[a] basic attribute of full territorial sovereignty is the power to enforce laws against all who come within the sovereign's territory." Although tribes once enjoyed full sovereignty, since their incorporation into the United States, aspects of their full sovereignty have been restricted or lost, including the authority to punish non-Indians. The Supreme Court has stated, however, that Congress has authority to relax restrictions on the tribes' inherent sovereignty. For example, in Duro v. Reina , the Supreme Court held that Indian tribes had lost the inherent authority to try nonmember Indians. The Court wrote that prosecution of a nonmember Indian was "inconsistent with the Tribe's dependent status and could only have come to the Tribe by delegation from Congress, subject to the constraints of the Constitution." Congress passed an amendment to the Indian Civil Rights Act to provide tribes with jurisdiction to try nonmember Indians. However, rather than delegating federal authority to the tribes, as the Supreme Court suggested, Congress "recognize[d] and affirm[ed] in each tribe the inherent tribal power (not delegated federal power) to prosecute nonmember Indians." In United States v. Lara , the Court considered whether a nonmember Indian defendant who was tried and convicted in tribal court could be tried for the same conduct in federal court or whether the double jeopardy clause prohibited the federal prosecution. Based on the language of the statute and its legislative history, which indicated congressional intent to affirm and acknowledge the tribes' inherent authority, the Court concluded the tribal court exercised its own non-federal authority in trying the defendant. Because the tribe and the federal government were exercising different authorities in prosecuting the defendant, the double jeopardy clause did not apply. The majority also wrote broadly that the Constitution authorized Congress to relax the restrictions on the tribes' inherent authority to allow tribes to try nonmember Indians. The VAWA Reauthorization would purport to exercise this congressional authority and expand the inherent sovereign authority of tribes to include the authority to try defendants involved in non-Indian on Indian domestic and dating violence. It is unclear whether the Supreme Court would find that Congress has this authority. In Oliphant v. Suquamish Indian Tribe , the Supreme Court implicitly recognized that prior to "submitting to the overriding sovereignty of the United States" Indian tribes possessed the power to try non-Indians. The power to try non-Indians, therefore, is an aspect of inherent sovereignty which the tribes lost, like the power to try nonmember Indians. In Lara , the majority opinion concluded that the Constitution authorized Congress to relax the restrictions on tribes' inherent authority to try nonmember Indians. It could be argued that because nonmember Indians and non-Indians are both outsiders to the tribe, there appears to be no reason to distinguish Congress's authority to relax restrictions on the tribes' inherent sovereignty to try nonmember Indians from its authority to relax restrictions on the tribes' authority to try non-Indians. In other words, if the tribe can exercise inherent authority over nonmember Indians, it appears it would be able to exercise inherent authority over non-Indians. However, it is not clear whether the Court would adopt that reasoning. In his concurrence in Lara , Justice Kennedy took issue with the majority's statement that the Constitution authorized Congress to relax the restrictions on the tribes' inherent authority and subject nonmembers to inherent tribal criminal authority. He questioned whether Congress has authority to subject citizens to a sovereign outside the structure of the Constitution. The Constitution is premised on consent of the governed, he wrote. The Constitution established a system of two sovereigns—the nation and the state—to which the citizen owes duties and against which the citizen has rights. Justice Kennedy wrote that by amending the Indian Civil Rights Act to extend inherent tribal criminal jurisdiction over nonmember Indians, "the National Government seeks to subject a citizen to the criminal jurisdiction of a third entity to be tried for conduct occurring wholly within the territorial borders of the Nation and one of the States. This is unprecedented. There is a historical exception for Indian tribes, but only to the limited extent that a member of a tribe consents to be subjected to the jurisdiction of his own tribe." Justice Kennedy, therefore, seems to believe that Congress may not have authority to subject nonmember citizens to the criminal jurisdiction of tribes, extra-constitutional sovereigns, to which they have not consented. Further, the Supreme Court considered the issue of tribal court civil jurisdiction over nonmembers in a case that, although it did not concern criminal jurisdiction, may be informative with regard to jurisdiction generally in tribal courts. In Plains Commerce Bank v. Long Family Land and Cattle Co. , decided four years after Lara , the majority held that the tribal court did not have civil jurisdiction over a non-Indian bank that had allegedly discriminated against a tribal member in connection with the sale of a parcel of non-Indian land on the reservation. The majority opinion, which cites Justice Kennedy's concurrence, notes that an exercise of tribal court jurisdiction must be based on the consent of the nonmember: Not only is regulation of fee land sale beyond the tribe's sovereign powers, it runs the risk of subjecting nonmembers to tribal regulatory authority without commensurate consent. Tribal sovereignty, it should be remembered, is "a sovereignty outside the basic structure of the Constitution." United States v. Lara , ... (Kennedy, J., concurring in judgment). The Bill of Rights does not apply to Indian tribes. Indian courts "differ from traditional courts in a number of significant respects." And nonmembers have no part in tribal government—they have no say in the laws and regulations that govern tribal territory. Consequently, those laws and regulations may be fairly imposed on nonmembers only if the nonmember has consented, either expressly or by his actions. Even then, the regulation must stem from the tribe's inherent sovereign authority to set conditions on entry, preserve tribal self-government, or control internal relations. Although the Supreme Court stated in Lara that Congress has authority to relax restrictions on the tribes' inherent authority so that they may try nonmember Indians, it is not clear whether today's Court would reach the same result. Of the five Justices signing on to that statement, only Justice Breyer and Ginsburg are on the Court today. Justice Kennedy expressed doubt about whether Congress had that authority. Justice Thomas questioned whether tribes had inherent sovereignty at all and stated that he believed tribes did not have inherent authority to try their own members, but that under existing precedent, he believed Congress had the authority to change the contours of the tribes' inherent sovereignty. Justice Scalia, in signing on to Justice Souter's dissent, apparently believed Congress did not have authority to expand the inherent sovereignty of Indian tribes to try nonmember Indians. Indian law is full of contradictions and confusion, making it difficult to predict how the Court will decide. As Justice Thomas wrote in his concurrence in Lara , "Federal Indian policy is, to say the least, schizophrenic. And this confusion continues to infuse federal Indian law and our cases." Therefore, it is not clear whether the Court considering a tribal court conviction under the VAWA Reauthorization would find that Congress has the authority to expand the inherent sovereignty of tribes to try non-Indian defendants. If Congress does not have authority to subject citizens to inherent tribal criminal authority, it is possible that the courts would uphold tribal authority to try defendants involved in non-Indian on Indian domestic and dating violence as a delegation of federal authority. This is what Justice Souter would have done in Lara . He, with Justice Scalia, dissented because they believed that prior precedent referring to the need for Congress to delegate authority to the tribes to try nonmember Indians was binding and that, by virtue of their dependent status, tribes simply cannot exercise inherent authority to try nonmembers. To fulfill Congress's intention to fill the jurisdictional void created by Duro , they would have found that Congress delegated federal authority to the tribes to try nonmember Indians. The dichotomy between delegated and inherent power of tribes has important constitutional implications. If Congress is deemed to have delegated to the tribes Congress's own power to prosecute crimes, the whole panoply of protections accorded criminal defendants in the Bill of Rights will apply. If, on the other hand, Congress is permitted to recognize the tribes' inherent sovereignty, so that the tribes are exercising their own powers, the Constitution will not apply. Instead, criminal defendants must rely on statutory protections under the Indian Civil Rights Act or those protected under tribal law. Although the protections found in federal statutory and constitutional sources are similar, there are several important distinctions between them. Most importantly, if inherent sovereignty is recognized and only federal statutory protections are triggered, defendants (1) may be subjected to double jeopardy for the same act; (2) may not be able to exercise fully their right to counsel; (3) may have no right to prosecution by a grand jury indictment; (4) may not have access to a representative jury of their peers; and (5) may have limited federal appellate review of their cases. Additionally, although the Indian Civil Rights Act (ICRA) covers many of the same protections found in the U.S. Constitution, the same protections are not always given the same meaning. For instance, the terms "due process" and "equal protection" are construed with regard to the "historical, governmental and cultural values of an Indian tribe." As such, these rights may function much differently than they do in federal courts. The Double Jeopardy Clause of the Fifth Amendment provides: "[N]or shall any person be subject for the same offence to be twice put in jeopardy of life or limb[.]" In general, the Double Jeopardy clause protects an individual from being subjected twice to the perils of trial for the same offense. The purpose of the Double Jeopardy Clause was best framed by Justice Black in Green v. United States : The underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence is that the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an offense, thereby subjecting him to embarrassment, expense, and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty. There are three broad classes of cases to which the clause applies: (1) a second prosecution for the same offense after an acquittal; (2) a second prosecution for the same offense after a conviction; and (3) multiple punishments for the same offense. To determine if two prosecutions are for the "same offense" (and thus barred by the clause), a court will ask whether the elements of the two crimes are the same. However, even in instances in which two acts constitute the "same offense" under this elements test, separate prosecutions are not prohibited when different sovereigns exert criminal jurisdiction. Under this dual sovereignty doctrine, the Supreme Court has ruled that "an act denounced as a crime by both national and state sovereignties is an offense against the peace and dignity of both and may be punished by each." As such, a defendant may be subjected to two prosecutions for the same offense by two different sovereign governments. This doctrine was extended to the tribal context in United States v. Wheeler . There, the Court had to determine if the Double Jeopardy Clause barred the prosecution of an Indian in federal court when he had previously been convicted in tribal court for a lesser included offense arising out of the same incident. This question hinged on whether the tribe's authority to prosecute its own members was inherent or delegated. If it were exercising inherent authority, the tribe would be deemed a sovereign, the dual sovereignty rule would apply, and the Double Jeopardy Clause would not bar a second prosecution for the same offense. However, if the tribe were exercising delegated authority from the federal government, its power would not be sovereign, but merely derivative of Congress's power. Under this approach, the dual sovereignty rule would not apply, and a second prosecution would be barred. The Court ultimately recognized that Indian tribes may have been divested of some powers of sovereignty, but have retained certain aspects of sovereignty, including criminal jurisdiction over their own members. Because of this dependent status, the Court explained, the tribes' sovereignty "exists only at the sufferance of Congress." Because Congress had been silent as to tribal jurisdiction over their own members, the Court concluded that they retained this power. Additionally, the Court relied on the fact that there was no express grant of criminal jurisdiction to the tribes to try their own members, further supporting the theory that the tribes were exercising pre-existing sovereign powers rather than powers delegated from Congress. By deeming this inherent power, the tribe's prosecution of the defendant did not violate the Double Jeopardy Clause. There are various double jeopardy implications for accepting either the inherent sovereignty or delegation theories. If tribal jurisdiction is extended to non-Indians under inherent sovereignty, any non-Indian may be subject to multiple prosecutions in tribal and federal courts, as the dual sovereignty doctrine will preclude application of the Double Jeopardy Clause. Conversely, as observed in Wheeler , under the delegation theory, a prosecution by a tribe for a minor offense may bar prosecution by the federal government for a more serious federal crime. If a tribal prosecution were to conclude before a federal case, under the delegation theory, this would preclude an imposition of sentence in the federal prosecution, usually for a more serious punishment under federal law. Further complicating the issue, under the Indian Civil Rights Act, tribes may only sentence a defendant for a maximum prison term of three years for any one offense or nine years total. If that prosecution concludes first, that will be the maximum penalty to which the defendant may be sentenced (as long as both prosecutions would be for the "same offense"). The Sixth Amendment requires that "[i]n all criminal prosecutions, the accused shall enjoy the right ... to have the Assistance of Counsel for his defense." The primary purpose of the right to counsel is to ensure the defendant is accorded a fair trial. The Sixth Amendment right to counsel is not limitless, but attaches when criminal proceedings have been initiated against the defendant "by way of formal charge, preliminary hearing, indictment, information, or arraignment." The right to counsel under the Sixth Amendment, however, does not cover police interrogations. To protect this fundamental right, the Supreme Court has required that both federal and state governments provide counsel when the defendant cannot afford one. The Court observed that this "noble ideal cannot be realized if the poor man charged with crime has to face his accusers without a lawyer to assist him." However, counsel need not be provided at no cost in every case. The court must determine if the case will result in actual imprisonment. If so, the defendant is entitled to counsel. If the criminal offense permits imprisonment, but the judge determines that such an imposition will not occur in that case, the defendant is not provided free counsel. In tribal prosecutions, the Indian Civil Rights Act requires that Indian tribes may not "deny to any person in a criminal proceeding the right ... at his own expense to have the assistance of counsel for his defense." Because the United States Constitution does not apply to Indian tribes, the tribal courts are not required under the Sixth Amendment to provide indigent defendants counsel in all cases where the defendant faces actual imprisonment. The Tribal Law and Order Act of 2010, however, requires Indian tribes to provide free counsel to defendants for crimes with a sentence of more than one year. Additionally, the VAWA Reauthorization would require tribes to provide counsel to defendants if any term of imprisonment may be imposed. There is, however, some question whether tribes have the resources to provide all defendants counsel when required to do so. If tribes are unable to provide counsel in some instances, evidence obtained in these cases might be inadmissible in a later federal prosecution. In United States v. Ant , for example, the defendant pleaded guilty to manslaughter in tribal court and was sentenced to six months' imprisonment. A federal indictment was then brought against him for the same crime. The prosecution sought to admit into evidence his guilty plea from the tribal prosecution. The U.S. Court of Appeals for the Ninth Circuit ruled that the plea was inadmissible, as it was obtained in violation of the defendant's Sixth Amendment right to counsel. In particular, Ant was not afforded the opportunity to have appointed counsel; did not make a knowing and intelligent waiver of that right; and was not made aware that his guilty plea could be used in a later prosecution. Although the Court left untouched the tribal prosecution, it would not permit evidence obtained in violation of the Constitution into evidence. In addition to the Sixth Amendment right to counsel, a distinct and separate right to counsel has been implied from the Fifth Amendment right against self-incrimination. Likewise, the Indian Civil Rights Act contains a nearly identical provision prohibiting the tribes from compelling any person "to be a witness against himself." In construing the Fifth Amendment right against self-incrimination, the Supreme Court held in Miranda v. Arizona that before questioning a suspect in custody, police are required to warn him that he has the right to have an attorney present and will have one appointed for him if he cannot afford one. As the Court noted in Miranda : If an individual indicates that he wishes the assistance of counsel before any interrogation occurs, the authorities cannot rationally ignore or deny his request on the basis that the individual does not have or cannot afford a retained attorney. The financial ability of the individual has no relationship to the scope of the rights involved here. The privilege against self-incrimination secured by the Constitution applies to all individuals. Once the accused invokes his right to counsel under Miranda , interrogation should stop until an attorney is present. As the Court observed in Miranda , the police are not required to keep a station house lawyer on hand at all times to advise suspects. However, if the tribes are unable to provide suspects with counsel, Miranda requires that the police not question the suspects unless they waive their right to counsel. Accordingly, if a suspect invokes his right to counsel, but the tribe does not provide one, any uncounseled statements would be inadmissible in a tribal or federal prosecution. As one observer has noted, over the years, Congress and the executive branch have made efforts to increase tribal prosecutions. With this increase may come a greater need for public defenders who can practice in tribal courts. If Congress expands tribal jurisdiction over non-Indians, it may want to consider additionally expanding resources for tribes in order to provide such counsel. The Fifth Amendment provides: "No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment of indictment of a Grand Jury." A grand jury is an investigatory body of citizens who are brought together to decide whether there is enough evidence to bring formal charges against an individual. Historically, grand juries were seen as a buffer between the accuser and the accused, preventing the arbitrary exercise of government power. As apparent from the constitutional text, not all criminal cases must be initiated by a grand jury, but only those for "infamous crimes." Rule 7 of the Federal Rules of Criminal Procedure requires that any crime that is punishable by death or imprisonment for more than one year (felony) must be prosecuted by a grand jury indictment. Unlike in federal court, in tribal prosecutions there is neither a constitutional nor federal statutory right to a grand jury indictment. In the seminal case Talton v. Hayes , the Supreme Court held that the right to prosecution by grand jury indictment contained in the Fifth Amendment did not apply against the tribes. The Court reasoned that because the Cherokee nation was constituted before the founding of America, protections in the United States Constitution could not logically apply to the tribes. Likewise, the Indian Civil Rights Act does not contain a statutory requirement for a grand jury indictment for felonies. With neither constitutional nor statutory protections, the accused in tribal court must submit to the criminal practices of that particular tribe. However, in the context of jurisdiction over non-Indians, if Congress is deemed to have delegated its power to the tribes, the grand jury requirement along with the other safeguards of the Constitution will apply in tribal prosecutions. The right to a jury trial has a long historical pedigree in Anglo-American tradition, dating back to the Magna Carta and before. This right was imported from England by the American colonists, and found its place in the Sixth Amendment, which provides: "In all criminal prosecutions, the accused shall enjoy the right to a ... public trial, by an impartial jury of the State and district wherein the crime shall have been committed." Like the right to a grand jury, the right to a jury trial relied on a body of one's peers to protect them against unrestrained and arbitrary government power. Not long after passage of the Fourteenth Amendment, the accused began attacking the racial composition of juries as a violation of the Equal Protection Clause. In Strauder v. West Virginia , the Supreme Court held that West Virginia's statute that required that a jury consist of only white men was a violation of the black defendant's right to equal protection of the law. Since then, there have been innumerable equal protection challenges concerning the racial make-up of juries. Along these lines, in 1942, the Court observed that "the proper functioning of the jury system, and, indeed, our democracy itself, requires that the jury be a 'body truly representative of the community.'" This has come to be known as the "fair cross-section" requirement. Generally, the prosecution and defense may remove an individual from the jury using a peremptory challenge without having to explain the reason for doing so. But the Court in Batson v. Kentucky held that peremptory challenges based solely on account of race are prohibited by the equal protection clause. Under the Indian Civil Rights Act, "[n]o Indian tribe in exercising powers of self-government shall ... deny to any person accused of an offense punishable by imprisonment the right, upon request, to a trial by jury of not less than six persons." This requirement meets the constitutional minimum of a six-member jury, but it does not require an impartial one. This could pose equal protection problems. For example, as one observer notes, some tribal courts are not required to allow nonmembers to sit on juries. To provide vastly different forms of constitutional protections to similarly situated people simply based on race is the problem the equal protection clause was designed to prevent. The Court's hesitation to submit non-Indians to an Indian jury was evident in Oliphant . In commenting on the inverse situation—Indians being tried by a non-Indian jury—the Court noted that Indians were being tried "not by their peers, nor by the customs of their people, nor the law of their land, but by … a different race, according to the law of a social state of which they have an imperfect conception." Although these possible equal protection problems have been raised, the Supreme Court has yet to squarely address this issue in the tribal context. S. 47 and H.R. 11 include specific protections to address this issue. The bill requires the tribe to provide defendants "the right to a trial by an impartial jury that is drawn from sources that—(A) reflect a fair cross section of the community; and (B) do not systematically exclude any distinctive group in the community, including non-Indians." If tribal criminal jurisdiction is extended to cover non-Indians under the VAWA Reauthorization, some tribes may have to reconstitute their jury systems to provide more representative juries for non-Indian defendants. There are significant differences in appellate review of criminal prosecutions between tribal and federal courts. Although in 1894 the Supreme Court held in McKane v. Durston that the due process clause does not create a constitutional right to appeal in a criminal case, there are numerous statutory avenues for appellate review in federal prosecutions. For example, under 18 U.S.C. Section 3742, a defendant may appeal a decision of a federal trial court if the sentence was imposed in violation of the law or an incorrect application of the sentencing guidelines. Criminal decisions in tribal courts, on the other hand, are not subject to direct federal appellate review. In Santa Clara Pueblo v. Martinez , the Supreme Court was asked to determine what forms of review may be granted from a tribal court ruling. The Court observed that, after balancing the competing interests of "preventing injustices perpetrated by tribal governments" with "avoiding undue or precipitous interference in the affairs of the Indian people," Congress chose habeas review as the sole form of relief. Generally speaking, the writ of habeas corpus requires any government authority who is holding (habeas) a person (corpus) in custody to produce that person to the court in order to determine the legality of his detention. In addition to the traditional custody requirement, ICRA requires that defendants may only seek federal habeas review when they have exhausted all tribal remedies. There are several potential defects with applying the habeas approach to cases over non-Indians. First, a writ of habeas corpus, as pointed out by Justice White's dissent in Santa Clara Pueblo , can only be invoked when the defendant is in custody. This will preclude any appeal to federal court that entails a fine or where the prison term has already been served. Second, protections under ICRA will primarily be construed and enforced in tribal forums. Important civil rights such as equal protection and due process will be construed by tribal courts, which may not be bound by the U.S. Constitution. With habeas as the only avenue of review, federal oversight accorded criminal defendants might be limited. In light of this, Congress may want to reconsider using habeas as the sole form of review if tribal criminal jurisdiction is extended over non-Indians under the VAWA Reauthorization. Authorizing the same federal appellate review as is received in federal courts could close this gap. Supporters of the VAWA Reauthorization assert there is a significant problem of domestic and dating violence against American Indian women. Currently, although tribes may prosecute Indian perpetrators, they may not prosecute non-Indian perpetrators. In addition, most states do not have jurisdiction to prosecute non-Indians who commit domestic and dating violence against Indians. Usually, the federal government has exclusive jurisdiction to try such non-Indian perpetrators. However, because federal prosecutors usually are located a long distance from reservations and have heavy workloads, investigation and prosecution of non-Indian on Indian domestic and dating violence are said to be inadequate. The VAWA Reauthorization would provide tribal courts with criminal jurisdiction to prosecute non-Indians charged with domestic or dating violence against an Indian that occurs within their jurisdictions. With the VAWA Reauthorization's tribal jurisdiction provisions, there are two fundamental legal questions that must be asked: (1) If Congress grants Indian tribes criminal jurisdiction over non-Indians, would this be a recognition of inherent sovereignty or a delegation of federal prosecutorial power?; and (2) Depending on which form of authority is employed, what procedural safeguards will be accorded criminal defendants? Through a series of cases and federal statutes, Indian tribes exercise their inherent sovereignty over member Indians and nonmember Indians. It is not clear from the Supreme Court case law whether this theory would be extended to prosecutions of non-Indians. If it is extended under an inherent sovereignty theory, it appears that tribes will not be bound by the Constitution but only by protections in the Indian Civil Rights Act, Tribal Law and Order Act, and the individual tribal laws. If, on the other hand, the tribes are exercising delegated federal authority, it appears the full catalog of protections in the Bill of Rights would apply against the tribes.

Domestic and dating violence in Indian country are reportedly at epidemic proportions. However, there is a practical jurisdictional issue when the violence involves a non-Indian perpetrator and an Indian victim. Indian tribes only have criminal jurisdiction over crimes involving Indian perpetrators and victims within their jurisdictions. Most states only have jurisdiction over crimes involving a non-Indian perpetrator and a non-Indian victim within Indian country located in the state. Although the federal government has jurisdiction over crime committed by non-Indians against Indians in Indian country, offenses such as domestic and dating violence tend to be prosecuted with less frequency than other crimes. This creates a practical jurisdictional problem. S. 47 and H.R. 11, the Violence Against Women Reauthorization Act, would recognize and affirm participating tribes' inherent sovereign authority to exercise special domestic violence jurisdiction over domestic violence involving non-Indian perpetrators and Indian victims occurring within the tribe's jurisdiction. It is not clear whether Congress has the authority to restore the tribes' inherent sovereignty over nonmembers, or whether such authority would have to be a delegation of federal authority. The tribal jurisdiction provisions of S. 47 and H.R. 11 are nearly identical to the tribal jurisdiction provisions of S. 1925, which passed the Senate in the 112th Congress. In a series of cases, the Supreme Court outlined the contours of tribal criminal jurisdiction. In United States v. Wheeler, the Court held that tribes have inherent sovereign authority to try their own members. In Oliphant v. Suquamish Indian Tribe, the Court held the tribes had lost inherent sovereignty to try non-Indians. The Court in Duro v. Reina determined that the tribes had also lost the inherent authority to try nonmember Indians. In response to Duro, Congress passed an amendment to the Indian Civil Rights Act that recognized the inherent tribal power (not federal delegated power) to try nonmember Indians. S. 47 and H.R. 11 would apparently supersede the Oliphant ruling and "recognize and affirm the inherent power" of the tribes to try non-Indians for domestic violence offenses. The Supreme Court stated in United States v. Lara that Congress has authority to relax the restrictions on a tribe's inherent sovereignty to allow it to exercise inherent authority to try nonmember Indians. However, given changes on the Court, and, as Justice Thomas stated, the "schizophrenic" nature of Indian policy and the confused state of Indian law, it is not clear that today's Supreme Court would hold that Congress has authority to expand the tribes' inherent sovereignty. It may be that Congress can only delegate federal power to the tribes to try non-Indians. The dichotomy between delegated and inherent power of tribes has important constitutional implications. If Congress is deemed to delegate its own power to the tribes to prosecute crimes, all the protections accorded criminal defendants in the Bill of Rights will apply. If, on the other hand, Congress is permitted to recognize the tribes' inherent sovereignty, criminal defendants would have to rely on statutory protections under the Indian Civil Rights Act or tribal law. Although the protections found in these statutory and constitutional sources are similar, there are several important distinctions between them.

Check cashers are nonbank businesses that cash checks for a fee. Check cashing businesses may offer additional fee-based products and services including money orders, processing utility bill payments, pre-paid phone cards, and funds transfers. These enterprises often operate in neighborhoods not well served by banks. Check cashers provide access to financial services for individuals without accounts at conventional banks. To provide these services, a check cashing enterprise establishes a business relationship with a bank to clear checks, transfer funds, and open lines of credit for liquidity purposes. The Bank Secrecy Act regulations define check cashers as money services businesses (MSBs). Both banks and nonbank MSBs must have written anti-money laundering programs, file currency transaction reports (CRTs) and supicious activity reports (SARs), and maintain certain records. MSBs, including check cashers, must register with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury. Banks providing services to check cashers are expected to have systems to manage the risks associated with these accounts. The following developments created difficulties to obtaining and maintaining access to banking services. The Office of the Comptroller of Currency (OCC) a federal bank regulatory agency included check cashers and other MSBs in a list of inherently high-risk businesses in its Bank Secrecy Act/ Anti-Money Laundering Manual. The OCC has also stated that the risk profiles of individual businesses can vary widely based on the variety and range of financial services offered. FinCEN strengthened BSA enforcement after the enactment of the USA PATRIOT Act and with the increased focus on terrorism financing after 9/11. Banker's compliance costs were affected by the risks associated with a check cashing business. Substantial fines were levied by bank regulators on banking institutions for BSA non-compliance. The potential price of doing business proved to be prohibitive for a number of banks, resulting in discontinuance of services to check cashers. In April 2005, bank regulators issued interagency guidance in response to concerns over the loss of access to banking services by check cashers and other MSBs. Concern is twofold: (1) widespread termination of account relationships could result in the loss of access to financial services and products by the significant market segment currently served by check cashers and (2) if these businesses are consequently forced "underground" the potential loss of transparency could damage ongoing efforts to safeguard the U.S. financial system. The guidance addressed both the ability of check cashers and other MSBs to obtain services and the caution to be maintained by banks dealing with these businesses. The goal was to clarify the regulatory expectations for banking institutions providing services to domestic businesses. It is generally acknowledged that the trend of individual banks terminating account relationships with check cashers has continued. On June 21, 2006, the Subcommittee on Financial Institutions and Consumer Credit of the House Financial Services Committee held an oversight hearing to assess the impact of the BSA obligations on check cashers and other MSBs. The nonbank check cashing industry can trace its origins back to the 1930's when employers began paying workers by check as opposed to cash. Workers without traditional bank accounts used check cashers, where an account relationship is not required, to convert those paychecks into cash for a fee. Today's check cashing enterprise may offer additional fee-based products and services including money orders, processing utility bill payments, pre-paid phone cards and funds transfers. Money transfers may include foreign worker remittances (money sent back to the workers' home countries). Some also offer credit products such as payday loans, where customers are given cash for a postdated personal check for the amount of cash requested plus the check casher's fee. Check cashing services can be offered as an ancillary component of a business, such as a liquor stores that cashes payroll checks. Items cashed are primarily payroll checks, government checks, personal checks, cashier's checks, money orders, and traveler's checks. The typical value of a cashed item ranges from $300 to $600. Most fees range from 1% to 12% of the check's value. The main financial risk for the check casher is a returned check unpaid by the bank on which it was drawn. Fees vary by type of check. For example, the fee for a personal check is usually greater than for a government check. Many states require a license for check cashing enterprises and/or regulate their fee structures. Some states have additional restrictions for pay day lending. The check cashing industry has experienced a period of significant growth since the early 1990's. One estimate for 1990 indicated that the check cashing industry comprised approximately 4,250 businesses that cashed 128 million checks with a total face value of $38 billion. In 2002, an estimated 11,000 check cashing enterprises cashed approximately 180 million checks with a total face value of $55 billion. Customers are drawn to check cashers for a variety of reasons. Check cashers typically offer convenient hours of service that extend beyond the normal hours of operation found at mainstream banking institutions. The barriers involved with opening an account at a bank such as minimum account balances, specific identification requirements, and credit checks are not encountered. In addition, the check holder is not subject to the variety of fees and services charges typically associated with a bank account. A customer's funds are immediately available while banks may impose check clearing holds. Customers of check cashing businesses tend to be low and moderate income consumers. The so called "unbanked" consumers rely on alternative financial services offered by nonbanks. There are a significant number of unbanked families in the United States; they do not hold a checking or savings account at a federally insured financial institution. Studies vary, but it is generally estimated that about 10 million U.S. households do not own a bank account. The costs associated with maintaining accounts, dislike of banking institutions, and the convenience offered by alternative nonbank service providers are among the more frequently given reasons for their popularity. Conversely, it is estimated that 58% of the check cashing industry's clientele are bank account holders. In 1970, the Bank Secrecy Act was enacted to create a federal anti-money laundering program. In 2001, Title 111 of the USA PATRIOT ACT amended the BSA with provisions to strengthen the existing program and to counter terrorist financing. The Financial Crimes Enforcement Network, a bureau of the U.S. Treasury Department, administers and issues regulations pursuant to the BSA. Check cashing enterprises that meet the definition of a money service business are required to register with FinCEN. Banks providing services to check cashers are expected to have in place systems to manage the risks associated with these accounts. BSA reporting and record keeping requirements apply to both banks and MSBs. Both must establish anti-money laundering programs commensurate with the risks posed by their size, location and financial activities. Both are required to file currency transaction reports (CTRs) for cash transactions over $10,000 and to maintain a log on the sale of financial products such as money orders or travelers checks valued from $3,000 to $10,000. Information must also be maintained on funds transfer of $3,000 or more. Finally, MSBs are required to file suspicious activity reports (SARs). FinCEN has delegated the authority to examine check cashers for BSA compliance to the Internal Revenue Service (IRS). The intent of the interagency guidelines was to clarify the supervisory expectations of banks to remain in compliance with the requirements of the BSA while providing services to check cashers and other MSBs. The guidance was issued to assist banks in developing appropriate BSA risk assessments. Another goal was to help ensure check cashers and other MSBs have reasonable access to banking services. Concurrent with the 2005 guidance, an advisory was issued addressing the BSA obligations of check cashers and outlining the documentation an MSB may be expected to provide when establishing an account relationship at a bank. The advisory was issued as part of an ongoing campaign to inform MSBs about their BSA requirements. FinCEN has recognized that outreach to the MSB industry is essential; they found that many of the businesses, especially the smaller operations, are unfamiliar or unaware of their obligations. The 2005 interagency guidance directed banks opening and maintaining accounts for MSBs to apply the requirements of the BSA on a risk-assessed basis. Five minimum due diligence expectations are presented: (1) apply the bank's Customer Identification Program, (2) confirm FinCEN registration, (3) confirm compliance with state or local licensing requirements, (4) confirm agent status (many MSBs operate through a system of agents), and (5) conduct a basic Bank Secrecy Act/Anti-Money Laundering risk assessment to determine the level of risk associated with the potential account and whether further due diligence is necessary. The guidance outlines further due diligence criteria, beyond the minimum expectations, that may be called for by the risk profile of the individual money service business. Check cashers require specific banking services to operate. These financial services include depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes. Banks generate fee income for financial services provided. An individual banking institution's experience with check cashers is often dependent on the proximity between the two. Some banks specialize in servicing check cashers. Consequently, the decision of an individual bank to discontinue services to check cashers could have a significant impact. For example, according to the Financial Services Center of America (FISCA), in New York 12 banks currently provide services to check cashers but 87% of the 640 licensed check cashers do business with only two of these banks. BSA compliance requirements and supervisory expectations are viewed as burdensome and have caused banks to re-evaluate the costs and benefits of opening and maintaining accounts for check cashers. Banking representatives testifying at the June 2006 oversight hearing stated that the level of BSA risk assessment and monitoring required of them by the regulatory agencies remains burdensome and costly despite the 2005 guidance. Of particular concern is determining the delineation between low and high risk profiles and the corresponding due diligence expectations. In addition, bankers suggested that regulators should not expect a bank's monitoring activity to extend beyond the check cashing business to the activity of the check casher's customers. They argue FinCEN should further clarify that banks are not expected to be de facto regulators of check cashers by instituting a system that more clearly defines the responsibility for oversight of the BSA obligations of check cashers and other MSBs. In March 2006, a FinCEN news release acknowledged the ongoing concerns of both the banking industry and money service businesses relating to BSA regulations despite the previous steps taken (including the April 2005 guidance) to address the issues. The difficulties involve how to minimize the resources and costs borne by financial institutions while ensuring the effective administration of the anti-terrorism financing and anti-money laundering programs. The news release announced an Advanced Notice of Proposed Rulemaking seeking input on what additional guidance or regulatory action would be appropriate to address the ongoing concerns about check casher's and other MSB's access to banking services. The news release emphasized the important role of MSBs and the negative effect on the health and safety of the U.S. financial system if these businesses are driven underground. Comments received by FinCEN are under review and potential next steps are being considered. On June 21, 2006, the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Financial Services held an oversight hearing on the Bank Secrecy Act's impact on money services businesses. There was general agreement that banks were re-evaluating their businesses strategies in light of BSA due diligence costs. There were reports of individual institutions concluding that opening and maintaining accounts for MSBs did not make economic sense. Regulatory and supervisory adjustments were discussed as a means of easing the burden on banks. Stronger state MSB regulatory oversight was encouraged. Joint industry/government training on BSA obligations for banks, bank examiners, and MSBs was suggested. In addition, FiSCA (the trade association, representing 6,000 check cashing operations and nonbank financial service centers), suggested the need for legislation that would remove state regulated check cashers from "high risk" categories. In its view, legislation could also limit administrative enforcement actions against banks that service check cashers in good faith.

A check cashing enterprise is a fee-based business that will cash a customer's check without requiring an account relationship. The U.S. check cashing industry underwent a significant expansion in the 1990s. Customers are attracted by the immediate access to funds, availability of service without a bank account, and convenience of extended hours of operation. In general, the industry is viewed as a provider of valuable financial services to an under served market segment. Check cashers are dependent on access to bank services to operate. Banks provide depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes. Banks and check cashers are both subject to Bank Secrecy Act (BSA) regulations. The BSA is an anti-money laundering and anti-terrorism financing statute. Federal regulators have cautioned banks that nonbank money service businesses (an umbrella term that includes check cashing enterprises) can present heightened money laundering risks. Consequently, some banks have discontinued their business relations with check cashers. The discontinuance of services to check cashers brought about complaints to regulators and increased lobbying of Congress. Bank regulators have issued guidance to clarify BSA compliance expectations. Congress held hearings on the concerns of banks and check cashers. This report will be updated as events and legislation warrant.

A healthy agricultural industry and a healthy environment are both important to the nation. However, agricultural production can have varying impacts on the environment. The use of both natural resources (e.g., soil and water) and synthetic inputs (e.g., fertilizers and pesticides) in agricultural production can sometimes create a negative impact on the surrounding ecosystem. For example, soil erosion, farm chemical runoff, and overgrazing can affect water and air resources. Converting grassland prairies and wetlands to crop production can impact wildlife populations. The magnitude of these environmental impacts varies widely across the country and changes over time. Traditionally, farm and ranch operations have been exempt or excluded from many federal environmental statutes and regulations, and some point out that the relative number of environmental regulations affecting agriculture is small compared to other industries. Historically, environmental policies have focused on large industrial sources such as factories and power plants, because attempting to regulate numerous individual crop and livestock operations can be a challenge for government regulators. Therefore, the current federal farm policy addressing environmental concerns is in large part voluntary; that is, it seeks to encourage agricultural producers to adopt conservation practices through economic incentives. Because natural resources are a major input into most agricultural production, many in agriculture cite the health of the surrounding environment as being important for long-term productivity. However, given the agricultural sector's size in the landscape and its potential to affect its surrounding environment, there is interest in both managing potential impacts of agricultural actions on the environment and also maintaining an economically viable agricultural industry. The U.S. Environmental Protection Agency (EPA) is the primary federal authority for administering environmental protection policies, while the U.S. Department of Agriculture (USDA) is the primary federal authority for incentivizing agricultural production. Most environmental regulation, in terms of permitting, inspection, and enforcement, is done by state and local governments, typically based on policies administered by the EPA. USDA provides both educational outreach and technical and financial assistance opportunities for producers to implement environmentally sustainable practices. While many of these voluntary programs and policies have been in place for decades and have had considerable success, some question whether a strictly voluntary approach to agricultural conservation generates sufficient environmental gains. EPA, on the other hand, has recently received criticism from some lawmakers and industry leaders for appearing to focus some of its recent regulatory efforts on agriculture. Some claim EPA has overreached its regulatory authority. In general, agricultural industry groups, among others, have been vocal in their displeasure with recent EPA regulatory proposals and the costs associated with protecting public health and the environment. Others, such as environmental groups, have supported some of the regulatory actions and in some instances voiced concerns that the federal actions may not go far enough in protecting public health and the environment, prompting some lawmakers offer statements supporting various EPA regulatory efforts. Criticisms of the regulatory actions are reflected in recent legislative proposals that would restrict or prohibit certain actions. Beyond the criticism of individual regulations of EPA and other agencies, there also are calls for broad regulatory reforms, for example, to reinforce the role of economic considerations in agency decision making or to increase Congress's role in approving or disapproving regulatory decisions. Congress will likely continue to give attention to EPA's and other federal agencies' roles in regulating environmental protection. Both the Senate and House Committees on Agriculture have shown particular interest in EPA's actions and conducted oversight hearings on regulatory impacts on agriculture during the 112 th Congress. This report provides the background, status, and issues related to selected environmental regulations or initiatives possibly affecting agriculture that have drawn attention in and beyond Congress. An issue's inclusion in this report is not intended to suggest or imply that the regulation or action has either a beneficial or harmful effect on agriculture or to what degree. Similarly, regulatory actions not included in this report do not indicate the lack of potential impact on the agriculture sector. This report only addresses federal regulatory actions. In many cases, constraints on agricultural production to reduce pollution emissions arise at the state level in response to local concerns. State and local regulations are not specifically included in this report, but may be discussed generally where appropriate. Actions considered voluntary or in response to regulatory actions are also not included. This means that many USDA programs and initiatives, which offer funding to agricultural producers mitigate environmental impacts, are not discussed in this report. The majority of the regulations discussed in this report are administered by EPA, though not all. In some cases, agriculture is the direct or primary focus of the regulatory actions. In other cases, agriculture is one of many affected sectors. In many cases, for a regulation to become effective, EPA rules must be adopted by states to which the program has been delegated (e.g., most environmental permitting programs are delegated to qualified states). Moreover, many states require that the state legislature review new regulations before the new rules would take effect. The general regulatory development and compliance process can be tedious and complex. In some cases, the promulgation and implementation of regulations may take years. In the case of some environmental regulations, the agencies must adhere to court-ordered requirements and deadlines. This report has been revised and updated a number of times since its initial release in early 2011. A few of the initial issues covered in this report are no longer congressionally active, either due to enacted legislation or because of a change in Administration priorities. These issues have been removed and new emerging issues have been added. Congressional interest in environmental regulations affecting agriculture remains and oversight is ongoing. Legislative action and oversight is discussed within each of the sections below. The remainder of this report is organized under four broad subheadings: Air, Water, Energy, and Pesticides. Each section includes selected regulatory actions and provides background information and statutory authority, followed by the current status of the rule or regulatory action and issues identified or raised by the agricultural community regarding the regulatory action. Finally, each section identifies the appropriate CRS specialist for additional information; these contacts are also listed in Table 1 . Agricultural production practices from both livestock and crop operations generate a variety of substances that enter the atmosphere, potentially creating health and environmental issues. Agriculture's effect on air quality rose to national importance in the 1930s, when the conversion of native grasslands to cropland caused severe dust storms known as the Dust Bowl. The federal response to this phenomenon created many of the conservation outreach and education programs that remain in place today. While dust storms of this proportion are rare in the United States today, issues associated with soil erosion, particulates and farm chemical emissions, and livestock odor are still of concern. The following section covers five federal regulations relating to air, including mandatory reporting of greenhouse gases (GHGs); GHG emissions tailoring rule and the "cow tax"; reductions of emissions from gasoline/diesel powered stationary engines; national ambient air quality standards (particulate matter and ozone); and Emergency Planning and Community Right-to-Know Act (EPCRA) and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) reporting requirements. EPA was required by the FY2008 Consolidated Appropriations Act "to develop and publish a ... final rule not later than 18 months after the date of enactment of this Act, to require mandatory reporting of greenhouse gas (GHG) emissions above appropriate thresholds in all sectors of the economy of the United States." On October 30, 2009, EPA promulgated the final Greenhouse Gas Reporting Rule. The rule required suppliers of fossil fuels or industrial gases, manufacturers of vehicles and engines, owners or operators of electric power plants, and other—mostly industrial—sources to report their emissions of GHGs to EPA annually, beginning in 2011. Covered entities are required to report to EPA if they emit 25,000 tons or more of carbon dioxide or the equivalent amount of five other GHGs (methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride and other fluorinated gases). About 10,000 facilities in 31 categories of sources were covered by the rule, as promulgated. EPA subsequently added 11 other categories of sources. The only agricultural sources covered by the Reporting Rule are manure management systems that emit methane and nitrous oxide in amounts greater than the reporting threshold. EPA identified six specific categories of agricultural sources that could be subject to the rule: beef cattle feedlots; dairy cattle and milk production facilities; hog and pig farms; chicken egg production facilities; turkey production; and broilers and other meat type chicken production. In all, EPA estimates that 107 livestock facilities nationwide would need to report under the rule. In EPA's FY2010 appropriations act, however, Congress included language barring EPA from using funds under that act to implement mandatory GHG reporting by manure management facilities. This prohibition has been carried over into FY2011, FY2012, FY2013, and FY2014 by the continuing resolutions and appropriations acts that have funded EPA's continued operation, including P.L. 113-76 , the Consolidated Appropriations Act of 2014. Therefore, despite the inclusion of manure management systems among the regulated entities, no agricultural sources are currently required to comply with the Reporting Rule. For the facilities required to report, the rule imposes little cost because it only requires monitoring and reporting, and the monitoring does not require direct measurement of emissions. EPA considered requiring direct measurement of GHG emissions from manure management systems, but rejected the approach due to what it termed "the extreme expense and complexity of such a measurement program." Instead, the agency promulgated an approach that allows the use of default factors, such as a system emission factor, for certain elements of the calculation, combined with the use of site-specific data (e.g., number of livestock). EPA estimated the total annual cost of the rule for the 107 potentially affected manure management facilities at $300,000. In comments on the proposed rule, a number of agricultural stakeholders noted that agriculture as a whole is responsible for less than 1% of total GHGs emitted and questioned why manure management systems in particular were included in the proposal. Other categories of agricultural sources, such as livestock enteric fermentation and soil management, emit larger amounts of methane and nitrous oxide. EPA explained that it did not include reporting by the other agriculture categories because, for those sources, no direct GHG emission measurement methods are available except for expensive and complex equipment. Using emissions estimates for such sources, instead of direct measurement, would have a high degree of uncertainty and could burden a large number of small emitters. Commenters also expressed concern about the difficulty that livestock facilities might have in determining whether or not they are subject to the rule. In response, EPA modified the proposal to remove manure sampling requirements and instead will allow facilities to use default values for estimating emissions. The threshold table within the final rule ( Table 2 ) identifies animal population threshold levels below which facilities are not required to report emissions. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] , or Jim McCarthy, Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . EPA promulgated standards for GHG emissions from new light duty motor vehicles on May 7, 2010. The standards themselves are not considered particularly controversial, but their implementation, on January 2, 2011, triggered two other requirements of the Clean Air Act (CAA) that apply to stationary sources. The first of these is a requirement that stationary sources emitting any air pollutant "subject to regulation" under the act must obtain a permit under Title V of the CAA (Title V permit) if they emit more than 100 tons per year of the pollutant subject to regulation. Agricultural sources, such as confined animal feeding operations (CAFOs), are among those that could potentially be subject to this permit requirement. Because permit applicants must pay a fee to cover the costs of administering the permit program, many in the agriculture community have referred to this requirement as the "cow tax." The second requirement triggered by implementation of the motor vehicle standards is a requirement that new or modified stationary sources emitting more than 100 or 250 tons annually of any pollutant subject to regulation under the act must obtain pre-construction permits (referred to as "PSD" permits) and install Best Available Control Technology (BACT) to reduce emissions. On June 3, 2010, EPA promulgated a rule that sets higher thresholds for the Title V permit and PSD/BACT requirements that would apply to GHG emissions. EPA says that under the promulgated rule, the agency has not identified any agricultural sources that would be required to obtain permits for GHG emissions, and therefore none would be subject to BACT requirements. Under the rule, called the GHG "Tailoring Rule," the threshold initially is annual emissions of 75,000 tons of carbon dioxide equivalents, not 100 or 250 tons as required for other pollutants by the PSD and Title V permits. With this threshold, the nation's largest GHG emitters, including power plants, refineries, cement production facilities, and about two dozen other categories of sources (an estimated 17,000 facilities in all, or nearly 70% of the nation's largest stationary source GHG emitters), are the only sources required to obtain permits. Farms, smaller businesses, and large residential structures (about 6 million sources in all these categories), which would otherwise be required to obtain permits after GHGs became subject to regulation, are shielded from permitting requirements, including permit fees. The June 2010 Tailoring Rule does not permanently exempt smaller sources. In promulgating the rule, EPA said it expected to lower the threshold, but not below 50,000 tons of GHG emissions, through separate rule-making that would take effect in 2013. The agency has subsequently decided not to lower the threshold and has also stated that, within five years of the rule's promulgation, EPA and state permitting authorities would conduct a study of the permitting authorities' ability to administer more inclusive PSD and Title V permit programs. Within a year of the study's completion, EPA and state permitting authorities would conduct rulemaking for this phase of the program. The study might confirm the threshold, revise it, or establish other streamlining techniques for subsequent permitting activity. It is unclear how agricultural sources might be affected by these potential rule changes. In the FY2010 appropriations act for EPA, Congress included a provision prohibiting EPA from using funds under the act to promulgate or implement any rule requiring the issuance of CAA Title V permits for GHG emissions associated with livestock production. This prohibition was carried over into FY2011, FY2012, FY2013, and FY2014 by the subsequent appropriations measures that fund EPA's continued operation. The issues related to the Tailoring Rule are similar to those raised by the " Mandatory Reporting of Greenhouse Gases (GHGs) ," discussed above. The rule itself appears to exempt all agricultural sources by its high thresholds and the exclusion of fugitive emissions, but many are concerned about whether EPA intends to consider any agricultural sources as subject to regulation under future Clean Air Act GHG rules. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] , or Jim McCarthy, Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . On June 15, 2004, EPA promulgated emission control standards for hazardous air pollutants emitted by gasoline- and diesel-powered stationary engines. This is primarily of concern to agricultural operations that rely on gas and diesel engines for irrigation pumping. The standards are generally referred to as the RICE (Reciprocating Internal Combustion Engine) rules. Besides setting emission standards, the rules would have exempted these engines from emission controls during startup, shutdown, and periods of malfunction. On December 18, 2008, the D.C. Circuit Court of Appeals ruled that the standards must address emissions during all phases of operation, including periods of startup, shutdown, and malfunction. As a result, the court vacated and remanded the rules to EPA. EPA subsequently divided the standards into two regulatory actions. On March 3, 2010, it issued a final rule for existing diesel-powered stationary engines. The rule applies to more than 900,000 stationary engines used as generators and to power pumps in industrial and agricultural settings. EPA issued final emissions standards for existing stationary engines that burn gasoline, natural gas, and landfill gas, known as spark ignition engines, on August 20, 2010. The proposed rules were criticized by some state permitting authorities and industry groups as being unworkable, difficult to enforce, and perhaps unnecessary in rural settings. In response to these comments, EPA stated that most engines used by agricultural sources are smaller than 300 horsepower, and will be subject only to required management practices (e.g., frequency of oil changes). Catalysts or other control equipment would not be required. Jim McCarthy, Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . National Ambient Air Quality Standards (NAAQS) are standards for outdoor (ambient) air that are intended to protect public health and welfare from harmful concentrations of pollution. NAAQS are at the core of the Clean Air Act, even though they do not directly regulate emissions. In essence, they are standards that define what EPA considers to be clean air. Once a NAAQS has been set, the agency, using monitoring data and other information submitted by the states, identifies areas that exceed the standard and must, therefore, reduce pollutant concentrations to achieve it. After these "nonattainment" areas are identified, state and local governments have up to three years to produce State Implementation Plans that outline the measures they will implement to reduce the pollution levels and attain the standards. NAAQS have been set for six pollutants. The two that affect the largest number of areas are those for ozone and particulate matter (PM). Because some farming and livestock practices contribute to particulate matter emissions and because particulate matter and ozone can affect agricultural productivity, the agricultural community has shown particular interest in these standards. NAAQS ozone issues are discussed in the next section. Partially in response to an June 6, 2012 order by the U.S. District Circuit Court for the District of Columbia, and as agreed to in a consent decree, EPA published a final rule revising the PM NAAQS January 15, 2013. The January 2013 revisions change the existing (2006) annual health-based ("primary") standard for "fine" particulate matter 2.5 micrometers or less in diameter (PM 2.5 ), lowering the allowable average concentration of PM 2.5 in the air from the current level of 15 micrograms per cubic meter (µg/m 3 ) to a limit of 12 µg/m 3 . The existing "24-hour primary standard" for PM 2.5 that was reduced from 65 µg/m 3 to 35 µg/m 3 in 2006 was retained, as was the existing standard for larger, but still inhalable, "coarse" particles less than 10 micrometers in diameter, or PM 10 . EPA promulgated its previous final revisions to the PM NAAQS and the associated national air quality monitoring requirements on October 17, 2006, primarily strengthening the preexisting (1997) PM 2.5 . The 2006 PM NAAQS revisions did not strengthen the existing annual standard for PM 10 . The EPA periodic review (as mandated by statute ) of the PM standards supporting the revisions published January 2013, was initiated at the same time as implementation of the current 2006 PM NAAQS. Revising PM NAAQS starts a process that includes a determination of areas in each state that exceed the standard and must therefore reduce pollutant concentrations to achieve it. Following determinations of these "nonattainment" areas based on multiple years of monitoring data and other factors, state and local governments must develop (or revise) State Implementation Plans (SIPs) outlining measures to attain the standard. Based on statutory scheduling requirements, nonattainment designations for revised PM NAAQS will not be determined until the end of 2014, and states would have until at least 2020 to achieve compliance with the January 2013 revised PM 2.5 NAAQS. Based on anticipated reductions associated with several other existing national air pollution control regulations and programs, EPA predicted that seven counties in California would be the only areas unable to meet the new PM 2.5 primary standard by 2020. The 2006 revised NAAQS, primarily affected urban areas: 120 counties and portions of counties in 18 states have been designated nonattainment areas for PM 2.5 by EPA based on 2006-2008 air quality monitoring data. Final designations for the 2006 PM NAAQS were published November 13, 2009. The majority of the roughly 3,000 counties throughout the United States (including tribal lands) were designated attainment/unclassifiable, and are not required to impose additional emission control measures to reduce PM 2.5 . For those 120 counties designated nonattainment for PM 2.5 , states had until November 2012 to submit state implementation plans (SIPs) identifying specific regulations and emission control requirements that would bring an area into compliance with the standard. The EPA will not be designating any new nonattainment areas for PM 10 NAAQS since the standards were not strengthened by the 2013 NAAQS revision. Similarly, EPA did not designate any new areas for PM 10 following the 2006 final PM NAAQS revisions. To the contrary, a number of counties previously designated nonattainment have been determined by EPA to be in attainment since the 2006 NAAQS revisions. As indicated in Figure 1 , below, the majority of the counties throughout the United States (including tribal lands) are designated attainment/unclassifiable for the PM 10 NAAQS. As of February 6, 2014, 49 of the original 89 areas designated nonattainment for PM 10 had been redesignated to maintenance. As shown in Figure 1 , the remaining 40 areas are either meeting the PM 10 NAAQS based on assessment of 2010-2012 air quality data (most recent three years available) and awaiting consideration for redesignation, have incomplete data, or remain nonattainment. Those areas previously designated nonattainment for the PM 10 NAAQS typically include, or were adjacent to, densely populated localities, where PM monitors are frequently located. Only a subset of PM 10 NAAQS nonattainment areas in California and Arizona have SIPs that directly include requirements related specifically to agricultural operations in addition to requirements for other sources. The agricultural community has generally been more concerned with EPA's review and potential changes of the PM 10 NAAQS than with the PM 2.5 NAAQS. Thoracic coarse particles (PM 10 ) are generally emitted as a result of mechanical processes that crush or grind larger particles or the resuspension of dusts. While certain agricultural operations can contribute to emission of PM 10 —sometimes referred to as "farm dust"—there are many sources of thoracic coarse particles, for example, unpaved and paved roads, traffic-related emissions such as tire and brake lining materials, direct emissions from industrial operations, construction and demolition activities, and mining operations. EPA has noted that atmospheric science and monitoring information indicates that exposures to PM 10 tend to be higher in urban areas than in nearby rural locations. Urban or industrial ambient mixes of PM 10 dominated by high-density vehicular, industrial, and construction emissions have been the primary concern with respect to reducing the negative health effects. EPA continues to research the link between coarse particle composition and toxicity, including the toxicity of urban versus rural particles. During the review process leading up to the publication of the revised PM NAAQS in January 2013, some Members of the 112 th Congress raised concerns in letters to the EPA Administrator and during oversight hearings, about EPA's staff draft reports, the Clean Air Scientific Advisory Committee (CASAC) recommendations, and the potential impacts that tightening the PM 10 NAAQS standards could have on the agricultural industry. Many Members encouraged EPA to retain the current PM 10 NAAQS standards. Other Members urged the Administrator to include retaining the PM 2.5 as an option for consideration in the agency's proposed rule. In addition, proposed legislation during the 112 th Congress addressed the ongoing PM NAAQS review. The January 15, 2013, final PM NAAQS rule revised the PM 2.5 standard but did not modify the standards for inhalable "coarse" particles larger than 2.5 but smaller than 10 microns (PM 10 ), nor were modifications to the PM 10 standard proposed in 2012. [author name scrubbed], Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . Under the CAA, EPA is to review the science for each of the NAAQS every five years, and either reaffirm or revise the standard. The EPA Administrator completed a review of the ozone NAAQS in March 2008, and made both the primary (health-based) and secondary (welfare-based) standards more stringent, but he did not set the standards within the ranges recommended by the independent panel of scientists that advises him (i.e., CASAC). He also rejected their advice to change the form of the secondary standard to better measure whether ozone concentrations were above levels needed to protect crops and forests from damage. Challenged in court, EPA agreed to reconsider the March 2008 decisions (court decisions are discussed further below). On January 19, 2010, EPA proposed to strengthen the primary ozone NAAQS and to revise the form of the secondary standard as the agency's scientific advisers had recommended. Under the proposed revisions, the vast majority of counties with ozone monitors would be found in nonattainment of the primary standard, using the most recent available data, and many might violate the secondary standard, as well. EPA expected to promulgate a final version in late summer 2011, but on September 2, 2011, the President requested that the agency withdraw its decision without promulgating it. Instead, the agency will continue a review that it aims to complete by October 2015. EPA is also proposing new monitoring requirements for the states, with more monitors to be placed in rural areas. EPA has resumed implementation of its 2008 ozone NAAQS, which affects few agricultural areas. Despite the withdrawal of what would have been an even more stringent standard, air quality is likely to improve as a result of regulations currently being phased in for cars, trucks, and electric power plants, among other sources. Ultimately, the 2015 ozone NAAQS revision could be one of the more significant regulations promulgated by EPA, and could call attention to air quality problems in agricultural areas to a far greater extent than previous standards. Jim McCarthy, Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . The Emergency Planning and Community Right-to-Know Act (EPCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund) have reporting requirements that are triggered when specified quantities of certain substances are released to the environment, including ammonia and hydrogen sulfide. Both ammonia and hydrogen sulfide are chemicals generated by livestock manure, particularly swine and poultry, when in concentrated animal populations. Both CERCLA and EPCRA include citizen suit provisions that have been successfully used to take legal action against poultry and swine operations for violations of the reporting requirements of the laws. In 2005, a group of poultry producers petitioned EPA for an exemption from EPCRA and CERCLA release reporting requirements, arguing that releases from poultry growing operations pose little or no risk to public health, while reporting imposes an undue burden on producers and government responders. In December 2008, EPA promulgated an EPCRA/CERCLA administrative reporting exemption for air releases. The final rule exempts hazardous substance releases that are emitted to the air from all livestock operations (not just poultry farms) from CERCLA's requirement to report releases to the air to federal officials. It provides a partial exemption for such releases from EPCRA's requirement to report releases to state and local emergency officials: the final rule continues to apply EPCRA's reporting requirement to large CAFOs (those subject to Clean Water Act permitting, discussed below in the section on " Implementation of Existing Clean Water Act Permit Requirements for CAFOs "), but it exempts smaller facilities. The reporting exemptions in the final rule took effect January 20, 2009. The 2008 rule was challenged by industry groups, including the National Pork Producers Council, as well as environmental advocates. Industry argued that CAFOs should be exempted from all reporting under Superfund and EPCRA because air emissions from animal feeding operations pose no threat to public health or the environment. Environmentalists also went to court, arguing that CAFOs should report under both laws because air emissions from animal feedings operations do pose a public health and environmental risk. The legal challenges were consolidated in the U.S. Court of Appeals for the District of Columbia ( Waterkeeper Alliance v. EPA, D.C. Cir., No. 09-1017). In June 2010 the government asked the court to remand the 2008 rule for reconsideration and possible modification. The court approved the government's request in October 2010. EPA anticipates proposing a new or revised rule, but a schedule for doing so is uncertain, and a rule has not been proposed. In the meantime, the 2008 exemption rule remains in effect. According to press reports, EPA does not plan to directly regulate air emissions from animal feeding operations, but is seeking to require their reporting. Legislation was introduced in the 112 th Congress to exclude "manure" from the definition of hazardous substance under CERCLA and to remove reporting liability under CERCLA and EPCRA ( H.R. 2997 and S. 1729 ), but no further action occurred. Proponents of the legislation argue that Congress did not intend either of these laws to apply to agriculture and that enforcement and regulatory mechanisms under other laws are adequate to address environmental releases from animal agriculture. Opponents respond that enacting an exemption would severely hamper the ability of government and citizens to know about and respond to releases of hazardous substances caused by an animal agriculture operation. No similar legislation has been introduced in the 113 th Congress. The agriculture industry remains concerned about the potential burden on large CAFOs of complying with the EPCRA reporting requirements, even though the final rule exempted facilities that are not subject to Clean Water Act permitting (see " Implementation of Existing Clean Water Act Permit Requirements for CAFOs ," below). Critics of the 2008 rule, including environmentalists and some state air quality officials, contend that the CERCLA and EPCRA reports provide good information about emissions that enable citizens to hold companies accountable in terms of how toxic chemicals are managed. Similarly, the agriculture industry is concerned about potential liability that could arise for animal operations if manure were to be defined as a "hazardous substance." [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . The release of sediment, nutrients, pathogens, and pesticides from agricultural production can degrade the quality of water resources. While it is widely believed that agriculture can have a significant impact on water quality, there is no comprehensive national study of agriculture's effect on water quality. Several water quality assessments document degradation from agriculture practices; however, the extent and magnitude is difficult to measure because of its nonpoint nature. Federal environmental laws, such as the Clean Water Act (CWA), largely do not regulate agricultural actors, in many cases giving the regulatory responsibilities to the states. Constraints on agricultural production to reduce pollution discharges typically arise at the state level in response to local concerns. The following section covers five regulations relating to water, including implementation of existing Clean Water Act permit requirements for CAFOs; Chesapeake Bay protection and restoration; Florida nutrient water quality standards; defining "waters of the United States" for CWA regulatory purposes; and spill prevention control and countermeasure (SPCC) plans. Under the CWA, while most of agriculture is exempt from federal regulation, large CAFOs are defined as point sources and thus are subject to the act's prohibition against discharging pollutants into U.S. waters without a permit. In October 2008, EPA issued a regulation to revise a 2003 CWA rule governing waste discharges from CAFOs. This action was necessitated by a 2005 federal court decision ( Waterkeeper Alliance et al. v. EPA , 399 F.3d 486 (2 nd Cir. 2005)), resulting from challenges brought by agriculture industry groups and environmental advocacy groups that vacated parts of the 2003 rule and remanded other parts to EPA for clarification. The 2008 rule details requirements for permits, annual reports, and development of plans for handling manure and wastewater. Parts of the rule are intended to control land application of manure and agricultural wastewater. According to EPA, the 2008 rule applies to about 15,300 CAFOs that need permit coverage (74% of the 20,700 CAFOs operating in 2008). Under the rule, CAFOs were to obtain permits and develop and implement nutrient management plans by February 27, 2009. Further legal challenges followed promulgation of the 2008 revised rule. Agricultural industry groups (although generally satisfied with the rule) filed lawsuits in several federal appellate circuits. Environmental groups also brought a legal challenge to the rule. The various petitions were consolidated in the U.S. Court of Appeals for the 5 th Circuit. In addition, EPA officials discussed with environmental plaintiffs possible settlement of portions of the litigation that could involve additional regulatory changes. In December 2009, the court agreed to a joint request from EPA and environmentalists to sever the activists' portion of the litigation. In settling with environmental plaintiffs, EPA agreed to issue guidance aimed at clarifying what CAFOs must do to comply with federal clean water regulations and to help CAFO owners determine whether they need permits; the guidance was issued in May 2010. In settling that part of the lawsuit, EPA also agreed to propose a rule within one year to collect facility information from all CAFOs, such as number of types of animals, type and capacity of manure storage or treatment process, and quantity of manure generated annually by the CAFO, in order to provide a CAFO inventory and assist in implementing the 2008 rule. In October 2011, EPA proposed a rule, referred to as the CAFO reporting rule, that would require CAFOs to submit a specific set of basic operational information to EPA. The proposal would require CAFOs to provide the following basic information: facility contact information; production area location; whether the CAFO has a CWA permit; the number and type of animals at the CAFO; and the number of acres available for land application of manure, litter, and process wastewater. The proposed rule drew criticism from industry groups who contend that the agency lacks legal authority to require CAFOs that do not discharge to report facility information. Environmental advocates defended EPA's authority to require non-discharging CAFOs to report, but they said that the proposed rule fell short of what is required of EPA under the 2009 settlement agreement that forced the reporting rule. In July 2012, after reviewing public comments, EPA decided not to promulgate a regulation. Based on comments and responses, especially from states, EPA concluded that it can obtain much of the desired CAFO information from federal agencies, states, and other existing data sources. It would be more reasonable and efficient to obtain existing information from these sources, EPA said, before determining whether to issue a rule requiring CAFOs to submit information. The agency noted that the 2010 settlement agreement with environmental groups committed EPA to proposing a rule, but did not commit it to any particular final action. The challenge to the 2008 CAFO rule by agricultural industry groups continued, even after EPA's settlement with environmental plaintiffs. In 2011, a federal court issued a ruling that supported industry's challenge on several issues. The court upheld the portion of the rule requiring a CAFO to apply for a permit if the facility has an actual discharge. However, the court vacated aspects of the rule requiring permits for proposed discharges (permits are still required for CAFOs that actually discharge) and allowing EPA to take enforcement action against CAFO owners based on their failure to apply for permits. In July 2012, EPA modified the 2008 CAFO regulations to conform to the court's 2011 ruling. The rest of the 2008 rule was not affected by the court's March 2011 ruling and remains in effect. The federal government did not seek a rehearing on the Fifth Circuit's ruling, nor did it petition the Supreme Court for a review. EPA concluded that the court's ruling effectively simplifies permitting by removing uncertainty about the "duty to apply" for a permit and thus is largely self-implementing. The agency has conducted outreach to states on the effect of the ruling and is in the process of revising the guidance that it issued in May 2010 concerning CAFOs that discharge or propose to discharge, in view of the ruling. A number of questions linger about implementation of the 2008 rule. For example, agricultural industry groups are concerned that EPA regions may be providing differing interpretations of a provision of the 2008 rule that allows farms to self-certify that they will not discharge, a finding that allows them to avoid having to apply for a permit and protects CAFOs from liability for not having a permit in the event of an accidental discharge. Some agricultural industry groups also are concerned that EPA could initiate a new rulemaking that would include additional permit and pathogen control requirements. Separate from the 2008 CAFO rule that applies nationally, EPA is developing new CWA requirements for CAFOs located in the Chesapeake Bay watershed (see " Chesapeake Bay Protection and Restoration ," below), which could expand the universe of regulated CAFOs in that region and require more stringent standards for permits. Many in the agriculture sector were concerned that these Chesapeake Bay-specific rules would be the basis for EPA to propose a revision of the broader 2008 rule. In fact, under the 2010 settlement agreement with environmental groups, EPA had agreed to propose changes to the national rule, but in June 2013, EPA and the environmental parties modified the 2010 agreement. Under the modification, EPA will decide by June 2018 whether a national rulemaking is needed. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . Despite several decades of activity by governments, the private sector, and the general public, efforts to improve and protect the Chesapeake Bay watershed have been insufficient to meet restoration goals. Although some specific indicators of Bay health have improved slightly or remained steady (such as blue crabs and underwater bay grasses), others remain at low levels of improvement, especially water quality. Overall, the Bay and its tributaries remain in poor health, with polluted water, reduced populations of fish and shellfish, and degraded habitat and resources. The primary pollutants causing impairments are nutrients (nitrogen and phosphorus) and sediment discharged from multiple urban, suburban, and rural sources around the Bay. In May 2009, President Obama issued an executive order that declared the Bay a "national treasure" and charged the federal government with assuming a strong leadership role in restoring the Bay. The executive order established a Federal Leadership Committee for the Chesapeake Bay to develop and implement a new strategy for protecting and restoring the Chesapeake region. The resulting strategy, which was released in May 2010, launched major specific environmental initiatives to establish new clean water regulations on stormwater discharges and pollution discharges from animal feedlots in the Bay watershed, put new agricultural conservation practices on farms in the region, and restore land and water habitat. According to EPA, agriculture represents the single largest source of nutrient and sediment pollution to the Bay, with about half of agriculture's pollutant load directly related to livestock waste. Agriculture covers about 25% of the Bay watershed, and is the largest intensively managed land use in the watershed. EPA believes that excess livestock waste, improperly applied fertilizers, and certain cropland tillage practices increase nutrient and sediment discharges to the Bay. A central feature of the overall strategy for restoring the Bay is EPA's establishment of a total maximum daily load (TMDL). Section 303 of the CWA requires states to identify waters that are impaired by pollution, even after application of pollution controls. For those waters, states must establish a TMDL to ensure that water quality standards can be attained. A TMDL is essentially a pollution budget, a quantitative estimate of what it takes to achieve standards, setting the maximum amount of pollution that a waterbody can receive without violating standards. If a state fails to do this, EPA is required by the CWA to make its own TMDL determination for the state. Throughout the United States—including the Chesapeake Bay watershed—more than 20,000 waterways are known to be violating applicable water quality standards and to require a TMDL. Lawsuits have been brought with the intention of pressuring EPA and states to develop TMDLs, including for the Chesapeake Bay because the waters of the Bay have been identified as being impaired, that is, as not meeting applicable water quality standards. The Chesapeake Bay TMDL is the largest single TMDL developed to date. It addresses all segments of the Bay and its tidal tributaries that are impaired from discharges of nitrogen, phosphorus, and sediment. The goal is to have TMDL implementation measures in place by 2025 to assure attainment and maintenance of all applicable water quality standards. The TMDL allocates needed reductions of these pollutants to all jurisdictions in the 64,000 square mile watershed, not to individual segments of streams or waterbodies, as is more typical of other TMDLs prepared by states or EPA. As part of the TMDL development process, states are to prepare Watershed Implementation Plans (WIPs) identifying specific reductions and control measures to achieve needed pollutant reductions from point sources (i.e., industrial and municipal facilities and CAFOs) and nonpoint sources (i.e., farms and forests), as well as two-year milestones to implement the plans. EPA fully expects that states will meet commitments and milestones in the WIPs, but the agency also has identified a number of potential actions currently available to it if a state fails to do so, including expanding permit coverage to currently unregulated sources (which could include additional CAFOs in the Chesapeake Bay watershed), requiring net improvement offsets, conditioning EPA grants, or increasing federal enforcement in the watershed. Under a consent decree resolving some of the litigation over the Chesapeake Bay, EPA was required to establish a TMDL no later than May 1, 2011. EPA issued the TMDL on December 29, 2010—ahead of its self-imposed December 31 deadline. Concurrent with issuance of the TMDL, the Bay watershed jurisdictions (Virginia, Maryland, West Virginia, Delaware, Pennsylvania, and the District of Columbia) prepared Phase I WIPs, which outlined the types of controls and best management practices (BMPs) that will be utilized to achieve the first major goal of the TMDL: that 60% of needed practices to achieve water quality standards will be in place by 2017. The jurisdictions have now developed Phase II WIPs, in which they describe how they will work with specific localities within their borders over the next five years to reduce nitrogen, phosphorus, and sediment loading into streams, lakes, and rivers that feed into the Bay. The Bay region exceeded its overall nutrient and sediment reduction goals for 2012-2013, according to data submitted by states to EPA in March 2014. From 2009 through 2013, states reduced the amount of nitrogen reaching Chesapeake Bay by 17 million pounds—4 million pounds more than they had committed to. Phosphorus reductions were also ahead of schedule. However, according to the data, reductions from agriculture and stormwater—two sectors where controls have long proven problematic—are not on a trajectory that would meet either a 2017 interim cleanup goal or the overall Bay goals for 2025, suggesting that control measures for these sectors will need to be accelerated. In the same consent decree that led to issuance of the Bay TMDL, EPA also agreed to revise CWA permit rules for CAFOs located in the Chesapeake Bay watershed (see " Implementation of Existing Clean Water Act Permit Requirements for CAFOs ," above). As part of the settlement, EPA agreed to propose Bay-specific rules to expand the universe of regulated CAFOs, including but not limited to designating an AFO as a CAFO or increasing the number of animal operations that would qualify as CAFOs and thus require CWA permits. The settlement also stipulates that EPA would propose more stringent permitting requirements for land application of manure, litter, and process wastewater in the Bay watershed in 2013, with rules to be final by mid-2014. However, in June 2013, EPA and the environmental groups announced a revised agreement. Under the modification, EPA will review compliance with existing CWA permits for CAFOs in the Chesapeake Bay watershed, assess state permitting programs for such operations, and inspect smaller, unregulated animal feedlots in the Bay watershed. On the basis of these reviews, EPA will decide by June 30, 2018, whether a national rulemaking is needed. As described above, under the earlier settlement agreement, EPA was to propose revisions to the 2008 national CAFO rules, but under the 2013 modification, EPA will first focus on pollution from CAFOs in the Chesapeake Bay region. EPA's TMDL plans and the overall federal Bay restoration strategy under the 2009 executive order are controversial with agricultural and other groups that are concerned about the likely mandatory nature of many of EPA's and states' upcoming actions. Agricultural interests are concerned that farm operations in the Bay watershed will be subject to more regulation than competitors in other states, putting their operations at a significant competitive disadvantage. Many of these groups have also been concerned that the underlying scientific data and modeling used by EPA to develop the TMDL do not fully reflect ongoing voluntary efforts by agriculture to reduce pollutant discharges. Legal challenges to the TMDL were brought by the American Farm Bureau Federation and home builder groups, who argue that, in setting pollution limits in the multistate plan, EPA has exceeded its CWA authority. In September 2013, a federal court upheld the TMDL. The court said that it found no evidence that EPA had intruded on states' rights in writing the plan. That ruling has been appealed. On the other hand, environmental activists in particular are pleased that the federal government is now asserting a leadership role to restore the Bay and have supported legislation that would codify requirements for the Bay TMDL in the CWA, while authorizing grants and other assistance for implementing required measures. Companion bills to do so were introduced in the 111 th Congress, while the House Agriculture Committee approved separate legislation ( H.R. 5509 ) that would have authorized an expanded role for USDA in Bay restoration. The 112 th Congress showed interest in early implementation of the TMDL, especially impacts on agriculture. The House Agriculture Subcommittee on Conservation, Energy, and Forestry held oversight hearings on March 16 and November 3, 2011. Legislation ( H.R. 4153 , similar to H.R. 5509 in the 111 th Congress) was introduced that would give states, not EPA, authority to set nutrient and sediment limits for the Bay and would increase USDA's role in Bay restoration. No legislation was enacted, and similar legislation has not been introduced in the 113 th Congress. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . The CWA directs states to adopt water quality standards for their waters and authorizes EPA to promulgate new or revised standards if a state's actions fail to meet CWA requirements. Water quality standards consist of designated uses, criteria to protect the designated uses, and an antidegradation statement. They serve as the framework for pollution control measures that are specified for individual sources by states. Because of severe water quality impairment of Florida waters by nutrients (nitrogen and phosphorus) from diverse sources, including agriculture and livestock, municipal and industrial wastewater discharges, and urban stormwater runoff, EPA determined in 2009 that Florida's existing narrative water quality standards for nutrients must be revised in the form of numeric criteria that will enable Florida to better control nutrient pollution. In 2009 EPA entered into a consent decree with environmental litigants requiring the agency to promulgate numeric nutrient water quality standards for Florida. To meet the legal deadline, EPA issued the first phase of these standards on November 15, 2010, establishing standards for lakes and flowing waters in the state. The EPA rule did not establish any requirements directly applicable to regulated entities or other sources of nutrient pollution. Water quality standards do not have the force of law until the state translates them into permit limits or otherwise imposes pollution control requirements on dischargers in the state. EPA said all along that it prefers that Florida implement its own numeric nutrient water quality criteria. Consequently, EPA delayed the effective date of the 2010 rule several times to allow the state to complete its process and to avoid confusion that could occur if federal criteria became effective while state criteria are being reviewed. Further, EPA's deadline for issuing the second phase of standards (for estuaries, coastal waters, and flowing waters in the South Florida Region) also was extended several times to allow the state to develop its own standards. In March 2013, EPA and the state reached agreement on steps to put the state in charge of determining numeric limits on nutrient pollution in Florida waterways. Groundwork for the agreement was laid in November 2012 when EPA approved a June 2012 submission by the state for lakes, rivers, streams, and some estuaries. Under the March agreement, Florida pledged to move forward with rulemaking and legislation to complete the job of setting numeric nutrient criteria for Florida waterways. The proposed state legislation would require completion of nutrient criteria rulemaking for remaining coastal and estuarine waters by December 1, 2014, and establishment of interim nutrient standards until then. In response to the state's actions, EPA approved the state's implementation plan for controlling nutrient pollution in Florida waters and petitioned the federal court in Florida to allow it to approve the state's water quality standards, although they lack numeric criteria for all waters. In January 2014, the court agreed to amend the 2009 consent decree in light of the adoption of new nutrient criteria, thus lifting the requirement for EPA to issue numeric nutrient standards under the second phase of rulemaking, and in April EPA proposed to withdraw its numeric nutrient criteria for Florida waters. Industry groups endorsed the agreement and the court's modification of the consent decree. However, it was criticized by environmental advocacy groups, who said that the plan lacks many elements that EPA previously said were essential and fails to cover large portions of the state's waters by, for example, exempting tidal waters, marine lakes, and flowing waters in the southern portion of the state, unless they are being used for "frequent recreation." Environmental groups' legal challenge to the plan was rejected by the court's January 2014 ruling, but the groups have appealed the ruling. While few dispute the need to reduce nutrients in Florida's waters, EPA's rule has been controversial, involving disputes about the data underlying the proposal, potential costs of complying with numeric standards when they are incorporated into discharge permit limitations, and disputes over administrative flexibility. Agricultural groups and others fear that numeric standards will result in mandates for costly pollution controls. EPA responds that adoption of numeric nutrient standards is intended to ensure the health of Florida's waterways and its economy, because the types of water quality problems associated with nutrients—algae blooms that are toxic to humans, fish, and animals—have economic impacts throughout the state. Some groups also fear that EPA's actions in Florida, which represented the first time that EPA has established statewide numeric nutrient standards, and even though now apparently resolved, will be a precedent for similar regulatory action elsewhere. For example, environmental advocacy groups have petitioned or filed lawsuits seeking to require EPA to establish numeric nutrient water quality standards in Kansas and for the Mississippi River Basin. In testimony before the House Agriculture Committee, the EPA Administrator stated that EPA is not working on any federal numeric nutrient limits, and the agency has developed guidance for its regional offices stating that addressing nutrient pollution is a problem best handled by states through a variety of tools. These issues also have drawn Congress's attention. In 2011, oversight hearings were held by subcommittees of the House Energy and Commerce and Transportation and Infrastructure committees. A bill in the 113 th Congress ( H.R. 1948 ) would restrict EPA's oversight of state water quality standards by allowing the agency to promulgate a water quality standard for a state only if EPA has previously approved the state's standard and the state concurs that a new or revised standard is necessary. Similar legislation passed the House in the 112 th Congress. Even with EPA's approval of Florida's rules, controversies persist. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . How best to protect the nation's remaining wetlands and regulate activities taking place in or affecting wetlands has become one of the most contentious environmental policy issues. Much of the debate has focused on the CWA, which contains a key wetlands regulatory tool, Section 404, which requires landowners or developers to obtain permits for disposal of dredged or fill material that is generated by construction or similar activity into navigable waters of the United States, including wetlands. A key issue since Section 404 was enacted in 1972 is which waters are determined to be "waters of the United States" for CWA purposes and thus are subject to Section 404 and all of the CWA's other requirements. In 2001 and 2006, the Supreme Court issued rulings in two cases that interpreted the regulatory scope of the CWA more narrowly than previously, but created uncertainty about the precise effect of the Court's decisions. The George W. Bush and Obama administrations both attempted to lessen confusion over the Court's rulings for the regulated community, regulators, and the general public by issuing guidance documents to identify, in light of the Court's rulings, categories of waters that are jurisdictional, categories that are not jurisdictional, and categories that require a case-specific analysis to determine if CWA jurisdiction applies. But the non-binding guidance documents did not resolve all questions. In an effort to do so, in March 2014, EPA and the Army Corps of Engineers (Corps) jointly proposed a rule defining the scope of waters protected under the CWA. The proposed rule would revise regulations that have been in place for more than 25 years. It is particularly focused on clarifying the regulatory status of waters located in isolated places in a landscape, as well as small streams, rivers that flow for part of the years, and nearby wetlands—the types of waters affected by the Supreme Court's 2001 and 2006 rulings. In developing the proposed rule, EPA and the Corps relied on a draft synthesis of more than 1,000 published and peer-reviewed scientific reports. EPA has asked its Science Advisory Board (SAB) to review the draft synthesis, and the agencies will not issue a final rule before the SAB completes its work. The agencies believe that, while the proposed rule would enlarge CWA jurisdiction beyond that under existing EPA-Corps guidance, which the agencies believe was narrower than is justified by science and the law, they contend that it would not enlarge jurisdiction beyond what is consistent with the Supreme Court's narrow reading of jurisdiction. In 1977, Congress amended the CWA to exempt normal farming, ranching, and silviculture activities from Section 404. The act also exempts agricultural stormwater discharges and return flows from irrigated agriculture from Section 404 and other permit requirements of the law. Further, prior converted cropland is excluded from the definition of "waters of the United States" by rule. All of these exemptions and exclusions are self-implementing. Nothing in the 2014 proposed rule changes the existing statutory and regulatory exemptions. In addition, simultaneous with proposing the rule, EPA and the Corps issued an interpretive rule that identifies 56 conservation practices approved by the U.S. Department of Agriculture that additionally qualify for exemption under the Section 404 exclusion of "normal farming" activities. Through this interpretive rule, the agencies intend to resolve uncertainties about "normal farming" activities that are exempt from permitting when these conservation practices are used. In other words, effective immediately, producers who utilize any of the 56 identified practices according to USDA technical standards need not seek a determination of CWA jurisdiction and need not seek a CWA permit. The three agencies also have signed a Memorandum of Understanding detailing implementation of the interpretive rule and identifying a process for reviewing and updating the list of qualifying conservation practices. The Corps and EPA are accepting public comment on the proposed rule until October 20, 2014. Although the EPA-Corps interpretive rule on agricultural conservation practices took effect on March 25, the agencies are accepting public comment until July 7, 2014. The EPA Administrator stated at a congressional hearing that it generally takes about one year to finalize a rule. Complex and controversial rules can take much longer from proposal to promulgation. Once a rule is finalized, legal challenges are likely, possibly delaying implementation of any rule for years. The agriculture sector has been vigorous in criticizing and challenging EPA regulatory actions that may affect the sector's operations, making potential impacts of the proposed rule on agriculture a focus of controversy—although the rule's potential impacts are not limited to agriculture. One of the sector's concerns about a new "waters of the United States" rule has been whether it would modify existing statutory and regulatory exemptions that exclude certain discharges resulting from agricultural activities from CWA permitting. As described above, the proposed rule makes no change and does not affect or alter these exemptions. The interpretive rule was intended to clarify the types of agricultural conservation practices that are exempt from Section 404, but some in agriculture contend that it has created confusion and uncertainty. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . The CWA mandated regulations to prevent the discharge of oil from various sources. Pursuant to this statutory requirement, EPA crafted regulations for non-transportation-related facilities in 1973. Affected facilities must prepare and implement, but not submit, spill prevention control and countermeasure (SPCC) plans. The EPA SPCC plan requirements apply to non- transportation-related facilities that drill, produce, store, process, refine, transfer, distribute, use, or consume oil or oil products; and that could reasonably be expected to discharge oil to U.S. navigable waters or adjoining shorelines. Facilities, including farms, are subject to the rule if they meet at least one of the following capacity thresholds: an aboveground aggregate oil storage capacity greater than 1,320 U.S. gallons, or a completely buried oil storage capacity greater than 42,000 U.S. gallons. Among other obligations, SPCC regulations require secondary containment (e.g., dikes or berms) for certain oil-storage units; and plans must be certified by a professional engineer unless a facility owner/operator is able to self-certify the plan. Following the passage of the Oil Pollution Act of 1990, EPA proposed changes and clarifications to the SPCC regulations that were made final in July 2002. EPA has both extended the 2002 rule's compliance date (on multiple occasions) and made further amendments to the 2002 rule. For most types of facilities subject to SPCC requirements, the deadline for complying with the changes made in 2002 was November 10, 2011. However, EPA extended the compliance date for farms to May 10, 2013. On March 26, 2013, Congress enacted P.L. 113-6 , which prohibited EPA from using appropriations to enforce SPCC provisions at farms for 180 days after enactment (i.e., through September 22, 2013). Note that the July 2002 final rule and subsequent amendments did not alter the requirement for owners or operators of facilities, including farms, to maintain and to continue implementing their SPCC plans in accordance with the SPCC regulations in effect before the 2002 rulemaking. Many of the recent SPCC issues have involved program scope and applicability: which facilities, materials, and equipment should be subject to SPCC requirements. These issues have garnered considerable attention in the 113 th Congress, ultimately resulting in enacted legislation that alters the applicability for farms subject to the SPCC regulations. On June 10, 2014, the President signed the Water Resources Reform and Development Act (WRDA) of 2014 ( P.L. 113-121 ). Section 1048 of the act alters the applicability of the SPCC. Selected changes include the following: Farms with an aggregate aboveground storage capacity less than 2,500 gallons are not subject to SPCC regulations; Farms with an aggregate aboveground storage capacity less than 6,000 gallons (or a to-be-determined lower threshold) and no reportable discharge history are not subject to SPCC regulations; Farms with an aggregate aboveground storage capacity less than 20,000 gallons (the prior threshold was 10,000 gallons), no individual storage tank greater than 10,000 gallons, and no reportable discharge history may self-certify their SPCC plan, in lieu of hiring a professional engineer for certification. In addition, several recent rulemakings included provisions that may benefit farming operations. In an April 2011 final rule, EPA exempted all milk and milk product containers and associated piping from the SPCC requirements. EPA's rationale for the exemption is that these units are subject to industry standards for sanitation and construction and may be regulated by other agencies, including the USDA. In addition, the final rule states that exempted milk storage units are not included in a facility's overall oil storage volume, a primary factor for SPCC applicability. In a November 2009 final rule, EPA exempted pesticide application equipment and related mix containers that may currently be subject to the SPCC rule when crop oil or adjuvant oil are added to formulations. EPA also clarifies that a nurse tank is considered a mobile refueler, and, like other types of mobile refuelers, is exempt from the sized secondary containment requirements. EPA estimated that the total cost savings to farm owners and operators from these (and other) amendments amount to $13 million on an annualized basis (2007$). Jonathan Ramseur, Specialist in Environmental Policy, [phone number scrubbed], [email address scrubbed] . The agricultural industry is sensitive to fluctuations in energy sources and cost. The use of fossil fuel-based fertilizers, diesel fuel, and, more recently, corn-based ethanol all have a significant impact on both crop and livestock operations. Since the 1970s, federal policies have offered a variety of incentives, regulations, and programs to encourage growth in the bioenergy industry as a sustainable alternative to fossil fuels. The increased emphasis on agriculture-based biofuels has received mixed reviews within the agricultural community. While some continue to push for greater federal involvement, critics of the federal intervention also have emerged. The following section covers several federal regulations relating to energy, including renewable fuels standard (RFS2) rule; and E15 waiver petition. The Energy Independence and Security Act of 2007 ( P.L. 110-140 ; EISA) expanded the renewable fuel standard (RFS) originally established in the Energy Policy Act of 2005 ( P.L. 109-58 ; EPAct05). The RFS requires that U.S. transportation fuel contain a minimum amount of biofuel—this mandate then supports the domestic production and use of biofuels. The 2013 RFS mandate was 16.55 billion gallons of biofuels (consisting mostly of ethanol produced from corn starch), ramping up to 36 billion gallons in 2022 (consisting of approximately 60% of advanced biofuels). EISA also requires that advanced biofuels (e.g., cellulosic biofuels, biomass-based diesel, and others) and conventional biofuels from newly built refineries used to satisfy RFS mandates meet certain lifecycle GHG reduction requirements. EPA is required to classify biofuel production based on their lifecycle emissions, including emissions from direct and indirect changes in land use. Only fuels that achieve a 50% reduction in GHG emissions relative to petroleum fuels may be classified as advanced biofuels. Cellulosic biofuels must achieve at least a 60% GHG emission reduction, while fuels from new corn ethanol plants must achieve a 20% GHG emission reduction—corn ethanol plants in existence or under construction when EISA was enacted (December 19, 2007) are grandfathered. Under the Clean Air Act Section 211(o), as amended by EISA, EPA is required to set the annual standards—or volume requirements—under the RFS each November for the following year based on gasoline and diesel projections from the Energy Information Administration (EIA). EPA is also required to set the cellulosic biofuel standard each year based on the volume projected to be available during the following year, using EIA projections and assessments of production capability from industry. From 2010 to 2014, EPA analysis suggested that the United States did not have sufficient cellulosic biofuel production capacity to meet the RFS mandates. As a result, EPA proposed substantial reductions to the statutory RFS mandates for cellulosic biofuels for each of those years. However, cellulosic biofuel production (and imports) failed to meet even the reduced standards for 2010-2013 and participating fuel companies were obligated to purchase waiver credits from the EPA in lieu of fulfilling their blending obligations. Then, in February 2013, under remand from the U.S. Court of Appeals for the District of Columbia, EPA revised the 2012 RFS for cellulosic biofuels to zero, and in November 2013, also revised the 2011 RFS for cellulosic biofuels to zero. Also, in April 2014 EPA revised the 2013 cellulosic biofuel standard from 6 million ethanol-equivalent gallons to approximately 810,000 ethanol-equivalent gallons. In addition to the difficulty of achieving the lowered cellulosic biofuels mandates, total renewable fuel consumption (after achieving a 10% blending level in 2013) appears limited by blending and distribution infrastructure—a phenomenon referred to as the blend wall. Also, significant declines in national transportation fuel consumption since 2006 have contributed to the difficulties in meeting biofuels RFS mandates. EPA is expected to announce a final 2014 RFS mandate in June. The RFS has been a major policy supporting the development of U.S. biofuels industries, especially for corn-based ethanol producers. Many believe that the expanded RFS will continue to be a primary pillar of support for existing U.S. biodiesel production capacity (due to the uneconomical nature of U.S. biodiesel production). In future years, as the advanced biofuel mandates grow, the RFS could be the key driver for the development of biofuels from cellulose, algae, and other non-food/feed commodities. However, unless substantial infrastructure issues which limit consumers ability to use higher levels of ethanol are first overcome or greater emphasis is placed on producing advanced biofuels that can be used with existing infrastructure, the biofuels blending and consumption goals may be difficult to achieve and the RFS—if imposed under such conditions—could have significant unintended economic consequences. The initial biofuels expansion, which occurred during the 2006 to 2010 period when biofuels usage was unobstructed by the blend wall, contributed to concomitant pressure on limited agricultural resources (most notably land) as feedstock production intensified on existing cropland and expanded onto new, marginal lands. This contributed to higher prices for those commodities that compete for the affected cropland, as well as having important secondary effects in related agricultural markets, including livestock feed markets and agricultural input markets. Corn is the primary feed ingredient used by the U.S. livestock sector (i.e., dairy, cattle, hogs, and poultry), representing over 90% of all grains consumed, and about 57% of all grains and feed concentrates consumed annually. As the price of corn rose, the entire feed complex price structure rose as well, putting a cost squeeze on the U.S. livestock sector. A severe, widespread drought in 2012 further elevated concerns of ethanol-induced corn shortages. Under these conditions, livestock and poultry producers joined the petroleum industry at the time in calling for the modification or elimination of the RFS. However, a return to normal weather and crop yields in 2013, coupled with the emergence of the blend wall (see " E15 Waiver Petition " discussion, below) in late 2012 have largely reduced the availability and cost of corn as an impediment to continued domestic ethanol consumption. Since 2010, both corn use for ethanol and ethanol production appear to have plateaued. Now, instead of corn shortages and resource constraints, it appears that without important blending and distribution infrastructure developments, corn ethanol consumption may be challenged to achieve its ceiling set in the RFS of 15 billion gallons by 2015. As a result, its impact in other corn-user markets has become negligible and is expected to diminish further in the coming years as corn yields outpace biofuels consumption. These infrastructure constraints, coupled with fresh memories of corn ethanol's past impact in secondary markets, are likely to keep tremendous pressure on policy makers to waive future RFS mandates. After four successive years (2010-2013) in which, first, EPA lowered the cellulosic biofuels mandate, and then cellulosic biofuels production failed to achieve the lowered mandates, many question whether the RFS mandates for cellulosic biofuels need to be drastically scaled back or eliminated entirely. The cellulosic biofuels industry has argued that it would be able to produce enough fuel to meet the RFS mandates if certain obstacles are overcome: lowering the cost of conversion technology at the initial stages of commercial application, easing access to financing, expediting government approval of cellulosic biofuel production pathways, developing environmental regulations that are more complementary to the cellulosic biofuels industry, removing feedstock supply uncertainties, and creating certainty for tax incentives. But with limited commercial success to date and the blend wall standing as a major barrier to further rapid expansion of biofuels consumption, there is considerable uncertainty about the future of the cellulosic biofuels industry—even if the technological and commercial breakthroughs for cellulosic biofuels were achieved. [author name scrubbed], Specialist in Agricultural Policy, [phone number scrubbed], [email address scrubbed] ; [author name scrubbed], Specialist in Agricultural Conservation and Natural Resources Policy, [phone number scrubbed], [email address scrubbed] ; or Brent Yacobucci, Specialist in Energy and Environmental Policy, [phone number scrubbed], [email address scrubbed] . By 2022, EISA requires the use of 36 billion gallons of renewable fuels, and much of this could be ethanol from a variety of feedstocks (many of which are agricultural-based; see " Renewable Fuels Standard (RFS2) Rule " discussion, above). However, there is an obstacle to the use of this quantity of 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. Until recently, the amount of ethanol that could be blended into gasoline for all uses was limited to 10% by volume (E10) pursuant to EPA guidance under the CAA, as well as by vehicle and engine warranties, and certification procedures for fuel-dispensing equipment. As the RFS is structured, assuming that most of the mandate is met using ethanol, the volume of ethanol blended in gasoline is limited by gasoline consumption. In 2013, the RFS required over 16 billion gallons of renewable fuel, while projected gasoline consumption for 2013 was 134 billion gallons. After 2013, the renewable fuel mandate is scheduled to continue to increase. However, a limit of 10% ethanol means that ethanol for gasoline blending (not including E85) likely cannot exceed 14 billion-15 billion gallons per year. This "blend wall" is the maximum possible volume of ethanol that can be blended into U.S. motor gasoline. The actual limit could be slightly lower, since older fuel tanks and pumps at some retail stations may not be equipped to handle ethanol-blended fuel. Because of the blend wall and other issues, EPA has proposed a total RFS of 15.21 billion gallons for 2014––a level lower than both the 2014 level scheduled in EISA and the actual amount required in 2013. What level EPA will finalize for 2014 and subsequent years will determine whether there is impetus to roll out E15 on a wider scale. On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to EPA for a waiver from the CAA limitation on ethanol content in gasoline. Until recently, ethanol content in gasoline for all uses was capped at 10% (E10); the application requested an increase in the maximum concentration to 15% (E15). If fully granted, the waiver would allow the use of significantly more ethanol in gasoline than is currently permitted. On November 4, 2010, EPA granted a partial waiver allowing the use of E15 in MY2007 and newer vehicles. The agency delayed a decision on MY2001-MY2006 vehicles until the Department of Energy completed testing of those vehicles. On January 21, 2011, EPA announced that the waiver would be expanded to include MY2001-MY2006 vehicles. EPA determined that data were insufficient to address concerns that had been raised over emissions from MY2000 and older vehicles, as well as heavy-duty vehicles, motorcycles, and non-road applications (including farm equipment), and thus a waiver for these vehicles/engines was denied. EPA has noted that granting the waiver eliminates only one impediment to the use of E15—other factors, including retail and blending infrastructure (including gasoline storage tanks and pumps), state and local laws and regulations, and manufacturers' warranties, would still need to be addressed. Because of concerns over potential damage by E15 to equipment not designed for its use, this partial waiver was challenged in court by a group of vehicle and engine manufacturers, among others, although the challenge was ultimately unsuccessful. In the 112 th Congress, the House adopted an amendment ( H.Amdt. 156 ) to H.R. 1 that would have blocked EPA from using FY2011 funds to implement the agency's waiver decision, although the Senate bill did not contain that provision and the bill was not enacted. In the 113 th Congress, legislation has been proposed ( H.R. 1462 , H.R. 1469 , and S. 344 ) that would overturn EPA's E15 decision and bar the agency from issuing further waivers. On March 15, 2012, EPA approved the model misfueling mitigation plan (MMP) submitted by the Renewable Fuels Association (RFA) as step for companies to develop their own MMPs. Since then, companies have registered with EPA, and at least 78 retailers have begun selling E15. EPA approval of the waiver request could help open the door to E15 blending. This could be a strong signal to the biofuels industry concerning federal support for meeting and enforcing RFS mandate levels. As a result, this could help to stimulate new investment in the biofuels sector. In the short run, the corn ethanol industry would be the main beneficiary, since it is best able to respond to the expanding RFS mandates. Any further increase in corn ethanol use would benefit corn producers. The net result could be an intensification of agricultural resource use with the same consequences discussed previously (see " Renewable Fuels Standard (RFS2) Rule "). However, as noted above, because of the limited availability of E15 and for other reasons, EPA has proposed a 2014 RFS mandate that is lower than both the 2014 level scheduled in the statute and the actual 2013 mandated level. Further reductions in the RFS mandates would likely hinder a significant roll-out of E15. The ability to address concerns over the use of E15 in legacy equipment (both infrastructure and vehicles) will affect the rollout of E15 to retail stations. As noted above, EPA's decision to allow E15 in some vehicles only addresses one part of the blend wall. State laws and regulations, vehicle and equipment certifications and warranties, and questions over fuel suppliers' willingness to market the fuel could all be impediments to an expansion of E15 use. For example, few automakers have updated their vehicle warranties to allow E15 in their newer vehicles, and none have updated warranties to cover the use of E15 in existing (pre-2012) vehicles. Equipment manufacturers, meat producers, gasoline suppliers, and others challenged the EPA E15 waiver decision in federal court. On August 20, 2012, the U.S. Court of Appeals for the D.C. Circuit found (2-1) that the plaintiffs did not have standing to challenge EPA's decision, and in June 2013 the Supreme Court denied a petition from the plaintiffs to appeal the circuit court decision. Brent Yacobucci, Specialist in Energy and Environmental Policy, [phone number scrubbed], [email address scrubbed] , or [author name scrubbed], Specialist in Agricultural Policy, [phone number scrubbed], [email address scrubbed] . Agricultural "pests," which includes certain insects, plant pathogens, weeds, and vertebrates, can interfere with the production of crops and livestock used for food and fiber. Pesticides are used in agriculture to prevent, kill, repel or mitigate pests that might harm crop yields, but their use may pose risks to human health and the environment. In order to prevent unreasonable risks from pesticide use, pesticides are primarily regulated at the federal level by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). FIFRA directs the Environmental Protection Agency (EPA) to regulate the sale and use of pesticide products through registration (that is, licensing) based on risk assessments. The federal regulation of pesticides also requires routine re-evaluations of risks in order for any necessary restrictions to reflect the latest scientific understanding. For more information about pesticide laws, see CRS Report RL31921, Pesticide Law: A Summary of the Statutes . The following section covers four selected issues concerning federal regulations relating to pesticides, including Clean Water Act permits for pesticide application; pesticide spray drift; atrazine; and pesticide registration and the Endangered Species Act (ESA). For the more than 30 years since Congress enacted the Clean Water Act (CWA) and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), little apparent direct conflict existed between the two laws. EPA's operating principle during that time was that pesticides used according to the requirements of FIFRA do not require regulatory consideration under the CWA. EPA had never required CWA permits for use of FIFRA-approved materials, and EPA rules did not specifically address the issue. EPA's interpretation and operating practice were challenged in several court cases. At issue has been how FIFRA-approved pesticides that are sprayed over or into waters are regulated and, specifically, whether the FIFRA regulatory regime is sufficient alone to ensure protection of water quality or whether such pesticide application requires approval under a CWA permit. The issue arose initially over challenges to some routine practices in the West (weed control in irrigation ditches and spraying for silvicultural pest control on U.S. Forest Service lands). It drew more attention in connection with efforts by public health officials to combat mosquito-borne illnesses such as West Nile virus. The litigation created uncertainty over whether application of pesticides and herbicides to waterbodies requires a CWA water discharge permit. EPA tried to promulgate policy to clarify the relationship of the two laws and to address conflicts resulting from several judicial rulings, ultimately in a regulation issued in 2006 that attempted to specify circumstances in which pesticides applied to U.S. waters do not require CWA permits. That rule was challenged by multiple parties, and in January 2009, a federal appellate court vacated the rule. As a result, persons who spray pesticides on or near water are now required to obtain a CWA permit. The federal court's ruling appeared to leave little room for EPA to fashion a new rule consistent with the agency's long-standing view that FIFRA-compliant applications do not require CWA permits. Industry groups subsequently petitioned the Supreme Court to review the case, but the Court denied the petition. To meet the court's mandate, EPA issued a pesticide general permit, or PGP, on October 31, 2011. EPA estimates that the universe of affected activities that for the first time will be subject to CWA permits is approximately 5.6 million applications annually, which are performed by 365,000 applicators covering four use patterns: (1) mosquito and other flying insect pest control; (2) aquatic weed and algae control; (3) aquatic nuisance animal control; and (4) forest canopy pest control. The permit covers about 500 different pesticide active ingredients that are contained in approximately 3,700 product labels. The permit applies to a variety of entities, including agricultural interests involved in crop and timber tract production, forest nurseries, and operating irrigation systems; pesticide and agricultural chemical manufacturing; mosquito or other vector control districts and commercial applicators that service them; utilities (e.g., electric power, natural gas, water supply, and wastewater); and government agencies and departments engaged in air and water resource management and conservation. It requires all operators to minimize pesticide discharges to waters by practices such as using the lowest effective amount of pesticide product that is optimal for controlling the target pest. It also requires operators to prepare pesticide discharge management plans to document their pest management practices. Permittees must monitor for observable adverse effects in the treatment area and where the pesticides are discharged to U.S. waters. The permit does not cover agricultural stormwater runoff or irrigation return flow, as these discharges are statutorily exempt from CWA permitting, and it also does not cover terrestrial application to control pests on agricultural crops or forest floors. Thus, because pesticide applications to land that do not result in point source discharges of pesticides to U.S. waters do not require permit coverage, EPA says that many farms are not affected by the court's decision and do not need CWA permits. The EPA general permit applies in states and areas where EPA is the National Pollutant Discharge Elimination System (NPDES) permitting authority, but has been used as a model for other states to develop their own general permits. General permits issued by the other states must meet CWA guidelines and also may be more stringent than EPA's requirements. Most entities subject to the EPA general permit were automatically covered, while some pesticide applicators with more significant discharges must submit a notice of intent (NOI) to be covered by the PGP. For example, any federal or state agency that conducts pest management as an integral part of its operation, and special-purpose districts with a specific responsibility to control pests, must submit a NOI. The permit took effect in January 2012. In an effort to halt EPA's regulatory activity, the House passed legislation in the 112 th Congress ( H.R. 872 ) intended to overturn the court's 2009 ruling by exempting aerial pesticide application activities from clean water permit requirements. Also in the 112 th Congress, the text of H.R. 872 was included as a provision of the 2012 farm bill approved by the House Agriculture Committee, but this bill was not enacted. In the 113 th Congress, legislation to exempt certain authorized pesticide uses from any permit requirements has been introduced again ( S. 175 , S. 802 , H.R. 935 ). The text of H.R. 935 was introduced in the House-passed farm bill ( H.R. 2642 ), but it was not included in the enacted 2014 farm bill ( P.L. 113-79 ). General permits cover categories of point sources that have common elements and that discharge the same types of wastes. They allow the permitting authority to allocate resources efficiently, especially when there is a large number of potential permittees. Permitting procedures are streamlined and simplified, compared with CWA individual permits. Still, many agricultural industry groups are fearful that the court's ruling and EPA's general permit will lead to more burdensome and potentially costly requirements that affect their operation and activities. [author name scrubbed], Specialist in Resources and Environmental Policy, [phone number scrubbed], [email address scrubbed] . Pesticide spray drift describes the movement of pesticide during or soon after its application through the air. Such drift can potentially move away from the intended target to unintended locations. Various stakeholders, including many in the agricultural community, have expressed their concerns to states and EPA regarding potential risk associated with exposure to spray drift. These include potential risks to the health of applicators and by-standers, and potential effects on non-target animals and plants. Many of these stakeholders remain cautious about the level and extent of restrictions EPA may require to prevent unreasonable adverse effects from spray drift. Pesticide spray drift has also been the subject of several citizen petitions and lawsuits filed against EPA by environmental advocacy groups. When considering whether to register a pesticide under FIFRA, EPA currently incorporates an assessment of the potential risks from spray drift as part of an overall risk assessment of a pesticide. EPA may require an applicant of a pesticide registration to conduct specific tests if the applicant proposes application methods that could potentially result in spray drift. Results from these tests may be used by the agency in determining whether precautionary labeling or certain other restrictions are needed as a condition for registration. Accordingly, EPA's current regulation of pesticide spray drift primarily affects pesticide manufacturers. Pesticide applicators may be subject to enforcement by states or EPA if pesticides are not applied in accordance with label restrictions. EPA has taken several actions to address risks from spray drift. In 2009, EPA proposed guidance for pesticide registration applicants and registrants to revise label statements intended to reduce spray drift. This guidance was not formally adopted. EPA also initiated a voluntary Drift Reduction Technology Program to encourage development and verification of new pesticide application technologies that may reduce spray drift. EPA is currently evaluating a drift reduction technology verification protocol, prior to its adoption for verifying the effectiveness of various spray drift reduction technology. Additionally, EPA has worked with pesticide applicators and the agricultural community to encourage the use of best management practices. In January 2014, EPA proposed guidance regarding the agency's process in evaluating risks from pesticide spray drift as part of its overall process for conducting pesticide risk assessments. The agency sought comments regarding refinements to models that are currently used by the agency to estimate spray drift and indirect exposure of such drift to children. Pesticide manufacturers and applicators are concerned that the proposed risk assessment methodologies regarding spray drift may result in EPA requiring overly restrictive measures regarding how and when certain pesticides are used. They contend that refinements to models proposed by EPA do not take into account technological advances in pesticide application that reduce spray drift. Conversely, environmental advocacy groups contend that EPA's proposal would not lead to sufficiently protective measures taken by the agency to ensure that off-target spray drift is minimized. Potential impacts of spray drift from conventional agricultural operations on neighboring organic farm operations have also been an area of some concern. [author name scrubbed], Analyst in Environmental Policy, [phone number scrubbed], [email address scrubbed] . The herbicide atrazine is one of the most widely used agricultural pesticides in the United States today. Widespread use of atrazine, reports of its presence and persistence in surface and drinking water in nearby areas where the herbicide is applied, and scientific studies suggesting that exposure to atrazine might disrupt the normal action of hormones in animals have prompted EPA to review the herbicide extensively. EPA has conducted a number of risk assessments of atrazine during the past 20 years as new information has become available to ensure that the existing registration still adequately prevents "unreasonable adverse effects on the environment" under FIFRA. In 2006, EPA issued a re-registration eligibility decision for atrazine after the agency completed a cumulative exposure assessment of atrazine and another triazine herbicide, simazine. The agency determined in its decision that products containing atrazine were eligible for continued registration only if registrants took certain risk mitigation measures including ecological monitoring of watersheds and specific label modifications. In 2009, EPA requested its FIFRA Scientific Advisory Panel (SAP) to assist in reviewing the agency's approach for evaluating new information about atrazine from human epidemiological studies as well as studies of laboratory animals and wildlife. From 2009 to 2012, the agency held six SAP meetings to consider the then newly available information about atrazine. Though no decisions resulted from these meetings, the agency indicated that the information from such meetings would be taken into account as part of the registration review process, which is described below. In 2011, EPA received a citizen petition requesting "a federal ban on the use and production of atrazine." The agency denied the petition in August 2013 for not "demonstrat[ing] that immediate regulatory action is either necessary or appropriate." In June 2013, EPA initiated its periodic review of the registration for atrazine. Such periodic reviews are required under FIFRA. EPA anticipates making a registration review decision in 2016. As part of this periodic review, the agency plans to conduct separate assessments on ecological, human health, and other risks using currently available information. The agency determined that registrants of atrazine were not required to develop new information. The public will have opportunity to comment on draft risk assessments and the proposed registration review decision upon their publication in the Federal Register . On the basis of its review, EPA will decide whether further regulatory restrictions are necessary to prevent unreasonable adverse effects on human health or the environment. Additionally, a "Special Review" of the potential risks posed by atrazine and related triazine pesticides that was initiated by the agency in 1994 remains ongoing during the registration review process. Pesticide manufacturers, distributors, and agricultural users of atrazine have expressed concerns that frequent reviews by EPA may lead to new restrictions or cancellation of uses. These stakeholders contend that further restriction could potentially limit the availability of atrazine as a cost-effective measure that helps growers increase crop yields. Conversely, public health and environmental advocates maintain that new restrictions on atrazine uses should be considered and may be warranted if the current measures associated with its registration are no longer adequate to ensure that the distribution, sale, and use of atrazine will not present risk of unreasonable adverse effects on human health or the environment. [author name scrubbed], Analyst in Environmental Policy, [phone number scrubbed], [email address scrubbed] . The Endangered Species Act (ESA) seeks to protect species identified as endangered or threatened with extinction and to protect the habitat on which they depend. It is administered primarily by the Fish and Wildlife Service (FWS). For certain marine and anadromous species, it is administered by the National Marine Fisheries Service (NMFS). Dwindling species are listed as either endangered or threatened according to assessments of the risk of their extinction. Once a species is listed, legal tools are available to aid its recovery and to protect its habitat. For activities on privately owned land such as farms and ranches, the primary direct impact of the ESA is through the law's prohibitions on taking of listed species. The word take means "to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct." Thus, such activities as applying pesticides to kill insects eaten frequently by an endangered bat species, or cutting down a tree that contains the nestlings of an endangered bird, would constitute a taking. If federal actions (or actions of non-federal parties that require a federal approval, permit, or funding) might adversely affect a listed species as determined by FWS (or NMFS, depending on the species), the federal action agencies must complete a biological assessment. The assessment is used to determine whether formal consultation is necessary. Through consultation with either FWS or NMFS, federal agencies must ensure, based on "the best scientific and commercial data available," that their actions are "not likely to jeopardize the continued existence" of any endangered or threatened species, nor to adversely modify critical habitat. This is referred to as a Section 7 consultation. "Action" includes any activity authorized, funded, or carried out by a federal agency, including permits and licenses. Actions of some federal agencies may affect a variety of agricultural practices over a very wide area or a region and have the potential to affect many listed species. Perhaps the most widely known of such agency actions is the registration and use of pesticides. Under ESA, EPA is required to consult with FWS and/or NMFS on whether the use of a pesticide might jeopardize the continued existence of a listed species or adversely modify critical habitat. To mitigate harm, EPA might need to include restrictions on a pesticide label regarding its use (such as limiting total area, weather conditions, distance from a particular habitat type, etc.). Consultation, or lack of consultation, between agencies in such cases has sometimes been contentious and has led to citizen lawsuits to enforce the ESA. On several occasions, EPA has been sued for failing to comply with ESA requirements on some of its pesticide regulation decisions. In 2013, EPA announced the availability of a final paper "describing enhanced opportunities for stakeholder input during its review of pesticide registrations ... and associated consultations under the Endangered Species Act (ESA)." This paper was jointly prepared by EPA, USDA, NMFS, and FWS, and outlined changes to EPA's registration review process that are intended to facilitate ESA consultations across the participating federal agencies, including a greater role for USDA. The practical effect of this paper appears to be earlier and more wide-ranging consultation among the agencies while conducting pesticide risk assessments. EPA's statutory obligation under ESA to consult with FWS and/or NMFS on its actions and to avoid jeopardy remained unchanged. Also, in 2013, the National Research Council (NRC) of the National Academies, as requested by EPA, USDA, NMFS, and FWS, published a report containing recommendations relevant to scientific and technical issues in assessing risks to species listed under the ESA from potential exposures to pesticides that are registered under FIFRA. The NRC recommended a common approach for EPA, NMFS, and FWS to conduct risk assessments that take into account exposure modeling, data on observable health effects, and uncertainties in current scientific understanding. Since NRC published its report, EPA, USDA, NMFS, and FWS have reported progress in implementing these recommendations including the development of interim approaches to be applied in the periodic review of pesticide registration reviews beginning in 2014. Section 10013 of the Agriculture Act of 2014 (2014 farm bill, P.L. 113-79 ) directs EPA, USDA, NMFS, and FWS to submit two reports (in 2014 and 2015) on the implementation of the NRC recommendations. As EPA, USDA, NMFS, and FWS continue to implement the NRC recommendations, the agencies' approach may affect how pesticides are assessed in terms of risk to listed species. Such assessments are used to inform the potential need for risk mitigation measures. These measures could include imposing restrictions on the application of certain pesticides, possibly affecting pesticide applications, including those in agricultural areas. As federal agencies work toward a revised approach for integrating ESA requirements as part of the pesticide registration process, various stakeholders, including pesticide registrants and the environmental community, continue to voice their concerns on how these activities are conducted. The environmental community remains active in litigation against EPA that seeks to compel the agency to implement requirements to protect listed species under ESA from the use of pesticides registered under FIFRA. Lynne Corn, Specialist in Natural Resources Policy, [phone number scrubbed], [email address scrubbed] , or [author name scrubbed], Analyst in Environmental Policy, [phone number scrubbed], [email address scrubbed] .

As the U.S. and global economies continue to struggle, some inside and outside of Congress have expressed concern about how environmental regulation may stifle growth and productivity. Much of the criticism has focused on environmental regulations promulgated by the Environmental Protection Agency (EPA). Some claim that EPA is overreaching its regulatory authority and imposing costly and burdensome requirements on society. In general, the agriculture community, among others, has been vocal in its concerns, contending that EPA appears to be focusing some of its recent regulatory efforts on agriculture. Many public health and environmental advocates, on the other hand, support many of EPA's overall regulatory efforts and in some cases argue that EPA has not taken adequate action to control the impacts of certain agricultural activities. Most environmental regulations, in terms of permitting, inspection, and enforcement, are implemented by state and local governments, often based on federal EPA regulatory guidance. In some cases, agriculture is the direct or primary focus of the regulatory actions. In other cases, agriculture is one of many affected sectors. Traditionally, farm and ranch operations have been exempt or excluded from many environmental regulations. Given the agricultural sector's size and its potential to affect its surrounding environment, there is interest in both managing potential impacts of agricultural actions on the environment and also maintaining an economically viable agricultural industry. Of particular interest to agriculture are a number of regulatory actions affecting air, water, energy, and pesticides. Agricultural production practices from both livestock and crop operations generate a variety of substances that enter the atmosphere, potentially creating health and environmental issues. Recent actions by EPA to regulate emissions and pollutants have drawn criticism, including greenhouse gas emission reporting and permitting requirements, and National Ambient Air Quality Standards (NAAQS) related to particulate matter (commonly referred to as dust). Water quality issues also are of interest to the agricultural industry, as water is an input for production and can also be degraded as a result of production through the potential release of sediment, nutrients, pathogens, and pesticides. Federal environmental laws largely do not regulate agricultural actors, in many cases giving responsibilities to the states. One exception is large concentrated animal feeding operations (CAFOs), which are subject to federal permitting requirements. Constraints on agricultural production to reduce pollution discharges typically arise at the state level in response to local concerns, and how to manage agricultural sources has been a prominent issue in several locations, such as the Chesapeake Bay and Florida. A proposed federal rule to define "waters of the United States" has drawn criticism from agriculture and others. Changes in energy policy, namely increased bioenergy production continue to be important to many in the agricultural industry, based on the potential of corn-based biofuel production to contribute to the nation's energy supply through both the renewable fuel standard (RFS) and the increased percentage of ethanol in gasoline (E15). Hundreds of chemical products are available to repel or kill "pests" that affect agricultural production. The federal regulation of these pesticides includes registering and restricting their use. The risks associated with agricultural pesticide use and possible impacts on human health and the environment also have led to recent federal regulatory reviews.

The President's National Strategy for Homeland Security, which proposed the creation of a new Department of Homeland Security (DHS), established as one of the Department's core missions the protection of America's infrastructure. The proposal had the new Department responsible for comprehensively evaluating the vulnerabilities of America's critical infrastructure, including food and water systems, agriculture, health systems and emergency services, information and telecommunications, banking and finance, energy (electrical, nuclear, gas and oil, dams), transportation (air, road, rail, ports, waterways), the chemical and defense industries, postal and shipping entities, and national monuments and icons. Working closely with state and local officials, other federal agencies, and the private sector, the proposal had the Department helping to ensure that proper steps are taken to protect high-risk targets. Information sharing between public and private entities about threats and vulnerabilities to critical infrastructures was a central component of the President's proposal which was subsequently introduced by request as H.R. 5005 (Armey), the Homeland Security Act of 2002. Section 204 of H.R. 5005 exempted infrastructure vulnerabilities information from disclosure under the Freedom of Information Act (5 U.S.C. § 552), and stated that "Information provided voluntarily by non-federal entities or individuals that relates to infrastructure vulnerabilities or other vulnerabilities to terrorism and is or has been in the possession of the Department [of Homeland Security] shall not be subject to section 552 of title 5, United States Code." A debate ensued regarding the exemption of critical infrastructure information from the Freedom of Information Act (FOIA). The debate essentially focused on the reconciliation of two public goods that come into conflict, on the one hand, the need to encourage voluntary information sharing, and on the other, the demands of open government. A new FOIA exemption for critical infrastructure information was opposed by civil libertarians and advocates of open government on several grounds. They testified that a new exemption would jeopardize the ability to obtain information about abusive government practices, would cast a shroud of secrecy over one of the Department of Homeland Security's critical functions, and was unnecessary because FOIA exemption 4 protects private companies against disclosures of trade secrets and confidential business information, and can be extended to critical infrastructure material that properly should be withheld from disclosure. Proponents of a new FOIA exemption for critical infrastructure information testified that private industry would be unwilling to voluntarily share critical infrastructure information with the federal government without assurances that its confidential business information would not be released by the government. Companies worried that if information sharing with the government becomes a reality, FOIA requests for information could prove embarrassing and costly. In addition, companies expressed concern that agency decisions about disclosure of business confidential data were fraught with ambiguity and discretion. There were also concerns expressed by private industry about antitrust and civil liability issues with respect to the willingness of some of those entities to provide information voluntarily to the federal government. Specifically, in congressional hearings industry representatives expressed concern about disclosure under the Freedom of Information Act; third-party liability (e.g., sharing suspected problems about a piece of equipment before its being thoroughly tested and verified); the lack of a defined antitrust exemption for appropriate information sharing concerning infrastructure vulnerabilities; possible disclosure of information under state open records laws; and disclosure of sensitive corporate information to competitors. When H.R. 5005 was reported out of the House Select Committee on Homeland Security after hearings on the legislation, the Administration's FOIA exemption was modified, and new limitations on the use and disclosure of critical infrastructure information were included in a separate subtitle (Title VII, Subtitle C, sections 721 - 724). The Select Committee on Homeland Security significantly expanded upon the President's proposal for an exemption from FOIA for information on infrastructure vulnerabilities. Section 204 of H.R. 5005 was no longer limited to the exemption from disclosure under FOIA of information on "infrastructure vulnerabilities or other vulnerabilities to terrorism." Its protections now extended to a broad and newly defined category of information – critical infrastructure information voluntarily submitted to the DHS with an express statement of expectation of protection from disclosure. The reported bill included some of the protections sought by industry representatives: it provided exemption from disclosure under FOIA; it provided that covered information would not be used directly in civil actions; it provided that critical infrastructure information would not be used or disclosed by any Federal employee (except to further criminal investigation or prosecution or to disclose the information to Congress or the General Accounting Office); it established that critical infrastructure information provided to a State or local government by DHS may not be made available pursuant to any State or local law requiring disclosure of information or records; and it provided that communications of critical infrastructure information would not be subject to the requirements of the Federal Advisory Committee Act (FACA). The Senate Governmental Affairs Committee, too, voted to add a FOIA exemption to its bill, S. 2452 (Lieberman, section 198) establishing a Department of Homeland Security. S. 2452 , the National Homeland Security and Combating Terrorism Act of 2002, agreed to by the Senate Governmental Affairs Committee on July 25, 2002, exempted a "record" pertaining to the vulnerability of and threats to critical infrastructure (as defined in the USA PATRIOT Act), furnished voluntarily to the Department of Homeland Security, from being made available under FOIA. A record was protected from disclosure if the provider would not customarily make the record available to the public. It also required the provider to certify, in a manner specified by the Department of Homeland Security, that the record is confidential and not customarily made available to the public. Under S. 2452 a record is submitted voluntarily if it was submitted to the Department of Homeland Security "in the absence of authority of the Department requiring that record to be submitted," and it is not submitted or used to satisfy any legal requirement or obligation or to obtain any grant, permit, benefit, or other approval from the federal government. Agencies with which the Department of Homeland Security shares protected records were to be bound by the FOIA exemption. FOIA requests for protected information were to be referred back to the Department of Homeland Security. S. 2452 allowed an agency which had received independently of the Department a record "similar or identical" to that received by the Department, to disclose the record under FOIA. The Senate bill did not preempt state or local disclosure laws if the state or local authority received the information independent of the Department of Homeland Security, nor did it contain civil liability immunity, or criminal penalties. Finally, the Senate bill required the Comptroller General to report to Congress on the implementation and use of its protections. On November 25, 2002, President Bush signed H.R. 5005 , the Homeland Security Act of 2002, P.L. 107-296 . The "Critical Infrastructure Information Act of 2002," ("CIIA"), to be codified at 6 U.S.C. § 131 et seq., is found in Subtitle B of Title II of the Homeland Security Act (sections 211 - 215). CIIA consists of a group of provisions that address the circumstances under which the Department of Homeland Security may obtain, use, and disclose critical infrastructure information as part of a critical infrastructure protection program. CIIA establishes several limitations on the disclosure of critical infrastructure information voluntarily submitted to DHS. The CIIA was enacted, in part, to respond to the need for the federal government and owners and operators of the nation's critical infrastructures to share information on vulnerabilities and threats, and to promote information sharing between the private and public sectors in order to protect critical assets. The Homeland Security Act of 2002 adopted sections 721- 725 of H.R. 5005 on critical infrastructure information verbatim. Congress' enactment of the Critical Infrastructure Information Act of 2002 was and continues to be somewhat controversial. The narrower Senate version, S. 2452 , was not considered by the full Senate, or the House of Representatives, when Congress enacted the Homeland Security Act on an accelerated schedule. The Homeland Security Act was approved by the House and the Senate expeditiously, with relatively little focus on its FOIA-related provisions. Following is a summary of the new law. The CIIA includes 4 key definitions: covered federal agency; critical infrastructure information; voluntary; and express statement. Another key definition, critical infrastructure, is defined elsewhere in the Homeland Security Act. The most important definition in CIIA is that of "critical infrastructure information" because the CIIA protections are triggered only for such information. Critical infrastructures are defined elsewhere in the Homeland Security Act. Section 2(4) of the Homeland Security Act states that critical infrastructure "has the meaning given that term in section 1016(e) of Public Law 107-56 (42 U.S.C. 5195(e))." Section 1016(e) of the USA PATRIOT Act defines critical infrastructure as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of these matters." This definition is viewed as a broad catch-all provision likely to cover a wide array of activities. Critical infrastructure information is defined as "information not customarily in the public domain and related to the security of critical infrastructure or protected systems— (A) actual, potential, or threatened interference with, attack on, compromise of, or incapacitation of critical infrastructure or protected systems by either physical or computer-based attack or other similar conduct (including misuse of or unauthorized access to all types of communications and data transmission systems) that violates federal, state, or local law, harms interstate commerce of the United States, or threatens public health and safety; (B) the ability of critical infrastructure or protected systems to resist such interference, compromise, or incapacitation, including any planned or past assessment, projection or estimate of the vulnerability of critical infrastructure or a protected system, including security testing, risk evaluation thereto, risk management planning, or risk audit; or, (C) any planned or past operational problem or solution regarding critical infrastructure... including repair, recovery, reconstruction, insurance, or continuity to the extent it relates to such interference, compromise, or incapacitation." This definition covers a wide range of information, and is further expanded by reference to the statutory definition of critical infrastructure from the USA PATRIOT Act. Covered federal agency is defined by the CIIA as the Department of Homeland Security. On the House floor, an amendment to this definition was offered, and failed. Amendment No. 25 would have amended the definition of "covered agency" to include not just the Department of Homeland Security, but any other agency designated by the Department of Homeland Security or with which the Department shares critical infrastructure information. Another important definition is of voluntary . Section 214 of the CIIA protects critical infrastructure information voluntarily submitted to the DHS when accompanied by an express statement of expectation of protection from disclosure. The term "voluntary" with respect to the submittal of critical infrastructure information to a covered federal agency means "the submittal thereof in the absence of such agency's exercise of legal authority to compel access or submission of such information and may be accomplished by a single entity or an Information Sharing and Analysis Organization on behalf of itself or its members" The CIIA defines "Information Sharing and Analysis Organizations" as "any formal or informal entity or collaboration created or employed by public or private sector organizations, for purposes of– (A) gathering and analyzing critical infrastructure information . . . (B) communicating or disclosing critical infrastructure information . . . and (C) voluntarily disseminating critical infrastructure information . . . ." In addition, the definition of voluntary includes a critical exclusion. A voluntary submission to DHS does not include filings that were also made with the Securities and Exchange Commission or Federal banking regulators, statements made pursuant to the sale of securities, or information or statements submitted or relied upon as a basis for making licensing or permitting determinations, or during regulatory proceedings. Consequently, information falling within the exclusion would not be protected from disclosure. The last critical definition is of an express statement . In order to obtain the protections of the CIIA, the submission must be accompanied by an express statement. In the case of written information or records, this means a written marking on the information or records similar to "This information is voluntarily submitted to the Federal Government in expectation of protection from disclosure as provided by the provisions of the Critical Infrastructure Information Act of 2002." In the case of oral information, CIIA requires the submission of a similar written statement within a reasonable time period following the oral communication. Section 214 of the CIIA is entitled "Protection of Voluntarily Shared Critical Infrastructure Information." The section establishes several protections for critical infrastructure information voluntarily submitted to the Department of Homeland Security for use regarding the security of critical infrastructures and protected systems and for other purposes when such information is accompanied by an express statement to the effect that the information is voluntarily submitted to the federal government in expectation of protection from disclosure. To encourage private and public sector entities and persons to voluntarily share their critical infrastructure information with the Department of Homeland Security, the CIIA includes several measures to ensure against disclosure of protected critical infrastructure information by DHS. Section 214(a)(1), entitled "In General," provides: Notwithstanding any other provision of law, critical infrastructure information (including the identity of the submitting person or entity) that is voluntarily submitted to a covered Federal agency for use by that agency regarding the security of critical infrastructures and protected systems, analysis, warning, interdependency study, recovery, reconstitution, or other informational purpose, when accompanied by an express statement . . . . (A) "shall be exempt from disclosure under section 552 of title 5, United States Code (commonly referred to as the Freedom of Information Act)." According to the Department of Justice, the agency responsible for administering the FOIA, section 214(a)(1) will operate as a new "Exemption 3 statute" under FOIA for "critical infrastructure" information that is obtained by the Department of Homeland Security. This section eliminates the presumptive right of access by any person—corporate or individual, regardless of nationality—to existing, unpublished DHS records on critical infrastructure information. Unlike FOIA, which specifies nine categories of information that may be exempted from disclosure, and permits rather than requires the withholding of requested information section 214(a)(1)(A) leaves no discretion and requires that critical infrastructure information voluntarily submitted to the DHS not be disclosed under FOIA. Prior to the enactment of this new FOIA exemption 3 statute, critical infrastructure information would have fallen under the scope of exemption 4 of FOIA which exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." Most exemption 4 cases have involved a dispute over whether the information was "confidential." In 1992, in Critical Mass Energy Project v. NRC , the full D.C. Circuit Court of Appeals established a new test to determine confidentiality for information submitted voluntarily to an agency. It ruled that voluntarily submitted information is exempt from disclosure under FOIA if the submitter can show that it does not customarily release the information to the public. The court in Critical Mass did not expressly define the two terms "required" and "voluntary" information submissions. The Department of Justice issued policy guidance on the Critical Mass distinction under exemption 4. Further guidance of the treatment of confidential business information is found in Executive Order 12,600 ( Predisclosure Notification Procedures for Confidential Commercial Information ). Similarly, the CIIA protects from disclosure critical infrastructure information "not customarily in the public domain" voluntarily submitted to DHS. The Report of the House Select Committee on Homeland Security accompanying H.R. 5005 states that "The Select Committee intends that subtitle C only protect private, security-related information that is voluntarily shared with the government in order to assist in increasing homeland security. This subtitle does not protect information required under any health, safety, or environmental law" (emphasis added). It should be noted that section 214(d) provides that "the voluntary submittal to the Government of information or records that are protected from disclosure by the Act shall not be construed as compliance with any legal requirement to submit such information to a federal agency." Section 214(a)(1)(B) of the CIIA provides that covered information will not be subject to agency rules or judicial doctrine regarding ex-parte communications. The Administrative Procedure Act (APA) establishes the rules for agencies to adhere to with respect to ex parte communications in agency proceedings. The APA defines an "ex parte communication" as an "oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given . . ." Section 556(e) of the Administrative Procedure Act incorporates the principle that formal agency adjudications are to be decided solely on the basis of record evidence. It provides that "[t]he transcript of testimony and exhibits, together with all papers and requests filed in the proceeding, constitutes the exclusive record for decision." The reason for this "exclusiveness of record" principle is to provide fairness to the parties in order to ensure meaningfully participation. Challenges to the "exclusiveness of record" occur when there are ex parte contacts – communications from an interested party to a decision making official that take place outside the hearing and off the record. Ex parte contact issues arise more frequently in agency adjudications than in judicial proceedings because the latter are almost always made on the record, after an adversary proceeding; however, on the record proceedings are a very small part of the docket in most agency proceedings. Section 557(d)(1) of the APA prohibits any "interested person outside the agency" from making, or knowingly causing, "any ex parte communication relevant to the merits of the proceeding" to any decision making official. Similar restraints are imposed on the agency decision makers, who are defined to include any "member of the body comprising the agency, administrative law judge, or other employee who is or may reasonably be expected to be involved in the decisional process." When an improper ex parte contact occurs, the APA requires that it be placed on the public record; if it was an oral communication, a memorandum summarizing the contact must be filed. Upon receipt of an ex parte communication knowingly made or knowingly caused to be made by a party in violation of the APA, the agency, administrative law judge, or other employee presiding at the hearing may require the party to show cause why his claim or interest in the proceeding should not be dismissed, denied, disregarded, or otherwise adversely affected on account of such violation. Section 214(a)(1)(B) of the CIIA exempts protected critical infrastructure information from APA prohibitions on ex parte communications. Section 214(a)(1)(C) of the CIIA creates an evidentiary exclusion for protected information. Section 214(a)(1)(C) prohibits the direct use, without the written consent of the information submitter, of protected critical infrastructure information by such agency (DHS), any other Federal, State, or local authority, or third party in any civil action arising under federal or state law if submitted in good faith. This protection is limited to critical infrastructure information that is voluntarily submitted to a covered federal agency [DHS] for use by that agency regarding the security of critical infrastructure and protected systems . . . or other informational purpose, when accompanied by an express statement. This evidentiary limitation does not apply to regulatory or enforcement actions by Federal, State, or local governmental entities, nor to civil actions when the information is obtained independently of the DHS. The courts may also limit application of the evidentiary exclusion in cases of bad faith. Public interest groups are concerned that this provision is very broad, and would shield owners and operators from liability under antitrust, tort, tax, civil rights, environmental, labor, consumer protection, and health and safety laws. However, a Federal entity may separately obtain the critical infrastructure information submitted to the DHS for its critical infrastructure protection program through the use of independent legal authorities, and use such information in any action. The CIIA does not limit the ability of governments, entities, or third parties to independently obtain critical infrastructure information or to use critical infrastructure information for limited purposes. Section 214(a)(1)(D) of the CIIA prohibits use or disclosure of critical infrastructure information by U.S. officers or employees, without consent, for unauthorized purposes; and authorizes the use or disclosure of such information by such officers and employees in furtherance of the investigation or the prosecution of a criminal act; or for disclosure to Congress or the General Accounting Office. The President's signing statement accompanying the Homeland Security Act of 2002 expressly addressed this provision. It states that "The executive branch does not construe this provision to impose any independent or affirmative requirement to share such information with the Congress or the Comptroller General and shall construe it in any manner consistent with the constitutional authorities of the President to supervise the unitary executive branch and to withhold information the disclosure of which could impair foreign relations, the national security, the deliberative processes of the Executive, or the performance of the Executive's constitutional duties." This subsection adopts word-for-word the language from provisions of the Privacy Act of 1974 which permit disclosure of personal information maintained by executive branch agencies in systems of records to Congress, and to the General Accounting Office. Similarly, FOIA provides that it is not authority for withholding information from Congress. Several existing federal statutes authorize the disclosure of certain categories of information for the investigation or prosecution of a criminal act. Federal laws protecting government, credit, communications, education, bank, cable, video, motor vehicle, health, telecommunications, children's, and financial information generally carve out exceptions for the disclosure of personally identifiable information to law enforcement officials, and authorize access to personal information through use of search warrants, subpoenas, and court orders. Section § 214(a)(1)(E) of the CIIA specifically mandates that the critical infrastructure information now exempt under the FOIA "shall not, if provided to a State or local government . . . be made available pursuant to any State or local law requiring disclosure of information or records." This statute thus explicitly provides for the "preemption" of state freedom of information laws by federal law. It also prohibits State or local governments from disclosing protected critical infrastructure information provided to them by DHS without written consent of the entity submitting the information; prohibits its use for other than critical infrastructure protection, or the furtherance of a criminal investigation or prosecution. Section 214(a)(1)(F) of the Act guards against "waiver of any applicable privilege or protection provided under law, such as trade secret protection." Legal protections for trade secrets vary from state to state. According to the Restatement of Torts, § 757, comment b, as adopted by most state laws, "a trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Other relevant evidentiary privileges may include the attorney-client privilege. Section 214(b) of the Act provides that no communication of critical infrastructure information to the Department of Homeland Security pursuant to the CIIA shall be considered an action subject to the requirements of the Federal Advisory Committee Act which requires that the meetings of federal advisory committees serving executive branch entities be open to the public. FACA defines an "advisory committee" as "any committee, board, commission, council, conference, panel, task force, or other similar group, or any subcommittee or other subgroup thereof (hereafter in this paragraph referred to as "committee"), which is - (A) established by statute or reorganization plan, or (B) established or utilized by the President, or (C) established or utilized by one or more agencies, in the interest of obtaining advice or recommendations for the President or one or more agencies or officers of the Federal Government, except that such term excludes (i) any committee that is composed wholly of full-time, or permanent part-time, officers or employees of the Federal Government, and (ii) any committee that is created by the National Academy of Sciences or the National Academy of Public Administration." The FACA also specifies nine categories of information, similar to those in FOIA, that may be permissively relied upon to close advisory committee deliberations. Prior to passage of the critical infrastructure information provisions, meetings of "Information Sharing and Analysis Organizations" (ISAO) could potentially be subject to FACA's requirements. However, the CIIA expressly authorizes ISAOs to voluntarily submit information to the DHS on behalf of itself or its members with the result being that such information will be protected in material respects under the Act from uses and disclosures unrelated to critical infrastructure protection. The CIIA defines "Information Sharing and Analysis Organizations" as "any formal or informal entity or collaboration created or employed by public or private sector organizations, for purposes of– (A) gathering and analyzing critical infrastructure information . . . (B) communicating or disclosing critical infrastructure information . . . and (C) voluntarily disseminating critical infrastructure information . . . ." For a discussion of information sharing and analysis centers formed by several sectors (e.g., banking and finance, telecommunications, electricity, water, etc.), see CRS Report RL30153, Critical Infrastructures: Background, Policy, and Implementation , by [author name scrubbed]. Section 214(e) requires the Secretary of DHS to establish procedures for the receipt, care, and storage of critical infrastructure information not later than 90 days after enactment. The Homeland Security Act took effect 60 days after passage; the legislation was enacted on November 25, 2003. In other words, Secretary Ridge is to establish those procedures no later that February 23, 2003. The Secretary of Homeland Security is to consult with the National Security Council and the Office of Science and Technology Policy to establish uniform procedures. In addition, it appears that these DHS procedures will not be subject to agency notice and comment rulemaking requirements for agency regulations under the APA because the CIIA requires the promulgation of agency procedures, not regulations. Moreover, in other sections of the Homeland Security Act, Congress clearly directed that regulations be promulgated. Presumably it would have done the same here if that is what it sought. Judicial review of agencies' interpretations of statutes entails a significant element of deference, as the Supreme Court emphasized in Chevron U.S.A., Inc. v NRDC . In Chevron, the Court prescribed two inquiries that a reviewing court should conduct when reviewing an agency's construction of a statute. The first was whether "Congress has directly addressed the precise question at issue." If so, the court would have to "give effect to the unambiguously expressed intent of Congress." However, if the statute were to prove "silent or ambiguous with respect to the specific issue," the remaining question was whether the agency's answer was "permissible" – or, as the Court phrased it, a "reasonable interpretation." Chevron , in effect, creates a presumption applicable to regulatory schemes in which Congress has delegated power to an agency: to whatever extent the statute remains ambiguous, the reviewing court should presume that Congress has delegated to the agency the task of filling in the gap in some reasonable way. Section 214(f) contains a provision that makes it a criminal offense for any federal employee to "knowingly . . . disclose[] . . . any critical infrastructure information [that is] protected from disclosure" under it, without proper legal authorization. "(f) PENALTIES- Whoever, being an officer or employee of the United States or of any department or agency thereof, knowingly publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by law, any critical infrastructure information protected from disclosure by this subtitle coming to him in the course of this employment or official duties or by reason of any examination or investigation made by, or return, report, or record made to or filed with, such department or agency or officer or employee thereof, shall be fined under title 18 of the United States Code, imprisoned not more than 1 year, or both, and shall be removed from office or employment." This provision is similar to the criminal penalties imposed in the Privacy Act, and the Trade Secrets Act. A possible concern with the criminal penalty provisions imposed under CIIA is their potential conflict with certain protections provided under the Whistleblower Protection Act (WPA), which protects covered employees from prohibited personnel actions taken because of a protected disclosure. WPA expressly provides that current employees, former employees, or applicants for employment to positions in the executive branch of government in both the competitive and the excepted service, as well as positions in the Senior Executive Service, are considered covered employees. WPA protects "any disclosure of information" that the employee "reasonably believes" evidences "a violation of any law, rule, or regulation" or evidences "gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety," if the disclosure is not prohibited by law or required to be kept secret by Executive Order. WPA also protects " any disclosure" made to the Special Counsel or to the Inspector General of an agency or another employee designated by the head of the agency to receive such disclosures, which the employee "reasonably believes" evidences "a violation of any law, rule, or regulation," or evidences "gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety." WPA further protects "cooperating with or disclosing information to the Inspector General of an agency, or the Special Counsel, in accordance with applicable provisions of law." WPA provides that the whistleblowing provisions are "not to be construed to authorize the withholding of information from the Congress or the taking of any personnel action against an employee who discloses information to the Congress." Hypothetically, if a "covered" federal employee discloses protected critical infrastructure information without legal authorization, she would be in violation of CIIA (and, for example, could be fined, imprisoned, and removed from office or employment). That is, since CIIA generally prohibits the disclosure of protected critical infrastructure information, except for the purpose of criminal investigation or prosecution or to disclose protected information to Congress or the General Accounting Office, such a disclosure would subject the "covered" federal employee to criminal sanctions under the CIIA. Moreover, the protections of the CIIA apply "Notwithstanding any other provision of law." Under the WPA, if a "covered" federal employee disclosed protected critical infrastructure information without legal authorization, she would not be protected by WPA if the disclosure was prohibited by law. However, the "covered" federal employee would appear to be protected by WPA, on the condition that such employee made "any disclosure to the Special Counsel, or to the Inspector General of an agency ... which the employee or applicant reasonably believes evidences a violation of any law, rule or regulation," or evidences "gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety." Furthermore, she would appear to be protected "from the taking of any personnel action against an employee who discloses information to Congress." In addition, it should be noted that Section 883 of the Homeland Security Act ( P.L. 107-296 ), to be codified at 6 U.S.C. § 463, expressly provides that "Nothing in this Act shall be construed as exempting the Department [of Homeland Security] from requirements applicable with respect to executive agencies ... (2) to provide whistleblower protections for employees of the Department (including pursuant to the provisions in section 2302(b)(8) and (9) of such title." Another issue that has been raised with respect to the criminal penalties provision in section 214(f) of the CIIA which applies to "an officer or employee of the United States" is whether Members of Congress and their staff could be criminally liable for the release of protected critical infrastructure information. The CIIA does not include a definition of "officer or employee of the United States." Section 214(C) of CIIA prohibits without written consent the use or disclosure of protected information by any officer or employee of the United States for unauthorized purposes except when disclosure would be for criminal prosecution or investigation, to Congress, or to GAO presumably for purposes of oversight. The Report of the Select Committee on Homeland Security on H.R. 5005 , the Homeland Security Act, states that "unauthorized disclosures of critical infrastructure information by any U.S. employee may be punished by fines, imprisonment up to one year, and removal from employment." In light of the fact that the underlying purpose of the CIIA is to promote voluntary information sharing on threats and vulnerabilities to critical infrastructure through the establishment of a statutory scheme designed to protect against unauthorized disclosures of confidential business information, it is arguable that the criminal penalties for unauthorized disclosure of protected information were intended to apply to Congress. However, if Congress had thought it was including itself, then disclosure from "an officer or employee of the United States" to Congress might arguably not be a "disclosure" at all, just information shared between one officer of the United States and another officer of the United States, and one could argue that the exception permitting disclosure to Congress wouldn't have been necessary. Another consideration that supports the conclusion that Congress is not subject to the criminal penalty provision is the fact that one of the penalties is "removal from employment." This argues against the provision applying to Congress, since a Member of Congress cannot be removed by statutory fiat, but only by the Constitutional process set out in Article I, Section 5 of the Constitution, that is, expulsion. Even though the plain meaning of "an officer or employee of the United States" could reasonably be interpreted to include Members of Congress, the Supreme Court had interpreted 18 U.S.C. 1001, prohibiting false statements in any matter before any agency or department of the United States, as not applying to Congress or the courts after more than 40 years of applying it to statements before some congressional entities. Congress had to amend it to expressly include Congress. In light of the Hubbard precedent it would appear unlikely that the term "officer or employee of the United States" would be construed by a court as applying to Congress without more definitions or legislative history. Moreover, the Speech or Debate clause of the U.S. Constitution prevents criminal prosecution of a Member of Congress for what she says on the floor, or during committee proceedings. Members of Congress have immunity for their legislative acts under Article I, § 6, cl. 1, of the Constitution, which provides in part that "for any speech or debate in either House, [Senators and Representatives] shall not be questioned in any other place." Even if the actions of a Senator or Representative are within the scope of the speech or debate clause or some other legal immunity, he remains accountable to the House of Congress in which he serves and to the electorate. The clause protects a Member when speaking on the House or Senate floor, introducing and voting on bills and resolutions, preparing and submitting committee reports, acting at committee meetings and hearings, and conducting investigations and issuing subpoenas. In a frequently quoted description of the scope of the privilege, the Court in Gravel v. United States , explained that, in addition to actual speech or debate in either House, the clause applies only to acts which are "an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings with respect to the consideration and passage or rejection of proposed legislation or with respect to other matters which the Constitution places within the jurisdiction of either House." In addition, the "Speech or Debate Clause applies not only to a Member but also to his aides insofar as the conduct of the latter would be a protected legislative act if performed by the Member himself." Section 214(g) of the CIIA authorizes the federal government to provide advisories, alerts, and warnings to relevant companies, targeted sectors, other government entities, or the general public regarding potential threats to critical infrastructure. In issuing a warning, the federal government must protect from disclosure the source of any voluntarily submitted critical infrastructure information that forms the basis for the warning, or information that is proprietary, business sensitive, or otherwise not appropriately in the public domain. Section 215 of CIIA expressly provides that a private right of action for enforcement of the Act is not created. Many federal statutes contain a private right of action, usually express but occasionally implied, which authorizes suits against the United States.

The Critical Infrastructure Information Act of 2002 ("CIIA"), to be codified at 6 U.S.C. §§131 - 134, was passed on November 25, 2002 as subtitle B of Title II of the Homeland Security Act ( P.L. 107-296 , 116 Stat. 2135, sections 211 - 215), and regulates the use and disclosure of information submitted to the Department of Homeland Security (DHS) about vulnerabilities and threats to critical infrastructure. This report examines the CIIA. For further information, see CRS Report RL30153, Critical Infrastructures: Background, Policy, and Implementation , by [author name scrubbed]. This report will be updated as warranted.

Medicaid, authorized under Title XIX of the Social Security Act, is a federal-state program providing medical assistance for low-income individuals who are aged, blind, disabled, members of families with dependent children, or who have one of a few specified medical conditions. The Balanced Budget Act of 1997 established SCHIP under a new Title XXI of the Social Security Act. SCHIP builds on Medicaid by providing health insurance to uninsured children in families with income above applicable Medicaid income standards. Section 1115 of the Social Security Act provides the Secretary of Health and Human Services (HHS) with broad authority to conduct research and demonstration projects under several programs authorized by the Social Security Act including Medicaid and SCHIP. Section 1115 also authorizes the Secretary to waive certain statutory requirements for conducting these projects without congressional approval. For this reason, the research and demonstration projects are often referred to as Section 1115 "waiver" projects. Under Section 1115, the Secretary may waive Medicaid requirements contained in Section 1902 (including but not limited to what is known as, freedom of choice of provider, comparability of services, and state-wide access). The Secretary may also use the Section 1115 waiver authority to provide Federal financial participation (FFP) for costs that are not otherwise matchable under Section 1903 of the Social Security Act. For SCHIP, no specific sections or requirements are cited as "waiveable." Section 2107(e)(2)(A) of the Social Security Act states that Section 1115 of the act, pertaining to research and demonstration waivers, applies to SCHIP. States must submit proposals outlining terms and conditions for proposed waivers to CMS for approval before implementing these programs. In recent years, there has been increased interest among states and the federal government in the Section 1115 waiver authority as a means to restructure coverage, control costs, and increase state flexibility. Under current law, states may obtain waivers that allow them to provide services to individuals not traditionally eligible for Medicaid (or SCHIP), cover non-Medicaid (or SCHIP) services, limit benefit packages for certain groups, among other purposes. Whether large or small reforms, Section 1115 waiver programs have resulted in significant changes for Medicaid and SCHIP recipients nationwide, and may serve as a precedent for federal and state officials who wish to make statutory changes to these healthcare safety net programs. While Section 1115 is explicit about provisions in Medicaid law that may be waived in conducting demonstration projects, a number of other provisions in Medicaid law and regulations specify limitations on how a state may operate a waiver program. For example, one provision restricts states from establishing waivers that fail to provide all mandatory services to the mandatory poverty-related groups of pregnant women and children; another provision specifies restrictions on cost-sharing under waivers. Other features of the Section 1115 waiver authority include: Federal Reimbursement for Section 1115 Demonstrations . Approved Section 1115 waivers are deemed to be part of a state's Medicaid (or SCHIP) state plan for purposes of federal reimbursement. Project costs associated with waiver programs are subject to that state's FMAP (or enhanced-FMAP) . Financing and Budget Neutrality . Unlike regular Medicaid, CMS waiver guidance specifies that waiver costs are budget neutral to the federal government over the life of the waiver program. To meet the budget neutrality test, estimated spending under the waiver cannot exceed the estimated cost of the state's existing Medicaid program under current law program requirements. For example, costs associated with an expanded population (e.g., those not otherwise eligible under Medicaid), must be offset by reductions elsewhere within the Medicaid program. Several methods are used by states to generate cost savings for the waiver component: (1) limiting benefit packages for certain eligibility groups; (2) providing targeted services to certain individuals so as to divert them from full Medicaid coverage; and (3) using enrollment caps and cost-sharing to reduce the amounts states must pay. Financing and Allotment Neutrality . Under the SCHIP program, a different budget neutrality standard applies. States must meet an "allotment neutrality test" where combined federal expenditures for the state's regular SCHIP program and for the state's SCHIP demonstration program are capped at the state's individual SCHIP allotment (i.e., original allotments and funds made available through the redistribution of unspent SCHIP funds). This policy limits federal spending to the capped allotment levels. Application and Approval Process. There is no standardized process to apply for a Section 1115 demonstration, but CMS has issued program guidance that impacts the approval process. States often work collaboratively with CMS to develop their proposals. Project proposals are subject to approval by CMS, the Office of Management and Budget (OMB), and the Department of Health and Human Services (DHHS), and may be subject to additional requirements such as site visits before the program may be implemented under the agreed upon terms and conditions. Duration. Waiver projects are generally approved for a five-year period, however, states may seek up to a three-year extension for their existing waiver program under the same special terms and conditions (STC), and an additional extension(s) under revised STC for the continuation of a waiver project operating under an initial three-year extension. Relationship of Medicaid/SCHIP Demonstration Waivers to Other Statutes . Section 1115 waiver projects may interact with other program rules outside of the Social Security Act; for example, employer-sponsored health insurance as described by the Employee Retirement Income Security Act (ERISA), or alien eligibility as contained in immigration law. In cases like these, the Secretary does not have the authority to waive provisions in these other statutes. Program Guidance. The Secretary can develop policies that influence the content of demonstration projects and prescribe approval criteria in three ways: (1) by promulgating program rules and regulations; (2) through the publication of program guidance (e.g., waivers must be budget neutral); and (3) waiver policy may also be implicitly shaped by the programs that have been approved (e.g., CMS approval of benefit specific waivers). Legislative action may be required if Congress chooses to further shape the Secretary's authority over the content of the demonstration programs, dictate specific Section 1115 waiver approval criteria, or otherwise limit the Secretary's waiver authority. As of July 1 2008, there were 94 operational Medicaid and SCHIP Section 1115 waivers in 43 states and the District of Columbia. In FY2006 (the most recent data available), Section 1115 waiver federal expenditures (for Medicaid and SCHIP) totaled approximately $42.4 billion. Section 1115 waiver programs represented approximately 24% of all federal Medicaid spending in the 50 states and the District of Columbia for FY2006 (19% for SCHIP), and provided coverage to approximately 11.5 million enrollees. Of the 11.5 million total Medicaid and SCHIP waiver enrollees, 2.5 million were only eligible for a targeted benefit package such as family planning benefits. There are several types of operational waiver programs including: Comprehensive demonstrations. These demonstrations provide a broad range of services that are generally offered statewide. Many of the comprehensive waivers operate under combined title XIX and title XXI authority and are financed with federal Medicaid and SCHIP matching funds. Several also include a family planning and/or Health Insurance Flexibility and Accountability (HIFA) component (see below). In FY2008, there were 32 operational comprehensive state reform waivers in 26 states. FY2006 state-reported enrollment estimates for these waivers totaled approximately 8.1 million, at a federal cost of approximately $38.4 billion. The SCHIP-financed portion of these waivers extended coverage to approximately 475,376 enrollees at a federal cost of $330 million. FY2006 enrollee estimates for the limited benefits offered under a FP component totaled approximately 104,990. Family planning demonstrations (FP) . In FY2008, there were 22 states with stand-alone FP waivers to provide a limited benefit package including family planning services and supplies for certain individuals of childbearing age. FY2006 enrollment estimates for stand-alone FP waivers totaled 2.4 million at a federal cost of approximately $1.4 billion. Just over 1,000 of FY2006 enrollees were SCHIP-eligible with care financed out of the SCHIP allotments. SCHIP and HIFA Waivers . Of the 20 states with SCHIP waivers in FY2008, 14 have SCHIP waivers that were granted under the HIFA initiative. HIFA demonstrations are designed to encourage states to extend Medicaid and SCHIP to the uninsured, with an emphasis on approaches that maximize private health insurance coverage and target populations with incomes below 200% of the federal poverty level (FPL). Under HIFA, states were encouraged to finance program expansions using unspent SCHIP funds to, for example, extend coverage to one or more categories of adults with children (typically parents of Medicaid/SCHIP children, caretaker relatives, or legal guardians), and/or pregnant women. Four states (i.e., Arizona, Michigan, New Mexico, and Oregon) have approval to cover childless adults under their HIFA waivers. The Deficit Reduction Act of 2005 prohibits new waivers that would use SCHIP funds to provide coverage to nonpregnant, childless adults. Recently the Administration has not renewed existing waivers that permitted coverage of adults through SCHIP. In addition to expanding coverage to new populations under SCHIP, some states use the SCHIP Section 1115 authority for other purposes including modifying cost-sharing rules (e.g., New Mexico), and requiring periods of no insurance prior to SCHIP enrollment (e.g., Alaska and New Mexico). As of FY2006, approximately 925,196 enrollees accessed services under SCHIP and HIFA demonstrations at a federal cost of $675 million. Specialty services and population demonstrations . These demonstrations generally include programs that provide cash to enrollees so that they may directly arrange and purchase services that best meet their needs. In addition, they include waivers to provide pharmacy benefits to persons with specific conditions, such as HIV/AIDS. As of FY2008, there were 20 such operational programs in 15 states and the District of Columbia. In FY2006, these demonstrations covered approximately 37,473 individuals at a federal cost of approximately $441 million. Federal costs for Pharmacy-only demonstrations totaled $1.5 billion in FY2006. Katrina/Multi - state Demonstrations. In response to the Hurricane Katrina disaster, CMS allowed states to provide temporary eligibility for specified Katrina evacuees so that such individuals could obtain state plan services in a host state (i.e., a state that has been granted an emergency Section 1115 waiver). Between September 2005 and March 2006 CMS approved 32 Katrina waivers that extended coverage to an estimated 118,602 individuals at a federal cost of $1.63 billion.

Section 1115 of the Social Security Act provides the Secretary of Health and Human Services (HHS) with broad authority to waive certain statutory requirements for states to conduct research and demonstration projects that further the goals of Titles XIX (Medicaid) and/or XXI (the State Children's Health Insurance Program; SCHIP). States use the Section 1115 waiver authority to cover non-Medicaid and SCHIP services, limit benefit packages, cap program enrollment, among other purposes. As of July 1 2008, there were 94 operational Medicaid and SCHIP Section 1115 waiver programs in 43 states and the District of Columbia. In FY2006 (the most recent data available), Section 1115 waiver federal expenditures (for Medicaid and SCHIP) totaled approximately $42.4 billion. Section 1115 waiver programs represented approximately 24% of all federal Medicaid spending in the 50 states and the District of Columbia for FY2006 (19% for SCHIP), and provided coverage to approximately 11.5 million enrollees—2.5 million of whom were eligible only for a targeted benefit package such as family planning or pharmacy benefits. FY2006 waiver expenditure and enrollment estimates from the Centers for Medicare and Medicaid Services (CMS) based on state-reported data, and are subject to change. Between FY2001 (the earliest year for which CRS has access to Section 1115 expenditure estimates) and FY2005, federal Medicaid waiver expenditures as a percentage of total Medicaid spending were steady at approximately12-14%. In FY2006, there was a substantial increase in federal waiver spending as a percentage of total Medicaid spending (i.e., almost 60% increase over the FY2005 totals). While there are several plausible explanations for this increase (e.g., ramp up of new and renegotiated waivers, prior period adjustments, etc.) because waiver financing arrangements are negotiated over a 5-year budget window it is hard to determine if the jump in federal expenditures represents a step increase in overall federal waiver spending, or a one-time increase that will be mitigated over the budget authority window. Analysis of future waiver expenditure trends will help to clarify this question. Estimates do not include state experience under the 5 month temporary Katrina waivers (described below).This report provides background information on the waiver authority, and will be updated when new data are available.

Title I of the Child and Family Services Improvement and Innovation Act ( P.L. 112-34 ) extends funding authorization for five years (FY2012-FY2016) for certain programs that support child welfare-related child and family services (under Title IV-B of the Social Security Act). The funding authorization for those programs had been set to expire with FY2011 (i.e., on September 30, 2011). The measure also makes certain child welfare policy changes to those programs and to the Foster Care and Adoption Assistance program (under Title IV-E of the Social Security Act). The policy changes included for programs under both Title IV-B and Title IV-E of the Social Security Act are primarily related to serving children who are in foster care and their families. Title II of P.L. 112-34 renews the authority for the U.S. Department of Health and Human Services (HHS) to annually approve up to 10 child welfare demonstration projects for each of three years (FY2012-FY2014). In addition, it adds a number of policy changes related to state eligibility to conduct child welfare demonstration projects (often called "waiver" projects) and HHS approval of those projects. Authority for HHS to grant new waivers expired on March 31, 2006. Substantively identical versions of the Child and Family Services Improvement and Innovation Act were introduced in the House ( H.R. 2883 ) by Representative Geoff Davis, with Representative Lloyd Doggett, and introduced in the Senate ( S. 1542 ) by Senator Max Baucus, with Senator Orrin Hatch, on the same day, September 12, 2011. After those bills were each favorably reported (and without substantive amendment) by the House Ways and Means Committee ( H.R. 2883 ) and the Senate Finance Committee ( S. 1542 ), the House passed H.R. 2883 on September 21, 2011, and the Senate did the same on September 22. President Barack Obama signed the bill into law on September 30, 2011 ( P.L. 112-34 ). Title IV-B of the Social Security Act authorizes a range of programs and activities to support child welfare-related child and family services and research. These include the Stephanie Tubbs Jones Child Welfare Services Program (Subpart 1, hereafter Child Welfare Services program), the Promoting Safe and Stable Families Program (Subpart 2), the National Random Sample Study of Child Welfare (Section 429), and the Mentoring Children of Prisoners Program (Section 439). The funding authorization for each of these programs was set to expire as of September 30, 2011. The Child and Family Services Improvement and Innovation Act makes the following changes to Title IV-B of the Social Security Act: It extends the annual discretionary funding authorization for the Child Welfare Services program at its current law level for five years ($325 million for each of FY2012-FY2016). It provides annual mandatory funding authorization for the Promoting Safe and Stable Families Program for five years (FY2012-FY2016) at $345 million; and it extends the discretionary funding authorization for that program at the current law level for those same five years ($200 million for each of FY2012-FY2016). It continues for each of five years (FY2012-FY2016) a reservation of mandatory Promoting Safe and Stable program funds for the Court Improvement Program ($30 million); grants to regional partnerships to assist children affected by parental substance abuse ($20 million); and grants to states related to monthly caseworker visits ($20 million). P.L. 112-34 does not extend program or funding authorization for the Mentoring Children of Prisoners Program, which was first authorized by the Promoting Safe and Stable Families Amendments of 2001 ( P.L. 107-133 ). The Mentoring Children of Prisoners Program was authorized to receive "such sums as necessary" for FY2007-FY2011. It received $49 million for each of FY2007-FY2010, but it received no appropriation ($0) for FY2011. Further, P.L. 112-34 does not extend funding for the National Random Sample Study of Child Welfare (a.k.a., the National Survey of Child and Adolescent Well-Being, NSCAW). The study has collected nationally representative and longitudinal data on children and families who come into contact with the child welfare agency. It includes firsthand reports from these children, their parents or other caregivers, and their caseworkers and teachers. The study has received annual funding since its initial authorization in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ); it received $6 million in mandatory funds for FY2011. States that seek to receive formula grant funds under the Title IV-B Child Welfare Services or Promoting Safe and Stable Families programs and states that wish to receive federal reimbursement for a part of the cost of providing foster care, adoption assistance, and guardianship assistance to eligible children (under the federal "Title IV-E program") must meet specific federal requirements. The Child and Family Services Improvement and Innovation Act makes several adjustments and additions to these federal child welfare requirements. A primary purpose of the Promoting Safe and Stable Families program (hereinafter, the "Safe and Stable program") is to "prevent child maltreatment among families at risk through the provision of supportive family services." The Child and Family Services Improvement and Innovation Act requires states, as part of their state plan for this program, to describe how they identify these "at risk" families and how services are targeted to them. Under the Safe and Stable program, states are required to spend no less than 90% of the funds they receive on four categories of services for children and their families: family support, family preservation, time-limited reunification, and adoption promotion and support. Moreover, federal law requires states to spend "significant portions" of the Safe and Stable program funds on each of these four service categories. "Family support services" are intended to strengthen and stabilize families, improve parenting skills, promote children's safety and well-being, and enhance their development. The Child and Family Services Improvement and Innovation Act amends the definition of those services to clarify that states may use these funds to provide mentoring programs for children. Also, it specifically defines this mentoring as a "structured managed program in which children are appropriately matched with screened and trained adult volunteers for one-on-one relationships, involving meetings and activities on a regular basis, intended to meet, in part, the child's needs for involvement with a caring and supportive adult who provides a positive role model." The Child and Family Services Improvement and Innovation Act also revises the definition of "time-limited family reunification services" used in the Safe and Stable program. These are services and activities intended to safely permit a child and his/her parent(s) to be reunited within the first 15 months after the child was removed from the parent's home (and placed in foster care). The services and activities are now stipulated as counseling, substance abuse treatment, assistance to address domestic violence, services to provide temporary child care, and transportation to and from any of these services. The new measure adds the following to these activities: peer-to-peer mentoring, support groups for parents and primary caregivers, and services and activities aimed at facilitating visits and other connections between children in foster care and their parents and siblings. The Child and Family Services Improvement and Innovation Act makes a number of changes to state plan requirements that are intended to protect children in foster care and enhance their permanence and well-being. As part of a currently required health and mental health oversight plan for all children in foster care, P.L. 112-34 requires states to develop specific protocols related to the appropriate use of psychotropic medication for children in foster care. Further, under the new measure states must also outline in this same oversight plan how they will respond to emotional trauma that is experienced by children in foster care (including trauma based on the children's experience of child abuse or neglect and trauma based on their removal from their biological homes). Separately, P.L. 112-34 requires each state to describe the activities it undertakes to meet the developmental needs of the very young children served (those four years of age or younger), including those activities to shorten the length of time those young children spend without a permanent family. P.L. 112-34 also revises current law education stability planning provisions to ensure that efforts to enroll children, in a timely manner, in the school that is most appropriate for them and in their best interests (and with all necessary records supplied) must apply both when a child is first placed in foster care and at any subsequent placement move that occurs while the child remains in foster care. In an effort to combat identity theft, it further requires that for any youth in foster care at age 16 or older, the state must annually obtain the child's credit report, provide it to the youth at no cost, and provide the youth with an explanation of what is in the report and appropriate guidance. Reviews of state child welfare performance have found that regular and quality caseworker visits with children in foster care are associated with more timely achievement of appropriate permanency goals and better placement stability for these children. The Child and Family Services Improvement and Innovation Act extends and revises current requirements related to ensuring that children in foster care are visited on a monthly basis and ensuring that the majority of caseworker visits with children in foster care take place where the child lives. In addition, P.L. 112-34 requires HHS to report additional information to Congress related to state performance on caseworker visits. Finally, the new law continues funding to states ($20 million provided in each of FY2012-FY2016) for formula grants to support monthly caseworker visits. However, it adjusts their focus somewhat. States are required to have standards in place to ensure both the quality and frequency of caseworker visits with children in foster care. Separately, beginning with FY2007 states were required to provide data to HHS on the number of children in foster care who were visited on a monthly basis while they were in care, and to take steps to ensure that no later than October 1, 2011, at least 90% of the children in their foster care systems receive a visit from their caseworker no less often than once each month they are in care. For FY2007, just one state was able to report that at least 90% of children in its foster care caseload were visited on a monthly basis. In fact, as many as 31 states reported for that year that caseworkers had visited less than half of the children in their caseloads in every month the children were in foster care. By FY2010—the most recent year for which these performance data are available—the number of states that reported they visited 90% or more of their children in foster care in every month they were in care had climbed to just seven. However, many states made significant progress toward the October 1, 2011, goal of 90%. The number of states where fewer than half the children in care were visited on a monthly basis declined to just nine and the average of all state averages of children visited monthly improved from 42% in FY2007 to 71% in FY2010. The Child and Family Services Improvement and Innovation Act extends and revises the requirements related to ensuring children in foster care are visited on a monthly basis. Specifically, each state is required to ensure that for each of FY2012, FY2013, and FY2014, it completes no fewer than 90% of the required monthly caseworker visits, and for FY2015, and every subsequent fiscal year, each state must complete 95% of those visits. Generally, states are required to provide at least 25% of Child Welfare Services program costs with non-federal resources in order to draw down their full federal allotment of Child Welfare Services program funding. However, beginning with FY2008 any state that failed to make the required progress toward the goal of ensuring that 90% of children in foster care received a monthly visit from their caseworker (as of October 1, 2011) was required to provide from 26% to 30% of Child Welfare Services program costs. Within that range, the specific amount of program costs to be provided by a state (from non-federal sources) depended on the degree of a state's failure to achieve the target caseworker visit percentage. If the state did not put up these additional non-federal funds, it was not eligible to receive its full federal allotment under the program. The Child and Family Services Improvement and Innovation Act continues to require states to increase the share of non-federal resources they commit to the Child Welfare Services if they do not meet the caseworker visit percentage, and, as under prior law, states that do not provide this additional funding are ineligible to receive their full federal allotments. At the same time, P.L. 112-34 changes the way state compliance with the monthly caseworker visit percentage is calculated. Previously, the percentage was calculated based on the share of children in foster care who receive a monthly visit. By contrast, under the Child and Family Services Improvement and Innovation Act, compliance with the monthly caseworker visits requirements is to be determined based on the share of monthly caseworker visits completed by a state. Here is a simplified example of the difference: A state has 10 children in foster care for each of the 12 months during the fiscal year. During that fiscal year, caseworkers visit five of those children in each of those 12 months, but they visit the remaining five children in just 11 of those 12 months. Under the current calculation, a state's monthly caseworker visit percentage would be 50%—half of the children received a visit in every month they were in care, half did not. Under the Child and Family Services Improvement and Innovation Act (as enacted), the same state's monthly caseworker percentage is 96%—the state was required to make a total of 120 caseworker visits, and a total of 115 of those visits were made. States have also been required to ensure (no later than October 1, 2011) that a majority of monthly caseworker visits with children in foster care occur where the child lives. For FY2009 (the most recent data publicly available), nearly every state reported that well above 50% of their monthly caseworker visits occurred where the child in foster care lived. The Child and Family Services Improvement and Innovation Act provides that for FY2012, and every succeeding fiscal year, a state must ensure that no less than 50% of all caseworker visits with children in foster care occur where the child lives. Further, states failing to meet this benchmark are now subject to reduced federal cost sharing in the Child Welfare Services program. Any reduction is to be calculated in the same way as provided for states failing to meet the monthly caseworker visit percentage. Further, these penalties are to be separately assessed, and cumulative. That means if a state missed both the required caseworker visit percentage and the required percentage of caseworker visits that occur where the child lives, the state would be required to pay—with non-federal resources—anywhere from 27% to 35% of total Child Welfare Services program costs in order to receive its full federal program allotment. HHS is required to provide annual information to Congress on how states perform on certain child welfare outcomes and other measures. Among these, they are required to provide state-by-state data on the share of children in foster care who received a visit in each month they were in foster care and the number of those visits that occurred where the child lives. The Child and Family Services Improvement and Innovation Act further requires HHS to provide state-by-state information on the number of monthly caseworker visits that a state completed compared to the total number of monthly caseworker visits it was required to complete. Beginning with funds provided for FY2006, states have received grants (distributed on a formula basis) to support monthly caseworker visits. Funding for these grants is provided by a reservation of mandatory funds provided for the Safe and Stable program. A total of $95 million was reserved for distribution among all states for this purpose (across FY2006-FY2011), including $20 million in each of FY2010 and FY2011. States were required to use these funds to support monthly caseworker visits of children in foster care with a "primary emphasis" on activities to improve the recruitment, retention, and training of caseworkers and to enable caseworkers to "access the benefits of technology." The Child and Family Services Improvement and Innovation Act continues to set aside mandatory funds for the Safe and Stable Program to provide grants related to caseworker visits of children in foster care. The amount of funding reserved is $20 million in each of FY2012-FY2016 (for a total of $100 million across those five years). As stipulated by P.L. 112-34 , the funds are available to states to improve the quality of monthly caseworker visits, with a new emphasis on better caseworker decision-making as well as a continued emphasis on activities to increase the retention, recruitment, and training of caseworkers. The Child and Family Services Improvement and Innovation Act requires states to describe, and as necessary increase, the sources of information used to report on child maltreatment-related fatalities. Separately, it requires HHS to make state fiscal data on the use, or planned uses, of funds provided under the Safe and Stable and Child Welfare Services programs more accessible. Finally, it requires the U.S. Government Accountability Office (GAO) to study the variety of sources of federal funding states use to support the same purposes as those for which funds are provided under the Safe and Stable and Child Welfare Services programs, and to study current access (or lack of access) of children and their families to the kinds of services provided by those programs. State child welfare agencies are required—to the "maximum extent practicable"—to annually provide information to HHS on the number of children who died in their state due to child abuse or neglect. A July 2011 report on this issue by GAO found that many state child welfare agencies do not report data on this issue from all relevant sources (i.e., sources other than the child welfare agency). As a result, GAO concludes, the national number of children who are estimated to have died in a given fiscal year due to child abuse or neglect—for FY2009, that number was 1,770—likely understates the total child deaths attributable to abuse or neglect. The Child and Family Services Improvement and Innovation Act requires each state, as part of its Child Welfare Services program plan, to describe the sources of information it uses in reporting child maltreatment-related fatalities. Further, if a states does not include information on these deaths from state vital statistics, child death review teams, law enforcement agencies, or offices of medical examiners or coroners, it must describe why this is the case and how the information will be included. States are required, as part of their Safe and Stable program plan, to annually provide HHS with information on planned and actual spending for child welfare-related child and family services and on the numbers of children and families served. The information is to be submitted by June 30 of each year and must be presented on standard forms. HHS, in turn, is required to compile these financial reports made by states and, not later than September 30 of each year, submit the compilation to the House Ways and Means Committee and the Senate Finance Committee. The current compilation consists of copies of each state's financial forms organized alphabetically. The Child and Family Services Improvement and Innovation Act requires HHS to provide some synthesis of this data in addition to providing these individual state reports. Specifically, it requires tables that show certain national totals derived from the state reports, including national totals related to planned and actual spending by service category for the Safe and Stable program and planned spending by service category for the Child Welfare Services program. In addition to providing these reports to the House Ways and Means Committee and the Senate Finance Committee by September 30 of each year, HHS is also required (by that same date) to publish the compiled information on the agency's website (in a location easily accessible to the public). Not later than 12 months after enactment of the Child and Family Services Improvement and Innovation Act, GAO is required to submit a report to Congress that (1) identifies alternative sources of federal funding that states or other entities use to support the same purposes that are supported by any federal funds provided under Title IV-B, including those under the Child Welfare Services and Safe and Stable programs; and (2) assesses the needs of families eligible for such services and programs, including identifying underserved communities, and providing information on supports for caseworkers to manage their caseloads in a safe and appropriate manner, the length of time families wait to receive substance abuse and other preventive services, the number of families waiting for such services, and the effect of the delay on healthy, successful reunification outcomes for families. For each of FY2012-FY2016, the Child and Family Services Improvement and Innovation Act continues to reserve $30 million in mandatory Safe and Stable program funds for the Court Improvement Program—plus 3.3% of any discretionary funding provided for the Safe and Stable program. Further, P.L. 112-34 amends and expands the purpose of those grants, permits courts to submit a single application to receive grants for all of the program purposes, and, for the first time, reserves some of the Court Improvement Program funding for tribal court improvement grants. The Court Improvement Program entitles the highest court in each state to receive funds to support three types of court improvement grants—basic, data, or training. The purpose of a basic grant is to assess and improve their handling of child welfare proceedings; the purpose of a data grant is to support better data collection and analysis to improve the timeliness and completeness of court actions related to children; and the purpose of a training grant is to increase the knowledge of judges, attorneys, and other legal personnel related to child welfare court proceedings. P.L. 112-34 continues those prior law purposes but expands on the purposes associated with both basic and training grants. Specifically, for both of those types of grants it also supports court efforts to increase and strengthen engagement of families in child welfare proceedings, including those related to family preservation, family reunification, and adoption. Further, P.L. 112-34 amends the basic grant purposes to emphasize the importance of concurrent planning (i.e., efforts to move toward adoption or some other permanent home for a child even as efforts to permit family reunification are ongoing). For FY2011, the Court Improvement Program received a total of $32 million, of which $30 million was reserved from the mandatory Safe and Stable program funding and $2 million was provided via a set-aside from the $63 million in discretionary funding that was provided for the Safe and Stable program. From this amount, each of the three Court Improvement grants received $10 million in mandatory funds; in addition, the basic grant received all of the $2 million in discretionary funds (for a total of $12 million in funding for that grant type). The Child and Family Services Improvement and Innovation Act continues the same overall reservation of funds from the Safe and Stable program for each of FY2012-FY2016 (i.e., $30 million in mandatory funds plus 3.3% of any discretionary funding provided for the Safe and Stable program). However, it reserves $1 million in mandatory Safe and Stable program funds for competitive grants to tribal courts and it reduces the amount of mandatory funds available for basic grants to state highest courts by that same amount. (Accordingly, funds available for basic court improvement activities in each of FY2012-FY2016 will be $9 million plus 3.3% of any discretionary funds appropriated for the Safe and Stable program, while data and training grants will both continue to receive $10 million each in mandatory Safe and Stable funds for each of those same years). For purposes of the competitive grants to tribal courts, P.L. 112-34 defines eligible tribal courts as the highest court of any tribe or tribal consortium that (1) is operating a Title IV-E program (with an approved Title IV-E plan), (2) is working toward approval of a Title IV-E plan (as evidenced by its receipt of a tribal IV-E implementation grant), or (3) has a court that is responsible for proceedings related to adoption and foster care. For FY2006-FY2011, the highest state courts were required to submit separate applications to receive each kind of Court Improvement grant (basic, data, and training). Further, they were entitled to an award of $85,000 for each successful grant application, plus a share of the remaining funds for a given grant based on the share of individuals in the court's state that were under the age of 21 (relative to the under-age-21 population in all the states where courts successfully applied for the grant). The Child and Family Services Improvement and Innovation Act permits courts to access funds for each of the three main grant purposes (basic, data, and training) by providing a single application. Courts, however, are required to indicate which one (or more) of the grant types they are applying for and to meet any previously existing application requirements related to those grant types. Further, they continue to be entitled to a grant amount of $85,000 for each of the three grant types plus a portion of the remaining funds for that grant type based on the under-age-21 population in their state relative to that population in all states applying for the particular grant type. Between FY2007 and FY2011, Congress provided $145 million in mandatory funds (reserved from the Safe and Stable program) to support grants to regional partnerships to improve outcomes for children who are at risk of entering foster care, or who have entered foster care, due to their parents' abuse of methamphetamine or other substances. For the most recent two years (FY2010 and FY2011), the annual funding set-aside for these grants was $20 million. Funding under this program has been provided to 53 regional partnerships operating in 29 states. The Child and Family Services Improvement and Innovation Act reserves a total of $100 million in mandatory Safe and Stable program funding—$20 million in each of five years (FY2012-FY2016)—for regional partnership grants. P.L. 112-34 removes the specific focus on methamphetamine abuse but retains the overall focus on substance abuse. It permits current grantees to seek a maximum two-year extension of their current grant and also clarifies that current grantees, as well as new ones, may apply for and be approved to receive more than one grant at a time. Additionally, the law limits HHS administrative expenditures under this grant program to no more than 5% of the funding provided. Finally, it requires HHS to conduct an evaluation of the grants provided under this authority between FY2007 and FY2011 and, separately, an evaluation of grants provided under this authority between FY2012 and FY2016. The first evaluation must be posted online no later than December 31, 2012, and the second no later than December 31, 2017. The Child and Family Services Improvement and Innovation Act makes the definitions of "Indian tribe" and "tribal organization" the same for both the Child Welfare Services program and the Safe and Stable program. For both programs, it references the definitions of those terms that are included in Section 4 of the Indian Self Determination and Education Assistance Act. (Those definitions were previously in place for the Child Welfare Services program. However, the definition of tribe under the Safe and Stable program had referenced a definition of the term that was used in the Social Security Act's Title IV-F Job Opportunities and Basic Skills (JOBS) program. The JOBS program was repealed in 1996.) In general, the Indian Self Determination and Education Assistance Act defines "Indian tribe" as any federally recognized Indian tribe, including Alaska Native Villages. Further, it generally defines a "tribal organization" as the "recognized governing body" of an Indian tribe and certain other legally established organizations. Finally, under Title IV-B, the Child and Family Services Improvement and Innovation Act requires HHS, with the Office of Management and Budget (OMB)—and in consultation with the states—to issue regulations on standard data elements and standard data reporting requirements for any category of information to be reported under Title IV-B. The longer-term goal of this policy, of which the data standardization effort under Title IV-B is one step, will be to allow accurate interstate communication about benefits and services provided, to both reduce fraud and abuse and to improve services, across programs, to children and families. Title II of the Child and Family Services Improvement and Innovation Act renews the authority of HHS to waive certain requirements of federal child welfare policy to permit states to conduct demonstration projects, sometimes referred to as "waiver projects." These projects must be likely to promote the child welfare objectives included in Title IV-B and Title IV-E of the Social Security Act. As discussed in the first part of this report, Title IV-B authorizes federal grants to states for provision of a broad range of services intended to strengthen and support families in ways that enhance the safety and stability of children and increase the well-being of children and their families. Title IV-E, by contrast, primarily provides federal reimbursement to states for a part of the cost of providing foster care to eligible children (including payments for room and board and cost of permanency planning activities), and for the cost of providing assistance on behalf of eligible children who leave foster care for adoption or guardianship. Similar to the Title IV-B purposes, the primary purposes of federal dollars provided to states under Title IV-E are to ensure the safety of children, to secure permanence for them, and, overall, to enhance their well-being. Authority for HHS to approve up to 10 new demonstration projects each year expired with the last day of March 2006. The Child and Family Services Improvement and Innovation Act renews the authority of HHS to approve as many as 10 demonstration projects, per year, for three years (FY2012-FY2014). Under past waiver authority, HHS could authorize demonstration projects to last for up to five years, and if it determined that the project warranted continuation, it could grant renewals or extension of the authority to operate the waiver beyond that timeframe. The Child and Family Services Improvement Act maintains those provisions. However, it newly stipulates that no waiver project can be in operation after September 30, 2019. The requirement that all projects end as of that date applies to any waiver whether it is currently being implemented or whether it is implemented sometime after enactment of the Child and Family Services Improvement and Innovation Act. The Child and Family Services Improvement and Innovation Act further establishes additional requirements for states seeking to implement a new demonstration project (i.e., a project receiving initial HHS approval in any year from FY2012 to FY2014). It provides that no state could be approved to operate a new demonstration project unless it can demonstrate that it had done the following: Put in place child welfare policies or procedures that will allow it to operate a demonstration project effectively and achieve the project goals. Identified one (or more) of the following three goals that the demonstration project will be designed to accomplish: (1) increasing permanence for children of all ages by reducing their lengths of stay in foster care, when possible, and by promoting a successful transition to adulthood for older youth; (2) increasing positive outcomes and improving the safety and well-being of children of all ages who are living in their own homes and communities, including tribal communities; and (3) preventing child abuse and neglect and the re-entry of children of any age to foster care. Implemented, or have definite plans to implement, at least 2 of 10 child welfare program improvement policies (specified in the law). In general (and unless otherwise noted), the program improvement policies now listed in the law are to apply to children in foster care of any age (i.e., infants, children, and youth). The program improvement policies listed are to 1. establish a bill of rights; 2. develop and implement child-specific health care planning; 3. opt to provide kinship guardianship assistance under Title IV-E; 4. opt to provide Title IV-E foster care assistance to eligible youth who remain in care until their 21 st birthday, as well as Title IV-E adoption or guardianship assistance to eligible youth, up to age 21, who leave foster care for adoption or guardianship after their 16 th birthday; 5. reduce the use of congregate care for children or youth; 6. accomplish more frequent placement of siblings in the same foster care, adoption, or guardianship setting; 7. develop and implement a plan to recruit and retain high-quality foster parents, including through provision of additional supports and training; 8. establish procedures to allow youth in foster care (ages 12 or older) to participate in age-appropriate extracurricular activities, have appropriate access to computers and cell phones, obtain a driver's license, receive counseling and financial support for post-secondary education, and be notified of where siblings are placed or located; 9. allow every youth in care (age 16 or older) to explore whether they wish to reconnect with members of their biological family, and if so, how to do so safely; and 10. establish one or more of a variety of programs designed to prevent children of all ages from entering foster care or to provide permanency for those in foster care (i.e., intensive family finding, kinship navigator, family counseling/family group decision-making/in-home peer support, comprehensive family-based substance abuse treatment, identify and address domestic violence that endangers children and puts them at risk of foster care entry, and mentoring). The Child and Family Services Improvement and Innovation Act further provides that at least one of those improvement policies must be implemented after the date on which the state submits its application for a waiver project. Further, it permits HHS to terminate a state's authority to operate a waiver project if the state, in the judgment of HHS, has not made significant progress toward implementing the improvement policy within three years of HHS granting approval for the project. In general, a state may continue to propose implementing any kind of demonstration project that is consistent with federal child welfare policy. However, the law now identifies two specific kinds of projects that states may choose to consider. These are to establish a program to (1) identify and address domestic violence that endangers children and results in their placement in foster care; or (2) permits federal (Title IV-E ) foster care maintenance payments to be made on behalf of a child residing in a long-term therapeutic family treatment center. For purposes of this provision, P.L. 112-34 defines a "long-term therapeutic family treatment center" as a program licensed or certified by the state that "enables parents and their children to live together in a safe environment" for not less than six months and that provides, either onsite or by referral, the following services or activities: substance abuse treatment, children's early intervention, family counseling, legal, nursery and preschool, parenting skills training, pediatric care, prenatal care, sexual abuse therapy, relapse prevention, transportation, and job or vocational training (or classes leading to a high school diploma or a GED). The Child and Family Services Improvement and Innovation Act further requires that states applying for a waiver project provide an accounting of "additional" federal, state, or local funds—as well as any private investments made in coordination with the state—that were used in the two years preceding the state's application to provide services under the waiver project. The state is also required to provide this accounting during each year the project is in operation. The Child and Family Services Improvement and Innovation Act continues to require that any state with an approved waiver project must ensure that an independent evaluation of the project is conducted, that the evaluation design be approved by HHS, and that the design permits a comparison of outcomes for children and families served under the project with those not served. Also, as was the case prior to the enactment of P.L. 112-34 , the law does not specify the kind of evaluation comparison design that must be used (or restrict it to any one kind of design). However, the Child and Family Services Improvement and Innovation Act removes current language that requires states (as part of their application for waiver project approval) "where appropriate" to describe how children and families will be randomly assigned to groups that are served (experimental) or not served (control) under the project. Further, P.L. 112-34 explicitly prohibits HHS from taking into consideration the fact that a state is using (or not using) a random assignment design as part of its decision to approve (or disapprove) of a child welfare waiver project. Beginning with FY2010, federal law permits tribes to operate directly a Title IV-E program and to receive federal support for foster care, adoption assistance, and guardianship assistance provided under that program. A number of tribes are actively working toward HHS approval of a Title IV-E plan, which is a necessary pre-requisite to receiving federal reimbursement of costs incurred under such a program. The Child and Family Services Improvement and Innovation Act permits any tribal entity that is approved by HHS to operate a Title IV-E program to apply for approval of a child welfare waiver. The Child and Family Services Improvement and Innovation Act replaces the current law requirement that states provide HHS with interim and final reports on the evaluation. It instead requires states to submit periodic reports on programs and strategies used to serve children and their families and the outcomes achieved for them during the period that the waiver project is being conducted. States are also required to post these periodic reports on their websites. In addition, P.L. 112-34 requires HHS to provide to the House Committee on Ways and Means and the Senate Committee on Finance (1) periodic reports based on these state level reports, and (2) a report that analyzes the results of the demonstration project evaluations and makes recommendations for any administrative or legislative changes it determines appropriate. The amendments made by the Child and Family Services Improvement and Innovation Act that are related to extension of waiver authority are effective on the date of enactment of H.R. 2883 (September 30, 2011). The amendments made with regard to data standardization are effective as of October 1, 2012. All of the other amendments are effective as of October 1, 2011. However, if HHS determines that a state needs to pass specific legislation (not appropriations) to allow it to comply with a new or amended (Title IV-B or Title IV-E) state plan requirement made by the act, that state may have some additional time (specified in statute) to come into compliance. Substantively identical versions of the Child and Family Services Improvement and Innovation Act were introduced on September 12, 2011, in the House and the Senate. The House bill ( H.R. 2883 ) was introduced by Representative Geoff Davis, with Representative Lloyd Doggett, and the Senate bill ( S. 1542 ) was introduced by Senator Max Baucus with Senator Orrin Hatch. The introduction of the Child and Family Services Improvement and Innovation Act was announced by the House Ways and Means Committee in a press release that quoted Senators Baucus and Hatch along with Representatives Davis and Doggett. Some of the provisions in the Child and Family Services Improvement and Innovation Act were previously included in the Child and Family Services Extension and Improvement Act ( H.R. 2790 ), introduced on August 2, 2011, by Representative Geoff Davis, with Representative Doggett; the State Child Welfare Innovation Act ( S. 1013 ), introduced on May 17, 2011, by Senator Baucus, with Senators Hatch, Enzi, and Rockefeller; the Partners for Stable Families and Foster Youth Affected by Methamphetamine and Other Substance Abuse Act ( S. 1234 ), introduced on June 20, 2011, by Senator Grassley; and a bill to renew the authority of HHS to grant child welfare waivers ( H.R. 1194 ), which was introduced by Representative McDermott, with Representative Geoff Davis, and passed the House on May 31, 2011. The introduction of the Child and Family Services Improvement and Innovation Act followed a March 2011 hearing held by the Senate Finance Committee with regard to child welfare waiver authority as well as several related hearings held by the Subcommittee on Human Resources of the House Ways and Means Committee—including those that looked at data matching (March 2011), improving Title IV-B programs (June 2011), and child maltreatment-related deaths (July 2011). On September 14, 2011, the House Ways and Means Committee held a markup of H.R. 2883 and unanimously agreed to report the bill favorably to the full House. The committee submitted a report on the bill ( H.Rept. 112-210 ) to the full House on September 19, 2011. On September 21, 2011, the full House passed H.R. 2883 under suspension of the rules (with a recorded vote of 395-25). On September 20, 2011, the Senate Finance Committee held a markup of S. 1542 and agreed to report that bill favorably to the Senate floor (without amendment). For a bill to be enacted, both chambers must act on the same bill. Therefore, when the full Senate took up the Child and Family Services Improvement Act on September 22, 2011, it acted on the House-passed bill ( H.R. 2883 ), which was identical to S. 1542 , and passed it by unanimous consent. The bill was presented to the President on September 27, 2011, and was signed into law on September 30, 2011 ( P.L. 112-34 ). The Congressional Budget Office (CBO) estimated no significant direct (mandatory) spending costs for H.R. 2883 . This is because all of the mandatory funding included in the bill (and related to the Safe and Stable program) is currently counted in the baseline. Further, none of the policy changes that are made by the bill were deemed by CBO to have a significant effect on federal spending. CBO did note that certain of the new requirements would necessitate some additional spending by states. However, it assumed the amount of this spending would be "small" and, therefore, was not enough for the legislation to be considered as creating an unfunded mandate. CBO's cost estimate notes that the bill also extends discretionary funding authorization for the Child Welfare Services program (all program funding) and the Safe and Stable program (some of the program's funding) for each of the five years from FY2012 to FY2016. These discretionary funding authorizations provided in H.R. 2883 (enacted as P.L. 112-34 ) are equal to the annual amounts authorized in each of the previous five fiscal years: $325 million for Child Welfare Services and $200 million for the Safe and Stable program. However, as noted by CBO, the amount of actual funding provided is subject to the discretion of Congress as part of the annual appropriations process. Further, the actual discretionary funding appropriated for these programs in FY2011 was considerably less.

The Child and Family Services Improvement and Innovation Act (P.L. 112-34) extends funding authorization for the Stephanie Tubbs Jones Child Welfare Services Program and the Promoting Safe and Stable Families Program for five years (FY2012-FY2016). The programs are authorized under Title IV-B of the Social Security Act and received combined funding of $709 million in FY2011. They both had funding authorizations that, absent legislative action, would have expired on September 30, 2011. Further, P.L. 112-34 renews authority for the U.S. Department of Health and Human Services (HHS) to grant approval for up to 10 child welfare demonstration projects (a.k.a., "waiver" projects) in each of three years (FY2012-FY2014). The authority of HHS to approve new child welfare waiver projects expired on March 31, 2006. Substantively identical versions of the Child and Family Service Improvement and Innovation Act were introduced on September 12, 2011, in the House and the Senate. The House bill (H.R. 2883) was introduced by Representative Geoff Davis, with Representative Lloyd Doggett, and the Senate bill (S. 1542) was introduced by Senator Max Baucus with Senator Orrin Hatch. Some of the provisions in the Child and Family Services Improvement and Innovation Act were previously included in other bills introduced or acted on in the 112th Congress (including H.R. 2790, H.R. 1194, S. 1234, and S. 1013). On September 14, 2011, the House Ways and Means Committee held a markup of H.R. 2883 and unanimously agreed to report the bill favorably (and without substantive changes) to the full House. The committee reported the bill (H.Rept. 112-210) on September 19, 2011. One day later, September 20, 2011, the Senate Finance Committee held a markup of S. 1542 and unanimously agreed to favorably report S. 1542 (without amendment) to the full Senate. On September 21, 2011, the full House passed H.R. 2883 under suspension of the rules (with a recorded vote of 395-25). On September 22, 2011, the full Senate passed H.R. 2883 by unanimous consent. The President signed the bill into law on September 30, 2011. This report describes provisions in the Child and Family Services Improvement and Innovation Act (P.L. 112-34).

The Public Health Service Act (PHSA) establishes authority for a wide range of activities that directly or indirectly affect the health of the U.S. population. In Title VII, Health Professions Education, the PHSA supports an education and training pipeline for professionals and pre-professionals to work in the medical, dental, public health, and allied health professions. Title VII provides support to both institutions and individuals. It supports institutions to expand the capacity to build and sustain the health workforce through training programs, mainly through grant awards and contractual agreements. For example, institutions may receive Title VII grants to implement residency programs at medical and dental schools; recruitment and retention initiatives in community-based educational settings; and health workforce data collection activities within state health departments. It supports individuals by providing them with direct assistance to support academic preparation in the health professions through scholarships, loans, loan repayments, and fellowships. Many Title VII programs and activities were reauthorized in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended). The ACA also created the National Health Care Workforce Commission for federal health workforce planning, and State Health Care Workforce Development Grants. The ACA also made sweeping changes to health care financing and delivery by restructuring the private health insurance market and setting minimum standards for health insurance coverage. Beginning in 2014, the ACA mandates that most U.S. citizens obtain health insurance or pay a penalty. Health policy experts expect this mandate combined with additional changes will increase health insurance coverage to be accompanied by a likely increased demand for health services and health care providers. Title VII represents one among several federal efforts to support the development of the health workforce. These authorities, enacted in various statutes, are established to achieve different purposes and consequently receive different levels of support. For example, in FY2012, the Medicare Graduate Medical Education (GME) payments contribute approximately $8.9 billion annually to residents' salaries, teaching compensation, and other direct costs. The Medicare direct GME program is the largest source of federal support for health workforce development, followed by the Medicaid GME payments (both state and federal), which were $1.1 billion in FY2011. Medicare and Medicaid GME payments support education and training mainly for physicians. By comparison, Title VII programs contributed approximately $266 million in FY2012 (the President's FY2014 request is for approximately $212 million) to education and training activities for physicians, physician assistants, dentists, therapists, and other health professionals. The text box below highlights other examples of federal support to develop or sustain the health workforce. This report describes programs and activities authorized in Title VII of the PHSA. It is divided into two major sections. The first section summarizes the intents and purposes of Title VII, as well as eligibility requirements for institutions interested in applying for Title VII grants, contracts, and agreements, and for individuals applying for direct assistance. The second part of the report provides details on each section within the title, including statutory requirements and preferences. References to "the Secretary" mean the Secretary of Health and Human Services (HHS) unless otherwise specified. Appendix A summarizes two ACA provisions that are Title VII-related. Title VII consists of six parts that authorize grants, contracts, and agreements to institutions, or direct assistance to individuals. Grants and contracts to institutions support education and training activities for individuals in the medical, dental, public health, and allied health workforce, and support health workforce data collection and analysis. Direct assistance to individuals provides scholarships, loans, and loan repayments to those pursuing health professions education and training. Also, this title authorizes health workforce advisory groups and councils to monitor and assess related programs and activities. Part A specifies requirements for agreements between the Secretary of HHS and eligible institutions that establish and operate federally-supported school loan funds. School loan funds are created to support students pursuing a full-time course of study in health professions schools. In providing for school loan funds, Part A establishes preferences for primary care medical students and individuals from disadvantaged backgrounds. Part B authorizes programs to increase the diversity of the health workforce. Part C authorizes grants to establish capacity-building programs in primary care medicine and dentistry, and it establishes an advisory committee to report on those activities. Part D authorizes programs to support recruitment and retention activities; community-based interdisciplinary groups; and capacity building within geriatrics and the allied health professions; and authorizes an advisory committee on interdisciplinary collaboration. Part E establishes the National Center for Health Workforce Analysis and authorizes the Council on Graduate Medical Education. It authorizes grants and contracts to institutions to support health workforce data collection, reporting, and analysis. Also, Part E authorizes programs and funds to support education and training in the public health professions. Part F specifies requirements that Title VII participants must adhere to, including preferences, prohibitions against sex discrimination, permissible use of funds, and matching fund requirements. Various entities are eligible to receive Title VII grants and contracts. Those entities include health professions schools, academic health centers, states, local governments, and other public or private nonprofit and for-profit groups. They must meet general eligibility requirements and, in some cases, specific requirements to qualify for a grant or contract. An example of a general eligibility requirement is that an institution must be accredited by an association that is recognized by the Secretary. An example of a specific eligibility requirement is that a program must collaborate with the Secretary to develop curricula and research and demonstration projects developed under another title. Individuals who are employed or studying in the health professions may be eligible for Title VII support, either directly or indirectly. Undergraduate or graduate students, medical residents, and professional school faculty are examples of individuals who may be eligible to participate in a program that receives institutional support. Also, individuals may qualify to receive direct assistance in the form of scholarships, loans, or loan repayments if they are studying or have studied in an eligible Title VII profession. Some Title VII programs establish preferences for certain individuals, such as those belonging to an underrepresented minority group. Table 1 summarizes Title VII by part. Parts are presented in the order that they appear in the PHSA. Title VII authorizes a broad range of programs and activities to develop and sustain the education and training pipeline for the health care workforce. The next section of this report describes each part of Title VII, Part A through Part F. Part A consists of two subparts. Subpart I establishes the Health Education Assistance Loan (HEAL) program, which from 1978 to 1998 provided federally insured loans to health professions students to pay for their education costs. Subpart II authorizes requirements for school-administered student loan funds, which provide direct assistance to health professions students to pay for their education costs. Each subpart establishes requirements for the borrowing and lending process. The text box below briefly explains selected terms and concepts related to that process. Subpart I establishes the Health Education Assistance Loans (HEAL) program. From 1978 through 1998, the HEAL program insured loans to health professions students. It enabled students in medicine, dentistry, osteopathy, veterinary medicine, optometry, and podiatry to borrow amounts up to $80,000 over the course of study. Students enrolled in health professions programs, including pharmacy and chiropractic medicine, were allowed to borrow up to $50,000 over a course of study. Refinancing of HEAL program loans continued through FY2004. Currently, congressionally appropriated funds support the administration of outstanding loans. According to HRSA, the HEAL program maintains oversight for an outstanding loan portfolio valued at $609 million some of which may not be fully repaid until 2037. Subpart II establishes requirements for health professions institutions that operate Title VII student loan funds. Section 721 authorizes the Secretary to enter into agreements with health professions schools to establish and operate student loan funds. A student loan fund must provide for deposit into the fund of federal capital contributions, and other collections and earnings such as interest payments. The federal capital contribution must be used to establish a direct account that provides loans to students. Student borrowers replenish the loan fund when they repay loans with interest. Section 722 specifies provisions for administering the federally supported loan programs. It provides terms and conditions for the loan, including maximum loan amounts, repayment, interest rates, collections, and prohibitions. Maximum loan amounts for a school year may not exceed the cost of attendance (which includes tuition and other reasonable educational and living expenses). An exception is that third- and fourth-year medical school students may borrow additional loan amounts that are needed to pay off additional qualified loan balances related to medical school attendance. Borrowers may repay loans in equal or graduated periodic installments over a payment period that is between 10 and 25 years. Liability to repay the unpaid loan balances and accrued interest is cancelled if the borrower dies, or if the borrower has become permanently and totally disabled. Loans must bear an interest rate of 5% per year on the unpaid balance of the loan, and computed only for periods for which the loan is repayable. Loans are not transferable to another school except if the borrower transfers to another school participating in a Title VII loan program. The Secretary is authorized to collect any student loan that is in default. Collected amounts must be deposited into the school's student loan fund. Civil actions regarding student loans must be referred to the Attorney General. The period for which the Secretary may file a suit, or take other action to collect loan repayment, is exempt from statutory limits. Section 723 requires a medical student who is a borrower to complete a residency training program in primary health care within four years after graduating from the health professions school. The borrower must practice in primary health care for 10 years (including a primary care residency) or through the date on which the loan is fully repaid. However, some students may be exempt from these requirements, depending on the date of their first loan, or the type of the federal capital contribution supporting the loan. If borrowers fail to comply with these obligations, an interest rate of 2% per year above the base interest rate must be applied to their loan. There are two conditions under which the Secretary may waive a student's obligation: (1) the student terminates before graduation from the school, whether voluntarily or involuntarily, and (2) the individual does not, after such termination, resume attendance at the school or begin attendance at any other school of medicine or osteopathic medicine. Section 724 specifies requirements for loan funds for students from disadvantaged backgrounds. Participating schools must be carrying out recruitment and retention programs for students from disadvantaged backgrounds, and for minority faculty. The Secretary is required to define the term "disadvantaged," and to give special consideration to health professions schools that have enrollments of underrepresented minorities above the national average for health professions schools. A health professions school that receives a federal capital contribution for disadvantaged students must agree to (1) ensure instruction on minority health issues in its curricula; (2) establish a mentor program for assisting disadvantaged students, including minority students, to complete health professions degrees; (3) enter into arrangements with one or more health clinics to provide students with experience in serving disadvantaged populations; and (4) enter into arrangements with educational institutions to carry out programs to prepare disadvantaged students, including minority students, to enter the health professions. Health professions schools must carry out the above activities no later than one year after the date on which the first federal capital contribution is made to the school, and continue those activities throughout the period that the student loan fund is operational. Schools that enter into agreements to establish student loan funds are required to provide that any federal capital contribution will be used to make loans to individuals from disadvantaged backgrounds, and to cover collection costs and interest on the loan. Part B establishes grant support for health workforce "pipeline" programs, including interventions that target underrepresented minorities and individuals from socioeconomically disadvantaged backgrounds. Part B authorizes programs for (1) Centers of Excellence (COE); (2) scholarships for disadvantaged students; (3) loan repayments and fellowships for faculty positions; (4) educational assistance in the health professions for individuals from disadvantaged backgrounds; and (5) grants to institutions to support individuals who are entering the health professions pipeline. This section specifies conditions for designating a COE, and it defines grant requirements. In general, the Secretary is required to make grants to, and enter into contracts with, health professions schools to establish or support programs of excellence in health professions education for underrepresented minority individuals. To be designated as a COE, health professions schools must generally meet the following conditions. A COE must (1) have a significant number of underrepresented minority individuals enrolled or accepted for enrollment in the school; (2) be effective in assisting underrepresented minority students at the school to complete the program for the health professions degree; (3) be effective in recruiting underrepresented minority individuals to enroll in and graduate from the school; and (4) make significant recruitment efforts to increase the number of underrepresented minority individuals serving in faculty or administrative positions at the school. The law provides exceptions for some COEs. A school may be designated as a Center of Excellence in Under-Represented Minority Health Professions Education; a Hispanic Center of Excellence in Health Professions Education; or a Native American Center of Excellence in Health Professions Education. Health professions schools that are COEs are required to fulfill a broad range of requirements, including (1) develop large competitive applicant pools through linkages with community-based entities and establish an education pipeline for health professions careers; (2) establish, strengthen, or expand programs to enhance the academic performance of underrepresented minority students attending the school; and (3) improve the capacity of the school to train, recruit, and retain underrepresented minority faculty. Additional requirements may apply depending on the type of COE designation. Grant periods may not exceed five years. Payments are subject to annual approval by the Secretary and the available appropriations. Funds are allocated to the various types of COEs according to a formula, which is based on whether the amount appropriated for a given fiscal year is (1) less than $24 million, (2) more than $24 million but less than $30 million, (3) more than $30 million but less than $40 million, or (4) more than $40 million. Health professions schools that receive a COE grant must maintain non-federal spending at the same levels expended before receiving the COE grant. An appropriation of $50 million is authorized for each of FY2010 through FY2015, and such sums as may be necessary (SSAN) for each subsequent fiscal year. This section authorizes the Secretary to make grants to eligible entities to award scholarships to eligible students. An eligible entity is a school of medicine, osteopathic medicine, dentistry, nursing, pharmacy, podiatric medicine, optometry, veterinary medicine, public health, chiropractic, or allied health; a school offering a graduate program in behavioral and mental health practice; or, an entity providing programs to train physician assistants. Also, an eligible entity must carry out a recruitment and retention program for students from disadvantaged backgrounds, including those who are members of racial and ethnic minority groups. An eligible student (1) is from a disadvantaged background, (2) has a financial need for a scholarship, and (3) is enrolled (or accepted for enrollment) at an eligible health professions or nursing school as a full-time student in a program leading to a degree in a health profession or nursing. The Secretary is prohibited from making a grant to an eligible entity unless it agrees that it will give scholarship preference to students who face severe financial hardship and to recipients of certain previous scholarships. The Secretary must establish priority for grant amounts based on the proportions of graduating students going into primary care, underrepresented minority students, and graduates working in medically underserved communities. (See Section 740, which authorizes funds for this section.) This section requires the Secretary to establish a loan repayment program for individuals who agree to serve as members of the faculty at eligible health professions schools. Individuals must have a contract with an eligible health professions school where the individual agrees to serve as a faculty member or fellow for two or more years. In return for each year of service, the federal government pays up to $30,000 of the principal and interest of the individual's educational loans. Eligible individuals must be from disadvantaged backgrounds and have a degree in medicine, osteopathic medicine, dentistry, nursing, or other health profession. Alternatively, they may be in an approved graduate program or they may be enrolled full-time in an eligible health professions school and be in the final year of study in a degree program. Eligible health professions schools are schools of medicine, nursing, osteopathic medicine, dentistry, pharmacy, allied health, podiatric medicine, optometry, veterinary medicine, or public health; schools offering physician assistant education programs; and schools offering graduate programs in behavioral and mental health. The employing institution must make payments of the principal and interest amount equal to the amount provided by the HHS Secretary for each year that the faculty member serves. In addition, the payments that the school makes on behalf of the individual must be in addition to the pay that the individual would otherwise receive for serving as a faculty member. However, the Secretary may waive these requirements if the requirement will impose an undue financial hardship on the school involved. Selected requirements for the National Health Service Corps program, such as obligated service requirements, apply to the loan repayment features of this program. This section also authorizes the Secretary to make grants to and enter into contracts with eligible institutions to assist them in increasing the number of underrepresented minority faculty members. To be eligible to receive institutional grants for the faculty fellowships program, health professions schools must demonstrate the ability to identify, recruit, and select underrepresented minority individuals who have the potential for teaching, administration, or research at a health professions institution. In addition, they must provide individuals with the skills needed to secure a tenured faculty position at the institution, must provide services designed to assist individuals in preparing for an academic career, and must provide health services to rural or medically underserved populations. Further, an institution must assure the Secretary that it will (1) make matching funds available for the fellowship, directly through cash donations; (2) provide institutional support for the fellow for the second and third years at a level that is equal to the total amount of funds that the institution provided prior to receiving the award; (3) place the fellow on the school faculty; and (4) provide the fellow with advanced preparation and special skills that are needed to teach and practice. Each fellowship must include a stipend and an allowance. (See Section 740, which authorizes funds for this section.) This section authorizes grants and contracts to assist eligible entities to support health professions training for individuals from disadvantaged backgrounds. Eligible entities are schools of medicine, osteopathic medicine, public health, dentistry, veterinary medicine, optometry, pharmacy, allied health, chiropractic medicine, and podiatric medicine. In addition, eligible entities include programs to train physician assistants; public and nonprofit private schools that offer graduate programs in behavioral and mental health; and other public or private nonprofit health or educational entities. Grant support is intended to assist institutions with meeting the cost of a variety of activities, which include (1) identifying, recruiting, and selecting individuals from disadvantaged backgrounds for education and training in a health profession; (2) facilitating the entry of selected individuals into a health professions school; and (3) providing counseling, mentoring, or other services designed to assist selected individuals to complete successfully their education at a health professions school. The Secretary must give preference to projects that involve a comprehensive partnership approach that will result in a competitive pool of individuals from disadvantaged backgrounds who want to enter the health professions. The Secretary also is required to ensure that services and activities are adequately allocated among various racial and ethnic populations who are economically disadvantaged. The Secretary may require that an entity provide non-federal matching funds to ensure institutional commitment to the funded project. (See Section 740, which authorizes funds for this section.) For Section 737, Scholarships for Disadvantaged Students, this section authorizes $51 million for FY2010 and SSAN for each of FY2011 through FY2014. For Section 738, Loan Repayments and Fellowships Regarding Faculty, this section authorizes $5 million for each of FY2010 through FY2014. For Section 739(a)(1), Educational Assistance in the Health Professions Regarding Individuals from Disadvantaged Backgrounds (grants), this section authorizes $60 million for FY2010 and SSAN for each of FY2011 through 2014. This section also required the Secretary to submit a report to Congress on the efforts taken to address the need of a representative mix of individuals from historically minority health professions schools, or other institutions. The Secretary is authorized to award grants, contracts, or cooperative agreements to eligible entities to develop, evaluate, and disseminate research, demonstration projects, and model curricula on cultural competency, prevention, reducing health disparities, and other public health issues. Eligible entities are health professions schools, academic health centers, state or local governments, other appropriate public or private nonprofit entities, or (as deemed appropriate by the Secretary) for-profit entities. In making grants, the Secretary is required to collaborate with entities, including health professions schools, health professional societies, licensing and accreditation entities, and experts in minority health and cultural competency. In addition, the Secretary is required to coordinate model projects developed under this section with those developed under Section 807. Model curricula developed under this section must be disseminated through the Internet Clearinghouse established under Section 270 and by other means as the Secretary requires. The Secretary is required to evaluate the adoption and implementation of cultural competency, prevention, public health, and training curricula for working with individuals with a disability; and to facilitate efforts to include competency measures in quality measurement systems. This section authorizes SSAN to be appropriated for each of FY2010 through FY2015. Part C consists of two subparts. In general, Subpart I authorizes grants to increase access to education and training opportunities for primary care professionals who specialize in primary care medicine (which includes the specialties of family medicine, general internal medicine, and general pediatrics) and dentistry (which includes general, pediatric, and public health specialties). Specifically, it authorizes support to (1) develop capacity-building programs in primary care medicine; (2) provide new training opportunities for direct care workers who are employed in long-term care settings; (3) develop dental training programs in the fields of general dentistry, pediatric dentistry, or public health dentistry; and (4) establish or expand primary care residency training programs at teaching health centers. Finally, Subpart I establishes the Advisory Committee on Training in Primary Care Medicine and Dentistry. Subpart II authorizes a single grant program, which assists institutions in recruiting students who are most likely to practice medicine in underserved rural communities. Section 747(a) authorizes the Secretary to make grants to, and contracts with, eligible entities to support or develop primary care training programs. Eligible entities are accredited public or nonprofit private hospitals, schools of medicine or osteopathic medicine, academically affiliated training programs for physician assistants, or public or private nonprofit entities as the Secretary may determine. Funds are to be used for various activities, including to (1) plan, develop, operate, or participate in an accredited professional training program, including an accredited residency or internship program in the field of family medicine, general internal medicine, or general pediatrics for medical students, interns, residents, or practicing physicians; (2) plan, develop and operate a program for the training of physicians who plan to teach in family medicine, general internal medicine, or general pediatrics training programs; and (3) plan, develop and operate a program for the training of physicians teaching in community-based settings. The award period for a grant or contract is five years. Section 747(b) authorizes grants for primary care capacity-building. The Secretary may award grants or contracts to medical schools (allopathic or osteopathic) to establish, maintain, or improve academic units or programs for clinical teaching and research in primary medical care (which includes family medicine, general internal medicine, or general pediatrics). In addition, this section authorizes support for programs that integrate academic administrative units in primary medical fields for the purpose of enhancing interdisciplinary recruitment, training, and faculty development. This section establishes award preference for applicants who agree to use the award to (1) establish academic units, or (2) substantially expand such units or projects. Also, this section establishes priority for projects that propose to carry out a variety of specified activities in primary care. The section authorizes an appropriation of $125 million for FY2010 and SSAN for each of FY2011 through FY2014, and requires that 15% of the amount appropriated in each fiscal year be allocated to physician assistant training programs that prepare students to practice in primary care. For purposes of carrying out programs that integrate academic administrative units in the various primary care specialties, the section authorizes an appropriation of $750,000 for each of FY2010 through FY2014. This section requires the Secretary to award grants to eligible entities to provide new training opportunities for direct care workers who are employed in long-term care settings such as nursing homes, assisted living facilities, skilled nursing facilities, community-based settings, and other settings as determined appropriate by the Secretary. An eligible entity is an institution of higher education that (1) is accredited by a nationally recognized accrediting agency or association, and (2) has established a public-private educational partnership with a nursing home or skilled nursing facility, agency, or entity that provides home- and community-based services to individuals with disabilities, or other long-term care provider. An institution must use the grant to assist eligible individuals to offset the cost of tuition and required fees for enrolling in academic programs supported by the award. An eligible individual must be enrolled in courses provided by the institution and maintain satisfactory academic progress. As a condition of receiving assistance, an individual must agree to work in the field of geriatrics, disability services, long-term services, or chronic care management for a minimum of two years. This section authorizes an appropriation of $10 million for the period of fiscal years 2011 through 2013. This section authorizes programs to support and develop education and training programs in general, pediatric, and public health dentistry. Section 748(a)(1) authorizes the Secretary to award grants and contracts to eligible entities. An eligible entity is a school of dentistry, public or nonprofit private hospital, or a public or private nonprofit entity. Also eligible are entities with programs in dental or dental hygiene schools; or residency or advanced education programs in the practice of general, pediatric, or public health dentistry. Eligible entities also may partner with schools of public health to educate dental students, residents, and dental hygiene students. Authorized activities and functions include programs for student financial assistance, traineeships, faculty development, and pre- and post-doctoral training. Section 748(a)(2) authorizes the Secretary to award grants or contracts to a general, pediatric, or public health dentistry program to establish or operate a faculty loan repayment program. Individuals must agree to serve as full-time faculty members in exchange for participation in the loan repayment program, which pays the principal and interest on their outstanding student loans. This section establishes priority in the awarding of training grants to qualified applicants who demonstrate (1) a proposal for collaborative projects between departments of primary care medicine and departments of general, pediatric, or public health dentistry; (2) a record of training the greatest percentage of providers, or significant improvements in the percentage of providers, who enter and remain in qualified fields of dentistry; (3) a record of training individuals who are from a rural or disadvantaged background, or from an underrepresented minority population; (4) formal relationships with federally qualified health centers, rural health clinics, or other authorized entities that conduct training for students, residents, fellows, or faculty; (5) a record of teaching programs that target vulnerable populations such as older adults, homeless individuals, victims of abuse or trauma, individuals with mental health or substance-related disorders, individuals with disabilities, and individuals with HIV/AIDS; (6) educational activities in cultural competency and health literacy; (7) a high rate of placing graduates in practice settings that serve underserved areas or health disparity populations, or a significant increase in the rate of graduate placements in such settings; (8) intentions to establish a special populations oral health care education center or training program for the didactic and clinical dental education for dental professionals who plan to teach oral health care for special populations, including the vulnerable elderly and people with developmental disabilities. The award period is five years for a grant or contract for dental support or training programs (excluding faculty loan payment programs). An entity that receives an award may carry over funds from one fiscal year to another for up to three years. This section authorizes an appropriation of $30 million for FY2010 and SSAN for each of FY2011 through FY2015. This section requires the Secretary to establish an Advisory Committee on Training in Primary Care Medicine and Dentistry (the Advisory Committee), and it authorizes requirements for the Advisory Committee's composition, duties, terms, meetings, documents, expenses, and compensation. The duties of the Advisory Committee are to (1) provide advice and recommendations to the Secretary on policy and program development and other matters of significance concerning the activities under Section 747; (2) develop, publish, and implement performance measures for programs under this part; (3) develop and publish guidelines for longitudinal evaluations under this part; and (4) recommend appropriation levels for programs under this part. The Secretary is required to determine the appropriate number and appoint health professionals who will serve on the Advisory Committee. In appointing members, the Secretary is required to ensure a fair balance of expertise, and that at least 75% of the members of the Advisory Committee are health professionals. In addition, the Secretary must ensure a broad geographic representation of members and a balance between urban and rural members. Members shall be appointed based on their competence, interest, and knowledge of the mission of the profession involved. Officers or employees of the federal government are not allowed to participate on the Advisory Committee. This section authorizes grants to cover the costs of establishing or expanding primary care residency training programs at teaching health centers. Grants may cover costs associated with items including (1) curriculum development; (2) recruitment, training, and retention of residents and faculty; (3) accreditation; (4) faculty salaries during the development phase and (5) technical assistance. This section establishes preference for applicants who have an existing affiliation agreement with an Area Health Education Center (AHEC). A discussion of AHECs appears later in the report under Section 751. This section defines a "teaching health center" as an entity that is a community-based, ambulatory patient care center; and operates a primary care residency program. It may include (1) a federally qualified health center; (2) a community mental health center; (3) a rural health clinic; (4) a health center operated by the Indian Health Service, Indian tribe, or tribal organization, or urban Indian organization; and (5) an entity receiving funds under Title X of the PHSA. Grants may be awarded for up to three years, and grant amounts must not exceed $500,000. For the purpose of carrying out this section, the following amounts are authorized to be appropriated: $25 million for FY2010, $50 million for FY2011, $50 million for FY2012, and SSAN for each subsequent fiscal year. No more than $5 million annually may be used for technical assistance grants. This subpart consists of one section that authorizes grants to institutions to train physicians to work in rural communities. This section requires the Secretary to establish a grant program to assist eligible entities in recruiting students who are most likely to practice medicine in underserved rural communities. Eligible entities are nationally accredited or Secretary-approved schools of allopathic or osteopathic medicine, or any combination or consortium of such schools. This section establishes basic requirements for the rural-focused program. The program must enroll a minimum of 10 students per class per year, and must prioritize admission for students who have either lived or served in an underserved rural community for two or more years and express a commitment to practice medicine in such an area. The curriculum must provide didactic coursework and clinical experience particularly applicable to medical practice in underserved rural communities, including clinical rotations in underserved rural communities, or other coursework or clinical experience deemed appropriate by the Secretary. All students must receive assistance in obtaining clinical training experiences in locations with postgraduate residency training opportunities in underserved rural communities, or in local residency training programs that support and train physicians to practice in underserved rural communities. The Secretary is required to define by regulation "underserved rural community." The entity that receives the grant must submit an annual report to the Secretary. This section establishes priority for entities that demonstrate (1) rural community institutional partnerships; (2) a record of successfully training students who practice medicine in underserved rural communities; and (3) a record of having a high percentage of graduates from an existing program, who practice medicine in underserved rural communities. Applicants must submit a long-term plan to track graduate placements. Awards must supplement, not supplant, any other federal, state, and local funds that an entity would otherwise expend to carry out the activities described in this section. Additionally, an eligible entity must agree to maintain expenditures of non-federal amounts for grant activities at a level that is no less than the level that the entity maintained for the fiscal year before the entity received the grant. This section authorizes an appropriation of $4 million for each of FY2010 through FY2013. Title VII, Part D authorizes grants and contracts to institutions to collaborate on education and training development that will result in health care delivery to underserved and vulnerable populations in non-hospital, community-based health care settings. For example, Area Health Education Centers (Section 751) support institutions in developing collaborative education and training programs for rural populations, geriatrics professionals, mental and behavioral health professionals, and other groups. In addition to providing funds for community-based training, Part D authorizes programs to develop the geriatric, allied health, and mental/behavioral health workforce to serve in community-based settings. Finally, Part D establishes an advisory committee to make recommendations to the Secretary and Congress concerning policy and program development to develop the community-based linkages. This section contains requirements for eligible entities to receive grants for interdisciplinary, community-based linkages. Eligible academic institutions must use grants collaboratively with two or more disciplines. Eligible entities must use funds to carry out innovative demonstration projects to meet national goals for interdisciplinary, community-based linkages. Authorized activities include support for, and the development of (1) workforce training programs, (2) faculty development, and (3) other activities that will produce outcomes consistent with the purposes this part. This section establishes two types of grant awards for academic institutions to be used in collaboration with two or more disciplines. Awards must be used to carry out innovative demonstration projects for workforce supplementation. It establishes provisions for grants to Area Health Education Center (AHEC) Programs and Area Health Education Centers (AHECs), which support workforce development and training for medical, public, and allied health professionals in rural areas. First, the infrastructure development award enables eligible entities to initiate an AHEC program, or to continue a comparable program that is already operating. Eligible entities are schools of medicine or osteopathic medicine, an incorporated consortium of such schools, or the parent institutions of such a school. In a state with no AHEC program, the Secretary may award a grant or contract to a school of nursing. Second, the point of service maintenance and enhancement award supports an existing AHEC program, to maintain and improve its effectiveness and capabilities, and to make other modifications to the program. Eligible entities include AHEC programs that have AHEC centers that are no longer eligible for infrastructure development grants. Required activities are the same for each type of award. To receive a grant, an entity must agree to carry out several activities, including but not limited to the following: (1) develop and implement strategies, in coordination with the applicable one-stop delivery system under Section 134(c) of the Workforce Investment Act of 1998, to recruit individuals from underrepresented minority populations or from disadvantaged or rural backgrounds into the health professions; (2) prepare individuals to more effectively provide health services to underserved areas and health disparity populations through field placements or preceptorships in conjunction with community-based organizations; and (3) propose and implement effective evaluation strategies for program and outcomes measurement. Funds may also be used to support innovative activities such as curriculum development in collaboration with community-based organizations to increase the number of primary care physicians and other primary care providers prepared to serve in underserved areas and health disparity populations. The Secretary must provide assurances for each type of grant depending on the type of institution and any previous grants that have been awarded under this section. AHEC programs must ensure that they conduct at least 10% of clinical education for medical students in community settings that are removed from the primary teaching facility of the contracting institution for grantees that operate a school of medicine or osteopathic medicine. For a nursing school or its parent institution, which receives an award under this section, the Secretary must ensure that the nursing school conducts at least 10% of clinical education required for nursing students in community settings that are remote from the primary teaching facility of the school; and that the entity maintains an agreement with a medical school to place its medical students in training sites within the local area health education center program. The Secretary must ensure that AHEC programs include AHEC centers that are public or private organizations whose structure, governance, and operation are independent from the awardee and the parent institution of the awardee, and are not medical schools, or the parent institution or branch of a medical school. An entity must provide non-federal matching funds or in-kind contributions to receive a grant, totaling at least 50% of total operating costs. At least 25% of the total required non-federal contributions must be made in cash. An entity may apply to the Secretary for a waiver of up to 75% of the matching requirement for each of the first three years the entity is funded through an infrastructure award development grant. At least 75% of the total funds provided for the two types of AHEC awards must be allocated to participating AHEC centers. To provide needed flexibility to newly funded AHEC programs, the Secretary may waive this requirement for the first two years that a new AHEC program is funded through an infrastructure development award. Awards must provide at least $250,000 annually per AHEC center. If appropriated amounts to carry out this section are not sufficient to provide this minimum award amount, the Secretary may reduce the per center amount. Generally, infrastructure development awards may not exceed 12 years for an AHEC program, and six years for an AHEC, but exceptions are allowed. This section authorizes an appropriation of $125 million for each of FY2010 through FY2014. Of the amounts appropriated for a fiscal year, no less than 35% are for infrastructure development awards; no less than 60% are for point of service maintenance and enhancement awards; no more than 1% is to be used for grants and contracts to implement outcomes evaluation for the area health education centers; and no more than 4% is for technical assistance. Appropriated funds may be carried over from one fiscal year to another without obtaining approval from the Secretary. However, funds may not be carried over for more than three years. This section requires the Secretary to make grants to, and enter into contracts with, eligible entities to improve health care, increase health worker retention, increase the representation of minority faculty members, enhance the practice environment, and provide information dissemination and educational support to reduce professional isolation. Eligible entities are defined by reference to Section 799(b); examples include health professions schools, academic health centers, state or local governments, and public or private nonprofit entities participating in health professions and nursing training activities. Eligible entities are required to use grants or contract awards to enhance education through distance learning, continuing educational activities, collaborative conferences, and electronic and distance learning activities. This section gives priority to primary care. This section authorizes $5 million for each of FY2010 through FY2014, and SSAN for each subsequent fiscal year. This section includes subsections that authorize programs for geriatric education centers, geriatric training for physicians and dentists, geriatric faculty training, and other incentives to develop the geriatric health workforce. Section 753(a) requires the Secretary to award grants or contracts to various health professions schools and entities to establish or operate a Geriatric Education Center. A Geriatric Education Center is required to (1) improve the geriatric health professions training through residencies, traineeships, or fellowships; (2) develop and disseminate curricula for geriatric health and medicine; (3) support faculty training and retraining to provide instruction in geriatrics; (4) support continuing education for geriatric professionals; and (5) provide students with clinical training in geriatric settings, including nursing homes and ambulatory care centers. Section 753(b) authorizes the Secretary to make grants to, and enter into contracts with, entities to provide support (including residencies, traineeships, and fellowships) for geriatric workforce training projects. Entities must be medical schools, teaching hospitals, and graduate medical education programs. Physicians, dentists, and behavioral and mental health professionals who plan to teach geriatric medicine, geriatric behavioral or mental health, or geriatric dentistry are qualified to study in programs funded under this subsection. Institutional applicants must meet specific training requirements. For example, geriatric training projects must be staffed by qualified physicians, dentists, or behavioral mental health professionals who have experience or training in geriatrics, and programs must provide training in geriatrics and exposure to the physical and mental disabilities of elderly individuals through a variety of service rotations. The program must provide training options consisting of a one-year retraining program in geriatrics for physicians, dentists, or mental and behavioral health professionals, and a two-year fellowship program designed to provide training in clinical geriatrics and geriatrics research. Subsection 753(c) requires the Secretary to establish a program for geriatric faculty fellowships for individuals. An eligible individual must (1) be board-certified or board-eligible in internal medicine, family practice, psychiatry, or licensed dentistry, or have completed any required training in a discipline, and be employed in an accredited health professions school that is approved by the Secretary; (2) have completed an approved fellowship program in geriatrics or have completed specialty training in geriatrics, and any additional geriatrics training as required by the Secretary; and (3) have a junior (non-tenured) faculty appointment at an accredited school of medicine, osteopathic medicine, nursing, social work, psychology, dentistry, pharmacy, or other allied health discipline in an accredited health professions school. Eligible individuals must commit to meet service requirements and spend 75% of total time providing training in clinical geriatrics, including training of interdisciplinary teams of health professionals. The amount awarded to physicians must be equal to $50,000, which is the 1998 base amount, plus an adjustment based on the Consumer Price Index. The maximum award term is five years. Section 753(d) requires the Secretary to award Geriatric Workforce Development grants or contracts to entities that operate a geriatric education center. A geriatric education center that receives an award is required to use funds to offer short-term intensive courses, or fellowships, which focus on geriatrics, chronic care management, and long-term care. Fellowships must provide supplemental training for faculty members in medical schools and other qualified health professions schools. Fellowships are open to current faculty, credentialed volunteer faculty, and practitioners who have no formal geriatric training. A fellowship program must be located either at the geriatric education center sponsoring it, or at an eligible health professions school. In addition, this section requires a geriatric education center that receives a fellowship award to apply funds to one of two options: Family Caregiver and Direct Care Provider Training or Incorporation of Best Practices . The option for Family Caregiver and Direct Care Provider Training requires the geriatric education center to offer at least two courses each year to family caregivers and direct care providers who support frail elders and individuals with disabilities. The Incorporation of Best Practices option requires a geriatric education center to develop and include material on depression and other mental disorders common among older adults. This section requires awards in the amount of $150,000. Up to 24 geriatric education centers may receive an award. A geriatric education center must assure the Secretary that awards will be used only to supplement, not to supplant, the amount of federal, state, and local funds otherwise expended by the geriatric education center. In addition to any other funding available to carry out this section, this section authorizes $10.8 million for FY2011 through FY2014, to carry out Geriatric Workforce Development (including awards, contracts, fellowship programs, and other required activities). Section 753(e) requires the Secretary to award grants or contracts, in the form of Geriatric Career Incentive Awards, to foster the interest of individuals entering the field of geriatrics, long-term care, and chronic care management. An advanced practice nurse, clinical social worker, pharmacist, or student of psychology who is pursuing a doctorate or other advanced degree in geriatrics or other qualified health profession is eligible to receive an award. As a condition of receiving an award, an individual is required to teach or practice in the field of geriatrics, long-term care, or chronic care management for a minimum of five years. This section authorizes $10 million for FY2011 through FY2013. This section authorizes the Secretary to make grants or contracts to help entities to fund interdisciplinary training projects designed to (1) train health care practitioners to provide services in rural areas; (2) demonstrate and evaluate innovative interdisciplinary methods designed to provide access to cost-effective comprehensive health care; (3) deliver health care services to individuals residing in rural areas; (4) enhance the quantity of research on health care issues in rural areas; and (5) increase the recruitment and retention of health care practitioners from rural areas. This section authorizes the Secretary to award grants or contracts to help entities fund activities that may (1) assist institutions with meeting the costs of expanding or establishing allied health professions; (2) involve planning and implementing projects in preventive and primary care training for podiatric physicians in approved or provisionally approved residency programs; and (3) carry out demonstration projects for chiropractors and physicians to collaborate on identifying and providing effective treatment for spinal and lower-back conditions. Activities may include projects that expand education and training opportunities for a broad range of health professionals. Examples are projects that provide rapid transition training programs for allied health professionals in health-related sciences; establish community-based allied health training programs that link academic centers to rural clinical settings; and develop curricula in the areas of prevention and health promotion, geriatrics, long-term care, among other allied health fields. The Secretary is authorized to award grants to eligible higher education institutions to support student recruitment, education, and clinical experiences in mental and behavioral health. An eligible institution must demonstrate that it (1) participates in programs that recognize individuals and groups from diverse racial, ethnic, cultural, geographic, religious, linguistic, and class backgrounds, and different genders and sexual orientations; (2) has knowledge and understanding of the concerns of individuals and groups from diverse backgrounds; (3) will prioritize cultural and linguistic competency for any programs assisted under the grant; (4) will provide the Secretary with data and information as required; and (5) will pay liquidated damages for any violation of the agreement. The following programs and entities qualify for support (1) programs of social work, which are offered at the baccalaureate, master's, and doctoral degree levels of study; (2) accredited psychology programs for developing and implementing interdisciplinary training for psychology graduate students, including substance abuse prevention and treatment services (which may be offered at the master's, doctoral, internship, and post-doctoral residency levels of study); (3) accredited institutions of higher education or accredited professional training programs that are establishing or expanding internships or other field placement programs in child and adolescent mental health in psychiatry, psychology, school psychology, behavioral pediatrics, psychiatric nursing, social work, school social work, substance abuse prevention and treatment, marriage and family therapy, school counseling, or professional counseling; and (4) state-licensed mental health nonprofit and for-profit organizations that pay for training programs for paraprofessional child and adolescent mental health workers. Also, this section establishes institutional requirements for grant awards to support students and/or faculty in social work. It requires that at least four of the grant recipients be historically black colleges or universities or other minority-serving institutions. In selecting grants for social work, priority is established for applicants that (1) are accredited by the Council on Social Work Education; (2) have a graduation rate of not less than 80% for social work students; and (3) exhibit an ability to recruit social workers from and place social workers in areas with a high-need and high-demand population. In selecting grant recipients in graduate psychology, priority is established for institutions that focus training needs on vulnerable groups such as individuals with mental health or substance-related disorders. In selecting the grant recipients in training programs for child and adolescent mental health, the Secretary is required to give priority to applicants that (1) have demonstrated the ability to collect data on the number of students trained in child and adolescent mental health and the populations served by such students after they have graduated or completed service training; (2) have demonstrated familiarity with evidence-based methods in child and adolescent mental health services (including substance abuse prevention and treatment services); (3) have programs designed to increase the number of professionals and paraprofessionals serving high-priority populations and to applicants who come from high-priority communities and plan to serve medically underserved populations in health professional shortage areas or in medically underserved areas; (4) offer a curriculum taught collaboratively on the importance of family-professional or family-paraprofessional partnerships; and (5) provide services through a community mental health program described in the Block Grants for Prevention and Treatment of Substance Abuse. For FY2010 through FY2013, this section authorizes the following: (1) $8 million for training in social work; (2) $12 million for training in graduate psychology, of which not less than $10 million is to be allocated for doctoral, postdoctoral, and internship level training; (3) $10 million for training in professional child and adolescent mental health; and (4) $5 million for training in paraprofessional child and adolescent work. This section requires the Secretary to establish the Advisory Committee on Interdisciplinary, Community-Based Linkages (in this section referred to as the ''Advisory Committee''). It also requires the Secretary to determine the appropriate number of individuals to serve on the Advisory Committee. In establishing the Advisory Committee, the Secretary is required to ensure that at least 75% of its members are health professionals, representing a broad geographic representation of members and a balance between urban and rural members; in addition, women and minorities must be adequately represented. Finally, the Secretary is required to appoint health professionals who are from a school of medicine or osteopathic medicine; an incorporated consortium of such schools, or the parent institutions of such a school, possibly a nursing school that receives an AHEC award; teaching hospitals and graduate medical education programs; and programs that support the allied health professions. The Advisory Committee is required to (1) provide advice and recommendations to the Secretary concerning policy and program development and other matters of significance concerning the activities under this part; (2) submit to Congress and the Secretary a report describing the activities of the committee, including findings and recommendations made by the committee concerning the activities under this part; (3) develop, publish, and implement performance measures for programs under this part; (4) develop and publish guidelines for longitudinal evaluations for programs under this part; and (5) recommend appropriation levels for programs under this part. The section requires the Advisory Committee to (1) meet at least three times yearly; (2) hold meetings jointly with other related entities established under this title, where appropriate; and (3) carry out preparations for meetings, including agenda preparation and material distribution. In addition to specifying requirements for membership appointments, terms, and vacancies, this section specifies requirements for Advisory Committee meetings, documents, compensation, and expenses. This section requires the Secretary, acting through the Director of HRSA, to award grants to eligible entities to develop interdisciplinary training and education programs. The programs are to provide undergraduate, graduate, post-graduate medical, nursing, and other health professions students with an understanding of, and clinical skills pertinent to, domestic violence, sexual assault, stalking, and dating violence. An eligible entity is an accredited school of allopathic or osteopathic medicine. An entity must demonstrate that the project includes (1) participation by a school of nursing and at least one other school of health professions or graduate program in public health, dentistry, social work, midwifery, or behavioral and mental health; (2) strategies for disseminating and sharing curricula and other educational materials that the project will develop on domestic violence and abuse; and (3) a plan for consulting with community-based coalitions or individuals who have experience and expertise in issues related to domestic violence, sexual assault, dating violence, and stalking. This section specifies required uses and permissive uses for the grant. Required uses are to (1) fund interdisciplinary training and education projects designed to train health professions students and residents to identify and provide health care services to individuals who are experiencing or who have experienced domestic violence, sexual assault, and related abuse and violence; and (2) plan and develop culturally competent clinical components that may be integrated into residency training programs that address domestic violence, sexual assault, and related abuse and violence. Permissive uses are to offer community-based training opportunities in rural areas for health professional students and residents on domestic violence, sexual assault, and related abuse and violence; or provide stipends to students who are underrepresented in the health professions to promote and enable their participation in offsite training experiences designed to develop health care clinical skills related to domestic violence, sexual assault, and related abuse and violence. Grantees must ensure that programs address issues of confidentiality and patient safety, and that faculty and staff are fully trained in procedures that will protect the immediate and ongoing security for patients, patient records, and staff. Not more than 10% of the amount of the grant is to be used for administrative expenses. A grantee that receives assistance for training and education must contribute non-federal funds, either directly or through in-kind contributions, in an amount that is not less than 25% of the total cost of such activities. This section authorizes $3 million for each of FY2007 through FY2011. The Secretary is authorized to award grants, contracts and cooperative agreements to health professions schools, hospices, and other public and private entities to develop and implement programs to provide education and training to health care professionals in pain care. The grant applicant must agree that the program will include information and education on (1) the means for pain assessment, diagnosis, treatment, and management, and the medically appropriate use of controlled substances; (2) applicable laws, regulations, rules, and policies on controlled substances; (3) interdisciplinary approaches to pain care delivery; (4) barriers to care—including cultural, linguistic, literacy, geographic—in underserved populations; and (5) recent findings, developments, and improvements in providing pain care. The Secretary must provide for an evaluation to determine the effect of the grant program(s) on the knowledge and practice of pain care. This section authorizes SSAN for each of FY2010 through FY2102. Amounts appropriated under this subsection must remain available until expended. Part E authorizes grants for the public health workforce within three subparts. Subpart 1 establishes a national center for health workforce analysis, authorizes grants to state and regional centers for health workforce analysis and longitudinal analysis, and establishes an advisory council on medical education. Subpart 2 authorizes grants to institutions to develop the public health and preventive health workforce, and provides for training centers, traineeships, and special projects. Subpart 3 establishes recruitment and retention programs for the public health, pediatric, and allied health workforce, including a fellowship program for the development of public health specialists in epidemiology, laboratory science, and informatics. This subpart establishes a center to encourage states, health professions organizations, and other public and private groups to collect and analyze health workforce data; and establishes an advisory council to make recommendations to the Secretary and Congress on graduate medical education. The purpose of this section is to provide for (1) the development of information describing the health professions workforce, and the analysis of related issues; (2) and information needed to make strategic decisions for health professions and nursing workforce programs. This section requires the Secretary to establish the National Center for Health Workforce Analysis (referred to as the National Center). The National Center, in coordination with the National Health Care Workforce Commission and relevant regional and state centers and agencies, is required to (1) provide for the development of information that describes and analyzes the health care workforce and related issues; (2) carry out activities under Section 792(a); (3) annually evaluate programs under this title; (4) develop and publish performance measures and benchmarks for programs under this title; and (5) establish, maintain, and publicize a national Internet registry of each grant awarded under this title, and a database to collect data from longitudinal evaluations and performance measures. In addition, the National Center is required to collaborate and share data with federal agencies and relevant professional and educational organizations to link data regarding grants awarded under this title. This section also requires the Secretary to award grants to, or enter into contracts with, eligible entities to (1) collect, analyze, and report data regarding programs under this title to the National Center, and (2) provide technical assistance to local and regional entities on the collection, analysis and reporting of data. An eligible entity is a state, a state workforce investment board, a public health or health professions school, an academic health center, or an appropriate public or private nonprofit group. The Secretary is required to increase the amount awarded to an eligible entity for a longitudinal evaluation to study practice patterns and to count, collect, and report data on performance measures. An eligible entity is one that has received a grant or contract under this title. This section authorizes funds for the National Center, state and regional centers, and longitudinal evaluations. It authorizes the following appropriations: $7.5 million for each of FY2010 through FY2014 to establish the National Center; $4.5 million for each of FY2010 through FY2014 to provide awards and grants to state and regional centers; and SSAN for the period FY2010 through FY2014 to provide an increase in grants for longitudinal evaluations. Of the amounts appropriated for this section, the Secretary is required to reserve no less than $600,000 for conducting health professions research and for carrying out data collection and analysis in accordance with Section 792. Amounts otherwise appropriated for programs or activities under PHSA Title VII may be used for activities related to the National Center. This section establishes the Council on Graduate Medical Education (COGME), which is required to make recommendations to Congress and the Secretary of HHS about related matters including (1) the physician supply and distribution in the United States; (2) current and future shortages or excesses of physicians in medical specialties and subspecialties; and (3) foreign medical school graduates, among other topics. In addition, this section requires COGME to (1) encourage entities providing graduate medical education to conduct activities to voluntarily achieve COGME's recommendations; (2) develop, publish, and implement performance measures for relevant programs under this title; (3) develop and publish guidelines for longitudinal evaluations for relevant programs under this title; and (4) recommend appropriation levels for relevant programs under this title. This section specifies requirements for COGME including membership, membership terms, quorum, and compensation. COGME membership must include administrators from the following agencies and offices: (1) HHS, Office of the Assistant Secretary; (2) HHS, Centers for Medicare and Medicaid Services; and (3) Department of Veterans Affairs. In addition, membership must include appointments by the Secretary that represent practicing primary care physicians, national and specialty physician organizations, foreign medical graduates, medical student and house staff associations, medical schools, public and private teaching hospitals, and health insurers, business, and labor. The term of office for appointed members is four years, and it follows a schedule of staggered rotation as the Secretary designates. Non-federal employees who are COGME members must receive a compensation rate equal to the daily rate for GS-18 employees; and federal employees must serve without additional compensation. Duties and authorities for COGME include information collection, attendance at hearings, records and document production, correspondence, and assistance from and cooperation with federal departments and agencies. This section requires COGME to coordinate its activities with the Secretary, and the Secretary to take steps to eliminate deficiencies in its health professions data program(s). The Secretary may use amounts otherwise appropriated under this title to support COGME'S activities. Although the statute required the COGME to terminate on September 30, 2003, annual appropriation acts have extended COGME. Currently, COGME meets periodically throughout the year. This section required the Secretary to submit a report to Congress, by October 2001, on the number of pediatric rheumatologists and the level of sufficiency needed to address the health care needs of children with arthritis and related conditions. In 2007, the Secretary submitted a report to Congress on The Pediatric Rheumatology Workforce: A Study of the Supply and Demand for Pediatric Rheumatologists . SSAN were authorized to be appropriated for each of FY2001 through FY2005. This subpart authorizes grants, contracts, and cooperative agreements to provide training and education programs and activities to develop the public health workforce. It authorizes programs and activities to establish or sustain training centers, traineeships, and special projects, and it makes a requirement for grants or contracts to train graduate medical residents in preventive medicine. Eligible institutions include health professions schools, academic health centers, state or local governments, and public or private nonprofit entities. This section authorizes the Secretary to award grants or contracts to eligible entities to increase the number of individuals in the public health workforce; enhance the quality of the workforce; and enhance the ability of the workforce to meet national, state, and local health care needs. Eligible entities include health professions schools, academic health centers, state or local governments, and other public or private nonprofit entities. A grant or contract may cover the costs of a broad range of activities, including planning, development, or operations for demonstration training programs; faculty development; trainee support; and technical assistance. Traineeships must be designed to increase access to public health education; increase the relevance of public health academic preparation to public health practice; provide education or training for students from traditional on-campus programs in practice-based sites; or develop educational methods and distance technology to address adult learning requirements and increase diversity awareness in public health. Grants or contracts may be used to operate programs that serve students who are in accredited schools of public health and who are studying to enter in fields where there is a severe shortage of public health professionals. These fields include epidemiology, biostatistics, and environmental health, among others. The Secretary may grant preference to entities that serve individuals who are from disadvantaged backgrounds (including underrepresented racial and ethnic minorities), and graduate large proportions of individuals who serve in underserved communities. This section authorizes the Secretary to award grants or contracts to eligible entities to operate public health training centers. Eligible entities are accredited schools of public health and public or nonprofit private institutions that provide graduate or specialized training in public health. An operator of a public health training center must establish or strengthen field placements for students in public or nonprofit private health agencies or organizations; involve faculty members and students in collaborative projects to enhance public health services to medically underserved communities; and specifically designate a geographic area or medically underserved population to be served by the center. The public health training center must be remotely located from the main location of the teaching facility for the school that is participating in the program. In addition, an operator of a public health training center must assess the health personnel needs of the area that the center will serve, and assist in planning and developing training programs to address those needs. The Secretary is required to give preference to accredited schools of public health. This section establishes general and specific requirements for public health traineeships. In general, the Secretary is authorized to award grants or contracts to accredited schools of public health, and other accredited public or nonprofit private institutions, to provide graduate or specialized public health traineeships. Grants must provide tuition, fees, stipends, and allowances as the Secretary determines. Eligible individuals are those pursuing a course of study in a public health field where there is a severe shortage of health professionals. The Secretary is required to determine the amount of a grant for a public health traineeship. This section requires the Secretary of HHS, acting through the Administrator of HRSA, in consultation with the Director of the Centers for Disease Control and Prevention (CDC), to award grants or contracts to eligible entities for the purpose of providing training to graduate medical residents in preventive medicine and public health. Eligible entities are an accredited school of public health or school of medicine or osteopathic medicine; an accredited public or private nonprofit hospital; a state, local, or tribal health department; or a consortium of two or more eligible entities. Funds must be used to (1) plan, develop, operate, or participate in an accredited residency or internship program in preventive medicine or public health; (2) defray the costs of practicum experiences; and (3) establish, maintain, or improve academic administrative units in preventive medicine and public health. The Secretary is required to submit to Congress an annual report on the programs carried out under this section. The Secretary is authorized to make grants to state or local governments (that have preventive medical and dental public health residency programs) or public or nonprofit private educational entities (including graduate schools of social work and business schools that have health management programs). Grants may be used to provide student traineeships, and to assist accredited health administration programs in developing or improving programs to prepare students for employment with public or nonprofit private entities. Programs must be accredited in teaching health administration, hospital administration, or health policy analysis and planning, or must meet other quality standards as the Secretary may require. Traineeships must provide tuition, fees, and stipends for trainees, at the Secretary's discretion. Preference is established for eligible entities that (1) produce classes of graduates in which no less than 25% are engaged in full-time practice settings in medically underserved communities; (2) recruit and admit students from medically underserved communities; (3) have established relationships with public and nonprofit health care providers in the community involved; and (4) emphasize employment with public or nonprofit private entities. Traineeship grant applicants must assure the Secretary that they will give priority to trainees who demonstrate a commitment to being employed with public or nonprofit private entities. This section authorizes $43 million for Subpart 2 for FY2011 and SSAN for each of FY2012 through FY2015. The Secretary may not obligate more than 30% of the total appropriation for Section 767, Public Health Traineeships. This subpart authorizes programs for loan repayments, scholarships, and fellowships to increase education and training support to build the public health workforce. Its programs target individuals, including pediatric medical specialists and public health professionals. This section requires the Secretary to establish and carry out a program for pediatric specialty loan repayment for eligible individuals. Qualified health professionals must agree to provide full-time services for a minimum of two years in one of the following specialty areas: pediatric medicine, pediatric surgery, or child and adolescent mental and behavioral health care, including substance abuse prevention and treatment. The Secretary must enter into a contract with eligible individuals and agree to make payments on the principal and interest of qualified undergraduate, graduate, or graduate medical education loans. Payments may not exceed more than $35,000 a year for each year of service for a maximum of three years. For pediatric medical or surgical specialists, the term "qualified health professional" means a licensed physician who is entering or receiving training in an accredited pediatric medical subspecialty, or entering a residency or receiving a fellowship for a pediatric surgical specialty, or who has completed training for child and adolescent mental and behavioral health. With respect to child and adolescent mental and behavioral health, the term "qualified health professional" includes a health care professional who received specialized training or clinical experience in child and adolescent mental health in psychiatry, psychology, school psychology, behavioral pediatrics, psychiatric nursing, social work, school social work, substance abuse disorder prevention and treatment, marriage and family therapy, school counseling, or professional counseling; has a license or certification in a state to practice allopathic medicine, osteopathic medicine, psychology, school psychology, psychiatric nursing, social work, school social work, marriage and family therapy, school counseling, or professional counseling; or is a mental health service professional who completed specialized training or clinical experience in child and adolescent mental health. Additionally, an individual must agree to work either within, or for a provider who is serving within, a health professional shortage area or medically underserved area. The individual must be enrolled in an accredited graduate program at an acceptable level of academic standing. The Secretary must give priority to applicants who (1) are working or will work in an academic setting for children or adolescents; (2) have familiarity with evidence-based methods and cultural and linguistic competence health care services; and (3) demonstrate financial need. This section authorizes the following appropriations: (1) $30 million for each of FY2010 through FY2014 to carry out the loan repayment program for pediatric specialists; and (2) $20 million for each of FY2010 through FY2013 to carry out the loan repayment program for child and adolescent mental and behavioral health. This section requires the Secretary to establish the Public Health Workforce Loan Repayment Program for direct assistance to individuals. It specifies requirements for eligibility, contracts, payments, obligated service, and breach of contract. An eligible individual must be accepted for enrollment, or be enrolled, as a student in an accredited academic educational institution in a state or territory. The individual must be in the final year of a course of study or program leading to a public health or health professions degree or certificate; and have accepted employment with a federal, state, local, or tribal public health agency, or a related training fellowship to begin upon graduation. Alternatively, an individual may be eligible to participate in the loan repayment program if he or she has graduated from an accredited educational institution in a state or territory during the 10-year period preceding application to the program. In addition, an individual must not have received a loan reduction for the same service from selected programs under the Higher Education Act of 1965. This section specifies requirements for the contract between the Secretary and an individual. The contract must specify terms for loan repayments, obligated service, service locations (including areas for priority of service), federal financial obligations, and rights and responsibilities of the individual and the Secretary. A loan repayment must consist of the principal, interest, and related expenses on government and commercial loans that an individual has received to pay tuition costs for undergraduate or graduate education. For each year of obligated service, the Secretary may pay up to $35,000 for qualified loans. For eligible loans that are less than $105,000, the Secretary is required to pay an amount that does not exceed one-third of the eligible loan balance for each year of obligated service of the individual. The Secretary is authorized to approve or postpone the date when an individual begins a period of obligated service. An individual who fails to comply with the loan repayment contract is subject to the same financial penalties as under the federal loan repayment program established in PHSA, Section 338B. This section authorizes $195 million for FY2010 and SSAN for each of FY2011 through FY2015. This section authorizes the Secretary to award grants or contracts to eligible entities to provide scholarships to eligible individuals to enroll in public health or allied health degree-granting or professional training programs. An eligible entity is an accredited educational institution that offers a course of study, a certificate program, or professional training program in public health or allied health. An eligible individual must be employed in a public health or allied health position at the federal, state, tribal, or local level. An appropriation of $60 million is authorized for FY2010 and SSAN for each of FY2011 through FY2015. Of the total appropriation, 50% must be allotted to public health mid-career professionals and 50% must be allotted to allied health mid-career professionals. This section establishes requirements for public health fellowships in specialized areas. It authorizes the Secretary to carry out activities to address workforce shortages in state and local health departments within the critical areas of applied public health epidemiology and public health laboratory science and informatics. It establishes fellowships within specialized areas of public health. It requires the Secretary to provide for the expansion of existing fellowship programs, including the Epidemic Intelligence Service operated through the CDC, and the Secretary may also expand other relevant applied epidemiology training programs. Funds may be used to expand the Public Health Informatics Program at the CDC. Participation in fellowship training programs under this section may satisfy work obligations required in contracts under Section 338I(j). This section authorizes an appropriation of $39.5 million, for each of FY2010 through FY2013, which must be applied as follows: $5 million for epidemiology fellowship training program activities; $5 million for laboratory fellowship training programs; $5 million for the Public Health Informatics Fellowship Program; and $24.5 million to expand the Epidemic Intelligence Service. This part specifies general provisions for Title VII programs and activities, including preferences and prohibitions. In awarding grants or contracts under Section 747 and Section 750, the Secretary is required to give preference to any qualified applicant that (1) has a high rate of placing graduates in practice settings where the principal focus is to serve medically underserved communities; (2) has significantly increased the rate of graduate placements in medically underserved communities during the two-year period before the prospective grant period; and (3) uses a longitudinal evaluation and submits it to the national workforce database. The Secretary may not give an applicant preference if the peer review group ranks the applicant's proposal at or below the 20 th percentile of proposals that have been recommended. This section provides an exception for new programs to be funded under this section, if those programs meet specific criteria. The term ''new program'' means any program that has graduated less than three classes. To receive preference for grants, a new program must meet at least four of the following criteria: (1) have a mission to prepare health professionals to serve underserved populations; (2) include curriculum content that will help prepare practitioners to serve underserved populations; (3) provide substantial clinical training experience in medically underserved communities; (4) have a minimum of 20% of the clinical faculty of the program spend at least 50% of their time providing or supervising care in medically underserved communities; (5) have its entire program or a substantial portion of the program physically located in a medically underserved community; (6) provide student assistance that is linked to service in medically underserved communities following graduation; and (7) provide a placement mechanism to deploy graduates to medically underserved communities. This section requires the Secretary to establish a program, including a uniform health professions data reporting system, to collect, compile, and analyze data on health professions personnel. The program must initially include data on all physicians and dentists in the states. The Secretary is authorized to expand the program to include data collection, compilation, and analysis on a broad range of health professionals, including pharmacists, optometrists, and podiatrists. Data sets for health professionals must include the following: the training, licensure status, places of practice, professional specialty, practice characteristics, place and date of birth, sex, and socioeconomic background. The Secretary is authorized to require other demographic information. The Secretary is required to collect information from local, state, and federal agencies and other appropriate sources for the health professions data reporting system. In addition, the Secretary must conduct or enter into contracts to conduct analytic and descriptive studies of health professions. Studies must include methods to determine by specialty and geographic location the number of health professionals who are members of minority groups, including Hispanics. In addition, they must provide, by specialty and geographic location, evaluations and projections of the demand for and supply of health professionals to serve minority groups, including Hispanics. Studies may include evaluations and projections of the supply of, and requirements for, the health professions by specialty and geographic location. This section authorizes the Secretary to make grants and to enter into contracts with states (or an appropriate nonprofit private entity in any state) to participate in the health professions data program. (The Secretary had been required to report to Congress on October 1, 1993, and biennially thereafter, on the status of health personnel by profession. The report was to include analytic and descriptive studies conducted under this section, and provide information about applicants who take part in Title VII programs. However P.L. 104-66 , enacted on December 21, 1995, terminated this reporting requirement.) Regarding personal data, the Secretary and each program entity must inform individuals of the right to refuse to supply personal data, and any specific consequences related to surrendering or withholding personal data. At the request of an individual, the Secretary and each program entity must inform an individual if he or she is the subject of a request for personal data. The Secretary and program entity must make the data available to the individual in a comprehensible form. The Secretary and program entity are required to ensure that personal data are not used in a matter that is inconsistent with the purposes of this section unless the individual has provided informed consent for doing so. Finally, upon request, the Secretary and program entity are required to inform any individual of how the data will be used, and who will use the data, relative to the programs under this section. Personal data collected by the Secretary or any program entity under this section may not be made available or disclosed by the Secretary or any program entity to any person other than the individual who is the subject of the data, unless the person requires such data for purposes of this section, or the disclosure is in response to a demand through the compulsory legal process. In carrying out the health professions data program, the Secretary may make grants to, or enter into contracts and cooperative agreements with, and provide technical assistance to, any nonprofit entity in order to establish a uniform allied health professions data reporting system. With respect to required reports in this section, each report made on or after October 1, 1991 must include a description and analysis of data on allied health professions personnel. The Secretary is prohibited from making a grant, loan guarantee, or interest subsidy payment under this title to any eligible entity unless the application contains assurances that the school or training center will not discriminate on the basis of sex. The Secretary may not enter into a contract under this title with any such school or training center unless the entity assures the Secretary that it will not discriminate on the basis of sex in admissions to its training programs. To be eligible to receive a grant or contract under this title, an entity must prepare and submit an application to the Secretary. An application must specify the plan for carrying out a project with amounts received under this title and the plan must be consistent with relevant federal, state, or regional health professions program plans. The application must specify performance outcome standards that will measure the project, and contain a description of the linkages with relevant educational and health care entities. To the extent practicable, grantees must establish linkages with health care providers who provide care for underserved communities and populations. Grants or contracts may be used to develop and support training programs for faculty and trainees (including tuition, books, program fees, and reasonable living expenses incurred during the period of training). Grants or contracts may also support technical assistance, workforce analysis, information dissemination, and policy planning. An entity is required to maintain non-federal expenditures for activities at a level that is equal to or greater than the level maintained preceding the fiscal year for which the grant was received. The Secretary may require that an entity provide non-federal matching funds to ensure that the entity is committed to the project funded under the grant. The source of such funds may be direct or indirect and may include donations from public or private entities, and be in cash or in-kind, including plant, equipment, or services. The Secretary is required to ensure that grants and contracts are awarded on a competitive basis to carry out innovative demonstration projects or provide for strategic workforce supplementation activities. Unless otherwise required, the Secretary must accept applications for grants or contracts from health professions schools, academic health centers, state or local governments, or other appropriate public or private nonprofit entities for funding and participation in health professions and nursing training activities. The Secretary may also accept applications from for-profit private entities. The Secretary is required to establish procedures to ensure that, with respect to any data collection required under this title, such data must account for age, sex, race, and ethnicity. The Secretary is required to establish procedures to allow the use of appropriations for data collection purposes, and to ensure that grants, contracts, programs and projects are evaluated annually. Funding periods for grants and contracts may not exceed five years. The Secretary, acting through HRSA, must carry out peer review functions. For certain programs, each grant application must be submitted to a peer review group. Each peer review group must be composed principally of individuals who are not officers or employees of the federal government. In providing for peer review groups and procedures, the Secretary is required to ensure gender, racial, ethnic, and geographic balance among members of the peer review group. The Secretary is required to ensure that cross-cutting workforce analytical activities are carried out under Section 761, and that discipline-specific workforce information and analytical activities are carried out as part of the community-based linkage program and the health workforce development program. Any reference to medical schools and medical students must include osteopathic medical schools and osteopathic medical students, respectively. The Secretary may use appropriated to provide technical assistance to any authorities included in this title. This section defines a variety of terms that are used throughout Title VII. The Patient Protection and Affordable Care Act (ACA) authorizes health workforce-related provisions in Sections 5101 and 5102, described below. In addition, ACA created Section 5103, which was enacted as Section 761, Health Professions Workforce Information and Analysis, within the Public Health Service Act (PHSA) and is described in the body of this report. National Health Care Workforce Commission (§5101) This provision authorizes a National Health Care Workforce Commission (Commission) to serve as a national resource for Congress, the President, state and local governments on health workforce issues; to coordinate among relevant federal agencies; to determine whether the demand for health care workers is being met; and to identify and address any barriers to coordination at the federal, state or local level. The Commission is directed to encourage innovation to address needs of different populations, changes in technology, and other environmental factors. The Comptroller General is directed to appoint Commission members (numbering 15), who must be national experts in their fields but a majority of whom may not be health care educators or practitioners. Certain sectors must be represented, including the health care workforce, employers, third-party payers, researchers, consumers, labor unions, state or local workforce investment boards, and educational institutions. Members will serve three-year terms, and the expiration date of their terms will be staggered. The Commission is directed to undertake a wide range of studies and make recommendations to Congress and the Administration annually. Among the specific topics to be reviewed are: the current health care workforce supply and demand, and projections for the next 10 and 25 years; the current health care workforce education and training capacity, and projected demands for such education and training over the next 10 and 25 years; education loan and grant programs authorized in Titles VII and VIII of the PHSA and whether they should be authorized under the Higher Education Act; the implications of new and existing federal policies on the health care workforce; the health care workforce needs of special populations; and recommendations for creating or revising loan repayment and scholarship programs to require low-income minority medical students to serve in their home communities, if designated as a medically underserved community. The Commission also must make recommendations on at least one "high priority" topic each year. Such topics include integrated health care workforce planning that maximizes skill sets across disciplines; an analysis of health care workers in enhanced information technology and management workplace; recommendations for alignment of Medicare and Medicaid graduate medical education policies with national workforce goals; and education and training capacity, projected demands, and integration with the health care delivery system for specific types of health care providers. The Commission may designate additional future high priority topics. The Commission also is charged with reviewing implementation of the State Health Care Workforce Development Grant program, also created by ACA (see description of this grant program, below). Such sums as necessary are authorized to be appropriated for the Commission. In September 2010, the Government Accountability Office announced the appointment of 15 members to the new National Health Care Workforce Commission. However, the Commission has not received funding, and has not met. State Health Care Workforce Development Grants (§5102) This provision establishes a competitive grant program to enable state partnerships to complete comprehensive planning and to carry out activities leading to strategies for health care workforce development at the state and local levels. It authorizes grants for planning and implementation. HRSA is authorized to carry out the program in consultation with the National Health Care Workforce Commission (described above), which is charged with reviewing reports on the development, implementation, and evaluation activities of the grant program. Planning G rants Planning grants may be awarded for up to one year, with a maximum award of $150,000. An eligible entity must be an eligible partnership, which is a state workforce investment board with adequate representation from a health care employer, labor organization, public two-year institution of higher education, public four-year institution of higher education, recognized state federation of labor, or other specific entity. A state partnership must perform several required activities, including but not limited to (1) analyzing state labor market information in order to create health care career pathways for students and adults, including dislocated workers; (2) identifying current and projected high demand state or regional health care sectors for purposes of planning career pathways; and (3) identifying existing federal, state, and private resources to recruit, educate or train, and retain a skilled health care workforce and strengthen partnerships. Before the state partnership receives a planning grant, the partnership and HRSA must jointly determine the performance benchmarks that will be established for the planning grant. Matching grant requirements direct each state partnership to provide an amount of no less that 15% of the total grant amount. Within a year of receiving a grant, a state partnership must submit a report to HRSA on the state's performance of the activities under the grant, including the use of funds and matching funds, and a description of the progress that the state workforce investment board has made in meeting the performance benchmarks. In addition, HRSA must submit a report to Congress analyzing the planning activities, performance, and fund utilization of each state grant recipient, including an identification of promising practices and a profile of the activities of each state grant recipient. The section authorizes $8 million for planning grants in FY2010 and SSAN for each subsequent fiscal year. Implementation G rants This provision requires HRSA to competitively award implementation grants to state partnerships to enable them to carry out activities that result in a comprehensive plan for health workforce development within the state. An implementation grant is awarded for a period of no more than two years, with some exceptions. To be eligible for an implementation grant, the state partnership must have received a planning grant and completed all requirements for that grant. Alternatively, the state partnership must have completed an application, including a plan to coordinate with required partners and complete required activities during the two-year period of the implementation grant. A state partnership may reserve no less than 60% of total funds to make competitive grant awards to regional partnerships. A state partnership receiving an implementation grant must perform specific duties, among them: (1) identify and convene regional leadership to discuss opportunities to engage in statewide health care workforce development planning; (2) in consultation with key stakeholders and regional leaders, take appropriate steps to reduce federal, state, or local barriers to a comprehensive and coherent strategy, including changes in state or local policies to foster coherent and comprehensive health care workforce development activities; (3) develop, disseminate, and review with key stakeholders a preliminary statewide strategy that addresses short- and long-term health care workforce development supply versus demand. Before the state partnership receives an implementation grant, the state and HRSA must jointly establish performance benchmarks. Each state partnership receiving a grant must provide a minimum of 25% of the implementation grant amount to meet matching requirements. For each year of the implementation grant, the state partnership must submit a report to HRSA. Also, HRSA must submit a report to Congress analyzing implementation activities, performance, and fund utilization of the state grantees. The section authorizes $150 million for implementation grants in FY2010 and SSAN for each subsequent fiscal year.

Title VII of the Public Health Service Act (PHSA) supports health professions education and training through grants to and contractual agreements with institutions, and direct assistance to individuals. Institutions may receive Title VII support for such activities as residency programs at medical and dental schools, recruitment and retention initiatives in community-based educational settings, and health workforce data collection and analysis within state health departments. Individuals typically receive direct assistance through scholarships, loans, loan repayments, or fellowships. Title VII authorizes several advisory groups to make recommendations to the Secretary of Health and Human Services and Congress on various health workforce programs and Title VII functions. The Health Resources and Services Administration (HRSA), within the Department of Health and Human Services (HHS), oversees programs authorized in Title VII. The health care workforce—the backbone of the health care delivery system—includes physicians, nurses, dentists, therapists, and others who deliver health services to individuals in physicians' offices, health centers, clinics, and other community-based health care settings. In 2010, Congress reauthorized Title VII health workforce programs and activities in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended). The ACA also added several new authorities that aim to build and sustain the health care workforce alongside other provisions for health reform, including health insurance expansion. The 113th Congress has held hearings and introduced legislation to address the adequacy of the health care workforce. Health policy experts anticipate that ACA provisions for health insurance expansion could lead to an increased demand for health service utilization, and they expect that this increased demand for services could prompt increased demand for health providers, including physicians and nurses. Other factors causing concern about the adequacy of the health workforce include uneven provider distribution, attrition and retirement, and demands of the aging population. Legislative interest or action may focus on the impact of Title VII programs on education and training in the health professions. This report describes and summarizes Title VII programs. It describes federal support for institutions and individuals in efforts to expand and sustain the pipeline for health professions education and training. Appendix A summarizes ACA initiatives for health workforce provisions related to Title VII.

Article I, Section 1 of the Constitution vests all federal legislative power in Congress, while Article I, Section 7 sets forth the process for effectuating this power through passage of legislation by both houses and either presidential approval or veto override. The exercise of the judicial power of the United States often requires that courts construe statutes so enacted to apply them in concrete cases and controversies. Judicial interpretation of a statute is authoritative in the matter before the court, and may guide courts in future cases. Beyond this, the methodologies and approaches taken by the courts in interpreting meaning also can help guide legislative drafters, legislators, implementing agencies, and private parties. This report provides an overview of how the Supreme Court approaches statutory interpretation, with particular emphasis on rules and conventions that focus on the text itself. That is, to inform Congress on how the Court might go about analyzing the meaning of particular legislative language, this report emphasizes "textualist"-based means of interpretation. "Textualism" considers the "law" to be embodied in the language of the statute, construed according to its "plain meaning," which can be discerned through the aid, as necessary, of various judicially developed rules of interpretation. As put by Justice Oliver Wendell Holmes in an oft-quoted aphorism: "We do not inquire what the legislature meant; we ask only what the statute means." "Textualism," as captured in Justice Holmes' quote, eschews explanatory legislative materials, and inferences drawn from them and other extrinsic sources, in applying statutory language to particular circumstances. Despite its currency in recent decades, "textualism" is not the exclusive means of statutory analysis, and this report also briefly discusses "intentionalist"-based means of interpretation and the Court's approach toward relying on legislative history and other extrinsic considerations. This report is not intended as an examination of all schools of judicial decision making, or as an analysis of the merits or limits of the many methodologies used by courts in applying statutes in specific cases. In this regard, even though textualism may be the primary approach toward interpreting statutes, individual Supreme Court opinions often employ multiple types of statutory analysis to support their conclusions and critique majority/dissenting opinions with which they do not agree. Moreover, as general approaches for inferring meaning, neither textualism nor intentionalism is rigidly mechanistic or limited to the action of the enacting Congress, with "textualists," for example, sometimes looking to broader legal contexts and "intentionalists" at times venturing beyond the enacting Congress's particular intent to preserve a statute's purposes. When reading statutory text, the Supreme Court uses content-neutral canons developed by the judiciary that focus on word usage, grammar, syntax and the like. Sometimes, the Court also brings to bear various presumptions that reflect broader judicial concerns and can more directly favor particular substantive results. Other conventions assist the Court in determining whether to go beyond the corners of a statute and judicial-based rules of interpretation to also consider the congressional deliberations that led to a statute's passage. Although there is some overlap and inconsistency among these rules and conventions, and although the Court's pathway through the mix is often not clearly foreseeable, an understanding of interpretational possibilities may nonetheless aid Congress in choosing among various drafting options. To this end, the Court has expressed an interest "that Congress be able to legislate against a background of clear interpretive rules, so that it may know the effect of the language it adopts." Of course, Congress can always amend a statute to supersede the reading given it by the Court. In interpreting statutes, the Court recognizes that legislative power resides in Congress, and that Congress can legislate away interpretations with which it disagrees. Congress has revisited statutory issues fairly frequently to override or counter the Court's interpretations. Corrective amendment can be a lengthy and uncertain process, however. The starting point in construing a statute is the language of the statute itself. The Supreme Court often recites the "plain meaning rule," that, if the language of the statute is plain and unambiguous, it must be applied according to its terms. There is no single test to assay the clarity of statutory language. The interpretive process frequently begins with a narrow focus on the meaning of particular words and phrases. This view is commonly supplemented by perspectives provided from elsewhere within the statute. How has Congress used or distinguished the same terms in other places in the statute? How does the section containing the language at issue fit within the statute's structure? What do the structure and language of a statute reveal about the statute's overall purposes? The primacy of text in statutory analysis would appear to marginalize whatever insight legislative history or other extrinsic aids might provide. The strictures of a text-based "plain meaning rule" were once thought honored more in the breach than in the observance. However, this perception has changed: More often than before, statutory text is thought to be the ending point as well as the starting point for interpretation. Under text-based analysis, the cardinal rule of construction is that the whole statute should be drawn upon as necessary, with its various parts being interpreted within their broader statutory context in a manner that furthers statutory purposes. Justice Scalia, who was in the vanguard of efforts to redirect statutory construction toward statutory text and away from legislative history, has characterized this general approach. "Statutory construction ... is a holistic endeavor. A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme—because the same terminology is used elsewhere in a context that makes its meaning clear, or because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law." In 1850 Chief Justice Taney described the same process: "In expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy." Thus, the meaning of a specific statutory directive may be shaped, for example, by that statute's definitions of terms, by the statute's statement of findings and purposes, by the directive's relationship to other specific directives, by purposes inferred from those directives or from the statute as a whole, and by the statute's overall structure. Beyond this, courts also may look to the broader body of law into which the enactment fits. Nevertheless, realities of the legislative process, including bundled deal making and consolidation of multiple proposals into omnibus bills, may militate against unstinting application of "whole act" or "whole code" methodologies. The Supreme Court often cites general rules, or canons, of construction in resolving statutory meaning. The Court, moreover, presumes "that Congress legislates with knowledge of our basic rules of statutory construction." It is well to keep in mind, however, that the overriding objective of statutory construction has been to effectuate statutory purpose as expressed in a law's text. As Justice Jackson put it 68 years ago, "[h]owever well these rules may serve at times to decipher legislative intent, they long have been subordinated to the doctrine that courts will construe the details of an act in conformity with its dominating general purpose, will read text in the light of context and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy." The "language" canons of construction are neutral, analytical guides for discerning the meaning of particular text that might otherwise appear unclear. That is to say, these canons are based on general linguistic principles, many of them of the common-sense variety, for drawing inferences about the meaning of language. The meaning of a word or phrase can be shaped by its ordinary or specialized meaning, its context in the statute, the usage of similar terms in the statute, the statute's structure, and other factors. The language canons are "axioms of experience," but none "preclude[s] consideration of persuasive [contrary] evidence if it exists." Each canon provides its own perspective, and different takes from different views can give different insights into the meaning of what is being observed. Considering and weighing the value of various views would appear to be a sound process for ensuring well-reasoned interpretations. However, the language canons are intrinsic aids only, not "rules of law." Discerning what Congress probably meant by particular language for the purpose of applying it to a particular set of facts can be a difficult judicial exercise that is not amenable to formulaic resolution. The sheer number and variety of canons have been cited to emphasize their limited utility as a stand-alone method of statutory construction. Still influential, for example, is a 1950 article by Professor Karl Llewellyn that lists many canons (both language canons and substantive canons) juxtaposed to equally "correct" but opposing canons. Professor Llewellyn's main point was to argue that judges should take current circumstances into account in applying a statute in a case—he was critical of the impression that "formalism" gave of there being "only one single correct answer possible" in reading text. Nevertheless, many have broadened his message into a charge that canons are mere pretext because judges may pick and choose among them to achieve whatever result they desire. However, accepting that there may be more than one "correct" answer in resolving the meaning of a statutory provision—a premise that seems unremarkable in many cases at the Supreme Court level —does not necessarily mean that a Court majority begins with a preferred policy outcome and then marshals only those canons that support it. Given an array of established templates to guide interpretation, one may be a particularly apt fit in a given case, and the case's outcome will in large measure be driven by the rationale of the canon applied. This might particularly be so when a substantive canon of interpretation (e.g., avoidance of constitutional issues) is in play. (These canons are discussed below.) In any event, one possible suggestion of the indeterminacy of canons is that statutory construction should be a narrow pursuit, not a broader one: [C]anons of construction are no more than rules of thumb that help courts determine the meaning of legislation, and in interpreting a statute a court should always turn first to one, cardinal canon before all others.... [C]ourts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: "judicial inquiry is complete." Determining how a statute is to be applied often comes down to considering what a particular word or phrase means as used in the statute . In this exercise, a threshold inquiry is whether language is being used in the "ordinary," "general dictionary" sense or in a narrower, specialized sense or as a term of art. Also, the appropriate reference is what a term meant to Members when Congress passed the statute, not its meaning at the time the statute is being adjudicated. If the word or phrase is defined in the statute (federal statutes frequently collect definitions in a "definitions" section), or elsewhere in the United States Code , then that definition governs if applicable in the context used. Even if the word or phrase is not defined by statute, it may have an accepted meaning in the area of law addressed by the statute, it may have been borrowed from another statute under which it had an accepted meaning, or it may have had an accepted and specialized meaning at common law. In each of these situations the accepted meaning governs and the word or phrase is considered a technical term or "term of art." Justice Jackson explained why this reliance is appropriate: [W]here Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed. In such a case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as departure from them. Words that are not terms of art and that are not statutorily defined are customarily given their ordinary meanings, frequently derived from the dictionary. Thus, the Court has relied on regular dictionary definitions to interpret the word "marketing" as used in the Plant Variety Protection Act, and the word "principal" as used to modify a taxpayer's place of business for purposes of an income tax deduction, and relied on Black's Law Dictionary for the meaning of the word "cognizable" as used in the Federal Tort Claims Act to identify certain causes of action. At times, the ordinary meaning of a term in an everyday dictionary has prevailed over an interpretation given to a term in circuit court precedents. Of course application of dictionary definitions is not always a clear course; many words have several meanings, and context must guide choice among them, where possible. However, "[a]mbiguity is a creature not of definitional possibilities but of statutory context." Consider two cases in which context did not clearly point to whether a term was to be given its broadest dictionary meaning or was to be construed narrowly according to "common understanding." In one case, the Supreme Court concluded that "use of a firearm" in the commission of a drug offense or crime of violence included trading a gun for drugs; that is, "use of a firearm" was not confined to its use as a weapon. This conclusion may be compared to a finding that purchasing drugs over a cell phone did not constitute the felony of "facilitating" drug trafficking through a communication device: "[S]tatutes are not read as a collection of isolated phrases ... 'A word in a statute may or may not extend to the outer limits of its definitional possibilities.' We think the word here does not." In close cases such as these, the Court may go beyond the words of a statute for guidance and look to the statute's broader purpose or its fit with other laws. As Judge Learned Hand observed, "it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning." Ordinarily, as in everyday English, use of the conjunctive "and" in a list means that all of the listed requirements must be satisfied, while use of the disjunctive "or" means that only one of the listed requirements need be satisfied. Courts do not apply these meanings "inexorably," however; if a "strict grammatical construction" will frustrate evident legislative intent, a court may read "and" as "or," or "or" as "and." Moreover, statutory context can render the distinction secondary. As in common usage, a drafter's choice between the definite and indefinite article can affect meaning. "The definite article 'the' particularizes the subject which it precedes. It is a word of limitation as opposed to the indefinite or generalizing force of 'a' or 'an.'" Use of "shall" and "may" in statutes also mirrors common usage; ordinarily "shall" is mandatory and "may" is permissive. These words must be read in their broader statutory context, however, the issue often being whether the statutory directive itself is mandatory or permissive. Use of both words in the same provision can underscore their different meanings, and often the context will confirm that the ordinary meaning of one or the other was intended. Occasionally, however, context will trump ordinary meaning. An elementary rule of statutory construction is that the singular includes the plural, and vice-versa. Thus, a statutory directive that the Secretary of Transportation require automakers to install a warning system in new cars to alert drivers "when a tire is significantly under-inflated" is only satisfied by a system capable of a separate warning for each tire, so that a driver knows when two tires on the same side, or all four tires, are significantly under-inflated. Ordinarily, specific terms in a statute prevail over general terms. "However inclusive may be the general language of a statute, it will not be held to apply to a matter specifically dealt with in another part of the same enactment." In one case citing this canon, the Court examined whether time granted to a defendant to prepare pretrial motions extended the Speedy Trial Act's deadline for the government to begin a trial. The act directed that the clock stop for "[a]ny period of delay resulting from other proceedings concerning the defendant, including but not limited to ... (D) delay resulting from any pretrial motion, from the filing of the motion through conclusion...." The Court held that this directive could not include time expended preparing motions: despite "delays from other proceedings" not being limited to those contained in a list of illustrative subparagraphs, the specific language in subparagraph (D) on delays due to pretrial motions, beginning with their being filed , left no room for delays related to preparing motions prior to their being filed. As with other canons, context is critical. Another interpretational guide used from time to time is the principle noscitur a sociis , that "words grouped in a list should be given related meaning." Thus, a tax provision that advantaged "income resulting from exploration, discovery, or prospecting" was held not to apply to income derived from patented cameras and pharmaceuticals that the taxpayers had "discovered." "Discovery," as used in conjunction with "exploration" and "prospecting," limited the scope of "discovery" to activities associated with oil and mineral extraction. Similarly, the Court inferred that "defalcation" in a bankruptcy code provision required an element of intentional wrongdoing based on its placement in the phrase "fraud [,] defalcation ..., embezzlement or larceny." Because "fraud," "embezzlement," and "larceny" require intentional wrongdoing, "defalcation" presumably is similarly intended. On the other hand, the term "administrative" in the phrase "a congressional, administrative, or Government Accounting Office [sic] report, hearing, audit or investigation" was held to extend beyond federal administrative entities to include the work of state bodies as well. Similarly, the term "report" in the same phrase was broadly construed to cover raw copies of contractor documents obtained through the Freedom of Information Act: the placement of "report" within a list including "hearings, audits, and investigations" did not, as the Second Circuit had concluded, limit "reports" to materials that also analyzed, synthesized, or explained the information presented. As with other language canons, noscitur a sociis can be a factor in interpretation, but "is by no means a hard and fast rule...." A corollary, ejusdem generis , instructs that, "where general words follow an enumeration of specific items, the general words are read as applying only to other items akin to those specifically enumerated." Thus, an exemption from arbitration for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in ... commerce" did not apply to the case of a salesperson at a consumer electronics store: only contracts for the employment of individuals who transported goods and materials were to be exempted. At times, however, discerning commonalities among particulars to guide interpretation of the general is not so straightforward. The old rule, borrowed from English law, was that "[p]unctuation is no part of the statute," and that "[c]ourts will ... disregard the punctuation, or repunctuate, if need be, to render the true meaning of the statute." Nevertheless, the modern Court now recognizes that punctuation may clarify meaning, even though it remains reluctant to place primary importance on it. "A statute's plain meaning must be enforced ..., and the meaning of a statute will typically heed the commands of its punctuation." So said the Court—not, however, in applying a plain meaning consistent with punctuation, but instead while justifying a departure from that meaning. "Overwhelming evidence from the structure, language, and subject matter" of the law led the Court to conclude that in this unusual case the punctuation at issue resulted from "a simple scrivener's error." The Court assumes that a legislative drafter writes precisely and in accordance with the rules of grammar. Verb tense and the like count. But, as with other interpretive challenges, more than one grammatical principle potentially might apply, and these principles might point to different interpretations. The interpreter is left with a choice of which principle applies most aptly. As an example, first consider the "rule of the last antecedent." That rule holds that a limiting clause or phrase should ordinarily be read as modifying only the noun or phrase that it immediately follows. One application of this rule looked at language that denies SSI disability to an individual who is able to "do his previous work ... or engage in any other kind of substantial gainful work which exists in the national economy." The claimant's job as an elevator operator had been eliminated, and her subsequent SSI application rested in part on the assertion that elevator operator work no longer existed in significant numbers in the national economy. A unanimous Court upheld the government's position that the claimant was ineligible for SSI if she was physically capable of doing elevator operator work at all: the phrase "which exists in the national economy" applied only to "other kind of substantial gainful work." Distinct from the rule of the last antecedent is a principle enunciated in Port Rico Railway, Light & Power Co. v. Mor : "When several words are followed by a clause which is applicable as much to the first and other words as the last, the natural construction of the language demands that the clause be read as applicable to all." A provision of the federal criminal code mandates restitution for the full amount of the victim's losses, which are defined to include five specific types of loss ( e.g. , medical costs, lost income) and "any other losses suffered by the victim as a proximate result of the offense." The Court held that the phrase "as a proximate result of the offense" modified each of the five separately listed types of losses. Though refusal always to be bound by the rules of grammar and punctuation gives the Court flexibility in construing statutes, this is not to say that grammatical rules should be disregarded in statutory drafting. These rules remain strong guides. There are many cases decided on the basis of what constitutes the most "natural reading" of a statute according to common rules of grammar, without extended reference to particular canons or other interpretational aids. A basic principle of statutory interpretation is that courts should "give effect, if possible, to every clause and word of a statute, avoiding, if it may be, any construction which implies that the legislature was ignorant of the meaning of the language it employed." The modern variant is that statutes should be construed "so as to avoid rendering superfluous" any statutory language: "A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant...." A related principle applies to statutory amendments: there is a "general presumption" that, "when Congress alters the words of a statute, it must intend to change the statute's meaning." Resistance to treating statutory words as mere surplusage "should be heightened when the words describe an element of a criminal offense." There can be differences of opinion, of course, as to when it is "possible" to give effect to all statutory language – that is, to search for distinctions between similar terms or apparently redundant language without distorting the significance of those distinctions -- and when the general rule should give way to a more "common sense" interpretation. The presumption against surplusage also can guide interpretation of "redundancies across statutes," but the canon "is strongest when an interpretation would render superfluous another part of the same statutory scheme." Two overlapping statutes may be given effect so long as there is no "positive repugnance" between them. A converse of the rule that courts should not read statutory language as surplusage is that, as discussed below, courts should not add language that Congress has not included. "A term appearing in several places in a statutory text is generally read the same way each time it appears." This presumption is "at its most vigorous when a term is repeated within a given sentence." It also has been applied to the appearance of a term in inter-related programs. Additionally, the Court in at least one instance referred to a broader "established canon" that similar language contained within the same section of a statute be accorded a consistent meaning. The general presumption is not rigid, however, and "readily yields when there is such variation in the connection in which the words are used as reasonably to warrant the conclusion that they were employed in different parts of the act with different intent." Context and statutory history can override the presumption. The other side of the coin is that "where Congress includes particular language in one section of a statute but omits it in another ..., it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." The Court cited this maxim when Congress had restricted direct access by Guantanamo detainees to the courts but did not expressly restrict access in pending cases through petitions for writs of habeas corpus: "A familiar principle of statutory construction ... is that a negative inference may be drawn from the exclusion of language from one statutory provision that is included in other provisions of the same statute." In an earlier case on the availability of habeas review by a convicted murderer, the Court referred to the history of the provision that treated habeas relief and other access to the courts differently: "[N]egative implications raised by disparate provisions are strongest when the portions of a statute treated differently had already been joined together and were being considered simultaneously when the language raising the implication was inserted." This maxim has been applied by the Court—or at least cited as a justification—in distinguishing among different categories of veterans benefits and among different categories of drug offenses. A court can only go so far with the maxim, of course; establishing that language does not mean one thing does not necessarily establish what the language does mean. Occasionally the Court contrasts a party's interpretation of certain language with language that expresses the same concept more clearly and directly. There are some instances—for example, a failure to employ particular terms of art—in which this argument can be fairly persuasive. For example, the Court reasoned that, although "Congress knew how to impose aiding and abetting liability when it chose to do so," it did not use the words "aid" and "abet" in the statute at issue, and hence did not impose aiding and abetting liability. To say that Congress did not use the most precise language, however, does not necessarily aid the court in determining what the less precise language means in its statutory context. Some statutes may not be well drafted, but others represent conscious choices, born of political compromise, that may or may not signal that a different result is intended or that Congress is leaving final interpretation to agencies, courts, or future legislatures. It may be inappropriate question begging to assume, therefore, that "[i]f Congress had intended such an irrational result, surely it would have expressed it in straightforward English." Nothing compels Congress to act comprehensively when it legislates on a subject. It is not safe to assume that Congress intends to address all ancillary issues directly whenever it acts. As one court has aptly put it, "[n]ot every silence is pregnant." In some cases, Congress intends silence to rule out a particular statutory application, while in others Congress' silence signifies merely an expectation that nothing more need be said in order to effectuate the relevant legislative objective. In still other instances, silence may reflect the fact that Congress has not considered an issue at all. An inference drawn from congressional silence certainly cannot be credited when it is contrary to all other textual and contextual evidence of congressional intent. Occasionally, the Court does regard silence as a significant indicator of meaning, especially when Congress has consistently used particular language in similar laws. Nevertheless, the Court generally assumes Congress will speak to major issues directly: "Congress ... does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not ... hide elephants in mouseholes." Thus, when the Court held that the FDA's authority did not include authority to regulate tobacco products as drugs, it stated: "Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion." A variation on the statutory silence theme is the negative inference: expressio unius est exclusio alterius (the inclusion of one is the exclusion of others). Thus, where Congress subjected specific categories of ticket sales to taxation but failed to cover another category, either by specific or by general language, the Court refused to extend the coverage. To do so, given the "particularization and detail" with which Congress had set out the categories, would amount to "enlargement" of the statute rather than "construction" of it. Relatedly, "[w]here Congress explicitly enumerates certain exceptions to a general prohibition, additional exceptions are not to be implied, in the absence of a contrary legislative intent." The Court applied the principle, albeit without express recognition, in holding that a statute requiring payment of an attendance fee to "a witness" applies to an incarcerated state prisoner who testifies at a federal trial. Because Congress had expressly excepted another category (detained aliens) from eligibility for these fees, and had expressly excepted any "incarcerated" witness from eligibility for a different category of fees, "the conclusion is virtually inescapable ... that the general language 'witness in attendance' ... includes prisoners ...." But here again, context may render the principle inapplicable. A statutory listing may be "exemplary, not exclusive," the Court once concluded. In one case, a provision of the Fair Debt Collection Act (FDCA) authorized the award of attorney's fees and costs to defendants who were sued in bad faith for the purpose of harassment. Did this provision negatively imply that costs could not be awarded to prevailing defendants in cases not involving bad faith and harassment? A majority of the Court found that costs could indeed be awarded in these cases. According to the Court, the expressio unius cannon only applies when it is fair to assume that Congress considered broader coverage but rejected it. Here, the general rules on awarding costs, the prevalence of redundancies in costs provisions, and certain aspects of the statutory structure all indicated that the FDCA was not meant to categorically bar the award of costs to any class of defendants prevailing in FDCA actions. "The venerable maxim de minimis non curat lex ('the law cares not for trifles') is part of the established background of legal principles against which all enactments are adopted, and which all enactments (absent contrary indication) are deemed to accept.... Whether a particular activity is a de minimis deviation from a prescribed standard must ... be determined with reference to the purpose of the standard." In some circumstances, the Court subordinates the general, linguistic canons of statutory construction, as well as other interpretive principles, to overarching presumptions that, unless rebutted, favor particular substantive results. Some of the "weighty and constant values" protected by these "substantive" canons of construction are derived from the Constitution, others from notions of federalism, and yet others from interests in judicial administration and ordered governance. Application of a substantive canon often, but not always, results in some form of "clear statement" rule, requiring that Congress, if it wishes to achieve a particular result inconsistent with the Court's view of legal traditions, must state such an intent with unmistakable clarity. Congress is presumed to legislate with knowledge of existing common law. When it adopts a statute, related judge-made law (common law) is presumed to remain in force and work in conjunction with the new statute absent a clear indication otherwise. Thus, when Congress established civil actions for harms "by reason of" violations of antitrust laws and the Racketeer Influenced and Corrupt Organizations Act (RICO), the courts incorporated common law principles of "proximate cause" to determine liability. Establishing that a harm would not have occurred "but for" the violation is insufficient; as is the case under common law actions, a more direct and immediate connection between violation and harm must be shown. Similarly, when Congress adopted the common law on abandonment of property as part of the Bankruptcy Code, it was deemed to have adopted all the judge-made corollaries and exceptions that attended the abandonment law: "The normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific." In another bankruptcy case the Court declared that "[w]e will not read the Bankruptcy Code to erode past ... practice absent a clear indication that Congress intended such a departure." Further, the Court held that Congress, in adopting language stating that a patent is presumed valid, concomitantly adopted the common law rule that the presumed validity of a patent may be overcome only by clear and convincing evidence. Questions about whether common-law rights and causes of action continue come up in a variety of contexts. In some instances, the presumption of continuation has been overcome by general reference to a statute's purpose, even absent a "clear statement." In other instances, the Justices have disagreed on whether particular language sufficiently evidences an intent to overcome the presumption: Does language in the Federal Employers' Liability Act making railroads liable for employee injuries "resulting in whole or in part from [carrier] negligence" supersede (and relax) common law rules limiting liability to injuries arising from a "proximate cause"? In one case, five Justices held that it does, while four Justices held that it does not. Under the Supremacy Clause of the Constitution (Article VI, cl. 2), federal law supersedes inconsistent state law. Whether a particular statute does so is a matter of congressional intent. One substantive canon proceeds from "the assumption that the historic police powers of the States were not to be superseded by [a federal law] unless that was the clear and manifest purpose of Congress." Also, solicitude toward state police powers can lead the Court to look for a clear indication of intent from Congress when a statute implicates traditional state authorities, even if there is no conflict with state law. Many federal regulatory statutes contain an express statement preempting state law or disclaiming intent to do so. Nevertheless, both preemption and savings statements have presented the Court difficult interpretive questions of precisely what has been foreclosed or preserved. When a statute is silent on preemption, the Court has asked three questions in determining whether state law has been preempted implicitly: Is there a direct conflict between federal and state law—can they be implemented simultaneously? Would implementation of state law "frustrate congressional purpose"? Has federal law "occupied the field" of regulation? Answering these questions has very much been a case-by-case exercise. In deference to the states, the Court will not lightly infer that Congress has enacted legislation that restricts how states may constitute their own governments. In ruling that state judges are not "employees" for purposes of the Age Discrimination in Employment Act, the Court cited the lack of a plain statement to limit state authority to determine the qualifications of important government officials—an authority protected by the Tenth Amendment and by the Guarantee Clause. "This plain statement rule is nothing more than an acknowledgment that the States retain substantial sovereign powers under our constitutional scheme, powers with which Congress does not readily interfere." Also protective of state sovereignty is the rule that, in order to abrogate the states' Eleventh Amendment immunity from suit, "Congress must make its intention 'unmistakably clear in the language of the statute.'" Even then, Congress has limited authority to abrogate states' Eleventh Amendment immunity. The Court held in Seminole Tribe of Florida v. Florida , that Congress's general legislative powers under Article I may not be used to "circumvent the constitutional limitations placed upon federal jurisdiction [by the Eleventh Amendment]." This leaves Section 5 of the Fourteenth Amendment (specific power to enforce the provisions of the Amendment) as the principal source of power to abrogate state immunity. Despite these restrictions, Congress has been found to have authorized suits against states in appropriate circumstances. Congress, if it chooses, can incorporate state law into federal law. Federal law usually applies uniformly nationwide, however, and there is a presumption that, "when Congress enacts a statute ... it does not intend to make its application dependent on state law." "[T]he Government's consent to be sued 'must be construed strictly in favor of the sovereign.'" A waiver of sovereign immunity must be effected by unequivocal expression in statutory text; legislative history "has no bearing" on the issue. As a consequence, "statutes which in general terms divest pre-existing rights or privileges will not be applied to the sovereign without express words to that effect." Separate from whether Congress has clearly and unequivocally waived immunity is the availability of money damages when immunity has been waived. When the amenability of the federal government to damages is at issue, the Court at times has read a statute under a "fair interpretation" standard that is "demonstrably" less exacting than the "clear and unequivocal" test to determine whether immunity has been waived in the first place. At other times, the Court has been more demanding, saying, for example, when waiver of state immunity under the Eleventh Amendment is at stake, liability for monetary damages must be stated unambiguously. Though most commonly the issue in immunity cases is whether a sovereign's right to immunity has been waived, the issue in some cases is whether a sovereign state has extended immunity to substate or private entities. The question arises under, among other areas, anti-trust law when a political subdivision or private entity claims that the state has cloaked it with state anti-trust immunity to engage in certain anti-competitive practices. To successfully claim immunity in this circumstance, it must be established that the extension of immunity was a foreseeable result of clearly articulated, affirmatively expressed statutory language. "[A]bsent a clear direction by Congress to the contrary, a law takes effect on the date of its enactment." There is a general rule, based on the unfairness of attaching new legal consequences to past events, disfavoring retroactive application of civil statutes. Statutory provisions do not apply to events antedating enactment unless there is clear congressional intent that they so apply. "Requiring clear intent assures that Congress itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits." The prohibition on ex post facto laws, of course, imposes a constitutional bar to retroactive application of penal laws. The doctrine of "constitutional doubt" requires courts to construe statutes, "if fairly possible, so as to avoid not only the conclusion that it is unconstitutional but also grave doubts upon that score." "[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress .... 'The elementary rule is that every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.' This approach not only reflects the prudential concern that constitutional issues not be needlessly confronted, but also recognizes that Congress, like this Court, is bound by and swears an oath to uphold the Constitution." As with other issues, of course, it is the view of the majority that prevails: "Grave doubt" as to constitutionality does not arise simply because a Court minority—even a minority of four Justices—believes a statute may be constitutionally suspect. "It is a longstanding principle of American law 'that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.' This 'canon of construction' ... serves to protect against unintended clashes between our laws and those of other nations which could result in international discord." A 2010 securities fraud case reasserted the preclusive extent of the presumption against extraterritorial application. Circuit court jurisprudence had been moving toward a fact-specific reasonableness test for allowing fraud-based actions related to securities transactions abroad. The Court eschewed this approach, however. Rather, it held that no fraud-related cause of action was available under U.S. securities law for foreign transactions in foreign securities because Congress had not affirmatively indicated it intended to cover those transactions. Absent a clear indication that extraterritorial effects ( e.g. , declines in share prices on a foreign exchange) were to be remediable, it did not matter, for example, that it was fraudulent conduct in the U.S. by a U.S. subsidiary that led to the parent company's inflated stock price on a foreign exchange. A majority of the Court also interposed the presumption against extraterritoriality as an obstacle to finding jurisdiction under the Alien Tort Statute over a foreign tort against a foreign national. That statute provides that "[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." According to the majority, nothing in this language, nor its historical context, overcomes the underlying presumption against recognizing a cause of action against a foreign national occurring abroad. By comparison, four concurring Justices approached the jurisdictional issue from more neutral ground. Rather than initially proceeding from a position presuming an absence of jurisdiction, they would assess the ties each case has to the U.S., taking into consideration whether the alleged tort occurred in the U.S., was committed by an American, or substantially and adversely affected important American interests. There is a strong presumption that Congress intends judicial review of administrative action: "[A] survey of our cases shows that judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress." The Court requires that a statute contain "clear and convincing evidence" of an intent to preclude judicial review of decisions made under it. Also, the Court tends to construe preclusions narrowly. Thus, even where a statute has barred judicial review of the merits of individual cases, the Court nevertheless has found that the regulations and practices for determining cases may be reviewed. While the presumption of reviewability predated the enactment of the Administrative Procedure Act in 1946, the APA embodied the presumption in statute. Under the APA, final agency actions for which there is no other adequate remedy in a court are subject to judicial review, "except to the extent that ... statutes preclude judicial review; or ... agency action is committed to agency discretion by law." As to the first exception, the presumption of reviewability may be overcome by specific statutory language, but it also "may be overcome by inferences of intent drawn from the statutory scheme as a whole." The second exception applies "in those rare instances where 'statutes are drawn in such broad terms that in a given case there is no law to apply.'" An aspect of the second exception is that "review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion." Thus, the Court in Webster v. Doe looked at the structure of the National Security Act and language allowing the Director of Central Intelligence to terminate an employee as the Director deemed necessary or advisable, and concluded that a court could not, as a general matter, review the necessity or advisability of terminating an employee based on sexual orientation. But, as in many other judicial review cases, the Webster Court was very precise as to what review a statute foreclosed. Though the Court found decisions on whether a dismissal was necessary or advisable resided with the Director alone, this discretion did not go so far as to preclude court consideration of colorable constitutional claims arising from the actions of the Director. In the Court's view, a clearer statement from Congress is necessary before courts should refrain from reviewing constitutional claims of administrative error. Interpreting statutes is not solely a matter for the courts. Executive agencies charged with implementing regulatory statutes adopt policies and processes to put statutes into action. Agency decisions might set operational rules of general application or might arise during agency adjudications; they might be the result of more or less formal processes; they might purport to be more or less binding. But they all involve interpreting the law to some degree, and courts considering challenges to agency decision making face the issue of how much to defer to an agency reading of the law or to proceed to interpret the law on their own. Under current precedent, when a court reviews an agency's formal interpretation of a statute that the agency administers, and when the statute has not removed agency discretion by compelling a particular disposition of the matter at issue, courts defer to any reasonable agency interpretation. This is the Chevron rule announced in 1984. In two decisions, one in 2000 and one in 2001, the Court clarified and narrowed Chevron's application, ruling that Chevron deference applies only if an agency's interpretation is the product of a formal agency process, such as adjudication or notice and comment rulemaking, through which Congress has authorized the agency "to speak with the force of law." Other agency interpretations that are made without a formal and public process often are reviewed under pre- Chevron principles set forth in Skidmore v. Swift & Co . Additional variations of deference analysis also may come into play in individual cases, depending on subject matter and other factors. As in other matters of interpretation, it is congressional intent that counts. Under Chevron , the first question is "whether Congress has directly spoken to the precise question at issue." If the court, "employing the traditional tools of statutory construction," determines that Congress has addressed the precise issue, then that is the end of the matter, because the "law must be given effect." However, if the statute does not directly address the issue, "the court does not simply impose its own construction of the statute," but rather determines "whether the agency's answer is based on a permissible construction of the statute." On its face, the Chevron rule is quite deferential, and was perceived as a significant break from the multi-factored approach that preceded it. One would expect that a court's conclusion as to whether Congress has "directly spoken" to the issue would be decisive in most cases, that most of the myriad of issues that can arise in the administrative setting would not be directly addressed by statute, and that, consequently, courts would most often defer to what are found to be "reasonable" agency interpretations. However, Chevron did not usher in a sea change of increased deference by the Supreme Court. The Court has frequently determined that in fact Congress has settled the matter, and that consequently there is no need to proceed to the second, more deferential step of the inquiry. The Court has also found that, even though Congress has left the matter for agency resolution, the agency's interpretation is unreasonable. In determining whether Congress has "directly spoken," there is much territory between an express delegation to an agency to address a particular issue and express legislative language resolving the issue statutorily. Imprecision on an issue may reflect an oversight by Congress, a failure to anticipate what might arise, a political compromise, an implicit assumption that the gap would be filled in by the agency with technical expertise, or other considerations. With this in mind, the Court has recognized circumstances in which it is less likely that Congress intended to leave resolution of statutory uncertainty to the administering agency, especially when it appears that the agency may be citing vague terms to justify jurisdiction over controversial matters with major policy implications traditionally resolved by Congress or another agency. Thus, in holding that the Food and Drug Administration lacked authority to regulate tobacco products as "drugs" and "devices" under the Federal Food, Drug, and Cosmetic Act, the Court concluded that "Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion." The Court ruled that Congress had "directly spoken" to the regulatory issue—not through the FDCA itself, but rather through subsequently enacted tobacco-specific legislation and through rejection of legislative proposals to confer jurisdiction on the FDA. In another case, the Court found deference to be inappropriate where the agency interpretation "invokes the outer limits of Congress' power," and there is no "clear indication" that Congress intended that result. A logical consequence of applying Chevron is to render irrelevant whether an agency interpretation was "contemporaneous" with a statute's enactment, or whether an agency's position has been consistent over the years. "Neither antiquity nor contemporaneity with the statute is a condition of validity." The fact that an agency has changed its position over the years "is not fatal," because "the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency." Agency interpretations that take place in the many less formal contexts where Chevron deference is inapplicable (e.g., opinion letters, policy statements, agency manuals, and enforcement guidelines, "all of which lack the force of law" ) can still be "entitled to respect," "but only to the extent that [they] have the power to persuade." As the Court put it in Skidmore v. Swift & Co. , agency interpretations "constitute a body of experience and informed judgment to which courts and litigants may properly resort.... The weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control." These factors may include whether an interpretation applied technical expertise on a complex matter within agency jurisdiction, whether an agency's decision was well-reasoned, and whether the agency's interpretation was longstanding or consistent. It should be emphasized that, far from being superseded by Chevron , the Court continues to consider agency interpretations under Skidmore -like analyses with some frequency. If Congress intends one statute to repeal an earlier statute or section of a statute in toto , it usually says so directly in the repealing act. There are other occasions when Congress intends one statute to supersede an earlier statute to the extent of conflict, but intends the earlier statute to remain in effect for other purposes. This too is often spelled out, usually in a section captioned "effect on existing law," "construction with other laws," or the like: "[It] can be strongly presumed that Congress will specifically address language on the statute books that it wishes to change." Not infrequently, however, conflicts arise between the operation of two federal statutes that are silent as to their relationship. In such a case, courts will try to harmonize the two so that both can be given effect. A court "must read [two allegedly conflicting] statutes to give effect to each if [it] can do so while preserving their sense and purpose." Only if provisions of two different federal statutes are "irreconcilably conflicting," or "if the later act covers the whole subject of the earlier one and is clearly intended as a substitute," will courts apply the rule that the later of the two prevails. "[R]epeals by implication are not favored, ... and will not be found unless an intent to repeal is clear and manifest." And, in fact, the Court rarely finds repeal by implication. As Judge Richard Posner has pointed out, this canon is "a mixed bag. It protects some old statutes from ... inadvertent destruction, but it threatens to impale new statutes on the concealed stakes planted by old ones." The presumption against implied repeals "is all the stronger" if both laws were passed by the same session of Congress. In the case of an irreconcilable conflict between two laws of the same session, the later enactment will be deemed to have repealed the earlier one to the extent of the conflict. Because the focus here is on legislative intent (or presumed legislative intent), time of legislative consideration, rather than effective dates of the statutes, is the key to determining which enactment was the "later" one. The doctrine disfavoring repeals by implication also "applies with even greater force when the claimed repeal rests solely on an Appropriations Act," since it is presumed that appropriations laws do not normally change substantive law. Nevertheless, Congress can repeal substantive law through appropriations measures if intent to do so is clearly expressed. The "rule of lenity" requires that "before a man can be punished as a criminal ... his case must be plainly and unmistakably within the provisions of some statute." Lenity principles "demand resolution of ambiguities in criminal statutes in favor of the defendant." The reasons for the rule are that "'fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed'" and that "'legislatures and not courts should define criminal activity.'" Consequently, the rule "places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress's stead." If statutory language is unambiguous, the rule of lenity is inapplicable. Intent is generally a required element of a criminal offense, and consequently there is a presumption in favor of a scienter or mens rea requirement in a criminal statute. The presumption applies "to each of the statutory elements which criminalize otherwise innocent conduct." The Court may read an express scienter requirement more broadly than syntax would require or normally permit, and may read into a criminal prohibition a scienter requirement that is not expressed. The Court recognizes some "strict liability" exceptions, especially for "public welfare" statutes regulating conduct that is inherently harmful or injurious and therefore unlikely to be perceived as lawful and innocent. Determining whether such an exception applies can be difficult. However, if the statute does not preclude a holding that scienter is required, and if the public welfare exception is deemed inapplicable, "far more than the simple omission of the appropriate phrase from the statutory definition is necessary to justify dispensing with an intent requirement." On the other hand, while "it is fair to begin with a general presumption that the specified mens rea applies to all elements of an offense, ... it must be recognized that there are instances in which context may well rebut that presumption." One can search in vain for recent Supreme Court reliance on the canon that "remedial statutes" should be "liberally" or "broadly" construed. This is probably due to a variety of factors, including recognition that the principle is difficult to apply and almost hopelessly general. This is because many statutes are arguably "remedial," and consequently courts have wide discretion in determining scope of application. There may also be uncertainty over what "liberal" or "broad" construction means. Nevertheless, if the principle is reformulated as merely requiring that ambiguities in a remedial statute be resolved in favor of persons for whose benefit the statute was enacted, the principle should be no more difficult to apply (once a "remedial" statute has been identified) than the rule of lenity, which counsels resolution of ambiguities in penal statutes in favor of defendants. The scarcity of this principle in the current Court's lexicon, therefore, may reflect substantive preferences of the Justices as well as recognition of its limitations. Then too, the Court may employ more specific or limited presumptions in circumstances in which earlier Courts might have cited the liberal-remedial maxim, or may instead prefer in such circumstances to analyze a statute without reliance on canonical supports. Categorizing a statute as "remedial," or even as a "civil rights statute," is often employed as a springboard to more refined analysis of the purposes of the particular statute at issue. Another subcategory of the "remedial" statutes canon is the proposition that "statutes passed for the benefit of dependent Indian tribes ... are to be liberally construed to favor Indians." Most cases resolving issues on tribal matters potentially raise this proposition, but frequently there are also statute-specific considerations that amplify or outweigh any such generalities. A 2009 case did not mention an interpretive canon to favor Indians in disallowing a protective measure taken by the Secretary of the Interior. Although "it has long been established that the title of an Act 'cannot enlarge or confer powers,'" the title of a statute or section "can aid in resolving an ambiguity in the legislation's text." As Chief Justice Marshall explained, "[w]here the mind labours to discover the design of the legislature, it seizes everything from which aid can be derived." A title or heading, however, being only "a short-hand reference to the general subject matter involved" and "not meant to take the place of the detailed provisions of the text," can provide only limited interpretive aid. Thus, a heading may shed light on the section's basic thrust, or on ambiguous language in the text, but it "cannot limit the plain meaning of the text," and "has no power to give what the text of the statute takes away." Preambles, or "whereas clauses," precede the enacted language, have no "operative effect," "are not part of the act," and consequently "cannot enlarge or confer powers, nor control the words of the act, unless they are doubtful or ambiguous." Nonetheless, "whereas clauses" sometimes serve the same purpose as findings and purposes sections, and can provide useful insight into congressional concerns and objectives. Preambles can sometimes help resolve ambiguity in enacted language. To apply the principle that statutory language be interpreted consistent with congressional intent, courts may consult the stated purposes of legislation to resolve ambiguities in the more specific language of operative sections. For example, the Court relied in part on the stated purpose of the Racketeer Influenced and Corrupt Organizations (RICO) statute to seek "the eradication of organized crime in the United States," to conclude that the term "enterprise" as used in the act includes criminal conspiracies organized for illegitimate purposes, and is not limited to legitimate businesses that are infiltrated by organized crime. The Court also cited legislative findings in the Americans with Disabilities Act in determining the scope of the act's coverage: by finding that "some 43 million Americans" suffered from one or more physical or mental disabilities, Congress indicated that the ADA was not meant to cover all individuals with uncorrected, but correctable, infirmities (e.g., severe myopia). It is easy, however, to place too much reliance on general statutory purposes in resolving narrow issues of statutory interpretation. Legislation seldom if ever authorizes each and every means that can be said to further a general purpose, and there is also the possibility that stated or inferred purposes may in some instances conflict with one another. "Sense of Congress" language is appropriate if Congress makes a statement without making enforceable law. Ordinarily, a statement that it is the "sense of Congress" that something "should" be done is merely precatory, and creates no legal rights. In the appropriate context "sense of Congress" language can have the same effect as statements of congressional purpose—that of resolving ambiguities in more specific language of operative sections of a law—but if that is the intent the more straightforward approach is to declare a "purpose" rather than a "sense." Savings (or "saving") clauses are designed to preserve remedies under existing law. "The purpose of a savings clause is merely to nix an inference that the statute in which it appears is intended to be the exclusive remedy for harms caused by the violation of the statute." A corollary is that a savings clause typically does not create a cause of action. Inclusion of a savings clause, however, does not make all pre-existing remedies compatible with the newly enacted law. If there is a conflict, the savings clause gives way. Courts will attempt to give the savings language some effect, but may have to narrow that effect to avoid eviscerating the new law. A reference to specific remedies to be preserved can ease interpretation. In some cases, the legislative context and history of the savings provision can reveal its purpose. In other cases courts must reason from the scope and purpose of the new statute. For example, when the Carmack Amendment to the Interstate Commerce Act imposed comprehensive federal regulation governing the liability of interstate carriers, the Court held that savings language preserving "any remedy or right of action ... under existing law" applied only to federal, not state remedies. To allow resort to state law remedies that were inconsistent with the federal regulation would negate the Amendment's effect. "[T]he act cannot be said to destroy itself," the Court concluded. Even very clear savings language will not be allowed to thwart what the Court views as an important element of a regulatory scheme carefully crafted by Congress and implemented by the executive branch. Congress sometimes seeks to underscore the primacy of a statutory directive by stating that it is to apply "notwithstanding" the provisions of another, specified statute or class of statutes. Courts take into account this expressed intent to override the provisions specified in a "notwithstanding" clause, but when the clause purports to override "any other provision of law," its preclusive scope often is unclear. One court, for example, ruled that a directive to proceed with timber sale contracts "notwithstanding any other provision of law" meant only "notwithstanding any provision of environmental law," and did not relieve the Forest Service from complying with federal contracting law requirements governing such matters as non-discrimination, small business set-asides, and export restrictions. "We have repeatedly held that the phrase 'notwithstanding any other law' is not always construed literally ... and does not require the agency to disregard all otherwise applicable laws." Still, there are cases that have given full measure to "any other provision of law." As a rule, though, it might be more effective to spell out which other laws are to be disregarded, and it must be kept in mind, of course, that no "notwithstanding" clause can foreclose subsequent legislation that supersedes it expressly or implicitly. From time to time courts have held that a federal statute that does not explicitly create a private cause of action nonetheless implicitly creates one. This notion traces to the old view that every right must have a remedy. As the Supreme Court put it in an early case, where "disregard of the command of a statute ... results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover damages from the party in default is implied." The Court has gradually retreated from that position, and now is willing to find an implied private right of action only if it concludes that Congress intended to create one. This raises an obvious question: if Congress intended to create a cause of action, why did it not do so explicitly? While the Court has attempted to explain that it does not mean direct intent, the test now seems weighted against finding an implied private cause of action. The Court appears particularly reluctant to find that a violation of a condition placed on funding (e.g., barring education funds to schools that do not require consent for release of student records) gives rise to a private remedy. When an implied right of a private cause of action has been found, the Court tends to give it "narrow dimensions," leaving to Congress the option to expand it. Interpretational difficulties may also arise if one statute incorporates by reference provisions of an existing statute. A leading treatise declares that incorporations by "general reference" normally include subsequent amendments, but that incorporations by "specific reference" normally do not. A general reference "refers to the law on the subject generally," while a specific reference "refers specifically to a particular statute by its title or section number." When one section of a law is held unconstitutional, courts are faced with determining whether the remainder of the statute remains valid, or whether the whole statute is nullified. "Unless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if what is left is fully operative as a law." Congress frequently includes a pro forma severability clause in a statute, and this may reinforce a "presumption" of severability by removing much of the doubt about congressional intent. A severability clause does not guarantee, however, that what remains of a statute after a portion has been invalidated is "fully operative"; courts sometimes find that valid portions of a statute cannot stand on their own even though Congress has included a severability clause. Far less frequently, Congress includes non-severability language providing that remaining sections of a law shall be null and void if a part (sometimes a specified part) is held unconstitutional. Case law is sparse, but there is no apparent reason why courts should refuse to honor a clearly expressed non-severability directive. "If a statute does not specify a consequence for noncompliance with statutory timing provisions, the federal courts will not in the ordinary course impose their own coercive sanction." Absent specified consequences, such deadlines "are at best precatory rather than mandatory," and are read "as a spur to prompt action, not as a bar to tardy completion." "A statute directing official action needs more than a mandatory 'shall' before the grant of power can sensibly be read to expire when the job is supposed to be done." Thus, agency actions taken after a deadline are ordinarily upheld as valid. Although courts are loath to impose "coercive" sanctions that would defeat the purpose of the underlying agency duty, courts sometimes will lend their authority, backed by the possibility of contempt for recalcitrant agency officials, by ordering compliance with statutory directives after a missed deadline. Under the Constitution, Congress determines what cases a federal adjudicatory body has authority to consider. Most fundamentally, Congress limits the subject matter a court or administrative adjudicator can hear. These subject matter limitations are "mandatory and jurisdictional"; an adjudicator is powerless over cases that lie outside them, however meritorious. Beyond subject matter rules, the Court at times also has held that statutory deadlines and preconditions to bringing a case are similarly "mandatory and jurisdictional." Thus, the Court in Bowles v. Russell held that a court of appeals could not hear an appeal when the notice to appeal was filed after a statutory 14-day deadline, but within a 17-day deadline set forth by the district court. Nevertheless, the Court often distinguishes between rules of "jurisdiction," which speak to the power of the adjudicator, and those restrictions and conditions, sometimes referred to as "claim-processing requirements," which speak more to the rights and obligations of parties. "Jurisdictional" rules are absolute bars, but the latter types of requirement may be waived or overcome by considerations of equity. Key to the distinction is whether Congress "clearly states that a threshold limitation on a statute's scope shall count as jurisdictional...." If Congress has not, the Court likely will regard the limitation's effect more flexibly. Filing deadlines for administrative review of monetary claims, reimbursements, fees, and the like, are particularly apt to be held non-jurisdictional. Different schools of statutory interpretation regard text differently. Textualists regard the words embodied in the text of a statute as the "law": "Congress' intent is found in the words it has chosen to use." Intentionalism and related methods are less sanguine about whether statutory language alone can fully and adequately embody the "law" for purposes of applying statutes in individual cases. Yet textualists on occasion recognize the value of extrinsic perspectives, and intentionalists regard statutory language as the analytical starting point and at least strong evidence of what a law intends. The primacy of text in discerning meaning is expressed in the "plain meaning rule." That rule holds that where the language of a statute is plain, the sole role of the courts is to enforce it according to its terms. In practice, the cases vary in characterizing the rule as mandatory or prudential, and those differences often play out indirectly through arguments about whether particular language is sufficiently clear and unambiguous to preclude further inquiry. There seems to be general consensus that the plain meaning rule aptly characterizes interpretational priorities (statutory language is primary, other considerations of intent and purpose secondary). However, agreement on the basic meaning of the plain meaning rule—if it occurs—does not guarantee agreement in the rule's application. There have been cases in which Justices of the Supreme Court have agreed that the statutory provision at issue is plain, but have split 5-4 over what that plain meaning is. There are other cases in which strict application is simply ignored; courts, after concluding that the statutory language is plain, nonetheless look to legislative history, either to confirm that plain meaning, or to refute arguments that a contrary interpretation was "intended." The one generally recognized exception to the rule is that a plain meaning is rejected if it would produce an "absurd result." Nevertheless, even in cases of "absurd results" Justices can disagree over whether it is appropriate to consult legislative materials for interpretational insight. The commonest bridge from text to legislative history is a finding that the statutory language is not plain, but instead is unclear or "ambiguous." Significant differences arise, however, in the willingness of courts to label particular statutory language as "ambiguous" and thereby resort to legislative history. Some judges are more sanguine than others in the ability to interpret statutory text without resort to the "extrinsic" aid of legislative history. Some judges limit themselves to a narrow focus on the clarity or ambiguity of a particular statutory phrase, while others look more broadly to statutory context for insight into phrases that may seem ambiguous in isolation. And, inevitably, tensions may arise between apparently clear language and perceived intent. Over time, the Court has by turns been relatively more receptive or skeptical toward mining the legislative process for insight into a statute's meaning. Legislating is a collective exercise. Drafters seek to capture a sponsor's intent in words, however imperfectly. Language introduced as legislation is subjected to examination, criticism and revision in diverse congressional fora—large and small, formal and informal—as it moves toward approval—again, via diverse groups with varying degrees of expertise and interest—and eventual enactment into law. Particularly since the 1980s, some Court opinions have characterized modern congressional processes as too fractured to admit any statement or explanation made in any step along the way as an authoritative declaration by Congress as a whole (assuming Congress had a discernible "collective understanding" on the matter at issue before the Court in the first place ). Adding to this reluctance is the perception of some that the published history could be skewed by the partisanship of committee staff, the manipulation of interest groups, or the dominant influence of federal agencies. It is preferable, under this view, to re-focus on the statutory text to gain some space for judicial independence and clarity. More recently, some commentators and jurists who look at congressional processes have had a different take. They, too, see complexity and fragmentation in Congress, but argue that one can ascribe an "institutional purpose" to legislation even though the motives of individual legislators may be unknown or unknowable. Under this "busy Congress" model, for example, congressional committees, as specialists in their field, are regarded as reporting accurate accounts of information and insight to their respective chambers so that Members may better consider legislation they have limited knowledge of. The stuff of legislative history itself potentially comprises a wide variety of materials. On the one hand, a current statute may be compared to its predecessors and differences among their language and structure analyzed. This use is limited to examining language passed by Congress, which, unlike materials attending congressional deliberations, is often thought to best reflect the intent of Congress as a whole. Considering past statutes and their evolution is not a particularly controversial exercise. On the other hand are the committee reports, hearings, floor debates, and other records of deliberations and correspondence on legislation as it moves through the legislative process. One aspect of examining this material can be to compare different versions of a provision as it progresses, a use somewhat like the comparing of statutes to their predecessors, but without each version having been approved by Congress as a whole. Courts may read contemporaneous congressional materials for many reasons: background information and context, explanations of specific legislative language, or expectations of how a provision will be applied to the particular fact situation before them. Reliance on these materials varies among courts, with the circumstances of a statute's passage and its clarity or complexity being factors. Courts also may be more willing to consult committee reports and the like for insight into the particular problem Congress sought to address than they are to consult language that purports to direct certain interpretations or outcomes. The nature of the issue before a court is another variable that may bear on what materials the court uses and why. Among published history, some sources may be considered relatively more authoritative. As a rule, committee report explanations, and especially those of conference committees, are considered more persuasive and reliable than statements made during floor debates or hearings. Within floor debates, statements of sponsors and explanations by floor managers are usually accorded the most weight, and statements by other committee members of the reporting committee[s] next. Floor statements by Members not associated with sponsorship or committee consideration of a bill have little weight, and statements by bill opponents less weight still. Hearings may be useful in providing background, less so as to illuminating the meaning of particular language. This hierarchy generally characterizes where a court might go to seek to clarify an unclear statute, but several factors might tip the scales in favor of one bit of history or another of a particular bill. Final language might have arisen from a floor amendment, in which case earlier reports and debates may be of interest only as a point of contrast. Similarly, final language might have been added by the second chamber to consider a bill, in which case the history developed in it would be most pertinent, especially absent conference consideration. Also, a court's willingness to delve into the more remote reaches of legislative history can vary with the issue at hand and the point sought to be clarified. Again, courts may consult explanatory documents to gain a better feel for context or to shed light on particular language. Reference to legislative history for background is commonplace. A "proper construction frequently requires consideration of [a statute's] wording against the background of its legislative history and in the light of the general objectives Congress sought to achieve." Looking to published history to help explain the meaning of statutory terms may be more controversial, either because contrary indications may be present in other passages of legislative history, or because the degree of direction or detail may be an unwarranted narrowing of a more general statutory text. The concern in the latter instances is whether the legislative history is a plausible explanation of language actually contained in the statutory text, or whether instead explanatory language (e.g., report language containing committee directives or "understandings") outpaces that text. As the Court observed in rejecting reliance on "excerpts" said to reflect congressional intent to preempt state law, "we have never [looked for] congressional intent in a vacuum, unrelated to the giving of meaning to an enacted statutory text ... [U]nenacted approvals, beliefs, and desires are not laws." A distinct but related inquiry focuses not on the explanations that accompanied committee or floor consideration, but rather on the sequence of changes in bill language. Consideration of the "specific history of the legislative process that culminated in the [statute at issue] affords ... solid ground for giving it appropriate meaning" and for resolving ambiguity present in statutory text. Selection of one house's version over that of the other house may be significant. In some circumstances rejection of an amendment or earlier version can be important, but there is no general "rejected proposal rule." While courts are naturally reluctant to attribute significance to the failure of Congress to act, that reluctance may be overcome if it can be shown that Congress considered and rejected bill language that would have adopted the very position being urged upon the court. Even more than in the case of legislative language, discussed above, silence in the published legislative history of a bill is seldom significant. There is no requirement that "every permissible application of a statute be expressly referred to in its legislative history." The Court does, however, occasionally attach importance to the absence of any indication in a statute or its legislative history of an intent to effect a "major change" in well-established law. And sometimes the Justices disagree over the significance of congressional silence. Once a statute is enacted, later Congresses may comment on it or choose to revisit it (or not) as circumstances change. Views expressed in the documents or deliberations of a subsequent Congress generally are eschewed. It has been stated in this context that "[t]he legislative history of a statute is the history of its consideration and enactment. 'Subsequent legislative history'—which presumably means the post -enactment history of a statute's consideration and enactment—is a contradiction in terms." The Court also is wary about reading significance into the actions of a subsequent Congress, having warned that they are "a hazardous basis for inferring the intent of an earlier one.'" To the degree congressional action is considered (as opposed to the statutory language), it is the enacting Congress that is key, and interpretation is ordinarily not affected by the several different kinds of congressional actions and inactions frequently characterized as "post-enactment history." However, depending on context, including intervening developments, what a subsequent Congress does may have interpretational value. If the views of a later Congress are expressed in a duly enacted statute, then the views embodied in that statute must be interpreted and applied. Occasionally a later enactment declares congressional intent about interpretation of an earlier enactment rather than directly amending or clarifying the earlier law. Such action can be given prospective effect because, "however inartistic, it ... stands on its own feet as a valid enactment." "Subsequent legislation declaring the intent of an earlier statute is entitled to great weight in statutory construction." Other statutes may be expressly premised on a particular interpretation of an earlier statute; this interpretation may be given effect, especially if a contrary interpretation would render the amendments pointless or ineffectual. The Court closely adheres to judicial precedents in interpreting statutes, on the grounds that Congress is free to supersede the Court's interpretation of a particular statute through subsequent legislation. But it may not always be evident exactly how far Congress went in subsequent legislation to sweep aside an earlier construction. For example, when Congress acts narrowly against a result in a Court decision, is it also discrediting the Court's reasoning that led to the result? A female employee who is adversely affected by a discriminatory seniority system is barred from relief under a Supreme Court decision that holds Title VII's statute of limitation clock is intended to tick solely from the time of the discriminatory act, not from the time harm is realized. Congress adopts a provision that specifies time of harm as restarting the statute of limitations clock for those discriminated against under a seniority system. Later, a female brings suit alleging that she had been discriminated against in raise decisions over time and that consequently her pay continued to be lower than that of men in similar positions. Is the Court's more general "time of the act" interpretation in the seniority case still to be accorded weight in the later raise discrimination case, even though the interpretation no longer pertains in a seniority system context? In Ledbetter v. Goodyear Tire & Rubber Co., Inc. , five Justices substantially relied on the earlier interpretation to hold that the raise discrimination was barred by the statute of limitations, over the objection of a four-Justice dissent. If Congress reenacts a statute and leaves unchanged a provision that had received a definitive administrative or judicial interpretation, the Court sometimes holds that Congress has ratified that interpretation. The stated rationale is that "Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change." Similarly, if Congress in enacting a new statute incorporates sections of an earlier one, "Congress normally can be presumed to have had knowledge of the interpretation given to the incorporated law, at least insofar as it affects the new statute." However, congressional ratification of a judicial interpretation will not be inferred from reenactment unless "the supposed judicial consensus [is] so broad and unquestioned that Congress knew of and endorsed it." Also, the reenactment presumption is usually indulged only if the history of enactment shows that Congress conducted a comprehensive review of the reenacted or incorporated statute, and changed those aspects deemed undesirable. Though the presumption can come into play in the absence of evidence that Congress directly considered the issue at hand, the Court may require other indicia of congressional awareness of the issue before reading significance into reenactment. Congress may have simply overlooked the matter, or may have intended to leave it "for authoritative resolution in the courts." Congressional inaction is sometimes construed as approving or "acquiescing" in an administrative or judicial interpretation. There is no general presumption that congressional inaction in the face of interpretation bespeaks acquiescence, and there is no consistent pattern of application by the Court. When the Court does infer acquiescence, the most important factor seems to be congressional awareness that an interpretation has generated widespread attention and controversy. As with reenactment, however, there are other inferences that can be drawn from congressional silence. Although congressional inaction or silence is sometimes accorded importance in interpreting an earlier enactment, post-enactment explanations or expressions of opinion by committees or members are often dismissed as "isolated statements" or "subsequent legislative history" not entitled to much if any weight. As the Court has noted, statements as to what a committee believes an earlier enactment meant are "obviously entitled to less weight" than is subsequent legislation declaring such intent, because in the case of the committee statement Congress had not "proceeded formally through the legislation process." The Court has also explained that "isolated statements by individual Members of Congress or its committees, all made after enactment of the statute under consideration, cannot substitute for a clear expression of legislative intent at the time of enactment." "It is the function of the courts and not the Legislature, much less a Committee of one House of the Legislature, to say what an enacted statute means." The disfavor in which post-enactment explanations are held is sometimes expressed more strongly when the views are those of a single member. The Court has declared that " post hoc observations by a single member carry little if any weight." Under the Constitution, the President's formal role in enacting statutes is one of "take it or leave it." Article I, Section 7, clause 2 provides that, after Congress passes a bill and presents it to the President, "if he approves he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it." Thus, the recording of a President's views as part of the constitutional lawmaking process is limited to objections attending a veto. Also, the President may not amend the language of a presented bill before acting on it. Nor may the President pick and choose which provisions of a presented bill to sign into law, while vetoing others. The President's options are "thumbs up" or "thumbs down" on a bill in its entirety. The President may have an integral role in the enactment of statutes into law, but "[a]ll legislative Powers" reside in Congress, and it is exclusively up to the houses of Congress, at least formally, to come to common agreement on statutory language. Nevertheless, recent Presidents have frequently used the occasion of signing a bill into law to issue statements that contend that portions of the bill are unconstitutional, claim a law is of limited application, or otherwise signal that a law will be implemented strictly in accord with the President's views of the office's prerogatives and authorities. Assertions in signing statements vary in specificity and purported scope; the statements would not appear to have any immediate, direct legal effect in and of themselves; and they may best be understood in the context of the enduring tension between the political branches over accountability, control of executive agencies, and similar institutional concerns. At the same time, Administrations since the 1980s have asserted that signing statements have weight as legislative history and should be taken into account by courts. There is no legal impediment to a President commenting on a statute's meaning in a signing statement, and the political reality is that an Administration is not a passive spectator during congressional deliberations. Often, the Administration forwards draft legislation for introduction, and liaisons from the executive branch regularly communicate its views on bills as they proceed. If the President or the Administration worked closely with Congress in developing legislation, and if the approved version incorporated the President's recommendations, reference to a signing statement arguably may help complete the picture of a bill's purpose, especially in the absence of published congressional documents on a bill. The same might also be said with respect to bills whose final content arose from compromise negotiations between the Administration and Congress. Citation of signing statements may be more controversial when statutory language appears clear or the meaning attributed in a signing statement conflicts with congressional history. Congress has no opportunity during the legislative process to respond as an institution to a characterization in a signing statement. Giving the President "the last word" on the meaning of a bill he approves, it may be pointed out, stands in contrast to the procedure for congressional consideration of the President's objections in the case of a vetoed bill. The Supreme Court has not accorded legal weight to signing statements. And, in longstanding litigation on a statute implicating the status of Jerusalem, the prominence of President George W. Bush's signing statement as an issue has steadily declined. Neither the latest court of appeals decision, nor recent briefs by the parties to the Supreme Court, do more than mention it in passing as part of the case's history. Also, lower courts have seldom had to resolve cases that require a choice between conflicting presidential and congressional interpretations. Presidents' routine use of signing statements to try to influence statutory interpretation by courts is a relatively recent development. Thus far, courts have not been particularly receptive, even while citing them on occasion. Judicial reluctance to consider signing statements would not appear to be contrary to judicial deference to agency action. Deference is premised on the conclusion that Congress has, by statute, authorized the agency to "speak with the force of law" through a rulemaking or other formal process. Congress has not authorized the President (or, indirectly, an agency) to speak with the force of law through signing statements. So, although signing statements may influence or even control agency implementation of statutes, it is the implementation, and not the signing statement itself, that would be measured against the statute's requirements. At most, signing statements might be considered analogous to informal agency actions, entitled to respect only to the extent that they have the power to persuade.

The exercise of the judicial power of the United States often requires that courts construe statutes to apply them in particular cases and controversies. Judicial interpretation of the meaning of a statute is authoritative in the matter before the court. Beyond this, the methodologies and approaches taken by the courts in discerning meaning can help guide legislative drafters, legislators, implementing agencies, and private parties. The Supreme Court has expressed an interest "that Congress be able to legislate against a background of clear interpretive rules, so that it may know the effect of the language it adopts." Though the feed-back loop of interpretive practices coming from the courts may not always speak well to actual congressional practice and desires, the judiciary has developed its own set of interpretive tools and methodologies, keeping in mind that there is no unified, systematic approach for unlocking meaning in all cases. Though schools of statutory interpretation vary on what factors should be considered, all approaches start (if not necessarily end) with the language and structure of the statute itself. In this pursuit, the Court follows the principle that a statute be read as a harmonious whole whenever reasonable, with separate parts being interpreted within their broader statutory context. Still, the meaning of statutory language is not always evident. To help clarify uncertainty, judges have developed various interpretive tools in the form of canons of construction. Canons broadly fall into two types. "Language," or "linguistic," canons are interpretive "rules of thumb" for drawing inferences based on customary usage, grammar, and the like. For example, in considering the meaning of particular words and phrases, language canons call for determining the sense in which terms are being used, that is, whether words or phrases are meant as terms of art with specialized meanings or are meant in the ordinary, "dictionary" sense. Other language canons direct that all words of a statute be given effect if possible, that a term used more than once in a statute ordinarily be given the same meaning throughout, and that specific statutory language ordinarily trumps conflicting general language. "Ordinarily" is a necessary caveat, since any of these "canons" may give way if context points toward a contrary meaning. Not infrequently the Court stacks the deck, and subordinates the general, linguistic canons of statutory construction, as well as other interpretive principles, to overarching presumptions that favor particular substantive results. When one of these "substantive" canons applies, the Court frequently requires a "clear statement" of congressional intent to negate it. A commonly invoked "substantive" canon is that Congress does not intend to change judge-made law. Other substantive canons disfavor preemption of state law and abrogation of state immunity from suit in federal court. As another example, Congress must strongly signal an intent to the courts if it wishes to apply a statute retroactively or override existing law. The Court also tries to avoid an interpretation that would raise serious doubts about a statute's constitutionality. Interpretive methods that emphasize the primacy of text and staying within the boundaries of statutes themselves to discern meaning are "textualist." Other approaches, including "intentionalism," are more open to taking extrinsic considerations into account. Most particularly, some Justices may be willing to look to legislative history to clarify ambiguous text. This report briefly reviews what constitutes "legislative history," including, possibly, presidential signing statements, and the factors that might lead the Court to consider it.

To qualify for Medicaid, potential beneficiaries generally must be a member of a covered group and meet certain financial criteria. Although all poor (i.e., below 100% of the federal poverty level, FPL) American children and pregnant woman are eligible for Medicaid or the State Children's Health Insurance Program (CHIP), other populations' upper-income eligibility threshold for Medicaid is often well below poverty. In some cases, individuals are ineligible for Medicaid regardless of their income. Some health reform proposals include provisions to expand traditional Medicaid—to 100% of poverty, for example—regardless of whether one is a member of a covered group, such as children, pregnant women, the aged, and the disabled. This report briefly describes two key aspects of current Medicaid eligibility—(1) categorical eligibility (i.e., membership in a covered group) and (2) income eligibility. The report then discusses some policy and legislative considerations in expanding mandatory Medicaid eligibility to 100% of poverty (regardless of category) through federal legislation. There are approximately 50 different eligibility "pathways" into Medicaid. The primary eligibility criteria include (1) categorical eligibility (if an individual is a child, pregnant, disabled, etc.) and (2) income-related eligibility. Income eligibility varies by category. Although federal Medicaid statute sometimes specifies that a category's income eligibility may go up to a certain income threshold, some states use statutory flexibility to go higher by using income counting rules that permit, for some eligibility pathways, disregarding various amounts and types of income. Many states also allow certain persons with long-term care needs to qualify for institutional and home and community-based services under Medicaid with income up to, and sometimes above, 222% of FPL; and others with high medical expenses to qualify via federal and state "spend down" rules. Finally, states may use flexibility in Section 1115 of the Social Security Act to waive eligibility and other requirements in the Medicaid statute—for example, to expand eligibility to categories of people not otherwise coverable under Medicaid. Table 1 illustrates income eligibility levels for some of the major categories of Medicaid enrollees. It excludes eligibility levels for persons who qualify for Medicaid because they need long-term care or become eligible via spend down. As shown in Table 1 , American children (under age 19) and pregnant women are already eligible for Medicaid if their family is in poverty. Thus, certain individuals in the following groups who currently are not eligible for Medicaid up to 100% of poverty in all 50 states and the District of Columbia could be affected by an expansion, depending on its structure: (1) parents, (2) childless adults, (3) the aged (age 65+) and disabled, and (4) certain non-citizens. Under current law (Section 1931 of the Social Security Act), parents are eligible for Medicaid if they would have been eligible for the former federal cash welfare program Aid to Families with Dependent Children (AFDC) as of July 1, 1996. The upper-income threshold for AFDC eligibility in 1996 ranged across states from 11% to 68% of poverty. However, Section 1931 gives states the flexibility to disregard income to effectively expand coverage as high up the income scale as they wish through the regular Medicaid State Plan Amendment (SPA) process, which 16 states, as of January 2009, used to cover parents up to 100% of poverty or higher. States have even greater flexibility if they obtain federal Section 1115 waivers, which are used by an additional seven states to cover parents up to 100% of poverty or higher. Through existing Section 1931 authority and Section 1115 waivers, a total of 23 states currently use federal funds to cover parents up to 100% of poverty or higher. There is no existing categorical pathway into Medicaid for these individuals based solely on income. However, states can obtain federal Section 1115 waivers to cover such adults. Currently, 14 states use such waivers to cover childless adults up to 100% of poverty (or higher) with a comprehensive benefit package. States are generally required to cover in their Medicaid programs the aged and disabled who receive SSI. The upper income eligibility thresholds for SSI in all of the lower 48 states ranges from 75% of poverty (for an individual who has no income from wages) to 174% of poverty (for a couple whose income is all from wages). Persons receiving SSI may also receive state supplemental payments (SSP), raising income levels of these beneficiaries. Some states also allow individuals who meet SSI's resource, or asset, test (i.e., $2,000 for individuals and $3,000 for couples) and disability criteria but who have higher income levels as a result of work to qualify for Medicaid. Although some of the aged and disabled may be "income eligible" for SSI, not all of these individuals are enrolled in SSI or Medicaid because they do not meet SSI's resources and/or disability criteria. As of 2003, 16 states and the District of Columbia have expanded up to 100% of poverty for the aged and disabled using an optional eligibility pathway authorized under the Omnibus Reconciliation Act of 1986 (OBRA 86). There are essentially three subpopulations of aged and disabled who could be newly eligible under an expansion of Medicaid based solely on income up to 100% of poverty: (a) those with income levels between the SSI and, for some, SSI plus SSP, and the upper income threshold of 100% of poverty; (b) those who meet SSI's resources test but not its income test and do not already qualify under Medicaid's special rules applying to disabled beneficiaries who work; and (c) those SSI beneficiaries who are not Medicaid eligible because the state uses more restrictive income criteria (would apply only to a subset of section 209(b) states). For purposes of determining eligibility for Medicaid, CHIP and other federal programs, non-citizens are categorized in several different groups, discussed in detail in other CRS reports. Three of these groups are (1) unauthorized aliens, sometimes referred to as "illegal immigrants"; (2) legal permanent residents (LPRs) who have been in the country for less than five years; and (3) LPRs who have been in the country for five years or more. Federal law prohibits unauthorized aliens from being enrolled in full-benefit Medicaid, regardless of income. LPRs who have been in the country for less than five years are generally ineligible for Medicaid, although there is a new option for states to cover such children and pregnant women under CHIP. For years, states have had the option to extend Medicaid eligibility to LPRs who have been in the country for five years or more. In spite of these limitations, Medicaid can pay for treatment for emergency medical conditions if these individuals would otherwise qualify for Medicaid if not for their legal or residency status. In addition, several states have solely state-funded programs that offer coverage to some of these individuals. The addition of a mandatory eligibility group to 100% of poverty in federal Medicaid statute would not automatically alter the treatment of these non-citizens. To alter the treatment of these non-citizens, additional amendments to federal statute would be required. A new mandatory group up to 100% of poverty could require states to amend their state Medicaid plans to cover parents, childless adults, and others through the regular SPA process — without requiring waivers or, for parents, the use of "block of income" disregards. Currently, the commonwealths and territories receive capped annual funding for Medicaid, which they exhaust. Unlike states, they are permitted to define poverty at relatively low levels in order to control enrollment and thus their spending. For the poor, is the proposal simply intended to ensure that no one is uninsured, or is it also intended to ensure a certain comprehensiveness and generosity of coverage? The latter part of this question is particularly relevant for those aged and disabled in poverty who are not eligible for Medicaid but are enrolled in Medicare. Expanding full-benefit Medicaid to these Medicare enrollees (a) would not reduce the number of uninsured, (b) would entail additional costs to both federal and state governments, but (c) could expand the services offered to Medicare beneficiaries to include such benefits as home or personal care, care management, transportation, vision and dental care, among others. These issues are similar for the following group as well. Will the new group be open to parents and childless adults who already have health insurance — from their employer, for example? If so, the additional Medicaid coverage could be beneficial if individuals needed health care not covered by their existing plan; however, coverage for such an individual would not reduce the number of uninsured and would entail additional costs to both federal and state governments. An additional concern is "crowd-out"—that individuals who would otherwise be covered by private health insurance would obtain public coverage instead. This was also a concern when CHIP was enacted in 1997 and was partly addressed by requiring that children be uninsured. CHIP also permits states to impose a waiting period (that is, minimum periods of uninsurance before being eligible for CHIP). Section 1115 waivers are also used by states to apply waiting periods, cost-sharing and other methods in Medicaid and CHIP for the purpose of reducing or preventing crowd-out. However, under traditional Medicaid (e.g., excluding states operating under an 1115 waiver), such waiting periods are not permitted, because individuals are entitled to Medicaid. Under current law, for Medicaid-covered populations, states receive federal funds at the Federal Medical Assistance Percentage (FMAP), which averages 57% but ranges across states from 50% to 76%; states are required to come up with the remaining share of program costs. If this new poverty-related group were simply added as a mandatory group with no other changes, this would likely entail automatically increased federal and state spending, based on the number of new enrollees and the states' FMAP, further straining federal and state budgets. In response, states may consider other ways to reduce spending if necessary. For example, they could cut provider payment rates, reduce enrollment by making the application and renewal processes for individuals more burdensome, or cut back on benefits offered for some or all groups. To lower states' apparent financial burden attributable to the new group, there are a number of questions to answer: Will the federal government cover (1) all of the costs of the new group (100% FMAP), (2) some amount above the regular FMAP but less than 100%, or (3) just the regular FMAP? If the federal government will pay a larger percentage than the regular FMAP, will it be (1) temporary or (2) permanent? If the federal government will pay a larger percentage than the regular FMAP, will it be (1) for those below poverty who are newly eligible (i.e., not eligible under former rules), (2) for those below poverty who were eligible under former rules but are newly enrolled, and/or (3) for those below poverty who were already enrolled? If the federal government will pay a larger percentage than the regular FMAP, will the federal funding be (1) capped, perhaps as a separate program like CHIP, or (2) open-ended? Is the new eligibility group (1) wholly in place as of a certain date or (2) phased in over time? Will states face a maintenance of effort (MOE) requirement (1) for the dollars (e.g., must not spend less than what they spent on Medicaid before a particular date) and/or (2) for the people (e.g., if people would have been eligible under an already existing eligibility group, they might still be treated as enrolled through that pathway, especially if benefits to individuals or states differ as a result). There are some additional considerations in adding a new mandatory eligibility group that may overlap with current eligibility groups, particularly along the following key dimensions. Approximately 50 eligibility pathways into Medicaid currently exist in federal law. States have their own methodologies for counting income for many of these pathways. To promote equity and consistency across states, Congress could require a single federal standard for counting income for the new group. However, would it correspond with the income methodologies of any existing group(s)? If not, it would likely entail greater administrative burdens on states (and perhaps also on applicants) who would be subject to new rules, although it would provide greater uniformity across states in terms of eligibility criteria for the new group. Similarly, although the legislative language may state that eligibility extends up to 100% of poverty, would states be permitted to effectively raise the group's income eligibility to as high a level as they wish through income counting rules? Medicaid statute permits states (and requires some) to allow individuals in certain categorical groups to "spend down" income on health care to the point they are considered eligible for Medicaid. That is, health care expenses are deducted from income, and the resulting net income is used to determine financial eligibility for Medicaid. Would "spend down" be permitted for the new eligibility group, thus effectively raising the income threshold above 100% of FPL for those with certain health care expenses? States also use resource/asset tests, which they have the flexibility to alter or waive for some pathways (e.g., families under Section 1931). What would be the resource test associated with the new group, if any? Currently the only federal means-tested benefit provided regardless of category is nutrition assistance through the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. The purpose of SNAP is to ensure that a nutritional safety net exists for all poor Americans. Extending Medicaid to 100% of poverty regardless of category would ostensibly ensure a health insurance safety net for all poor Americans. However, having Medicaid (or any other type of health insurance) does not necessarily guarantee access to health care. State Medicaid programs sometimes struggle to maintain adequate access to primary care and dental care, for example, for their beneficiaries. Thus, the adequacy of provider payments and provider supply in state Medicaid programs are additional issues to consider. Arguments could also be made for circumstances in which potential beneficiaries should have additional or fewer eligibility requirements. For example, should eligibility for certain adults be tied to work requirements, as is the case in the federal cash welfare assistance program, Temporary Assistance for Needy Families (TANF)? On the other hand, should financial eligibility requirements be more flexible so that individuals who apply to renew their Medicaid coverage are not deemed ineligible because of a small wage increase, for example? In current Medicaid statute, states define the "amount, duration and scope" of covered benefits for both mandatory and optional services. These benefits vary by eligibility group. Would this new group of enrollees be able to access all benefits available under the Medicaid program, or would access be limited to a more restrictive benefit package? What, if any, additional flexibility would states have in defining these benefits for the new group? Generally "nominal" cost-sharing is the maximum that can apply in Medicaid for those below 100% of poverty. The Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ) provided states with flexibility in cost-sharing not previously permitted without a waiver. However, a later law ( P.L. 109-432 ) clarified that the additional flexibility is not available to those "with family income not exceeding 100 percent of the poverty line." What, if any, additional flexibility would states have in defining cost-sharing for the new group? Although federal Medicaid financing is generally open-ended for defined eligibility categories and benefits, current administrative policy is that federal financing under Section 1115 waivers is capped so that they are budget neutral over the life of the waiver, with savings permitted by potentially reducing benefits, capping enrollment, etc. The new mandatory group might have a number of potential impacts on new and existing waivers. For example, would the new group's impact on budget neutrality be specified in legislation or left to regulation? For states already covering the group through a waiver, would their current flexibility (a) terminate, (b) last until the waiver's expiration but without ability to renew the waiver, or (c) last in perpetuity? The Medicaid statute (Title XIX of the Social Security Act) includes some eligibility groups that are no longer relevant. For example, one mandatory pathway in Medicaid statute is "qualified children, a group "no longer needed for any purpose" because of other, more expansive eligibility pathways for children. Expanding to 100% of poverty irrespective of category could make additional groups obsolete as well. Thus, adding this mandatory population in Title XIX (1) could be as simple as adding a new eligibility group under Section 1902(a)(10)(A)(i)(VIII), plus conforming amendments; or (2) could be used as an opportunity to also "clean up" the statute of some obsolete groups by requiring that this new group supersede eligibility groups and rules that are currently used to allow persons with lower income levels to qualify. Although adding a new group to the statute, as described in the former option, would add more complexity to an already somewhat convoluted Medicaid statute, it might also provide states with an opportunity to streamline some of their income counting methodologies. Rather than apply burdensome income counting methodologies to applicants who would otherwise qualify through lower income eligibility pathways, the former method would enable states to simply enroll higher income applicants through the 100% of FPL group and avoid having to calculate income disregards. This could somewhat lighten states' administrative burden. The latter option would standardize eligibility rules across the nation and could improve equity and consistency among the states. However, it could be problematic if the new group has a specified income-counting methodology that is inconsistent with what states currently do. For example, Medicaid currently requires states to cover children age 6-18 up to 100% of poverty, and states are required to disregard certain amounts of income and some types of income entirely. The legislation for the new eligibility group could require an income-counting methodology different than states use. For example, a child who is currently covered as a "poverty-related child" at 95% of poverty (FPL) may be at 105% of poverty under a new methodology with fewer or less generous disregards. Thus, although it might seem to simplify the situation for the state to not determine the child's eligibility under the prior income-counting rules, it could lead to some individuals losing eligibility if those existing eligibility categories were dropped. However, the legislation could require states to ensure that no current enrollee lost coverage and/or that no applicant was deemed ineligible because of the change, which raises the next point. The latter could also be problematic if the legislation called for the state to make assessments based on its income-counting methods prior to the new group's addition. This is also likely to be the case if the legislation calls for additional federal funds (1) for those below poverty who are newly eligible (i.e., not eligible under prior rules), and/or (2) for those below poverty who were eligible before but are newly enrolled. Regardless, the state would have to maintain its ability to determine whether these individuals would have been eligible before the addition of the new group. As a result, removing these categories from the statute would provide no meaningful benefit to states in terms of administrative ease, since they would have to process eligibility determinations for those groups as if the prior rules were still in existence. According to analyses by the Agency for Healthcare Research and Quality (AHRQ), there were 39.6 million adults without health insurance in 2005, of whom approximately 16% (6.1 million) were eligible for Medicaid, CHIP, or a solely state-financed program. As shown in Figure 1, if Medicaid eligibility had been expanded to cover nonaged adults up to 100% of poverty, then another 8.3 million uninsured adults would have been eligible in 2005; approximately 25.1 million uninsured adults (63%) would still have been ineligible. Medicaid coverage is not provided for individuals in certain subgroups under 100% of poverty: Parents (23 states currently at 100%+ FPL through Section 1931 or an 1115 waiver; all states cover some parents, with lowest eligibility level at 11% FPL) Childless adults (14 states currently at 100%+ FPL with an 1115 waiver; without a waiver, no Medicaid pathway exists for these individuals) Aged and disabled (many are enrolled in Medicare, except for the disabled in the two-year waiting period—16 states currently at 100% FPL; all states cover some aged and disabled, based on SSI receipt, which has a minimum upper-income eligibility threshold of 75% FPL) Certain non-citizens Additionally, should uninsurance be a requirement for this pathway, in order to exclude individuals already enrolled in health insurance (e.g., aged and disabled in Medicare, individuals with employer-sponsored health insurance)? What about those eligible for employer-sponsored health insurance? Will the federal government cover (1) all of the costs of the new group (100% FMAP), (2) some amount above the regular FMAP but less than 100%, or (3) just the regular FMAP? If the federal government will pay a larger percentage than the regular FMAP, will it be (1) temporary or (2) permanent? If the federal government will pay a larger percentage than the regular FMAP, will it be (1) for those below poverty who are newly eligible (i.e., not eligible under prior rules), (2) for those below poverty who were eligible before but are newly enrolled, and/or (3) for those below poverty who were already enrolled? If the federal government will pay a larger percentage than the regular FMAP, will the federal funding be (1) capped or (2) open-ended? Is the new group (1) wholly in place as of a certain date or (2) phased in? Will the state face a maintenance of effort (MOE) requirement (1) for the dollars (e.g., must not spend less than what they spent on Medicaid before a particular date) and/or (2) for the people (e.g., if individuals would have been eligible under an already existing eligibility pathway, states could be required to enroll them through that pathway, especially if the benefits to individuals or the financial impact on states differ for the new eligibility group). Eligibility. (1) A federal standard for counting income for the new group or state-based standards? (2) If state-based standards, how much flexibility to use income disregards? (3) Allow states to deduct medical expenses from income for eligibility determinations (i.e., "spend down") or not? (4) Assets test or not? (5) If additional individuals are made eligible, are provider payments and provider supply adequate to ensure beneficiaries' access to needed care? Benefits. Provide standard Medicaid benefits already offered in each state or permit additional state flexibility? Cost-sharing. Generally only "nominal" amounts currently required or permit additional state flexibility? Section 1115 waivers. (1) Is the new group's impact on budget neutrality specified in legislation or left to regulation? (2) For states already covering the group through a waiver, would their current flexibility (a) terminate, (b) last until the waiver's expiration but without ability to renew the waiver, or (c) last in perpetuity?

All poor American children and pregnant woman are eligible for Medicaid or the State Children's Health Insurance Program (CHIP), although millions are not enrolled. However, some other populations' upper income eligibility threshold for Medicaid is often well below the federal poverty level. For working parents of dependent children, for example, the median Medicaid upper income eligibility threshold among the states is 68% of poverty—less than $10,000 a year for a single parent with a child. (For parents who are not working, the median Medicaid upper income eligibility threshold among the states is even lower, at 41% of poverty—less than $6,000 a year for a single parent with a child.) Adults under age 65 who are not disabled, not pregnant and not custodial parents of dependent children—often referred to as "childless adults"—are generally ineligible for Medicaid, regardless of their income. Some health reform proposals include provisions to expand traditional Medicaid—to 100% of poverty, for example—regardless of whether one is in a covered "category," such as children, pregnant women, the aged or disabled, as generally required for Medicaid coverage today. This report briefly describes current Medicaid eligibility and presents some policy and legislative considerations if Congress decided to expand mandatory Medicaid eligibility to 100% of poverty through federal legislation.

The security situation in Central America has deteriorated over the past decade. Gangs, drug traffickers, and other criminal groups have expanded their activities, contributing to escalating levels of crime and violence that have alarmed citizens and overwhelmed governments. Violence is particularly intense in the "northern triangle" countries of El Salvador, Guatemala, and Honduras, which have some of the highest homicide rates in the world. Citizens of those nations now rank crime as the top problem facing their countries, and an increasing number have sought refuge abroad. Crime and violence also take an economic toll on the countries of the region, which is estimated to range from 2.5% of gross domestic product (GDP) in Costa Rica to 10.5% of GDP in Honduras. While some analysts argue that the growth of organized crime in Central America poses challenges to U.S. strategic interests and may present a greater threat to regional security than the civil conflicts of the 1980s, U.S. policymakers have only recently begun to offer increased attention and financial support to the region. During the 1980s, U.S. economic and military assistance to Central America averaged nearly $1.4 billion (inflation-adjusted 2013 dollars) annually to prevent potential Soviet allies from establishing political or military footholds in the region. U.S. attention to the region declined significantly in the early 1990s, however, as the civil wars ended and Cold War concerns faded. The U.S. government continued to provide Central American nations with some assistance for narcotics interdiction and institutional capacity building, but the funding levels were comparatively low. U.S. security assistance to the region did not increase substantially until FY2008 with the introduction of the Mérida Initiative, a counterdrug and anticrime assistance program that focused primarily on Mexico but also included some funding for Central America. In FY2010, Congress and the Obama Administration re-launched the Central America portion of the Mérida Initiative as the Central America Regional Security Initiative (CARSI). Whereas most U.S. security efforts in Central America since the 1990s have focused on preventing illicit narcotics from reaching the United States, CARSI is designed to address a broader array of security concerns. While it continues to support immediate law enforcement and interdiction operations, it also aims to strengthen the capacities of communities and governmental institutions to address security challenges and the underlying conditions that contribute to them. Since FY2008, Congress has appropriated nearly $1.2 billion for the seven nations of Central America through the Mérida Initiative and CARSI. Although more than seven years have passed since Congress first appropriated funding for the initiative, Central America continues to face significant security challenges. As Congress evaluates budget priorities and considers additional assistance for the region, it may examine the scope of the security challenges in Central America, the current efforts being undertaken by the governments of Central America to address those challenges, and how the United States has supported Central American efforts. This report provides background information about these topics and raises potential policy issues regarding U.S.-Central America security cooperation that Congress may opt to consider, such as the strategy and funding levels necessary to achieve U.S. objectives, how best to promote and protect human rights, and how U.S. domestic policies impact security conditions in the region. As in neighboring Mexico, the countries of Central America—particularly the northern triangle countries of El Salvador, Guatemala, and Honduras—are dealing with escalating homicides and generalized crime committed by drug traffickers, gangs, and other criminal groups. While drug trafficking-related violence in Mexico has captured U.S. policymakers' attention, the even more dire security situations in many Central American countries have received considerably less focus or financial support from the United States. In 2013, the homicide rate per 100,000 people in Mexico stood at 18.9, a rate exceeded by those of El Salvador (39.8), Honduras (84.3), and—according to local sources—Guatemala (39.3) (see Table 1 ). Common crime is also widespread. According to 2014 polling data, nearly a fifth of Salvadorans, Hondurans, Nicaraguans, and Guatemalans had been victims of a crime within the past year (see Figure 2 ). Multiple studies have found that those who have been victims of crime or who perceive that crime is increasing in their countries express less support for the political system and the rule of law than other citizens. In extreme cases, some people—including on- and off-duty police—have carried out vigilante killings of those suspected of committing crimes. Recent killings of suspected gang members in El Salvador appear to be one recent manifestation of that phenomenon. The social fabric in many Central American countries has been tattered by persistent poverty, inequality, and unemployment, with few opportunities available for growing youth populations. With the exceptions of Costa Rica and Panama, the countries of Central America are generally low-income countries with high levels of poverty (see Table 2 ). They are also highly unequal societies with income disparities exacerbated by the social exclusion of ethnic minorities and gender discrimination. The U.N. Office on Drugs and Crime (UNODC) has found that countries with large income disparities have homicide rates that are four times higher than those of more equal societies. Poverty and inequality have been reinforced by the lack of social mobility and persistent unemployment and underemployment in many Central American countries. With limited opportunities at home, many Central Americans have emigrated abroad. The resulting family disintegration has further weakened the social fabric in the region. With the exceptions of Belize and Costa Rica, Central American countries have also had long histories of armed conflicts and/or dictatorships. A legacy of conflict and authoritarian rule has inhibited the development of democratic institutions and respect for the rule of law in many countries. Protracted armed conflicts also resulted in the widespread proliferation of illicit firearms in the region, as well as a cultural tendency to resort to violence as a means of settling disputes. Some former combatants have put the skills they acquired during their countries' armed conflicts to use in the service of criminal groups. In El Salvador, for example, illicit networks that smuggled arms and other supplies to both sides involved in the armed conflict have been converted into transnational criminal networks that smuggle drugs, people, illicit proceeds, weapons, and other stolen goods. In recent years, much has been written about the governance problems that have made many Central American countries susceptible to the influence of drug traffickers and other criminal elements and unable to guarantee citizen security. Many governments do not have operational control over their territories. As an example, the Mexico-Guatemala border is 600 miles long and has only eight formal ports of entry, but as many as 350 informal crossings. This lack of territorial control is partially a result of regional security forces being undermanned and/or ill-equipped to establish an effective presence in remote regions or to challenge well-armed criminal groups. Resource constraints have persisted over time as governments have often been unwilling to increase tax collection. Tax revenue in Central America averaged 17.8% of GDP in 2013, ranging from a low of 13% of GDP in Guatemala to a high of 22% of GDP in Costa Rica. Resource constraints aside, there have also been serious concerns about corruption at all levels of the police, prisons, judicial, and political systems in Central America. This is partially a result of several countries' failures to fully implement post-conflict institutional reforms in the 1990s. Criminal groups' efforts to influence public officials and elections, particularly at the local level, have also contributed to corruption. According to Transparency International's 2014 Corruption Perceptions Index, citizens in nearly every Central American country perceive high levels of public sector corruption . In 2015, Guatemala's Attorney General, with support from the U.N. Commission Against Impunity in Guatemala (CICIG), uncovered massive corruption in the customs and social security systems. Those revelations ultimately led to the resignation of Guatemalan President Otto Pérez Molina as well as other top-level officials. Large-scale corruption scandals have also emerged in Honduras, where several prominent officials have been arrested on corruption charges and President Juan Orlando Hernández is accused of financing his 2013 election campaign with funds embezzled from the country's social security institute. Weak state presence, corruption, and criminal infiltration have contributed to widespread impunity, which has further eroded public confidence in Central American governments. Of all the homicides committed in Honduras between 2010 and 2013, for example, only 4% resulted in convictions. With crime victimization rates on the rise and conviction rates remaining stubbornly low, Central Americans express little confidence in law enforcement and other governmental institutions. Many businesses and wealthy individuals in the region have turned to private security firms to ensure their safety. One study found that the number of authorized private security personnel in Central America exceeds 160,000, with private security agents outnumbering police in every country in the region. Perhaps more alarmingly, non-state actors such as drug trafficking organizations and gangs are increasingly exercising governance in areas where national governments have failed to establish effective state presence. Many different types of criminal actors are taking advantage of the instability and institutional weakness in Central America, as well as the large informal economies in the region, to conduct a wide range of illicit activities. Those activities include, but are not limited to, crimes that impact people's daily lives, such as extortion, robbery, rape, and small-scale drug distribution. They also include transnational criminal activities, such as money laundering, weapons smuggling, drug trafficking, migrant smuggling, and human trafficking. Criminal organizations tend to generate violence when rivals or government security forces challenge their control of territories and illicit markets. Since the mid-1990s, the primary pathway for illegal drugs, including Andean cocaine, entering the United States has been through Mexico. Nevertheless, as recently as 2007, only a small amount of the cocaine that passed through Mexico first transited through Central America. This has changed in recent years, as stepped-up enforcement efforts in Mexico and instability in certain Central American countries have provided incentives for traffickers to use the region as a transshipment point. Traffickers now use overland smuggling, littoral maritime trafficking, and short-distance aerial trafficking through Central America instead of directly transporting cocaine from South America to Mexico (see Figure 3 ). According to the U.S. State Department, about 84% of cocaine trafficked to the United States passes through Central America and Mexico. A large but unknown proportion of opiates, as well as foreign-produced marijuana and methamphetamine, also flow through the same pathways. In September 2015, President Obama identified all seven Central American nations as "major drug transit" countries for the fifth consecutive year. In the past, Mexican and Colombian drug trafficking organizations (DTOs) tended to contract local drug trafficking groups in Central America, sometimes referred to as transportistas , to transport drugs through that region. More recently, drug transshipment activities have increasingly been taken over, often after violent struggles, by Mexican drug traffickers, such as the Sinaloa DTO and the Zetas, and their affiliates. Mexican DTOs have been most active in Guatemala, where they are battling each other and family-based Guatemalan DTOs for control over lucrative drug smuggling routes. Mexican DTOs have paid transportistas and gangs—who sometimes serve as enforcers (or hit men)—in product, which has increased drug consumption in many countries and sparked disputes between local groups over control of domestic drug markets. The DTOs, particularly the Zetas, have also taken control of many migrant smuggling routes originating in Central America, enacting harsh penalties on those who fail to work for them or pay them quotas. In recent years, Central American governments, the media, and analysts have attributed, sometimes erroneously, a significant proportion of violent crime in the region to transnational youth gangs, or maras , many of which have ties to the United States. The major gangs operating in Central America with ties to the United States are the "18 th Street" gang (also known as M-18) and its main rival, the Mara Salvatrucha (MS-13). The 18 th Street gang was formed in the 1960s by Mexican youth in Los Angeles who were not accepted into existing Hispanic gangs. MS-13 was created during the 1980s by Salvadorans in Los Angeles who had fled the country's civil conflict. Both gangs later expanded their operations to Central America. This process accelerated after the United States began deporting illegal immigrants, many with criminal convictions, back to the region after the passage of the Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA) of 1996. Estimates of the overall number of gang members in Central America vary widely. A top State Department official estimated that there were 85,000 MS-13 and 18 th Street gang members in the northern triangle countries (El Salvador, Guatemala, and Honduras) in 2012. UNODC has estimated total MS-13 and M-18 membership in El Salvador, Guatemala, and Honduras at a more modest 54,000. According to UNODC, in 2012 there were roughly 20,000 gang members in El Salvador, 22,000 in Guatemala, and 12,000 in Honduras. El Salvador has the highest concentration of gang members, with 323 for every 100,000 citizens, double the level of Guatemala and Honduras. Nicaragua has a significant number of gang members, but does not have large numbers of MS-13 or M-18 members, perhaps due to the fact that Nicaragua has had a much lower deportation rate from the United States than the "northern triangle" countries. Belize, Costa Rica, and Panama also have local gangs. Central American officials have blamed gangs for a large percentage of homicides committed in recent years, particularly in El Salvador and Honduras. The actual percentage of homicides that can be attributed to gangs in Central America remains controversial, but analysts agree that the gangs have increasingly become involved in extortion; kidnapping; and drug, auto, and weapons smuggling. Gangs have extorted millions of dollars from residents, bus drivers, and businesses in cities throughout the region. Failure to pay often results in harassment or violence. There is some evidence that the MS-13 and M-18 have expanded their geographic presence and the scope of their illicit activities. Certain gang cliques ( clicas ) in El Salvador have established ties with gangs in Los Angeles and Washington, DC. Likewise, regional and U.S. authorities have reported increasing gang involvement in drug trafficking. In Honduras, the 18 th Street gang still generates most of its income from extortion, whereas the MS-13 is now generating more income from local drug dealing. A transactional relationship between DTOs and gangs appears to be present in El Salvador, where the MS-13 works with transportista groups who in turn collaborate with transnational DTOs. Some MS-13 members are reportedly being contracted on an ad hoc basis by Mexican DTOs to carry out revenge killings. Still, UNODC maintains that the term transnational gangs is misleading when used to describe the maras , as their primary focus continues to be on local issues, such as dominating a particular extortion racket or local drug distribution area. Much less information is publicly available about what analysts have termed "other criminal organizations" than about DTOs or gangs operating in the region. Criminal organizations included in this catchall category may be involved in a wide variety of illicit activities, including, but not limited to, arms trafficking, alien smuggling, human trafficking, and money laundering. Some organizations specialize in one type of crime, such as human trafficking, while other enterprises engage in a range of criminal activities. Although most of the income-generating activities of these criminal organizations are illicit, some groups receive revenue through ties to legitimate businesses as well. Some criminal enterprises active in Central America focus only on a certain neighborhood, city, or perhaps region in one country, while others, often referred to as "organized crime," possess the capital, manpower, and networks required to run sophisticated enterprises and to penetrate state institutions at high levels. The more organized criminal groups in Central America include both domestically-based and transnational groups. In Guatemala, for example, much has been written on the ongoing influence and illicit activities of domestic criminal organizations, often referred to as "hidden powers," whose membership includes members of the country's political and economic elite, including current and former politicians and military officials. While the dominant transnational criminal organizations may vary from country to country, some transnational criminal groups appear to be active throughout the region. Confronting the increasing threats posed by both domestic and transnational organizations has become a central concern of governments throughout Central America. Governments in the northern triangle countries have tended to adopt more aggressive approaches than those in the rest of the region, enacting tough anti-gang laws and deploying military forces to help police perform public security functions. In general, such policies have been put in place in reaction to rising violence rather than formulated as part of proactive, forward-looking strategies to strengthen citizen security. They have failed to stave off rising crime rates and have had several negative unintended consequences. Experts have urged Central American governments to adopt more holistic approaches, leading some countries to experiment with alternative policies, such as gang truces, and to place more emphasis on modern policing techniques and crime and violence prevention programs. While national strategies have diverged, Central American governments have continued to pursue closer regional coordination. In the early 2000s, governments in the northern triangle countries adopted mano dura (strong-handed) anti-gang policies in response to popular demands and media pressure for them to "do something" about an escalation in gang-related crime. Mano dura approaches typically involve incarcerating large numbers of youth (often those with visible tattoos) for illicit association and increasing sentences for gang membership and gang-related crimes. While early public reactions to the tough anti-gang reforms enacted in El Salvador and Honduras were extremely positive, the long-term effects of the policies have been largely disappointing. Most youth arrested under mano dura provisions were subsequently released for lack of evidence that they committed any crime. Some youth who were wrongly arrested were recruited into the gang life while in prison. Moreover, studies have shown that, as happened in the United States, gang leaders in Central America have used prisons to increase discipline and cohesion among their ranks. Given the failure of mano dura policies to produce sustainable reductions in violence, some governments have experimented with alternative policies. In Belize and El Salvador, governments supported efforts to broker truces between warring gangs. Those efforts were short-lived, however, as the truce launched in Belize in 2011 broke down in 2012, and the truce negotiated in El Salvador in 2012 unraveled in 2014. (See the text box, "The Salvadoran Gang Truce and Dissolution," below). In recent years, Central American governments have increasingly turned to their militaries to provide public security. While most Central American countries have made significant progress in subordinating military forces to civilian control since the end of dictatorships and armed conflicts in the 1990s, they have made much less progress in defining proper military-police roles and relationships. El Salvador, Guatemala, and Honduras have deployed thousands of troops to help their often underpaid and poorly equipped police forces carry out public security functions, without clearly defining when those deployments might end. In Guatemala, 21,000 troops are deployed to "maintain security" throughout the country. In El Salvador, the government created three new "rapid reaction" military battalions in May 2015; some 7,000 troops were already involved in public security. In Honduras, the government has heavily relied on a 3,000-member military police force, as well as regular military units, to perform law enforcement tasks. This trend has led many observers to raise concerns about the "re-militarization" of Central American societies and to predict an increase in human rights abuses since military personnel are ill-trained to perform police work. Evidence also indicates that military involvement in public security functions has not reduced crime rates significantly. The U.S. government has advised Central American nations to employ "intelligence-led policing" and has called on legislatures in the region to give police and prosecutors new law enforcement tools. The governments of Costa Rica and Panama, for example, are adopting comparative statistics (COMPSTAT) systems, which allow for real-time mapping and analysis of criminal activity. Every country in the region has enacted wiretapping legislation, which assists police and prosecutors in gathering evidence and building successful cases. Central American nations are also in the process of implementing laws that enable governments to fund law enforcement entities with assets seized from criminal organizations. Many security analysts maintain that governments in the region still need to carry out far-reaching institutional reforms to improve the investigative capacity of police and the conviction rates secured by public prosecutors' offices. Improving trust, information-sharing, and coordination between police and prosecutors is an important component of the reform process. Building that trust will require proper recruiting, vetting, and training of police and prosecutors, as well as robust systems of internal and external controls in both institutions to detect and punish corruption. Such reforms have generally not been undertaken, however, because of limited resources and political will to do so. Recognizing the challenging nature of institutional reform, some governments have sought outside assistance. (See the text box, "The International Commission Against Impunity in Guatemala: A Regional Model?" below.) In the past few years, Central American leaders, including those from the northern triangle countries, appear to have moved, at least on a rhetorical level, toward more comprehensive approaches to dealing with gangs and crime. Every country in the region has created institutional bodies to design and coordinate crime prevention strategies and has units within their national police forces engaged in prevention efforts. Some governments, with support from the U.N. Development Program (UNDP) and other donors, have also begun to encourage municipalities to develop crime prevention plans. However, government-sponsored prevention programs have tended, with some exceptions (such as Nicaragua's national youth crime prevention strategy), to be small-scale, ad hoc, and underfunded. Governments have been even less involved in sponsoring rehabilitation programs for individuals seeking to leave gangs, with most reintegration programs funded by church groups or nongovernmental organizations. Central American officials have generally cited budgetary limitations and competing concerns as major factors limiting their abilities to implement more extensive prevention and rehabilitation programs. This may be changing, however, as the government in El Salvador has increased funding for prevention programs and sought international assistance to fund large-scale reinsertion programs to reduce gang violence. The Honduran government has also moved toward a more comprehensive security strategy, dedicating a third of the funds raised from seized assets to crime and violence prevention programs. Experts have long argued that it is important to offer educational and job opportunities to youth who are willing to leave gangs. It is also critical, they argue, for intervention efforts to focus on strengthening families of at-risk youth. Some analysts maintain that the increasing threat posed by transnational organized crime has led to greater security cooperation among Central American countries; others disagree, maintaining that many obstacles to regional efforts remain. While most governments appear to agree on a theoretical level that they need to work together on security issues, they continue to differ as to the biggest threats facing the region and the best ways to combat those threats. The need to cooperate on shared security challenges has also sometimes been overshadowed by unrelated disputes among the countries. Central American leaders and officials have regularly met over the past few years, often accompanied by their U.S. and Mexican counterparts, to discuss ways to better coordinate security efforts and information sharing on gang members and other criminal groups. Most of the regional security meetings have been organized by the Security Commission of the Central American Integration System (SICA). SICA member states began developing a regional security strategy in 2006, which was subsequently revised in 2011 with assistance from the United States and a collection of other international donors known as the Group of Friends of Central America. While the international community pledged roughly $1.1 billion in funding for specific projects and the Central American Security Strategy at a donors' conference in Guatemala City in June 2011, SICA has not demonstrated the institutional capacity necessary to manage projects across the region, and the results of its projects remain unclear. In response to the massive exodus of family units and unaccompanied minors that occurred in 2014, the governments of El Salvador, Guatemala, and Honduras worked with the Inter-American Development Bank (IDB) to draft a plan to address the security and economic problems that are fueling emigration from the region. In September 2014, they proposed the " Plan of the Alliance for Prosperity in the Northern Triangle . " The five-year, $22 billion plan seeks to (1) stimulate the productive sector, (2) develop human capital, (3) improve public safety, and (4) strengthen institutions. The three northern triangle governments intend to fund about 80% of the plan, but are seeking private sector and international donor support to finance the rest. Given the geographic proximity of Central America, the United States has long been concerned about potential security threats from the region and has provided Central American nations with assistance to counter those threats. Central America was a major focus of U.S. policy during the Cold War, but attention to the region waned in the 1990s following the dissolution of the Soviet Union and the end of the region's civil conflicts. U.S.-Central American engagement has increased again over the past decade, as U.S. policymakers have become concerned by rising levels of violence and increasing emigration from the region. The principal component of this renewed engagement, until recently, has been the Central America Regional Security Initiative. During the Cold War, the United States viewed links between the Soviet Union and leftist and nationalist political movements in Central America as a potential threat to U.S. strategic interests. To prevent potential Soviet allies from establishing political or military footholds in the region, the United States heavily supported anti-communist forces, including the Salvadoran government in its battle against the leftist insurgency of the Farabundo Martí National Liberation Front (FMLN), and the contra forces seeking to overthrow the leftist government of the Sandinista National Liberation Front (FSLN) in Nicaragua. Between 1979, when the Sandinistas seized power in Nicaragua, and 1992, when peace accords were signed to end the civil war in El Salvador, U.S. economic and military assistance to Central America averaged over $1.3 billion (inflation-adjusted 2013 dollars) annually. In the aftermath of the Cold War, preventing narcotics from reaching the United States became the primary focus of U.S. security efforts in the Western Hemisphere. In an attempt to reduce the supply of illicit drugs, the bulk of U.S. security assistance in the region was concentrated in Colombia and the other cocaine-producing nations of South America. The United States provided some support for counternarcotics and other security efforts elsewhere in the hemisphere, but the funding levels were comparatively low. Between FY1993 and FY2007, U.S. economic and military assistance to Central America averaged $514 million (inflation-adjusted 2013 dollars) annually, a little over a third of what had been provided in the previous 14 years. The majority of U.S. assistance during that time period was directed toward economic and political development, as the United States sought to encourage the spread of free-market economic policies and the consolidation of democratic governance. Of the security-related assistance that the United States provided to the region following the end of the Cold War, a substantial portion was dedicated to U.S. Agency for International Development (USAID) rule-of-law programs, which provided support for justice sector reforms in several Central American nations. U.S.-Central American security cooperation has increased significantly over the past decade. In March 2007, then-President George W. Bush traveled to Central America and Mexico. Concerns over an increase in narcotics flows and the rapid escalation of crime and violence in the region reportedly dominated the President's conversations with his counterparts, as well as follow-on consultations between U.S., Central American, and Mexican officials. To capitalize on the emergence of a cohesive security dialogue among the seven nations of Central America and the Mexican government's willingness to address the issues of drug trafficking and organized crime, the Bush Administration began to develop the framework for a new regional security partnership. In October 2007, the Bush Administration requested funding for a security assistance package designed to support Mexico and the countries of Central America in their fight against organized crime, to improve communication among the various law enforcement agencies, and to support the institutional reforms necessary to ensure the long-term enforcement of the rule of law and protection of civil and human rights. This security assistance package was originally known as the Mérida Initiative, named after the location in Mexico where President Bush had met with President Calderón. Congress and the Obama Administration re-launched the Central America portion of the Mérida Initiative as the Central America Regional Security Initiative (CARSI) in FY2010. As currently formulated, CARSI provides the seven nations of the isthmus with equipment, training, and technical assistance to support immediate law enforcement operations. It is also designed to strengthen the long-term capacities of Central American governments to address security challenges and the underlying conditions that contribute to them. The five primary goals of CARSI are to 1. create safe streets for the citizens of the region; 2. disrupt the movement of criminals and contraband to, within, and among the nations of Central America; 3. support the development of strong, capable, and accountable Central American governments; 4. establish effective state presence, services, and security in communities at risk; and 5. foster enhanced levels of coordination and cooperation among the nations of the region, other international partners, and donors to combat regional security threats. From FY2008 to FY2015, the U.S. government allocated nearly $1.2 billion to the countries of Central America under what was formerly known as the Mérida Initiative and is now known as CARSI. Nearly 66% of the funds were appropriated under the International Narcotics Control and Law Enforcement (INCLE) foreign aid account, which is managed by the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL). Another 31% of the funds were appropriated under the Economic Support Fund (ESF) account, most of which is managed by USAID. A small portion (3%) of the funding appropriated from FY2008-FY2015 was provided through the Nonproliferation, Anti-Terrorism, De-mining and Related programs (NADR) and Foreign Military Financing (FMF) accounts. The Obama Administration requested $286.5 million for CARSI in FY2016 as part of a broader $1 billion request to implement a new "U.S. Strategy for Engagement in Central America." Although the Consolidated Appropriations Act, 2016 ( H.R. 2029 ) would not fully fund the Administration's request for Central America, it would provide $750 million for the region, including $348.5 million for CARSI (see Table 3 ). The bill would also place a number of conditions on the assistance, requiring the State Department to withhold 75% of the funds 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. According to a 2014 report by the U.S. Government Accountability Office (GAO), a slight majority of the funding Congress appropriated for CARSI between FY2008 and FY2012 was allocated to the northern triangle nations of Central America; 22.5% was allocated to Guatemala, 17.3% was allocated to Honduras, and 16.3% was allocated to El Salvador. In comparison, 10% was allocated to Panama, 6.9% was allocated to Costa Rica, and 3.9% was allocated to both Belize and Nicaragua. Nearly 20% of CARSI funding appropriated in the first five years of the initiative was allocated to regional programs that benefit multiple countries (see Figure 4 ). The State Department has not publicly disclosed how CARSI assistance has been distributed among Central American nations since FY2012, but reports that a majority of the funding has been allocated to the northern triangle nations. A number of U.S. and partner nation agencies are involved in developing, supporting, and implementing CARSI activities. While the vast majority of funding is managed by the Department of State and USAID, other agencies and sub-agencies involved in implementing programs include the Department of Defense (DOD); the Department of the Treasury; the Department of Homeland Security (DHS); Immigration and Customs Enforcement (ICE); Customs and Border Protection (CBP); the Coast Guard; the Department of Justice (DOJ); the Federal Bureau of Investigation (FBI); the Drug Enforcement Administration (DEA); the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and the Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT). CARSI working groups within U.S. embassies include representatives of the relevant agencies present at each post and serve as the formal mechanism for interagency coordination in the field. The U.S.-SICA dialogue serves as the forum for regional coordination, while bilateral coordination varies by country. Of the nearly $1.2 billion appropriated for CARSI between FY2008 and FY2015, $984 million (86%) had been obligated (i.e. agencies had entered into contracts or submitted purchase orders for goods or services) and $457 million (40%) had been expended (i.e., agencies had made payments for goods or services) as of September 30, 2015. A number of challenges have slowed the implementation of CARSI, including delayed enactment of annual appropriations bills, the time-consuming U.S. government procurement process, insufficient staff to administer programs, and legislative withholding requirements that prevent some funds from being released until certain reporting requirements are met. The need to negotiate agreements with seven different countries has also proved challenging, as changes in governments and top-level officials have required U.S. officials to restart negotiations and delay program implementation. Through CARSI, the United States funds a variety of activities designed to support U.S. and Central American security objectives. U.S. agencies provide partner nations with equipment, technical assistance, and training to improve narcotics interdiction and disrupt criminal networks that operate in the region, as well as in the United States. CARSI-funded activities also provide support for Central American law enforcement and justice sector institutions, identifying deficiencies and building their capacities to ensure the safety and security of the citizens of the region. Additionally, CARSI supports prevention efforts that seek to reduce drug demand and provide at-risk youth with educational, vocational, and recreational opportunities. Many of the activities funded by CARSI build on previous security efforts in the region. U.S. officials have repeatedly asserted that CARSI allows the United States to set up pilot programs that demonstrate potentially successful approaches to improving security conditions, but that it is up to Central American nations themselves to sustain and replicate such programs. Some U.S. assistance provided through CARSI provides Central American nations with equipment and related maintenance, technical support, and training to support narcotics interdiction and other law enforcement operations. In addition to the provision and refurbishment of aircraft, boats, and other vehicles, CARSI provides communications; border inspection; and security force equipment such as radios, computers, X-ray cargo scanners, narcotics identification kits, weapons, ballistic vests, and night-vision goggles. Although the types of equipment and training vary according to the capabilities and needs of each Central American nation, in general, the assistance is designed to extend the reach of the region's security forces and enable countries to better control their national territories. For example, an aviation support program provided helicopters to Guatemala to enable security forces to rapidly reach areas of the country that would otherwise be too difficult or dangerous to access and thereby limit sanctuaries for DTOs. U.S. assistance provided through CARSI also supports specialized law enforcement units that are vetted by, and work with, U.S. personnel to investigate and disrupt the operations of transnational gangs and trafficking networks. FBI-led Transnational Anti-Gang (TAG) units, which were first created in El Salvador in 2007, have now expanded into Guatemala and Honduras with CARSI support. In 2013, the Salvadoran TAG unit gathered evidence that led to the arrest and extradition of the first MS-13 member from El Salvador to stand trial in the United States. DEA, ICE, and INL also have vetted unit programs throughout Central America. Among other activities, they conduct complex investigations into money laundering; bulk cash smuggling; and the trafficking of narcotics, firearms, and persons. In Honduras, the U.S. government supports a violent crimes task force that investigates high-profile crimes, such as attacks against journalists and prosecutors. In addition to supporting immediate law enforcement efforts, CARSI provides funding to identify deficiencies and build long-term capacity within law enforcement and justice sector institutions. INL and USAID community-policing programs are designed to build local confidence in police forces by converting them into more community-based, service-oriented organizations. One such program, the Villa Nueva model precinct in Guatemala, is being replicated in other Central American communities with CARSI funding. To improve the investigative capacity of Central American nations, CARSI has supported assessments of forensic laboratories, the establishment of wiretapping centers, and the creation of criminal investigative schools. CARSI funding has also supported the implementation of ATF's Electronic Trace Submission (eTrace) System to track firearms and the expansion of the FBI's Central America Fingerprint Exchange (CAFE), which assists partner nations in developing fingerprint and biometric capabilities. CARSI also seeks to reduce impunity by improving the efficiency and effectiveness of Central American judicial systems. U.S. agencies provide training and technical assistance designed to enhance prosecutorial capabilities, improve the management of courts, and facilitate coordination between justice sector entities. In Honduras, for example, CARSI funding has supported assessments designed to identify weaknesses in justice sector institutions and recommend policy changes. U.S. agencies also provide training and technical assistance to improve prison management, which repeatedly has been identified as a major weakness throughout the region. Beyond providing support for law enforcement and institutional capacity-building efforts, CARSI funds a variety of prevention programs designed to address underlying conditions that leave communities vulnerable to crime and violence. U.S. officials assert that Central American youth often see few alternatives to gangs and other criminal organizations as a result of the social and economic exclusion that stems from dysfunctional families, high levels of unemployment, minimal access to basic services, ineffective government institutions, and insufficient access to educational and economic opportunities. USAID supports prevention programs designed to address these issues by providing educational, recreational, and vocational opportunities for at-risk youth. Although projects vary by country, nearly all are community-based and municipally led as a result of lessons learned through previous efforts in the region. In El Salvador, for example, USAID's Community-Based Crime and Violence Prevention Project works in municipalities to strengthen the capacities of local governments, civil society organizations, community leaders, and youth to address the problems of crime and violence. Prevention councils in each municipality analyze problems within the community and develop prevention plans to address those problems through activities ranging from vocational training to social entrepreneurship projects. Region-wide, CARSI funds have been used to establish more than 120 community outreach centers that provide employment resources and other opportunities for at-risk youth. INL offers additional assistance to at-risk youth through its Gang Resistance Education and Training (GREAT) and Drug Abuse Resistance Education (DARE) programs. There is little information publicly available about the impact of most CARSI programs; however, the programs that have been rigorously evaluated appear to be producing positive results in the communities where they are being implemented. USAID contracted the Latin American Public Opinion Project (LAPOP) at Vanderbilt University to evaluate the impact of the community-based crime and violence prevention programs that USAID is implementing with CARSI funding. The study randomly assigned 127 neighborhoods within municipalities in El Salvador, Guatemala, Honduras, and Panama to either a "treatment" group, which received USAID programming, or a "control" group, which did not, and compared changes in perceptions of security over time. The study found statistically significant evidence that outcomes in the treatment communities improved more (or declined less) than they would have without USAID interventions. Residents of communities where USAID implemented crime and violence prevention programs reported 19% fewer robberies, 51% fewer extortion attempts, and 51% fewer murders than would be expected. Likewise, their perception of neighborhood insecurity was 5% lower and their trust in police was 9% higher than would be expected. Although two-thirds of the funding appropriated though CARSI is managed by the State Department's INL Bureau, there is little information available about the impact of INL programs. INL asserts that it regularly evaluates the impact of its CARSI-funded programs, but it has not publically released the metrics used to assess their performance. For example, INL asserts that communities targeted by its community policing programs show reduced homicide rates, including more than 60% reductions in Lourdes and Santa Ana, El Salvador. It is unclear over what time period those reductions occurred or how representative they are of municipalities receiving INL support. Outside assessments suggest that other INL-backed programs, such as vetted units, have produced relatively mixed results. INL asserts that it has augmented its monitoring efforts in the past year by hiring an experienced monitoring and evaluation contractor and funding an independent study of citizen perceptions of security, justice, and corruption in all seven Central American countries to help measure the impact of INL programs. Despite indications of progress in certain communities, most country-level security indicators have yet to show significant improvements. While some Central American countries have experienced declining homicide rates in recent years (see Table 1 ), others, such as El Salvador, have experienced a significant escalation in violence. The number of Salvadorans, Guatemalans, and Hondurans seeking asylum in the United States has increased 410% from about 8,000 in 2010 to more than 41,000 in 2014, suggesting that security conditions have deteriorated for many citizens of the northern triangle. Moreover, polling data indicate that most Central Americans have yet to experience the benefits of U.S.-backed efforts to strengthen institutions since they continue to express low levels of confidence in their police forces and justice systems. Although more than seven years have passed since Congress first appropriated funding for CARSI, Central America continues to face significant security challenges. As Congress continues to oversee the implementation of CARSI and considers additional funding for the initiative, there are a number of issues it might opt to examine. These include the strategy and funding levels necessary to achieve U.S. objectives in Central America, how best to promote and protect human rights, and how U.S. domestic policies impact security conditions in the region. Over the past year, Congress has been reexamining the strategy and funding levels necessary to achieve U.S. objectives in Central America. As previously noted, the U.S. government has set forth five broad goals for CARSI: (1) create safe streets for the citizens of the region; (2) disrupt the movement of criminals and contraband to, within, and among the nations of Central America; (3) support the development of strong, capable, and accountable Central American governments; (4) establish effective state presence, services, and security in communities at risk; and (5) foster enhanced levels of coordination and cooperation among the nations of the region, other international partners, and donors to combat regional security threats. While many analysts have welcomed these ambitious goals, they have noted that the U.S. government has not put forward a comprehensive strategy, including priorities and measurable benchmarks, for achieving them. Critics contend that without a strategy, CARSI is effectively a collection of individual security assistance programs that focus on issues ranging from citizen safety to drug trafficking to human smuggling. They maintain that many programs are stove-piped, with each agency implementing its own activities and pursuing its own objectives. As a result, U.S. agencies may occasionally work at cross purposes. For example, as USAID and INL have been working with Central American governments to strengthen justice-sector institutions by removing corrupt officials, some U.S. law enforcement agencies reportedly have been willing to overlook corruption in order to protect assets or preserve certain programs. Inter-agency coordination appears to be improving, however, as USAID and INL recently adopted a "place-based strategy" that integrates prevention efforts and law enforcement interventions in the most-at risk communities. U.S. officials have acknowledged that CARSI, as it is currently formulated and funded, is not capable of substantially altering the security situation in Central America. According to Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson, "Over the past five years of implementing our Central America Regional Security Initiative, we've learned a great deal about what works and what doesn't work on security in Central America.... What we learned most of all was that unless we focus on improving the ability of governments to deliver services efficiently and accountably, and improve economic opportunities, especially for young people, as integral parts of security, nothing we do to make things safer will be sustainable." Accordingly, the Administration drafted a new "U.S. Strategy for Engagement in Central America," that includes a series of initiatives designed to promote prosperity, enhance security, and improve governance in the region. The Administration requested $1 billion of assistance, including $286.5 million for CARSI, to implement the new strategy in FY2016. Although some Members of Congress have embraced the new strategy, others argue that security should remain the primary focus of U.S. efforts in Central America. As noted above, the Consolidated Appropriations Act, 2016 ( H.R. 2029 ) would provide $750 million to implement the U.S. Strategy for Engagement in Central America, including $348.5 million for CARSI. While the bill would not fully fund all aspects of the Administration's request, it would significantly increase the amount of assistance available to address socioeconomic and governance concerns. The bill would also require the State Department to develop a multi-year spending plan that includes objectives, indicators to measure progress, and a timeline for implementation of the new strategy. Congress supported increased security cooperation with Central America in the FY2016 National Defense Authorization Act ( P.L. 114-92 ). The legislation calls on the U.S. Department of Defense to increase its efforts to prevent illicit trafficking into the United States, build partner capacity, support inter-agency activities that address instability, and promote respect for human rights in the region. It also provides $30 million above the FY2016 request for U.S. Southern Command operations in Central America. There is considerable agreement among analysts and U.S. policymakers that even if the U.S. government significantly scales up its assistance for Central America, improvements in security conditions will ultimately depend on Central American nations carrying out substantial internal reforms. While many analysts are skeptical that leaders in the region are committed to structural changes, especially in light of recent corruption scandals, governments in the region have begun to enact some significant reforms. Without continued progress on these issues, CARSI and other U.S. initiatives in Central America could meet the same end as previous U.S.-backed programs in the region, which simply faded away once U.S. assistance declined. As noted previously, the Consolidated Appropriations Act, 2016 ( H.R. 2029 ) would require the State Department to withhold 75% of the funds 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. It also would require the Secretary of State to review periodically the progress of each of the Central American governments in addressing those concerns and suspend assistance if progress has been insufficient. Members of Congress have expressed concerns about how alleged human rights abuses committed by military and police forces in some Central American countries are investigated and punished, the transparency of judicial systems in the region, and whether security forces accused of committing past abuses are being held accountable for their actions. Like all countries, Central American nations are subject to legal provisions (Section 620M of the Foreign Assistance Act of 1961, as amended, and a recurring provision in the annual DOD appropriations bill) that require the State Department and DOD to vet assistance for foreign security forces and prohibit funding for any unit if there is credible evidence that it has committed "a gross violation of human rights." From FY2008 to FY2011, appropriations legislation that provided funding for Mérida Initiative and CARSI programs contained additional human rights conditions on security aid to the region. Specifically, P.L. 110-252 , P.L. 111-8 , P.L. 111-117 , and P.L. 112-10 required that 15% of INCLE and FMF assistance be withheld until the Secretary of State reported in writing that the governments of Central America were taking action in three areas: (1) establishing police complaints commissions with authority and independence to receive complaints and carry out effective investigations; (2) implementing reforms to improve the capacity and ensure the independence of the judiciary; and (3) investigating and prosecuting members of the federal police and military forces who have been credibly alleged to have committed violations of human rights. Congress did not include the 15% withholding requirement in the appropriations legislation ( P.L. 112-74 ) that provided funding for CARSI in FY2012 and did not restore the provision in FY2013, FY2014, or FY2015. Congress has placed separate human rights conditions on assistance to security forces in Honduras since FY2012 (see the Appendix ). As noted previously, the Consolidated Appropriations Act, 2016 ( H.R. 2029 ) would prevent the obligation of 75% of assistance for the central governments of El Salvador, Guatemala, and Honduras until the Secretary of State certifies that the governments of those countries are taking effective steps to address a variety of concerns. Among other actions, the northern triangle governments must implement reforms, policies, and programs to improve transparency and strengthen public institutions, including increasing the capacity and independence of the judiciary and the Office of the Attorney General; investigate and prosecute in the civilian justice system members of military and police forces who are credibly alleged to have violated human rights, and ensure that the military and police are cooperating in such cases; cooperate with commissions against impunity, as appropriate, and with regional human rights entities; and protect the right of political opposition parties, journalists, trade unionists, human rights defenders, and other civil society activists to operate without interference. The bill also would require the Secretary of State to periodically review the progress of each government and suspend assistance if it is insufficient. Human rights organizations have generally lauded the inclusion of human rights conditions on assistance to Central American nations. The State Department's annual report on human rights practices notes that security forces in several Central American countries continue to be implicated in human rights violations, including extrajudicial killings, and that many of the alleged abuses are never properly investigated. Given continued reports of abuses and potential criminal infiltration of security forces, some analysts argue that U.S. assistance could prove counterproductive unless the recipients are thoroughly vetted and assistance programs are properly sequenced. A recent study of U.S. counternarcotics assistance to Latin America from 1984 to 2005, for example, found that such aid was positively associated with increased human rights violations. U.S. officials have privately and publicly complained about restrictions placed on assistance to the region. When combined with the delays in enacting appropriations legislation for each of the past several fiscal years, consultations with congressional appropriators related to human rights conditions have contributed to significant delays in funds being released and have slowed program implementation. U.S. officials also maintain that legislative restrictions hinder security cooperation by limiting the ability of the United States to fully engage with partners in the region. While some officials acknowledge that aid restrictions give them leverage with partner governments in pursuing improvements in human rights practices, they argue that such restrictions should be tied to objective criteria rather than subjective assessments. An innovative component of the Mérida Initiative, as it was originally conceived, was the principle of "shared responsibility," or the idea that all countries involved in the initiative—the United States, Mexico, and the seven nations of Central America—would take steps to tackle domestic problems contributing to crime and violence in the region. The Mexican and Central American governments committed to address corruption and reform their law enforcement and judicial institutions. For its part, the U.S. government pledged to address drug demand, money laundering, and weapons smuggling. While President Obama and other Administration officials have reiterated the importance of "shared responsibility" on a number of occasions, Mexican and Central American officials have periodically challenged the U.S. government's commitment to matching words with deeds. When debating future support for CARSI, Congress may consider the extent to which the U.S. government needs to modify aspects of its domestic policies in order to fulfill its pledges to its partners in Mexico and Central America and achieve its objectives in the region. In November 2015, the Administration released the 2015 National Drug Control Strategy, which continued to emphasize the need to reduce U.S. drug demand. Although cocaine consumption in the United States steadily declined from 2007 to 2012, the number of cocaine users has remained relatively stable in recent years and the number of heroin users appears to have increased significantly. The Administration's FY2016 drug control budget request included $1.4 billion for prevention activities, a 6% increase over the FY2015 funding level, and $11 billion for treatment programs, a 7% increase over the FY2015 level. Nevertheless, supply reduction activities such as domestic law enforcement, interdiction, and international programs accounted for 55% of the funding request. While drug policy experts have praised the Administration's focus on reducing consumption, some argue that it should further shift the balance of drug control efforts toward treatment and other demand reduction programs. In the past few years, U.S. Customs and Border Patrol (CBP) and U.S. Immigration and Customs Enforcement (ICE) have worked together to increase operations against bulk cash smuggling and other forms of money laundering. CBP has increased southbound inspections of vehicles and trains for bulk cash flowing into Mexico and Central America. In December 2009, ICE opened a bulk cash smuggling detection center to assist U.S. federal, state, and local law enforcement agencies in tracking and disrupting illicit funding flows. Despite these efforts, the vast majority of illicit monetary transfers and shipments continue to flow southward undetected. The Department of Justice and its Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) have made efforts to staunch the flow of illegal guns from the United States to Mexico and Central America. They have stepped up enforcement of domestic gun control laws and have sought to improve coordination with law enforcement bodies in the region. The ATF maintains a foreign attaché in Mexico City and a Regional Firearms Advisor in El Salvador to support firearms-related investigations throughout the region. For example, the ATF trains Central American law enforcement officers how to use the eTrace program, through which investigators are sometimes able to determine the origin and commercial trail of seized firearms, identify gun trafficking trends, and develop investigative leads. In 2014, almost 8,200 guns were seized in Central America and submitted to the ATF for tracing, nearly 3,300 of which originated in the United States. The ATF notes that the firearms submitted for tracing do not constitute a random sample and may not be representative of firearms used in the region. Analysts have identified a variety of ways U.S. policymakers could reduce arms trafficking to Central America, ranging from executive actions to tighten certain regulations to ratifying the Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials (CIFTA, Treaty Doc. 105-49 ). CIFTA was signed by the United States in 1997 and submitted to the Senate for its advice and consent in 1998; the Senate has never acted on the treaty. Others note that military and police stockpiles in El Salvador, Guatemala, and Honduras are the largest sources of illegal firearms in the region. They argue that while concerns about international arms trafficking are legitimate, Central American governments need to exercise better oversight over government stockpiles, improve record keeping, destroy excess arms, and prosecute corrupt officials that illegally sell and traffic weapons. In addition to the issues mentioned above, policymakers in Central America have consistently expressed concerns that increasing U.S. removals ("deportations") of individuals with criminal records are exacerbating the gang and security problems in the region. Analysts do not necessarily agree. Many argue that while deportations in the 1990s appear to have contributed to the spread of gang violence in Central America, recent deportations have had a minimal effect on security conditions in the region. The Central American countries of Guatemala, Honduras, and El Salvador have received the highest numbers of U.S. deportees (after Mexico) for the past several fiscal years. In FY2014, ICE removed 54,423 Guatemalans, 40,695 Hondurans, and 27,180 Salvadorans. About 33% of Guatemalans, 45% of Hondurans, and 45% of Salvadorans deported in FY2013 (the most recent year for which data are available) had prior criminal convictions. For a number of years, Central American officials have asked the U.S. government to consider providing a complete criminal history for each deportee who has been removed on criminal grounds, including whether he or she is a member of a gang. DHS has used some CARSI funding to develop the Criminal History Information Sharing (CHIS) initiative, which allows the U.S. government to provide Salvadoran, Guatemalan, and Honduran law enforcement officials with relevant criminal history records of deportees before they are removed from the United States. El Salvador and Honduras also receive detailed information on gang members through another CARSI-funded initiative known as the Criminal History Information Program (CHIP). The seven nations of Central America face significant security challenges. Well-financed and heavily armed criminal threats, fragile political and judicial systems, and persistent social hardships such as poverty and unemployment contribute to widespread insecurity. From FY2008 to FY2015, Congress appropriated nearly $1.2 billion under what is now known as the Central America Regional Security Initiative (CARSI) to support security efforts in the region. While some CARSI programs have contributed to improved security conditions in certain communities, there is little information available about other CARSI-funded efforts. Country-level security indicators remain poor in several Central American nations, and the Obama Administration now asserts that a broader U.S. effort, including substantially more resources, will be necessary to improve conditions in the region. As Congress evaluates budget priorities and debates the form of assistance to Central America, it might take into consideration the opinion of many analysts that improving security conditions in the region will be a difficult, multifaceted endeavor. Central American leaders will need to address long-standing issues such as incomplete institutional reforms, precarious tax bases, and the lack of opportunities for young people. International donors will need to provide extensive support over an extended period of time. And all of the stakeholders involved will need to better coordinate their efforts to support comprehensive long-term strategies that strengthen institutions and address the root causes of citizen insecurity. Absent such efforts, conditions are likely to remain poor in several Central American countries, contributing to periodic instability that—as demonstrated by the increasing number of migrants, asylum seekers, and refugees from the region arriving at the U.S. border—is likely to affect the United States. FY2008 Appropriations When announcing the Mérida Initiative, the Bush Administration originally requested $50 million for the countries of Central America. All of the funds were requested in the INCLE account and were designated to be used for public security and law enforcement programs. Members of Congress, some of whom expressed considerable disappointment that they were not consulted as the plan was being formulated, dedicated additional funds to Central America and broadened the focus of the initiative. Through the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ), Congress appropriated $60 million for Central America and divided the funds among the INCLE, ESF, NADR, and FMF accounts. Congress allotted $25 million in ESF funds for the creation of an Economic and Social Development Fund for Central America, $20 million of which was to be administered by USAID and $5 million of which was to be administered by the State Department to support educational and cultural exchange programs. Congress also allotted $1 million to support the International Commission Against Impunity in Guatemala. The act required the State Department to withhold 15% of the INCLE and FMF assistance appropriated for the countries of Central America until the Secretary of State could report that the Central American governments were taking steps to improve respect for human rights, such as creating police complaints commissions, reforming their judiciaries, and investigating and prosecuting military and police forces that had been credibly alleged to have committed human rights violations. FY2009 Appropriations In the FY2009 Omnibus Appropriations Act ( P.L. 111-8 ), Congress provided $105 million in funding for Central America. It required that at least $35 million of the funds appropriated for the region be used to support judicial reform, institution building, anti-corruption, and rule-of-law activities. The explanatory statement to the act directed that $70 million of the funds for the region be provided through the INCLE account, that $15 million of the FMF funds support maritime security programs, and that $12 million in ESF aid support USAID's Economic and Social Development Fund for Central America. The FY2009 funds were subject to the same human rights conditions as the funds provided through the FY2008 supplemental. FY2010 Appropriations In the FY2010 Consolidated Appropriations Act ( P.L. 111-117 ), Congress appropriated "up to" $83 million for the countries of Central America "to combat drug trafficking and related violence and organized crime, and for judicial reform, institution building, anti-corruption, rule of law activities, and maritime security." After consultations with Congress, the State Department allocated an additional $12 million in ESF from funds appropriated to its Western Hemisphere Regional account to crime and violence prevention programs administered by USAID. The State Department later reprogrammed an additional $76 million in INCLE funding to the region, bringing total FY2010 CARSI funding to $171 million. The conference report to the act ( H.Rept. 111-366 ) split Central America funding from the Mérida Initiative and placed it under a new Central America Regional Security Initiative (CARSI). The Obama Administration embraced the change as a way to focus more attention on the situation in Central America and U.S. efforts in the region. In addition to subjecting CARSI funds to the same human rights conditions as previous years, the conference report to the act directed the Secretary of State to submit a report within 90 days of enactment detailing regional threats or problems to be addressed in the region, as well as realistic goals for U.S. efforts and actions planned to achieve them. FY2011 Appropriations After a series of continuing resolutions, the FY2011 Department of Defense and Full-Year Continuing Appropriations Act ( P.L. 112-10 ) was signed into law on April 15, 2011. The legislation had no accompanying report and did not designate a funding level for CARSI. It did, however, direct the Obama Administration to report back to Congress within 30 days on its proposed allocations of the appropriated funds. After consultations with Congress, the Department of State allocated $101.5 million for CARSI in FY2011. The funds were subject to the same human rights conditions as previous years. FY2012 Appropriations President Obama signed the Consolidated Appropriations Act of 2012 ( P.L. 112-74 ) into law on December 23, 2011. Although the legislation did not designate a funding level for CARSI, the accompanying report ( H.Rept. 112-331 ) noted the conferees' support for the Obama Administration's budget request, which was $100 million. The report also directed the Secretary of State to submit a spending plan for CARSI noting "activities that were conducted with prior year appropriations, achievements associated with the expenditure of such funds, and activities that will be funded in fiscal year 2012, including goals to be met." The State Department submitted the FY2012 CARSI spending plan to Congress in June 2012. According to the spending plan, CARSI funding for FY2012 was increased to $135 million. Neither the legislation nor the accompanying report included the human rights provisions from previous years that required the Department of State to withhold a portion of CARSI funding until certain conditions were met. The legislation did include a new Honduras-specific provision, however, that required the Department of State to withhold 20% of the funds for Honduran military and police forces until the Secretary of State could report that the Honduran government was (1) implementing policies to protect freedom of expression and association, and due process of law; and (2) investigating and prosecuting military and police personnel who are credibly alleged to have violated human rights. The provision did not apply to assistance intended to promote transparency, anti-corruption, and the rule of law within the military and police forces. FY2013 Appropriations After enacting a six-month continuing resolution ( P.L. 112-175 ) in September 2012, Congress approved the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ) on March 21, 2013. Signed into law by the President on March 26, 2013, the act provided funding for federal programs through the end of FY2013. The act did not include a specific funding level for CARSI. Nor did it include any restrictions on CARSI aid. However, it did maintain the human rights conditions on security assistance for Honduras that were enacted in FY2012. After consulting with Congress, the State Department allocated $145.6 million for CARSI in FY2013. The State Department later reprogrammed an additional $600,000 in INCLE funding to the region, increasing total FY2013 CARSI funding to $146.2 million. FY2014 Appropriations After an appropriations lapse that resulted in a 16-day U.S. government shutdown and two short-term continuing resolutions ( P.L. 113-46 and P.L. 113-73 ), the President signed into law the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) on January 17, 2014. The joint explanatory statement accompanying the act stipulated that $61.5 million in ESF aid and $100 million in INCLE assistance should be provided through CARSI in FY2014. The act did not include broad restrictions on CARSI aid. It did, however, alter the restrictions on security aid to Honduras (originally enacted in FY2012) by increasing the withholding requirement from 20% to 35%, increasing the number of human rights conditions that need to be certified by the State Department, and slightly broadening the exception so that the withholding requirement does not apply to border security funding. FY2015 Appropriations President Obama signed into law the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) on December 16, 2014. The explanatory statement accompanying the act stipulated that $100 million in ESF aid and $160 million in INCLE assistance should be provided through CARSI in FY2015. After consultations with Congress, the State Department increased INCLE funding for CARSI to $170 million. The act maintained restrictions on security aid to Honduras (originally enacted in FY2012), but reduced the withholding requirement from 35% to 25% and broadened the exception so that the withholding requirement does not apply to programs related to maritime security or human trafficking. The explanatory statement directed the Administration to use CARSI funding to implement a "strategy to address the key factors in the countries in Central America contributing to the migration of unaccompanied, undocumented minors to the United States." It stipulated that ESF-funded programs should "improve prosperity in the region by focusing on education, vocational training, and employment opportunities, and should seek to strengthen families, including by reducing child abuse and neglect and facilitating foster care and adoption." It also stipulated that INCLE funding should support "enhanced border security initiatives, anti-trafficking and anti-gang programs, and counternarcotics and law enforcement activities."

Central America faces significant security challenges. Criminal threats, fragile political and judicial systems, and social hardships such as poverty and unemployment contribute to widespread insecurity in the region. Consequently, improving security conditions in these countries is a difficult, multifaceted endeavor. Since U.S. drug demand contributes to regional security challenges and the consequences of citizen insecurity in Central America are potentially far-reaching—as demonstrated by the increasing number of migrants, asylum seekers, and refugees arriving at the U.S. border—the United States is collaborating with countries in the region to implement and refine security efforts. Criminal Threats Well-financed drug trafficking organizations, gangs, smugglers, and other criminal groups are threating citizen security and the rule of law in Central America. The isthmus has become a major transshipment point for illicit drugs as counternarcotics efforts in Colombia and Mexico have disrupted other trafficking routes to the United States. At the same time, clashes between street gangs have paralyzed cities and intensified violence. Several Central American countries now have homicide rates that are among the highest in the world. The resulting desperation has created opportunities for smugglers and traffickers to prey on Central Americans attempting to travel, or to send their children, to the United States. Social and Political Factors Throughout Central America, underlying social conditions and structural weaknesses in governance inhibit efforts to improve security. Persistent poverty, inequality, and unemployment leave large portions of the population susceptible to crime. Given the limited opportunities other than emigration available to the expanding youth populations in Central America, young people are particularly vulnerable. The failure to fully implement post-conflict institutional reforms that were initiated in several countries in the 1990s has left police, prisons, and judicial systems weak and susceptible to corruption. Recent scandals that have led to the resignations of the president of Guatemala and senior officials in Honduras demonstrate the extent to which criminality has infiltrated state institutions. Central American Security Policies Central American governments have attempted to improve security conditions in a variety of ways. The Honduran government has taken a hardline approach to crime, deploying military forces to carry out policing functions. The Salvadoran government is pursuing similar policies after the truce it brokered between criminal gangs broke down. The Guatemalan government has also embraced a larger role for the military in public security while simultaneously working with the U.N.-backed International Commission Against Impunity in Guatemala (CICIG) to strengthen its investigative and prosecutorial capacities and root out corruption. Other Central American governments have emphasized modern policing strategies and prevention activities, such as programs that focus on strengthening families of at-risk youth. Recognizing the transnational nature of the threats they face, Central American governments have also sought to improve regional security cooperation. U.S. Assistance Since FY2008, the U.S. government has supported security efforts in Central America through the Central America Regional Security Initiative (CARSI). The initiative provides the seven nations of the isthmus with equipment, training, and technical assistance to support immediate law enforcement operations. CARSI is also designed to strengthen the long-term capacities of Central American governments to address security challenges and the underlying social and political factors that contribute to them. Since FY2008, Congress has appropriated nearly $1.2 billion for Central America through CARSI. As of the end of FY2015, $457 million of the funds allocated to CARSI had been expended. The Obama Administration requested $286.5 million for CARSI in FY2016 as part of a broader $1 billion request to support a new "U.S. Strategy for Engagement in Central America." Although the Consolidated Appropriations Act, 2016 (H.R. 2029) would not fully fund the Administration's request for Central America, it would provide $750 million for the region, including $348.5 million for CARSI. The bill would also place a number of conditions on the assistance, requiring governments in the region to take steps to improve border security, combat corruption, increase revenues, and address human rights concerns, among other actions.

Enactment of the Unfunded Mandates Reform Act of 1995 (UMRA) culminated years of effort by nonfederal government officials and their advocates to control, if not eliminate, the federal imposition of unfunded mandates. Supporters contend that the statute is needed to forestall federal legislation and regulations that impose questionable or unnecessary burdens and have resulted in high costs and inefficiencies. Opponents argue that mandates may be necessary to achieve results in areas in which voluntary action may be insufficient or state actions have not achieved intended goals. Since the mid-1980s, Congress debated legislation to slow or prohibit the enactment of unfunded federal mandates. The inclusion of the issue in the Contract with America, the blueprint of legislative action developed by the House Republican leadership when it gained the majority, practically guaranteed that action would be taken. UMRA was signed into law early in the 104 th Congress, on March 22, 1995. Under UMRA, federal mandates include provisions of law or regulation that impose enforceable duties, including taxes. They also include provisions that reduce or eliminate federal financial assistance available for carrying out an existing duty. UMRA distinguishes between "intergovernmental mandates," imposed on state, local, or tribal governments, and "private sector mandates." Intergovernmental mandates include legislation or regulations that would (1) reduce certain federal services to state, local, and tribal governments (such as border control or reimbursement for services to illegal aliens); and (2) tighten conditions of assistance or reduce federal funding for existing intergovernmental assistance programs with entitlement authority of $500 million or more. Exclusions and exemptions outside the reach of the statute are discussed later in this report. Under UMRA, an intergovernmental mandate is considered unfunded unless the legislation authorizing the mandate meets its costs by either (1) providing new budget authority (direct spending authority or entitlement authority) or (2) authorizing appropriations. If appropriations are authorized, the mandate is considered unfunded unless the legislation ensures that in any fiscal year (1) the actual costs of the mandate will not exceed the appropriations actually provided; (2) the terms of the mandate will be revised so that it can be carried out with the funds appropriated; (3) the mandate will be abolished; or (4) Congress will enact new legislation to continue the mandate as an unfunded mandate. The act consists of five prefatory sections and four titles. The prefatory sections address matters such as the purpose, short title, and exclusions from coverage of the act. Title I amends the Congressional Budget and Impoundment Control Act, as amended, to permit Congress to (1) identify legislation proposing mandates, and (2) decline to consider legislation proposing unfunded intergovernmental mandates. Title I also sets forth thresholds for action, authorizations, and definitions. Title II requires that federal agencies assess the financial impact of proposed rules on nonfederal entities, determine whether federal resources exist to pay those costs, solicit and consider input from affected entities, and generally select the least costly or burdensome regulatory option. Title III called for a review of federal mandates to be completed within 18 months of enactment. This statutory requirement was not completed. UMRA assigned the study to the Advisory Commission on Intergovernmental Relations (ACIR), which no longer exists. The ACIR completed a preliminary report in January, 1996, but the final report was not released. Title IV authorizes judicial review of federal agency compliance with Title II provisions. The remainder of this report summarizes the requirements set forth in Titles I, II, and IV of the act. Referred to as "Legislative Accountability and Reform," Title I establishes requirements for committees and the Congressional Budget Office (CBO) to study and report on the magnitude and impact of mandates in proposed legislation. Title I also creates point-of-order procedures through which these requirements can be enforced and the consideration of measures containing unfunded intergovernmental mandates can be blocked. Under UMRA, congressional committees have the initial responsibility to identify federal mandates in measures under consideration. Committees may have CBO study whether proposed legislation could have a significant budgetary impact on nonfederal governments, or a financial or employment impact on the private sector. Also, committee chairs and ranking minority members may have CBO study any legislation containing a federal mandate. When an authorizing committee orders reported a public bill or joint resolution containing a federal mandate, it must provide the measure to CBO. CBO must report to the committee an estimate of mandate costs. The office must prepare full quantitative estimates if costs are estimated to exceed $59 million (for intergovernmental mandates) or $117 million (for private sector mandates) in any of the first five fiscal years the legislation would be in effect. Below these thresholds, CBO must prepare brief statements of cost estimates. For each reported measure with costs over the thresholds, CBO is to submit to the committee an estimate of the direct costs of federal mandates contained in it, or in any necessary implementing regulations; and the amount of new or existing federal funding the legislation authorizes to pay these costs. If reported legislation authorizes appropriations to meet the estimated costs of an intergovernmental mandate, the CBO report must include a statement on the new budget authority needed, for up to 10 years, to meet these costs. For a measure that reauthorizes or amends an existing statute, the direct costs of any mandate it contains are to be measured by the projected increase over those costs required by existing law. The calculation of increased costs must include any projected decrease in existing federal aid that provides assistance to nonfederal entities. The committee is to include the CBO estimate in its report or publish it in the Congressional Record . The committee's report on the measure must also identify the direct costs to the entities that must carry out the mandate; assess likely costs and benefits; describe how the mandate affects the "competitive balance" between the public and private sectors; and state the extent to which the legislation would preempt state, local, or tribal law, and explain the effect of any preemption. These requirements apply to all proposed mandates, both intergovernmental and private sector. For intergovernmental mandates alone, the committee is to describe in its report the extent to which the legislation authorizes federal funding for the direct costs, and details on whether and how funding is to be provided. UMRA establishes that when any measure is taken up for consideration in either house, a point of order may be raised that the measure contains unfunded intergovernmental mandates exceeding the $59 million threshold. This point of order applies to the measure as reported, including, for example, a committee amendment in the nature of a substitute. The point of order may also be raised if CBO reported that no reasonable estimate of the cost of intergovernmental mandates was feasible. A point of order also may be raised against consideration of a measure reported from committee if the committee has not published a CBO estimate of mandate costs. This point of order applies to both intergovernmental and private sector mandates. In the Senate, either point of order may be waived by majority vote. Otherwise, if the chair sustains the point of order, the measure may not be considered. In ruling on these points of order, the chair is to consult with the Committee on Governmental Affairs on whether the measure contains intergovernmental mandates. Also, the unfunded costs of the mandate are to be determined based on estimates by the Committee on the Budget (which may draw for this purpose on the CBO estimate). For the House, UMRA provides that if either point of order is raised, the chair does not rule on it. Instead, the House votes on whether to consider the measure despite the point of order. To prevent dilatory use of the point of order, the chair need not put the question of consideration to a vote unless the Member making the point of order meets the "threshold burden" of identifying specific language that is claimed to contain the unfunded mandate. Also, if several points of order could be raised against the same measure, House practices under UMRA afford means for all to be consolidated in a single vote on consideration. Finally, if the Committee on Rules proposes a special rule for considering the measure that waives the point of order, UMRA subjects the special rule itself to a point of order, which is disposed of by the same mechanism. These procedures are intended to insure that the House, like the Senate, will always have an opportunity to determine, by vote, whether to consider a measure that may contain an unfunded mandate. Also, if the House votes to consider a measure in spite of the point of order, UMRA protects the ability of Members to offer amendments in the Committee of the Whole to strike out unfunded intergovernmental mandates, unless the special rule specifically prohibits such amendments. A point of order under the UMRA mechanism may be raised not only against initial consideration of a bill or resolution, but also against consideration of an amendment, conference report, or motion (e.g., a motion to recommit with instructions or a motion to concur in an amendment of the other house with an amendment) that would cause the unfunded costs of intergovernmental mandates in a measure to exceed the specified threshold. UMRA does not require amendments or motions to be accompanied by CBO mandate cost estimates, but a Senator may request CBO to estimate the costs of mandates in an amendment he or she prepares. If an amended bill or resolution or a conference report contains a new mandate or other new increases in mandate costs, the conferees are to request a supplemental estimate, which CBO is to attempt to provide. UMRA requires no publication of these supplemental estimates. The UMRA points of order are not applicable against consideration of appropriations bills. However, if an appropriation bill contains legislative provisions that would create unfunded intergovernmental mandates in excess of the threshold, the UMRA point of order may be raised against the provisions themselves. In the Senate, if this point of order is sustained, the provisions are stricken from the bill. Legislation pertinent to the following subject matters remains exempt from the UMRA point-of-order procedures: individual constitutional rights, discrimination prohibitions, auditing compliance, emergency assistance requested by nonfederal government officials, national security or treaty obligations, emergencies as designated by the President and the Congress, and Social Security. The provisions of Title I pertinent to federal agencies (for example, the requirement that agencies determine whether sufficient appropriations exist to provide for proposed costs) do not apply to federal regulatory agencies. Also, provisions establishing conditions of federal assistance or duties stemming from participation in voluntary federal programs are not mandates. Title II requires that federal agencies prepare written statements that identify costs and benefits of a federal mandate to be imposed through the rulemaking process. The requirement applies to regulatory actions determined to result in costs of $117 million or more in any one year (2003 figure, as adjusted for inflation). The written assessments to be prepared by federal agencies must identify the law authorizing the rule, anticipated costs and benefits, the share of costs to be borne by the federal government, and the disproportionate costs on individual regions or components of the private sector. Assessments must also include estimates of the effect on the national economy, descriptions of consultations with nonfederal government officials, and a summary of the evaluation of comments and concerns obtained throughout the promulgation process. Impacts of "any regulatory requirements" on small governments must be identified; notice must be given to those governments; and technical assistance must be provided. Also, UMRA requires that federal agencies consider "a reasonable number" of policy options and select the most cost-effective or least burdensome alternative. The requirements in Title II pertaining to the preparation of a mandate assessment statement and notification of impact on small governments remain subject to judicial review. A federal court may compel a federal agency to comply with these requirements, but such a court order cannot be used to stay or invalidate the rule.

This summary of the Unfunded Mandates Reform Act (UMRA) of 1995 will assist Members of Congress and staff seeking succinct information on the statute. The term "unfunded mandates" generally refers to requirements that a unit of government imposes without providing funds to pay for costs of compliance. UMRA establishes mechanisms to limit federal imposition of unfunded mandates on other levels of government (intergovernmental mandates) and on the private sector. The act establishes points of order against proposed legislation containing an unfunded intergovernmental mandate, requires executive agencies to seek comment on regulations that would constitute a mandate, and establishes a means for judicial enforcement. This report will be updated if the act is amended.

O ne of the more controversial tax laws enacted in recent years is the Foreign Account Tax Compliance Act (FATCA). FATCA is intended to curb U.S. tax evasion occurring through the use of offshore accounts. While the law was enacted in 2010 with a 2013 effective date, the IRS delayed FATCA's implementation for several years in order to give entities time to comply. The law is now fully in effect. Key among FATCA's provisions is the requirement that foreign financial institutions (FFIs) report information on their U.S. account holders to the Internal Revenue Service (IRS). In order to implement this requirement, the United States has entered into bilateral agreements with numerous countries. Under some of these agreements, FFIs report the information to their home country, which then provides the information to the IRS. For those FFIs that are not covered by such an agreement, FATCA generally requires they report the information directly to the IRS. This report provides an overview of the FFI reporting requirements and examines the role of the intergovernmental agreements (IGAs) in implementing them. The report then discusses the confidentiality protections provided to the information reported by FFIs and litigation in which plaintiffs have raised concerns about privacy and the use of IGAs. It ends with a summary of FATCA legislation introduced in the 114 th Congress. For further discussion of FATCA, as well as the related requirements known as Foreign Bank Account Reporting (FBAR), see CRS Report R43444, Reporting Foreign Financial Assets Under Titles 26 and 31: FATCA and FBAR . FATCA generally requires that FFIs enter into agreements with the IRS under which the FFIs agree to report information about their U.S. account holders and comply with other requirements. The financial institutions subject to these requirements include foreign banks, investment funds, hedge funds, private equity funds, broker-dealers, and certain types of insurance companies. The requirements apply to the depository and custodial accounts maintained by the FFI, as well as equity and debt interests in the FFI (except publicly traded interests). FFIs that fail to comply will have tax withheld at a rate of 30% on many payments made to them from U.S. sources, including interest and dividends. The withholding provision's relatively high rate and broad reach is significant because, as one commentator has explained, "[f]rom a practical perspective and due to the importance of U.S. banks to the global financial community, most foreign banks must comply or they may be effectively prevented from conducting business in many circumstances." The reporting and withholding requirements are summarized in Table 1 . The United States has entered into bilateral intergovernmental agreements (IGAs) with numerous countries in order to implement the above FFI reporting requirements. In general, an FFI that is resident in, or organized under the laws of, a country that has entered into an IGA will be deemed to comply with FATCA's requirements so long as the terms of the agreement are met. This section examines the IGAs. Since FATCA's passage, there has been criticism of the FFI provisions and their application to entities outside the United States, generally focused on whether the United States was correct to take FATCA's unilateral approach. Questions have arisen about whether FATCA's requirements are inconsistent with existing U.S. treaty obligations; how to handle potential conflict of law issues arising when an FFI is faced with complying with FATCA or its home country's domestic (e.g., banking and privacy) laws; and whether the United States has intruded into other countries' sovereignty. These concerns, and the extent to which they may influence international views of FATCA, could be particularly important because it has been argued that FATCA's successful implementation will likely require the assistance of other countries. In order to address these concerns, the Treasury Department and IRS developed the IGAs to provide other countries with a role in implementing the FFI reporting requirements. The Treasury Department and IRS have developed two model IGAs, which are used as the basis for all the IGAs currently in effect. The main differences between the two models are summarized in Table 2 . A list of the countries with IGAs in effect and whether they use a Model 1 or Model 2 agreement is found in the Appendix . There are different versions of each model to account for whether the United States has an existing income tax treaty or tax information exchange agreement (TIEA) with the other country. In cases in which there is an existing tax treaty or TIEA, the model IGA generally uses the treaty or TIEA as the authority for the IGA's requirements and links its practices and procedures to those developed under the treaty or TIEA. If there is no existing treaty or TIEA, then the agreement creates its own practices and procedures based on FATCA's reporting requirements. Additionally, there are different versions of Model 1, depending on whether the agreement calls for the reciprocal exchange of information between the United States and the other country. Model 2 has no reciprocal exchange provision. As of August 1, 2016, there are 63 IGAs that are in force. Additionally, the Treasury Department and the IRS treat certain countries as having an IGA in effect even though the country has not taken all the necessary steps to actually bring the agreement into force. Such a country will be treated as having an IGA in effect if (1) it has signed an IGA and is taking steps to bring it into force within a reasonable time; or (2) it reached an agreement in substance with the United States on the terms of an IGA prior to November 30, 2014, and it continues to demonstrate intent to sign the IGA as soon as possible. Table 3 lists all the countries that the Treasury Department and IRS recognize as having an IGA in effect—either because the IGA is actually in force or because the country is treated as such under the above circumstances. (The Appendix provides more information about each of these countries, including the dates on which IGAs went into force, if applicable.) In July 2016, the IRS made a significant announcement regarding the treatment of those countries without an IGA actually in force: such countries will stop being treated as having an IGA in effect in 2017 unless they comply with certain requirements by December 31, 2016. Specifically, if any country in the final two columns of Table 3 wants to continue to be treated as having an IGA in effect, it must provide the Treasury Department with a detailed explanation of why it has not yet brought the IGA into force and a step-by-step plan for doing so. The Treasury Department will then decide whether it is appropriate to continue to treat the country as having an IGA in effect, considering the explanation and plan, as well as the country's prior conduct. If the agency determines that such treatment is not appropriate, then any affected FFI in that country will have at least 60 days to enter into the IRS agreement that is required in order to comply with FATCA (discussed above in Table 1 ) or be subject to withholding. In those cases in which the Treasury Department decides it is appropriate to continue to treat the country as having an IGA in effect, the agency will monitor the country's progress toward bringing the IGA into force and will reconsider the country's treatment if it fails to comply with the step-by-step plan. Some have expressed concerns about the privacy of the information that FFIs are required to collect and report under FATCA. This section discusses the confidentiality protections contained in FATCA and the IGAs. FATCA expressly provides confidentiality protections to the information obtained or used in connection with the FFI reporting requirements. Specifically, no person may inspect or use any information obtained under the FFI reporting provisions for any purpose other than complying with the FATCA requirements or for purposes permitted under IRC Section 6103 (which allows the disclosure of taxpayer information collected by the IRS in certain circumstances, such as sharing it with law enforcement). If a person knowingly or negligently violates these confidentiality protections, the individual or entity whose information was inspected or used may bring a suit for civil damages against such person in U.S. district court. The law provides for damages in an amount equal to the greater of (1) $1,000 per unlawful act or (2) the plaintiff's actual damages plus, if available, punitive damages. The defendant may also be liable for court costs and attorney's fees. Any such suit must be brought within two years of the plaintiff discovering the unlawful activity. With respect to the confidentiality provisions contained in the IGAs, there are two basic frameworks. If the United States and the country in question have an existing income tax treaty or tax information exchange agreement (TIEA) in place, then the IGA refers to the confidentiality protections in that treaty or TIEA and may further address such protections. For example, one model IGA provides: All information exchanged shall be subject to the confidentiality and other protections provided for in the [Treaty/TIEA], including the provisions limiting the use of the information exchanged. Following entry into force of this Agreement, each Competent Authority shall provide written notification to the other Competent Authority when it is satisfied that the jurisdiction of the other Competent Authority has in place (i) appropriate safeguards to ensure that the information received pursuant to this Agreement shall remain confidential and be used solely for tax purposes, and (ii) the infrastructure for an effective exchange relationship…. When there is no existing treaty or TIEA, the IGAs provide express confidentiality protections. For example, one of the model IGAs to be used when there is no treaty or TIEA provides that: The [FATCA Partner] Competent Authority shall treat any information received from the United States pursuant to Article 5 of this Agreement as confidential and shall only disclose such information as may be necessary to carry out its obligations under this Agreement. Such information may be disclosed in connection with court proceedings related to the performance of the obligations of [FATCA Partner] under this Agreement. Information provided to the U.S. Competent Authority pursuant to … this Agreement shall be treated as confidential and may be disclosed only to persons or authorities (including courts and administrative bodies) of the Government of the United States concerned with the assessment, collection, or administration of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, U.S. federal taxes, or the oversight of such functions. Such persons or authorities shall use such information only for such purposes. Such persons may disclose the information in public court proceedings or in judicial decisions. The information may not be disclosed to any other person, entity, authority, or jurisdiction. Notwithstanding the foregoing, where [FATCA Partner] provides prior, written consent, the information may be used for purposes permitted under the provisions of a mutual legal assistance treaty in force between the Parties that allows for the exchange of tax information. U.S. law, meanwhile, expressly requires that tax treaty information be kept confidential unless such disclosure is permitted under the treaty's terms. Protected information includes information exchanged under the treaty, applications for relief under the treaty, and documents relating to the treaty's implementation. There are limited exceptions in which disclosure is permissible, such as providing information to law enforcement regarding terrorist activities. If information is impermissibly disclosed, the individual disclosing it is subject to a penalty of up to $5,000 and imprisonment for up to five years. Additionally, the person whose information was disclosed may sue for damages under the same authority discussed above. While some argue that the use of IGAs may have positive outcomes, including reduced compliance costs for foreign entities and avoidance of international conflict of law issues, others have taken issue with them. Concerns about IGAs are illustrated in two lawsuits—one in the United States and one in Canada. These are discussed below. The case in the United States is Crawford v. De partment of the Treasury . It was brought in 2015 by several U.S. citizens living abroad and Senator Rand Paul, who argue that IGAs are unconstitutional, among other claims. The plaintiffs characterize IGAs as sole executive agreements (in contrast to treaties submitted to the Senate for its advice and consent) that are only permissible if they "fall within the President's independent constitutional authority to make international agreements." As such, the plaintiffs argue that the President is without such authority here because IGAs deal with tax issues and thus fall within the taxing power reserved to Congress under the Constitution. The plaintiffs further argue that IGAs are unconstitutional because they override the statutory provisions passed by Congress in FATCA. Their argument is that FATCA and IGAs are incompatible because (1) FATCA requires FFIs to report directly to the IRS, while IGAs allow FFIs to report to their home government; and (2) FATCA requires FFIs to get a waiver of local privacy laws from account holders, which IGAs circumvent by having foreign governments collect the information. In April 2016, a U.S. district court in Ohio dismissed the case after determining that the plaintiffs lacked standing. Standing is required by Article III of the U.S. Constitution, which provides that federal courts may only decide actual cases or controversies. The Supreme Court has interpreted this provision to mean that, in order to bring suit in federal court, a plaintiff must establish that (1) he or she suffered an injury; (2) there is a causal connection between the injury and the defendant's action; and (3) it is likely the injury will be redressed by a favorable court decision. The court in Crawford ruled that none of the plaintiffs had met all three requirements. For example, the court determined that injuries based on privacy concerns were insufficient because the reporting requirements were not "an invasion of a legally protected interest," and that none of the plaintiffs had alleged a concrete, non-hypothetical injury because none had actually been subject to the 30% withholding or any other penalty. Plaintiffs have appealed the decision to the U.S. Court of Appeals for the Sixth Circuit, and that court has not yet issued a decision. If a court were to rule in the plaintiffs' favor on the merits of the IGA issue, such a ruling would likely affect the way in which FATCA is administered but might not change the law itself. FATCA's reporting and enforcement provisions are not legally dependent on the use of IGAs, and these provisions would appear to still have legal force even if IGAs were found to be unconstitutional. Thus, FFIs and other entities would still be subject to FATCA, but would no longer be able to report information to their home country under the IGA or take advantage of other provisions in the IGAs. Possible implications for Congress of a ruling that IGAs are outside the President's authority could include passing legislation to authorize these types of agreements; potentially reexamining FATCA, particularly in light of compliance issues that might arise without the use of IGAs; or taking no action and letting the law continue without IGAs. If Congress chose not to make any legislative changes, possible options for the Treasury Department and IRS, should they conclude that IGAs are a useful tool, might include implementing the agreements through the regular treaty process, which would require the Senate's approval. The litigation in Canada concerns the validity of that country's FATCA IGA. In the case, Hill is v. Attorney General of Canada , dual U.S.-Canadian citizens have raised two arguments against the Canadian legislation implementing the IGA: (1) the information exchange authorized by the IGA is inconsistent with the U.S.-Canada income tax treaty and Canadian tax law; and (2) it runs afoul of Canada's constitution. In September 2015, the Federal Court of Canada held that there was no legal impediment to implementation of the IGA under the income tax treaty or Canadian tax law, and allowed the first exchange of information under the IGA. The court permitted the plaintiffs to continue to assert their constitutional claim, but the status of such claim is unclear. If the court were to hold that the IGA is invalid under Canada's constitution, this would not appear to change FATCA's underlying requirements. That is, banks and other financial entities in Canada would still be subject to FATCA reporting requirements, which might then lead to potential conflict of law questions. One possible outcome of such a ruling might be for the United States and Canada to attempt to find a mechanism that would be consistent with both countries' laws (e.g., amending the existing income tax treaty, which would require U.S. Senate approval). Another possible consequence of such a ruling is that it might encourage U.S. expatriates living in other countries to challenge those countries' IGAs, particularly since many have similar bilateral income tax treaties with the United States. Several bills have been introduced in the 114 th Congress that would amend or otherwise address FATCA. First, S. 663 , whose stated purpose is "[t]o repeal the violation of sovereign nations' laws and privacy matters," would repeal many of FATCA's provisions, including the FFI reporting and withholding requirements. The Stop Tax Haven Abuse Act ( H.R. 297 and S. 174 ) includes a provision with the stated purpose of "strengthening" FATCA. Among other things, the bill provision would expand the reporting requirement for passive foreign investment companies; expand the definition of "financial account" to include transaction accounts; expressly include entities engaged in investing in derivatives and swaps in the definition of "financial institution"; and include beneficial owners within the definition of "substantial U.S. owner." The provision would also make it easier for information to be disclosed in certain circumstances. Finally, the Commission on Americans Living Abroad Act ( H.R. 3078 ) would establish a commission to study how federal laws and policies, including FATCA, affect U.S. citizens living in foreign countries. The countries that have IGAs in effect—either because the IGA is actually in force or because the country is treated as such—are listed in Table A-1 . As discussed above, Treasury and the IRS treat certain countries as having an IGA in effect even though the country has not taken all the steps necessary to actually bring the agreement into force under two circumstances: (1) it has signed an IGA and is taking steps to bring it into force within a reasonable time; or (2) it has reached an agreement in substance with the United States on the terms of an IGA prior to November 30, 2014, and it continues to demonstrate intent to sign the IGA as soon as possible. In addition to providing such status information for each country, Table A-1 also notes whether each country uses a Model 1 or Model 2 IGA and provides relevant dates.

Enacted in 2010, the Foreign Account Tax Compliance Act (FATCA) is intended to curb U.S. tax evasion occurring through the use of offshore accounts. Key among its provisions is the requirement that foreign financial institutions (FFIs), such as foreign banks and hedge funds, report information on their U.S. account holders to the Internal Revenue Service (IRS). FFIs that fail to comply will have tax withheld at a rate of 30% on many payments made to them from U.S. sources, including interest and dividends. Since FATCA's passage, there has been international criticism of the FFI provisions, generally focused on whether the United States was correct to take FATCA's unilateral approach. Questions have arisen about whether FATCA's requirements are inconsistent with existing U.S. treaty obligations; how to handle potential conflict of law issues arising when an FFI is faced with complying with FATCA or its home country's domestic (e.g., banking and privacy) laws; and whether the United States has intruded into other countries' sovereignty. Recognizing that these concerns could affect the success of FATCA, the United States has entered into bilateral intergovernmental agreements (IGAs) with numerous countries in order to implement the FFI requirements. Under some of these agreements, FFIs report information on their U.S. account holders to their home country, which then provides the information to the IRS. In general, for those FFIs that are not covered by such an agreement, FATCA requires that they report the information directly to the IRS. As of August 1, 2016, there are 63 IGAs that are currently in force. Additionally, the United States treats certain countries as having an IGA in effect even though the country has not taken all the steps necessary to actually bring the agreement into force. In July 2016, the IRS made a significant announcement regarding these countries: they will stop being treated as having an IGA in effect in 2017 unless they comply with certain requirements by December 31, 2016. Among other things, the country must explain why the IGA is not yet in force and provide a step-by-step timeline for doing so. The Treasury Department and the IRS will then decide whether it is appropriate to continue to treat the country as having an IGA in effect. Some praise the FFI reporting requirements as an effective tool to combat tax evasion and argue that using the IGAs leads to positive outcomes, including reduced compliance costs for FFIs and avoidance of international conflict of law issues. Others, meanwhile, have expressed concerns about the privacy of information reported by FFIs and the appropriateness of the IGAs. These concerns are illustrated in an ongoing lawsuit, Crawford v. Department of the Treasury, in which the plaintiffs argue that the executive branch does not have the power to enter into IGAs and that the FFI reporting requirements violate the Fourth Amendment's protections against unreasonable search and seizures by requiring FFIs to report information about U.S. account holders without any judicial oversight. In April 2016, a U.S. district court in Ohio dismissed the case after determining that the plaintiffs lacked standing. The plaintiffs have appealed the decision to the U.S. Court of Appeals for the Sixth Circuit, which has not yet issued a decision. Finally, legislation has been introduced in the 114th Congress that would repeal much of FATCA (S. 663); modify FATCA with the intent of "strengthening" it (Stop Tax Haven Abuse Act, H.R. 297 and S. 174); or require that its effects on U.S. citizens living overseas be studied (Commission on Americans Living Abroad Act, H.R. 3078).

Established in 1971 at the request of the SEC, the Nasdaq stock market is an all-electronic trading facility, which, unlike traditional exchanges like the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX), has no trading floors and facilitates the trading of over-the-counter (OTC) stocks through a network of market makers connected by telephone and computer. Nasdaq stock market was originally a wholly-owned for-profit subsidiary of the nonprofit NASD, which also served as its direct regulator or self-regulatory organization (SRO). In the mid-1990s, NASD's integrity as a self regulator was called into question when Nasdaq market makers were accused of manipulating stock prices. After a federal investigation, the NASD Regulation (NASDR) was established in 1996 as an independent subsidiary of the NASD. The main purpose was to separate the regulation of the broker/dealer profession from the operation of the Nasdaq. The NASDR became the primary regulator of broker-dealers and of the Nasdaq. All broker-dealers who are registered with the SEC, except those doing business exclusively on a securities exchange, are required to join the NASD. The NASDR's regulatory budget is derived solely from fees and fines imposed on NASD member firms. When it began, Nasdaq was regarded as a technological innovator because it did not rely on a physical trading floor. But over the last decade, both Nasdaq and traditional exchanges have faced growing competition from two principal sources: First, global stock markets that compete with U.S. markets for multinational corporate listings have grown dramatically. Second, continuous technological change has led to automated, computer-matching, trading platforms called electronic communication networks (ECNs). Indeed, Nasdaq has developed its own ECN, the SuperMontage and has acquired another one, Brut. To help themselves remain competitive, the world's major stock markets are reexamining their governance and capital structures with an eye toward changes that would enable them to react more deftly to the rapidly changing securities marketplace. Conversion from privately-held (mutual) status to shareholder-owned status known as demutualization, has become an increasingly attractive strategic response to the changing market dynamics. Many international and domestic stock exchanges have demutualized over the last decade or so, including the London, Tokyo, Philadelphia, and the New York Stock Exchange (in early 2006 after merging with Archipelago, the electronic communication trading network). Key reasons for demutulization have included that (1) it enables exchanges to more immediately raise capital and provide better regular access to capital markets; (2) it makes exchanges better able to align their interests with those of their key participants; and (3) it provides exchanges with greater flexibility and speed in adapting to changing market conditions. In the summer of 1999, the Nasdaq announced its intent to demutualize. This change raised a number of policy concerns that largely involved demutualized stock markets' ability to effectively discharge their SRO duties. Among the key questions raised by the prospect of demutulization were (1) Is there a cause for concern when a for-profit, shareholder-owned SRO regulates entities like broker-dealers who in turn have ownership stakes in competitive rivals such as electronic communication networks? and (2) Would the altered economics of being a for-profit, shareholder-owned exchange affect an exchange's ability to effectively regulate itself? After announcing its interest in pursuing demutualization, the NYSE cited other pressing concerns and put the process on hold. In April 2000, however, the NASD membership approved spinning off the for-profit Nasdaq from the non-profit NASD and converting it into a shareholder-owned market. The process was initially envisioned to have three broad stages: (1) issuing privately placed stock; (2) converting to technical exchange status; and (3) issuing public stock. The private placement took place in two sub-stages. In the initial sub-stage, the private placement, which was completed in June 2000, the NASD sold shares and issued warrants on shares of Nasdaq that it owned, and Nasdaq also issued and sold additional shares. The NASD's ownership interest in Nasdaq was reduced from 100% to 60%. The second sub-phase of the private placement was completed on January 18, 2001, with NASD's ownership interest then falling to 40% or about 77 million Nasdaq shares. The NASD, however retained 51% of the actual voting interest in Nasdaq. On February 21, 2002, Nasdaq acquired 13.5 million shares held by the NASD. On March 8, 2001, Nasdaq acquired 20.3 million shares from the NASD, leaving 43.2 million shares still owned by the NASD in the form of underlying warrants that had been issued during Nasdaq's private placements. Concurrently, a new series of preferred voting stock was issued to the NASD, allowing it to continue to have majority voting interest in Nasdaq. The second stage, conversion to exchange status, was a requirement for the third stage—sale of Nasdaq shares to the public. Although from a practical standpoint it has little significance, Nasdaq currently is exempt from the definition of an "exchange" under Rule 3a1-1 of the Securities and Exchange Act of 1934 because it is operated by the NASD. Before the NASD could relinquish control of it, Nasdaq was required to register as a national securities exchange. With approval of Nasdaq's exchange application, the preferred shares that provide the NASD with its majority vote interest over Nasdaq will expire and it will no longer have effective control over Nasdaq. The exchange's ultimate goal has been to conduct an initial public offering (IPO). On March 15, 2001, Nasdaq submitted an initial application for exchange status to the SEC, an application that the agency published for comment on June 14, 2001. It later made several amendments to the application in late 2001 and early 2002. After the initial application, the foremost regulatory concern for the SEC and a number of securities market participants was that, as written, the application would have continued to allow Nasdaq to operate without a trade execution protocol known as intra-market price and time priority, which is required of exchanges. This protocol is described below. Nasdaq processes limit orders, orders to buy or sell a stock when it hits a specified price. The NYSE centrally posts limit orders, which permits better-priced orders to receive priority execution there or on the various other interlinked market centers that trade NYSE-listed stocks. This is known as price and time priority and all exchanges abide by it. (Both the Nasdaq and the NYSE are markets in which brokers are required to exercise their duty of best execution when they route their customer's orders. The concept is inexplicit but is often interpreted to means that an order should be sent to the market center providing the best prevailing price.) But a significant fraction of Nasdaq market makers match buyer and seller orders from their own order books. Known as internalization, this can result in well priced limit orders outside of a market maker's book being ignored. Nasdaq officials have argued that their market permits competing dealers to add liquidity to the markets by interacting with their own order flow but SEC officials have concerns about the formal absence of price priority. This was a major sticking point in the agency's delay in approving the exchange application, concerns that Nasdaq attempted to address through subsequent amendments to its exchange application. On January 13, 2006, the SEC approved Nasdaq's application to become a registered national securities exchange. As a registered exchange, Nasdaq will become a self-regulatory organization (SRO) with ultimate responsibilty for its own and its members compliance with the federal securities laws. Several years ago, Nasdaq entered into a Regulatory Services Agreement with the NASD to perform certain key regulatory functions for it, an arrangement that should continue. Nasdaq is now officially a registered an exchange, but the SEC will not permit Nasdaq to begin operations as an exchange and to fully relinquish its independence from ongoing control by the NASD until various conditions, including the following key ones, are satisfied: Nasdaq must join the various national market system plans and the Intermarket Surveillance Group; The NASD must determine that its control of Nasdaq through its Preferred Class D share is no longer necessary because NASD can fulfill through other means its obligations with respect to non-Nasdaq exchange-listed securities under the Exchange Act; The SEC must declare certain regulatory plans to be filed by Nasdaq to be effective; and Nasdaq must file, and the Commission must approve, an agreement pursuant to Section 17d-2 of the Securities Exchange Act of 1934 that allocates to NASD regulatory responsibility with respect to certain activities of common members. Nasdaq's exchange application limits the exchange to transactions in the Nasdaq Market Center, previously known as SuperMontage and Brut, which will adhere to rules on intramarket priorities. However, orders that are internalized by NASD broker dealers that may not adhere to intra-market priority rules would be reported through the new Trade Reporting Facility (TRF), which must go through a separate regulatory review process and which will be administered by the NASD. Nasdaq will receive revenues from TRF trades (a contentious point for a number of its rivals).

Traditionally, the Nasdaq stock market was a for-profit, but wholly-owned subsidiary of the nonprofit National Association of Securities Dealers, Inc. (NASD), the largest self-regulatory organization (SRO) for the securities industry. In 2000, in a strategic response to an increasingly competitive securities trading market, the NASD membership approved spinning off the for-profit NASD-owned Nasdaq and converting it into a for-profit shareholder-owned market that later planned to issue publicly traded stock. For Nasdaq, this process has involved three basic stages: (1) issuing privately placed stock; (2) converting to technical exchange status; and (3) issuing publicly-held stock. Stage one, the private placement stage has been completed. In March 2001, Nasdaq submitted an application for exchange status to the Securities and Exchange Commission (SEC), an application that has been amended several times to address certain criticisms. Obtaining exchange status is necessary for Nasdaq to proceed to stage three, the issuance of publicly held stock. Realization of that stage became much closer on January 13, 2006, when after more than a half decade, the SEC approved Nasdaq's application to become a registered national securities exchange.

Shortly after President Bush took office in January 2001, the Administration declared itsintent to undertake a full review of U.S. policy towards North Korea, distancing itself from theClinton engagement policy that culminated in Madeleine Albright's October 2000 visit to Pyongyangfor talks to curtail North Korea's missile program. (2) The reformulated policy, announced in June 2001, outlined afurther lifting of U.S. sanctions (3) , increased assistance to North Korea, and "other political steps" ifthe North agreed to 1) start to take serious, verifiable steps to reduce the conventional weapons threatto the South, 2) undertake "improved implementation" of the 1994 Agreed Framework, and 3) allowverifiable "constraints" on North Korea's missile exports. Formal negotiations between Washingtonand Pyongyang did not occur, however, during 2001. Following the 9/11 attacks, Bush linked NorthKorea to the war on terrorism by including it in the "axis of evil" along with Iraq and Iran in hisJanuary 2002 State of the Union address. The Administration insisted, however, that its stated policyof resuming a dialogue with the North Koreans "any time, any place," remained in effect. Scheduled bilateral talks were postponed in summer 2002 due to a naval skirmish betweenthe North and South Koreans; during this delay, U.S. intelligence, building on evidence dating backto 1998, reportedly indicated that the North Koreans were secretly developing a highly enricheduranium program. Prospects for successful talks were derailed when Assistant Secretary of StateJames Kelly reportedly presented the North Koreans with evidence of the program during a visit toPyongyang in October 2002. North Korea reportedly confirmed the allegations. The BushAdministration maintained that the suspected uranium program constituted a breach of Pyongyang'sinternational obligations under the 1994 Agreed Framework and the Nuclear Non-proliferationTreaty (NPT). With this confrontation, already uneasy relations abruptly shifted to a more hostilestance. After the confrontation became public, the Agreed Framework quickly unraveled. At U.S.urging, KEDO's executive board decided to halt the heavy fuel oil shipments in November 2002. This prompted a series of angry and consequential responses from the North Koreans: shrilldenouncements of the U.S. failure to live up to its obligations under the agreement, the removal ofIAEA monitors from the Yongbyon plant, the expelling of IAEA inspectors from the country, theremoval of fuel rods from the storage pond, and withdrawal from the Nuclear Non-ProliferationTreaty (NPT). The Bush Administration maintained that a serious flaw of the Clinton approach during theAgreed Framework talks in the 1990's was the willingness to engage Pyongyang in direct bilateralrelations, instead of relying on a more multilateral process to pressure the North into compliance. As the 1994 agreement faltered, the Administration stood by its conviction that the previousarrangement rewarded North Korea for bad behavior and failed to engage regional powers,particularly China, in enforcement. Pyongyang, meanwhile, insisted that direct talks withWashington were the only way to reach a resolution. Together with the Chinese, the Administrationset the stage for a multilateral forum to address the North Korean nuclear issue. In April 2003, around of three-party talks was held in Beijing among the United States, North Korea (also knownas the Democratic People's Republic of Korea, or the D.P.R.K.), and China (also known as thePeople's Republic of China, or the P.R.C.). In the month that followed, President Bush met withSouth Korean President Roh Moo-hyun and Japanese Prime Minister Junichiro Koizumi, pledgingto include both countries in future talks. North Korea rejected the arrangement. At the ASEANRegional Forum (ARF) in mid-June, China also called for Japan and South Korea (also known asthe Republic of Korea, or the R.O.K.) to "join the efforts," and Pyongyang relented. Four monthsafter the three-party talks, the first round of six party talks convened in Beijing, also including formerNorth Korean patron Russia. Central to the Administration's initiative of multilateral talks was the involvement of China,the North's last major ally. China earlier had been reluctant to engage in multilateral efforts to dealwith North Korea and did not play a direct role in the 1994 Agreed Framework. Because China isthought to be North Korea's top trading partner and source of aid, Beijing's cooperation wasconsidered crucial to any attempts by the international community to put economic pressure on thePyongyang regime. President Bush cultivated Chinese cooperation by addressing the nuclear issuewhen Chinese President Jiang Zemin visited Crawford, Texas in October 2002, and later callingJiang directly to request his help in resolving the escalating crisis. On both occasions, Jiang statedChina's commitment to a non-nuclear Korean peninsula. China's new activism in diplomacycontinued under Jiang's successor Hu Jintao, who officially assumed the presidency in March 2003. Chinese leadership pushed firmly for the formation of the six-party talks and, according to reports,shut down an oil pipeline to North Korea for three days early in 2003, demonstrating its resolve toPyongyang. Beijing also reportedly gave the North Koreans substantial amounts of money, oil, andfood in exchange for attendance at the six-party meetings. Beijing reportedly fears the profoundly destabilizing effects of either a robust nuclear-armedNorth Korea, which could set off an arms race in the region, or the collapse of the regime, whichcould send thousands of refugees over the border into China. China has struggled to deal with tensof thousands of North Koreans who are believed to be living in and traveling to and from China.Some observers have noted the limitation of depending on China, which prioritizes stability on theKorean peninsula above all, while some members of the Bush Administration reportedly favorregime change in Pyongyang. Three rounds of talks -- in August 2003, February 2004, and June 2004 -- failed to achievesignificant breakthroughs. Analysts blamed a number of factors for the stalemate: most significantly,intransigence by Pyongyang and inflexibility by Washington. Semantics also stalled meaningfuldebate, as negotiators disagreed over the meaning of phrases such as the U.S.-demanded "complete,verifiable, and irreversible dismantlement"(which became known by its acronym CVID) of NorthKorea's weapons program and "simultaneous" or "reciprocal" actions. The formation of workinggroups during the second round of talks was also criticized as slowing the process by detractingattention from the higher-level plenary sessions. Many observers faulted the perceived struggle within the Administration for severely limitinglead U.S. negotiator Kelly's freedom to work out compromises. The United States did not putforward a detailed negotiating proposal until June 2004, despite requests from Chinese, Japanese,and South Korean leaders. According to reports, an influential coalition in the Administrationconsisted of the offices of the Secretary of Defense and the Vice President, and non-proliferationspecialists in the State Department and the National Security Council. This group reportedly opposeddirect negotiations with and concessions to North Korea, favored the issuance of demands forunilateral North Korean concessions on military issues, and advocated an overall U.S. strategy ofisolating North Korea diplomatically and economically. Officials within this group expressed hopeand/or expectations of a collapse of the North Korean regime. A second faction, mainly in the StateDepartment and NSC, was composed of officials with experience on East Asian and Korean issues. This faction believed that the Administration should attempt negotiations before adopting morecoercive measures in order to build coalitions among the other parties, and they reportedly doubtedthe effectiveness of a strategy to bring about a North Korean collapse. (4) Despite regular denunciations of the talks, North Korea set forward a series ofvaguely-worded proposals. Prior to the second round of talks, North Korea indicated that it may bewilling to end its nuclear program if the United States issued a non-aggression pact or securityguarantee. President Bush indicated in a statement in October 2003 that he would support a multilateral security guarantee. (5) A separate plan advanced by the North Koreans in December 2003included a "freeze"of its weapons program in exchange for a list of U.S. concessions, includinglifting economic sanctions and energy assistance. The United States rejected this proposal, insistingon a complete dismantlement of North Korea's nuclear programs before entering into othernegotiations. The U.S. eventually countered with a proposal at the June 2004 talks, which wasloosely modeled on Libya's decision to abandon its nuclear weapons program in December 2003:a freeze of North Korea's weapons' program, followed by a series of measures to ensure completedismantlement, and, eventually, a permanent security guarantee and discussions on a return tonormal relations. In the interim, Japan and South Korea would provide heavy oil. The proposalclosely resembled one presented by South Korea earlier in the talks. After some mixed reactions,the North Koreans ultimately rejected the offer. A major obstacle to the negotiations was NorthKorea's suspected uranium enrichment program: North Korean envoys refused to acknowledge itsexistence, while the United States insisted that its verified dismantlement be a prerequisite for furtherprogress. Many analysts used a "1-3-2" formulation to describe the dynamics of the six- party talks:North Korea on its own; South Korea, Russia, and China favoring a more conciliatory approach ofoffering incentives to North Korea and more emphasis on a nuclear freeze instead of dismantlement;and Japan and the United States preferring a mix of dialogue and pressure on Pyongyang. After thefirst two rounds of talks failed to produce breakthroughs, indications of frustration with the U.S.approach appeared among the other parties. In June 2004, China's deputy prime minister assertedthat the U.S. had not convinced Beijing that North Korea was pursuing a uranium program, asuggestion echoed by officials in South Korea. (6) At the G-8 summit in Sea Island the same month, Prime MinisterKoizumi urged President Bush to open up a productive dialogue with North Korea, stressing KimJong-il's readiness to find a resolution. Some speculated that this pressure led to the U.S. proposalat the June 2004 talks. China and Russia also reportedly voiced some support for allowing NorthKorea to use nuclear technology for "peaceful" civilian purposes, while the United States insistedthat all nuclear programs should be dismantled. Following the June meeting, the talks came to astandstill in the run-up to the U.S. presidential election. In October 2004, during a trip to Asia bySecretary of State Colin Powell, both Chinese and South Korean officials criticized the U.S. position,calling for a more "realistic" and "flexible" approach to resolving the problem, without noting NorthKorea's rejection of the June U.S. proposal. (7) As the talks failed to achieve any breakthroughs, North Korea is believed to have movedahead with its nuclear weapons program, according to its own statements and estimates from variousintelligence agencies. In the months following the October 2002 confrontation, North Koreaexpelled International Atomic Energy Agency (IAEA) inspectors, removed IAEA seals andmonitoring devices, moved spent fuel rods to its Yongbyon power plant, and announced itswithdrawal from the Nuclear Non-proliferation Treaty (NPT). In 2002, U.S. and South Koreanintelligence officials indicated that the Yongbyon nuclear reactor was re-started. Pyongyang officialslater claimed that the plutonium from the fuel rods had been turned into weapons. Rumors ofpossible nuclear tests or missile launches proliferated, but North Korea refrained from "physicallydisplaying" its "nuclear deterrent force" as it had threatened. (8) At the talks, spokesmen forNorth Korea also reportedly made threats that they would export their nuclear weapons. (9) Despite frequent setbacks, North-South relations advanced, particularly on a variety ofhumanitarian issues and economic cooperation. President Roh Moo-hyun pledged in his inauguraladdress in February 2003 to pursue a policy of "peace and prosperity" on the Korean peninsula, apolicy widely understood to be a continuation of Kim Dae Jung's "Sunshine Policy" of politicalengagement and economic integration. Bilateral ministerial talks, held on a nearly quarterly basis,led to a wide range of government-to-government contacts. Unprecedented military talks were heldin June 2004 at the general level; meetings since the 1950's had not gone beyond the colonel rank. The talks led to the exchange of radio messages between North and South Korean vessels and acessation of the daily broadcasts of propaganda across the DMZ. Other joint projects, such as arailway linking the two countries and an industrial park in Kaesong, North Korea for South Koreancompanies, also moved forward, causing some to question Seoul's iterations that future large-scaleassistance to the North first required resolution of the nuclear issue. South Korea has become NorthKorea's second biggest trade partner and aid provider, spending over $3 billion in assistance since2000. South Korea's steadily increasingly economic engagement with the North reportedlyconcerned many U.S. policymakers who advocated a hard-line stance to pressure Pyongyang. Although Seoul continued to promote a policy of eventual reunification of the peninsula, it alsomade clear that its top priority for the short-term was stability, which precludes precipitating acollapse of the regime in Pyongyang. The progress in inter-Korean relations took place against a backdrop of uncertainty about thefuture of the U.S.-South Korea alliance. Anti-American sentiment reportedly rose among the publicin South Korea, particularly after two schoolgirls were killed accidentally by a U.S. military vehiclein 2002. President Roh Moo-hyun took office pledging to develop a defense policy moreindependent of the United States, but he stood by his decision to send 3,600 troops, medics andengineers to Iraq despite public opposition to the U.S.-led war. Recent military configurationdecisions -- the redeployment of 3,600 U.S. troops to Iraq and the withdrawal of one third of the37,000 American troops stationed in the country by the end of 2005 -- alarmed some South Koreansthat the United States was not committed to the defense of South Korea. (10) Many observers noted asharp discrepancy between Seoul and Washington's public stances on North Korea; in a speech inLos Angeles in November 2004, Roh suggested that Pyongyang's claims to be developing nuclearweapons as a deterrent were "understandable considering the environment they live in," insisted thatdialogue was the only option, and described as positive North Korea's "reward for freeze"proposal. (11) The BushAdministration did not offer a public reaction to Roh's speech. In September 2002, Japanese Prime Minister Junichiro Koizumi traveled to Pyongyang fora historic summit with Kim Jong-il. During the visit, Kim Jong-il admitted to Koizumi that NorthKorea had abducted 13 Japanese nationals in the 1970's and 1980's. Repercussions from hisadmission continued to affect Japan's role in dealing with North Korea. Facing an outraged Japanesepublic, Koizumi prioritized the return to Japan of the abductees in October 2002 and spent furtherdiplomatic capital to win the release of the abductee family members during a second summit inPyongyang in May 2004. While Koizumi reportedly pressed Kim Jong-il to abandon his nuclearweapons program during the 2004 meeting, he also pledged in the same visit to provide 250,000 tonsof rice and $10 million in other aid to the North. The Japanese legislature, however, reinforced itsthreats to cut off economic assistance to North Korea by passing laws that allow the Japanesegovernment to impose sanctions on Pyongyang and to ban foreign vessels, suspected of carrying hardcurrency, that go to and from North Korea. (12) Japan's position hardened in December 2004, after JapaneseDNA tests invalidated North Korea's claims that boxes of remains delivered to Japan were those ofdeceased kidnap victims. Following this development, the Japanese government suspended its aidshipments to North Korea, and calls for an imposition of sanctions increased. The six nation talks unfolded during a period of unprecedentedly strong U.S.-Japan securitycooperation. Following the attacks of September 11, 2001, Japanese Self Defense Forces providedlogistical support to U.S. military operations in Afghanistan, the first time that Japan had dispatchedits forces overseas for a non-peacekeeping operation since the end of World War II. Again breakingwith its postwar tradition, Tokyo deployed over 500 troops to southern Iraq to support humanitarianactivities as part of the U.S.-led coalition. In addition, Japan provided billions of dollars in financialassistance to the reconstruction of Iraq and Afghanistan. In the six-party talks, Japan was generallyseen as hewing more closely to the U.S. position than the other participants, but domestic focus onthe abductee issue and security concerns -- specifically about North Korea's missile program -- created somewhat different priorities for Japan. The Bush Administration reportedly urged Japannot to institute sanctions against North Korea, fearing that sanctions would damage the six-partytalks. (13) As state-to-state contact continued in the six-nation talks, non-Administration emissaries alsomade trips to North Korea to explore possible resolutions or to clarify claims of capability. In May2003, Representative Curt Weldon led a bipartisan delegation to Pyongyang and held discussionswith government officials on potential deals to eliminate the North's nuclear weapons program. Asecond trip planned in October 2004 by Representative Weldon was cancelled because of WhiteHouse objections. In January 2004, two aides from the Senate Foreign Relations Committee (FrankJanuzzi and Keith Luse) accompanied a nuclear scientist (Siegfried Hecker), and the former seniorenvoy for negotiations with North Korea (Jack Pritchard) to Pyongyang and nearby nuclear facilities,including the Yongbyon reactor. The findings of the trip were viewed as significant because thevisitors reported that the nuclear plutonium facilities other than Yongbyon were defunct; NorthKorea was apparently capable of producing plutonium metal; and the 8,000 fuel rods previouslystored and watched by IAEA inspectors had been removed from the cooling pond. In addition to the Member and staff delegations, Congress was engaged in issues concerningNorth Korea through a series of hearings on the six-party talks as well as on refugees and humanrights. In June 2002, the House of Representatives passed H.Con.Res. 213 (107thCongress), which called on China to halt forced returns of refugees to North Korea and give the U.N.High Commission on Refugees access to North Korean refugees. Congress also passed H.R. 4011 , the North Korean Human Rights Act of 2004, in September 2004. The act( P.L. 108-333 ) eases the asylum and legal immigration process for North Korean refugees and callsfor the U.S. executive branch to adopt a number of measures aimed at furthering human rights inNorth Korea, including financial support of non-government human rights groups, increased radiobroadcasts into North Korea, the distribution of radios in North Korea, and more effectivemonitoring of food aid. The Administration, although it brought up human rights concerns brieflyin the six-party talks, and generally raised the issue more often than did previous Administrations,assigned higher priority to the North's nuclear program, as well as conventional forces, missiles, andNorth Korea's trade in illicit goods. Although the six nation talks have reached no significant breakthroughs, the multilateralapproach has provided a forum for Northeast Asian powers to meet regularly and establish commonobjectives. The players have achieved a strong degree of consensus on stopping the spread ofweapons of mass destruction and a shared commitment to maintaining regional stability. Asiawatchers speculate that the six-party format could provide an institutionalized forum for securitydiscussions in the future. The inclusion of North Korea in the talks may also prove to be valuable if the state continues to threaten regional stability in the years to come. CRS Issue Brief IB98045, Korea: U.S.-Korean Relations -- Issues for Congress CRS Issue Brief IB91141, North Korea's Nuclear Weapons Program CRS Report RL31696 , North Korea: Economic Sanctions CRS Report RS21834 , U.S. Assistance to North Korea: Fact Sheet CRS Report RL31785 , U.S. Assistance to North Korea: Issues and Options for U.S. Policy CRS Report RL32493(pdf) , The North Korean Economy: Background and Policy Analysis CRS Report RS21391 , North Korea's Nuclear Weapons: How Soon an Arsenal? CRS Report RL31900 , Weapons of Mass Destruction: Trade Between North Korea and Pakistan CRS Report RS21473 , North Korean Ballistic Missile Threat to the United States CRS Report RS21582 , North Korean Crisis: Possible Military Options CRS Report RL32167 , Drug Trafficking and North Korea: Issues for U.S. Policy CRS Report RL32428, Japanese Prime Minister Koizumi's May 2004 Trip to North Korea:Implications for U.S. Objectives CRS Report RL32161 , Japan-North Korea Relations: Selected Issues CRS Report RL32137 , North Korean Supporters in Japan: Issues for U.S. Policy CRS Report RL31906 , South Korean Politics and Rising "Anti-Americanism": Implications for U.S.Policy Toward North Korea 7/5/04In a statement issued by the state news agency, North Korea said it had "no objection" to a request by the Red Army hijackers to return to Japan. 7/5/04At working-level military talks in Kaesong, the two sides agree to maintain openwireless communications to prevent accidental clashes in the West Sea, and to startthe second phase of removing propaganda at the Demilitarized Zone (DMZ). 7/7-7/9/04National Security Adviser Condoleezza Rice visits Tokyo, Seoul, and Beijing. 7/8/04The 10th anniversary of the death of Kim Il-sung. Seoul prohibits a group of NGOsfrom traveling to the North to mark the occasion, prompting Pyongyang to cancelofficial North-South dialogues. 7/11-7/16/04The 10th round of family reunions at Mt. Kumgang. 7/13-15/04Scheduled fifth round of inter-Korean maritime cooperation working-level talks arecancelled by North Korea. 7/19/04Planned North-South working level military talks are not held after NorthKorea fails to respond to phone calls to arrange logistics. 7/21/04U.S. House of Representatives approves H.R. 4011 , the NorthKorea Human Rights Act. 7/23/04The U.S. and ROK finalize agreements to relocate all of the roughly 8,000U.S. Forces from the Seoul Metropolitan Area to the Pyongtaek area,approximately 50 miles south of Seoul, by the end of 2008. 7/24/04North Korea denounces the U.S. nuclear proposal as "nothing but a shamoffer." 7/27-28/04The ROK airlifts over 450 North Korean defectors from Vietnam to Seoul. Decryingthe action as an "abduction,"Pyongyang halts most forms of inter-Korean dialogue. 8/3-6/04Scheduled 15th inter-Korean ministerial cabinet level talks are postponed byNorth Korea, which cites South Korea's mass acceptance of over NorthKorean refugees. 8/10/04At a closed-door session of an international seminar on the North Koreannuclear issue hosted by the National Committee on American Foreign Policyin New York, Ri Gun, deputy director-general of American affairs at theDPRK's Foreign Ministry; meets with Joseph DeTrani, U.S. special envoy tothe DPRK, State Department Policy Planning Director Mitchell Reiss, andHan Seung-joo, ROK ambassador to Washington. 8/11-12/04Japan-DPRK abduction talks in Beijing reportedly yield little progress. 8/13/04At the opening ceremony for the Athens Olympics, the ROK and DPRKOlympic march together under the same flag, just as they did in Sydney in2000. 8/23/04KCNA quotes a DPRK Foreign Ministry spokesman as saying "The meetingof the working group for the six-party talks cannot be opened because theU.S. has become more undisguised in pursuing its hostile policy." Thespokesman calls President Bush an "imbecile" and "a tyrant that puts Hitlerinto the shade." 8/31-9/3/04Scheduled 10th inter-Korean economic talks are postponed by North Korea. 9/2/04South Korea admits scientists enriched a tiny amount of uranium in 2000 to a levelclose to what would be usable in a nuclear weapon. Seoul claims this was donewithout the government's knowledge or authorization, so was not reported at the timeto the IAEA. 9/2/04Conducting a case-by-case review of possible U.S.-made dual-use technology thatSouth Korean companies may bring into the Kaesong Industrial Zone, ROK and U.S.officials clear 11 of 15 approved ROK companies to begin operating in Kaesong. 9/12/04Sources in Seoul and Beijing report seeing a huge mushroom cloud innorthern North Korea on September 9, the anniversary of the founding of theDPRK. President Bush reportedly is briefed that the cloud may have resultedfrom a nuclear test. North Korea claims the cloud resulted from a detonationassociated with a hydroelectric dam, but when it transports foreignambassadors to the area for a visual inspection, it brings them to a site 60miles away from where the cloud was reported. South Korean authoritieslater say the episode may have been an unusual cloud formation. 9/9/04South Korean scientists admit they separated a tiny amount of bomb-grade plutoniumin 1982 without notifying the IAEA. 9/12/04In an interviews with the New York Times , Democratic Presidential nomineeSenator John Kerry accuses the Bush administration of letting "a nuclearnightmare" develop by refusing to deal with North Korea when it first cameto office. 9/12/04Kim Jong-il meets in Pyongyang with a senior communist party delegationfrom the PRC that reportedly informs the DPRK leadership that China wouldcontinue to provide development assistance to North Korea. 9/15/04ROK officials reportedly say that removal of propaganda installations alongthe DMZ has stalled. 9/21/04A ceremony to mark the completion of an ROK office in the KaesongIndustrial Zone is called off after the North bars 11 lawmakers of theopposition GNP from attending. After Pyongyang later agrees to allow the11 to attend, the event is rescheduled for October 21. 9/23/04Amid reports that U.S. and Japanese intelligence indicates North Korea maybe preparing to test-launch an intermediate ballistic missile, ROK ForeignMinister Ban, meeting Secretary of State Powell in New York, warns theDPRK that any such launch would negatively affect inter-Korean ties,including Kaesong. 9/23/04North Korea's state-run Rodong Sinmun newspaper declares "if the UnitedStates ignites a nuclear war, the U.S. military base in Japan would serve asa detonating fuse to turn Japan into a nuclear sea of fire." 9/24/04South Korea announces that the Export-Import Bank of Korea will insureSouthern investors in the North for between 70%-90% of any losses in caseof events such as broken agreements, blocked remittances, confiscation ofassets, or war. 9/24/04The ROK government confirms that 107 metric tons of sodium cyanide, a keyingredient in the manufacture of nerve gas, were sent illegally to North Koreavia China in 2003. 9/25-9/26/04Japan and North Korea hold a second round of working-level consultations in Beijingon the abduction issue, with no progress reported. 9/27/04In a speech before the opening session of the U.N. General Assembly, NorthKorean Vice Foreign Minister Choe Su Hon says "the ever intensifying U.S.hostile policy" and the lack of clarity about "the secret nuclear relatedexperiments in South Korea...makes us unable to participate in the talksaimed at discussing the nuclear weapon program." Later, at a newsconference, Choe says "We have already made clear that we have alreadyreprocessed 8,000 wasted fuel rods and transformed them into arms," he said. 9/28/04The Senate approves H.R. 4011 , the North Korea Human RightsAct. 9/30/04In their first debate of the presidential campaign, President Bush andDemocratic presidential nominee Kerry clash over the U.S.' North Koreapolicy. 10/5/04KCNA quotes a DPRK Foreign Ministry spokesman as saying the Senate'spassage of the Human Rights Act has deprived the DPRK of "anyjustification" for participating in the six-party talks, and reveals the U.S.' "realintention" is to "topple" the North Korean government. Later, KCNA callsthe act "a declaration of war." 10/6/04Washington and Seoul announce that Washington's plans to reduce sharplyits troops in South Korea would be delayed to 2008, instead of the end of2005. 10/7/04Inter-Korean working-level military talks on rail and load links break down. 10/18/04President Bush signs the North Korean Human Rights Act into law. ( P.L.108-333 ) 10/21/04Dedication ceremony held in Kaesong for the new office of Koland, the ROKstate-run main contractor for the Kaesong Industrial Zone. In attendance are63 members of the ROK National Assembly. 10/22/04A North Korean Foreign Ministry spokesman tells KCNA that in order forPyongyang to return to the six-party talks, the U.S. must drop its hostilepolicy, join an economic aid program for the North, and agree to discuss"South Korea's nuclear problem." 10/23/04Secretary of State Powell begins a trip to Japan, China, and the ROK. Powellurges North Korea to rejoin the six-party talks and rejects demands fromNorth Korea that the U.S. offer economic inducements before North Koreahas agreed to dismantle its nuclear program. Chinese Foreign Minister LiZhaoxing reportedly asks the U.S. to "adopt a flexible and practical attitude." In Seoul, ROK Foreign Minister Ban Ki-moon says he told Powell that allcountries involved develop a "more creative and realistic" offer to encouragethe North to return to the negotiating table. 10/26/04Proliferation Security Initiative exercise is held off the coast of Japaninvolving navy and coast guard vessels from 10 countries, including Japan,France, and Australia. Pyongyang condemns the exercise as an "ultimate waraction." 11/1/04In an interview with the Wall Street Journal , Han Song Ryol, North Korea'sambassador in charge of U.S. affairs, says that "Pyongyang won't participatein six-party talks unless it sees real changes" in U.S. policy, includingannulling the U.S. North Korea Human Rights Act and completely liftingeconomic sanctions. Han also says Senator John Kerry's proposal to negotiatebilaterally with North Korea is "as hostile as Bush's DPRK policy." 11/1/04South Korean patrol boats fire warning shots to repel three North Koreanpatrol boats that reportedly crossed the NLL in two separate incidents. 11/2/04George W. Bush re-elected to the U.S. Presidency. 11/12/04In a speech before the Los Angeles World Affairs Council, President RohMoo-hyun reportedly says that taking a hard line over North Korea's nuclearweapons program could have "grave" consequences and that "there is noother way than dialogue." 11/20-21/04At the APEC summit in Santiago, Chile, President Bush urges members to drawNorth Korea back into six-nation negotiations and says he is convinced "that the willis strong, that the effort is united and the message is clear to Mr. Kim Jong-il: Get ridof your nuclear weapons programs." 11/26/04KEDO's Executive Board members decide to extend for another year (untilDecember 1, 2005) a freeze on constructing two light-water nuclear reactorsin North Korea. 11/29/04At ASEAN Plus Three summit in Laos, PRC Premier Wen Jiabiao, ROKPresident Roh Moo-hyun, and Japanese Prime Minister Junichiro Koizumiagree to "promote close consultations and cooperation for the peacefuldenuclearization of the Korean Peninsula through the Six-Party Talks." 12/1/04Speaking to a group of South Koreans living in England, President Roh saysthat the ROK has grown powerful enough that no country can impose asolution that would be unacceptable to South Korea. 12/1/04The final section of an inter-Korean road along the east coast border isopened to traffic. 12/2-4/04Working-level inter-Korean talks at Mt. Kumgang to discuss technical issues forbuilding a permanent meeting place for separated families. 12/3/04The two Koreas announce an agreement for South Korean electric powercompany KEPCO to supply electricity to the Kaesong Industrial Complex. 12/3/04In an interview with the New York Times , IAEA Director General MohamedElBaradei says that he is "sure" that North Korea has reprocessed all the8,000 rods of spent plutonium that the IAEA had watched over untilDecember 2002. 12/6/04Speaking to a group of ethnic Koreans in Paris, President Roh is quoted assaying, "As long as the regime itself is questioned due to the North Koreannuclear issue, those countries that do not want it to collapse, like China andSouth Korea, and those countries and individuals that think regime change isnecessary will not be able to coordinate." 12/8/04Japanese officials announce that the results of DNA tests on a box of bonesand ashes that North Korea had said contained the remains of MegumiYokota, a Japanese woman kidnapped by North Korea, proved that theremains belong to a number of other people. "'It would be difficult undersuch circumstances to provide further assistance to North Korea," says chiefcabinet secretary, Hiroyuki Hosoda. 12/8/04Convicted American army deserter Charles Jenkins leaves the United StatesArmy base at Camp Zama outside Tokyo, where he served a one-monthprison term and was given a dishonorable discharge. 12/10/04An eight-member team from the ROK and DPRK begin a joint survey of Mt.Kumgang for the construction of a permanent meeting place for separatedfamily members. 12/12/04Fueled by public anger, Acting Secretary General of the LDP Shinzo Abe,along with other politicians, urge the Japanese government to imposesanctions on North Korea. 12/13/04In an interview Assistant Secretary of State Kelly says that the currentarmistice agreement on the Korean peninsula can be replaced with amulti-party peace treaty if the North agrees to dismantle all of its nuclearprograms. 12/15/04KCNA quotes a Foreign Ministry spokesman as warning that any move byJapan to impose economic sanctions on Pyongyang would be regarded as a"declaration of war" and would cause North Korea to reconsider taking partin the six-party talks. 12/15/04On December 15, a ceremony is held at the Kaesong Industrial Complex inNorth Korea to mark the start of production of an initial line of goods. On thesame day, 1,000 sets of pots delivered from the Livingart's Kaesong factoryto the Lotte Department Store in Sodong-dong, Seoul, sold out in only sevenhours. 12/17/04In a summit in Kagoshima, Japan, President Roh urges Prime MinisterKoizumi not to impose sanctions on North Korea. Koizumi states that thedecision will be based on North Korea's response to Tokyo's complaint aboutYokota's false remains. 12/23/04South Korea's Unification Ministry announced it will decrease the flatfinancial subsidies for North Korean defectors by a third but plans tointroduce an incentive system to encourage them to undertake job trainingand obtain jobs. CVID - complete, verifiable, and irreversible dismantlement (of North Korea's nuclear programs) DMZ - demilitarized zone dividing North and South Korea DPRK - Democratic People's Republic of Korea EU - European Union GNP - Grand National Party, South Korea's largest opposition party HEU - highly enriched uranium IAEA - International Atomic Energy Agency KCNA - Korea Central News Agency (North Korea's official news agency) KEDO - Korea Peninsula Energy Development Organization NGO - non-governmental organization NLL - Northern Limit Line NPT - Nuclear Non-Proliferation Treaty PRC - People's Republic of China PSI - Proliferation Security Initiative ROK - Republic of Korea TCOG - Trilateral Coordination and Oversight Group (United States, Japan, and South Korea) Figure 1. Map of the Korean Peninsula

This report provides a chronology of events relevant to U.S. relations with North Korea fromOctober 2002 through December 31, 2004. The chronology includes significant meetings, events,and statements that shed light on the issues surrounding North Korea's nuclear weapons program. An introductory analysis provides background on U.S. policy preceding October 2002 as well as anoverview of developments and dynamics among the major players in the North Korea nucleardispute: South Korea, Japan, China, Russia, and the United States. Particular attention is paid to thedemise of the Agreed Framework, the ongoing six-party talks, China's prominent role in thenegotiations, inter-Korean relations, and the Japanese abductee issue. Also discussed is Congress'srole in dealing with North Korea, including the passage of the North Korea Human Rights Act ( P.L.108-333 ). This report will not be updated.

In 2017, approximately 39.7 million people, or 12.3% of the population, had incomes below the official definition of poverty in the United States. The poverty rate (the percentage that were in poverty), fell from 12.7% in 2016, while the number of persons in poverty showed no discernible change. In this report, the numbers and percentages of those in poverty are based on the Census Bureau's estimates. While this official measure is often regarded as a statistical yardstick rather than a complete description of what people and families need to live, it does offer a measure of economic hardship faced by the low-income population: the poverty measure compares family income against a dollar amount called a poverty threshold , a level below which the family is considered to be poor. The Census Bureau releases these poverty estimates every September for the prior calendar year. Most of the comparisons discussed in this report are year-to-year comparisons. This report only considers a number or percentage to have changed from the previous year, or to be different from another number or percentage, if the difference has been tested to be statistically significant at the 90-percent confidence level. However, in addition to the most recent year's data, this report presents a historical perspective as well as information on poverty for demographic groups (by family structure, age, race and Hispanic origin, and work status) and by state. Over the past several decades, criticisms of the official poverty measure have led to the development of an alternative research measure called the Supplemental Poverty Measure (SPM), which the Census Bureau also computes and releases. Statistics comparing the official measure with the SPM are provided at the conclusion of this brief. The SPM includes the effects of taxes and in-kind benefits (such as housing, energy, and food assistance) on poverty, while the official measure does not. Because some types of tax credits are used to assist the poor, as are other forms of assistance, the SPM may be of interest to policymakers. However, the official measure provides a comparison of the poor population over a longer time period, including some years before many current anti-poverty assistance programs had been developed. In developing poverty-related legislation and conducting oversight on programs that aid the low-income population, policymakers may be interested in these historical trends. The Census Bureau determines a person's poverty status by comparing his or her resources against a measure of need. For the official measure, "resources" is defined as total family income before taxes, and the measure of "need" is a dollar amount called a poverty threshold. There are 48 poverty thresholds that vary by family size and composition. If a person lives with other people to whom he or she is related by birth, marriage, or adoption, the money income from all family members is used to determine his or her poverty status. If a person does not live with any family members, his or her own income is used. Only money income before taxes is used in calculating the official poverty measure, meaning this measure does not treat in-kind benefits such as the Supplemental Nutritional Assistance Program (SNAP, formerly known as food stamps), housing subsidies, or employer-provided benefits as income. The poverty threshold dollar amounts vary by the size of the family (from one person not living in a family, to nine or more family members living together) and the ages of the family members (how many of the members are children under 18 and whether or not the family head is 65 years of age or older). Collectively, these poverty thresholds are often referred to as the "poverty line." As a rough guide, the poverty line can be thought of as $25,094 for a family of four, $19,515 for a family of three, $15,877 for a family of two, or $12,488 for an individual not living in a family, though the official measure is actually much more detailed. The threshold dollar amounts are updated annually for inflation using the Consumer Price Index. Notably, the same thresholds are applied throughout the country: no adjustment is made for geographic variations in living expenses. The official poverty measure used in this report is the federal government's definition of poverty for statistical purposes, such as comparing the number or percentage of people in poverty over time. A different definition of poverty, the poverty guidelines published by the Department of Health and Human Services (HHS), is used for administrative purposes such as eligibility criteria for assistance programs and will not be discussed in this report. Figure 1 shows a historical perspective of the number and percent of the population below the poverty line. The number in poverty and the poverty rates are shown from the earliest year available (1959) through the most recent year available (2017). Because the total U.S. population has grown over time, poverty rates are useful for historical comparisons because they control for population growth. Poverty rates fell through the 1960s. Since then, they have generally risen and fallen according to the economic cycle, though during the most recent two expansions poverty rates did not fall measurably until four to six years into the expansion. Historically notable lows occurred in 1973 (11.1%) and 2000 (11.3%) . Poverty rate peaks occurred in 1983 (15.2%), 1993 (15.1%), and 2010 (15.1%). Poverty rates tend to rise during and after recessions, as opposed to leading economic indicators such as new housing construction, whose changes often precede changes in the performance of the overall economy. The poverty rate's lag is explainable in part by the way it is measured: it uses income from the entire calendar year. Notably, the poverty rate in 2017 registered a third consecutive annual decrease since the most recent recession, though it remained higher than the rate in 2000, the most recent low point. The drop in the U.S. poverty rate (from 12.7% in 2016 to 12.3% in 2017) affected some demographic groups more than others, notably the population ages 18 to 64, people of Hispanic origin, and part-time workers; it was not a broad-based decline. Details for selected demographic groups are described below. Because poverty status is determined at the family level by comparing resources against a measure of need, vulnerability to poverty may differ among families of different compositions. In this section, poverty data by family structure are presented using the official poverty measure, along with a definition of "family" that the Census Bureau has used in the CPS ASEC for nearly four decades. In the " Supplemental Poverty Measure " section of this report, a different definition will be used. Families with a female householder and no husband present (female-householder families) have historically had higher poverty rates than both married-couple families and families with a male householder and no wife present (male-householder families). This remained true in 2017: female-householder families experienced a poverty rate of 25.7%, compared with 4.9% for married-couple families and 12.4% for male-householder families. None of these groups registered a significant decrease from 2016, although families as a whole (i.e., all family types together) did—from 9.8% in 2016 to 9.3% in 2017, a drop of 0.4 percentage points after rounding). Among individuals not living in families, the poverty rate was 20.7% in 2017, not distinguishable from the previous year. Poverty rates of families in 2017 are shown in Figure 2 . When examining poverty by age, three main groups are noteworthy for distinct reasons: under 18, 18 to 64, and 65 and older. People under age 18 are typically dependent on other family members for income, particularly young children below their state's legal working age. People ages 18 to 64 are generally thought of as the working-age population and typically have wages and salaries as their greatest source of income. People 65 years and older, referred to as the aged population, are often eligible for retirement, and those who do retire typically experience a change in their primary source of income. For the working-age population, the poverty rate, but not the number of persons in poverty (22.2 million), registered a decline. In 2017, 11.2% of the working-age population was in poverty (down from 11.6% in 2016). Neither children nor the aged registered any significant changes in their poverty rate or number in poverty from 2016. Among children, 12.8 million (or 17.5%) were poor; among the aged population, 4.7 million (or 9.2%) were poor. From a historical standpoint, the poverty rate for those 65 and over used to be the highest of the three groups. In 1966, the aged had a poverty rate of 28.5%, compared with 17.6% for those under 18 and 10.5% for working-age adults. By 1974, the poverty rate for people 65 and over had fallen to 14.6%, compared with 15.4% for people under 18 and 8.3% for working-age adults. Since then, people under 18 have had the highest poverty rate of the three age groups, as shown in Figure 3 . Poverty rates vary by race and Hispanic origin, as shown in Figure 4 . In surveys, Hispanic origin is asked separately from race; accordingly, people identifying as Hispanic may be of any race. The poverty rate fell for Hispanics (from 19.4% in 2016 to 18.3% in 2017). Among blacks (21.2%), Asians (10.0%), and non-Hispanic whites (8.7%), the poverty rate did not change discernably from 2016. While having a job reduced the likelihood of being in poverty, it did not guarantee that a person or his or her family would avoid poverty. Among the 18 to 64 year old population living in poverty, 36.6% had jobs in 2017. However, workers were less likely to be in poverty in 2017 (5.3%) than they were the year before (5.8%). Among full-time year-round workers, 2.2% were poor in 2017, not measurably changed from the previous year. Among part-time or part-year workers, 13.4% were poor, down from 14.7% in 2016. No change was detected among those who did not work at least one week in 2017 (30.7% were poor). Because poverty is a family-based measure, the change in one member's work status can affect the poverty status of his or her entire family. Among all 18 to 64 year olds who did not have jobs in 2017, 58.1% lived in families in which someone else did have a job. Among poor 18 to 64 year olds without jobs, 19.1% lived in families where someone else worked. Poverty is not equally prevalent in all parts of the country. The map in Figure 5 shows states with relatively high poverty rates across parts of the Appalachians, the deep South, and the Southwest, with the poverty rate in Mississippi (19.8%) among the highest in the nation, and not statistically different from the rates in New Mexico (19.7%), Louisiana (19.7%), and West Virginia (19.1%). The poverty rate in New Hampshire (7.7%) was lowest. When comparing poverty rates geographically, it is important to remember that the official poverty thresholds are not adjusted for geographic variations in the cost of living—the same thresholds are used nationwide. As such, an area with a lower cost of living accompanied by lower wages will appear to have a higher poverty rate than an area with a higher cost of living and higher wages, even if individuals' purchasing power were exactly the same in both areas. The District of Columbia and 20 states experienced poverty rate declines from 2016 to 2017: six in the Midwest (Illinois, Indiana, Iowa, Michigan, Missouri, and Ohio), three in the Northeast (Maine, New York, and Pennsylvania); eight in the South (District of Columbia, Florida, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Texas); and four in the West (Arizona, California, Colorado, and Idaho). Delaware and West Virginia were the only states to experience increases, and 28 states, as well as Puerto Rico, experienced no significant change. Criticisms of the official measure have led to the development of the Supplemental Poverty Measure (SPM). Described below are the development of the official measure, its limitations, attempts to remedy those limitations, the research efforts that led to the SPM, and a comparison of poverty rates based on the SPM and the official measure. The poverty thresholds were originally developed in the early 1960s by Mollie Orshansky of the Social Security Administration. Rather than attempt to compute a family budget by using prices for all essential items that low-income families need to live, Orshansky focused on food costs. Unlike other goods and services such as housing or transportation, which did not have a generally agreed-upon level of adequacy, minimum standards for nutrition were known and widely accepted. According to a 1955 U.S. Department of Agriculture (USDA) food consumption survey, the average amount of their income that families spent on food was roughly one-third. Therefore, using the cost of a minimum food budget and multiplying that figure by three yielded a figure for total family income. That computation was possible because USDA had already published recommended food budgets as a way to address the nutritional needs of families experiencing economic stress. Some additional adjustments were made to derive poverty thresholds for two-person families and individuals not living in families to reflect the relatively higher fixed costs of smaller households. While the official poverty measure has been used for over 50 years as the source of official statistics on poverty in the United States, it has received criticism over the years for several reasons. First, it does not take into account benefits from most of the largest programs that aid the low-income population. For instance, it uses money income before taxes – meaning that it does not necessarily measure the income available for individuals to spend, which for most people is after-tax income. Therefore, any effects of tax credits designed to assist persons with low income are not captured by the official measure. The focus on money income also does not account for in-kind benefit programs designed to help the poor, such as SNAP or housing assistance. The official measure has also been criticized for the way it characterizes families' and individuals' needs in the poverty thresholds. That is, the method used to compute the dollar amounts used in the thresholds, which were originally based on food expenditures in the 1950s and food costs in the 1960s, do not accurately reflect current needs and available goods and services. Moreover, the official measure does not take account of the sharing of expenses and income among household members not related by birth, marriage, or adoption. And, as mentioned earlier, the official thresholds do not take account of geographic variations in the cost of living. In 1995, a panel from the National Academy of Sciences issued a report, Measuring Poverty: A New Approach, which recommended improvements to the poverty measure. Among the suggested improvements were to have the poverty thresholds reflect the costs of food, clothing, shelter, utilities, and a little bit extra to allow for miscellaneous needs; to broaden the definition of "family;" to include geographic adjustments as part of the measure's computation; to include the out-of-pocket costs of medical expenses in the measure's computation; and to subtract work-related expenses from income. An overarching goal of the recommendations was to make the poverty measure more closely aligned with the real-life needs and available resources of the low-income population, as well as the changes that have taken place over time in their circumstances, owing to changes in the nation's economy, society, and public policies (see Table 1 ). After over a decade and a half of research to implement and refine the methodology suggested by the panel, conducted both from within the Census Bureau as well as from other federal agencies and the academic community, the Census Bureau issued the first report using the Supplemental Poverty Measure (SPM) in November 2011. Compared with the official measure, the SPM takes into account greater detail of individuals' and families' living arrangements and provides a more up-to-date accounting of the costs and resources available to them. Because the SPM recognizes greater detail in relationships among household members and geographically adjusts housing costs, it provides an updated rendering, compared with the official measure, of the circumstances in which the poor live. In that context, some point out that the SPM's measurement of taxes, transfers, and expenses may offer policymakers a clearer view of how government policies affect the poor population today. However, the SPM was developed as a research measure, and the Office of Management and Budget set the expectation that it would be revised periodically to incorporate improved measurement methods and newer sources of data as they became available; it was not developed for administrative purposes. Conversely, the official measure's consistency over a longer time span makes it easier for policymakers and researchers to make historical comparisons. Under the SPM, the profile of the poverty population is slightly different than under the official measure. After rounding, the SPM was about 1.6 percentage points higher in 2017 than the official poverty rate (13.9% compared with 12.3%, a figure that includes foster children under age 15, who are not normally included in the official measure. See Figure 6 ). More people ages 18 to 64 are in poverty under the SPM (13.2% compared with 11.2% under the 2017 official measure), as are people ages 65 and over (14.1%, compared with 9.2% under the official measure). The poverty rate for people under age 18 was lower under the SPM (15.6% in 2017) than under the official measure (17.5%, with foster children included). Again, the SPM uses a different definition of resources than the official measure: the SPM includes in-kind benefits which generally help families with children; subtracts out work-related expenses, which are often incurred by the working-age population; and subtracts medical out-of-pocket expenses, which are incurred frequently by people age 65 and older. With the geographically-adjusted thresholds, the poverty rate in 2017 was lower under the SPM than under the official measure for the Midwest (10.7% compared with 11.4%), while it was higher than the official measure for the Northeast (14.2% compared with 11.4%), the West (15.1% compared with 11.8%), and the South (14.8% compared with 13.6%).

In 2017, approximately 39.7 million people, or 12.3% of the population, had incomes below the official definition of poverty in the United States. Poverty statistics provide a measure of economic hardship. The official definition of poverty for the United States uses dollar amounts called poverty thresholds that vary by family size and the members' ages. Families with incomes below their respective thresholds are considered to be in poverty. The poverty rate (the percentage that was in poverty) fell from 12.7% in 2016. This was the third consecutive year since the most recent recession that the poverty rate has fallen. The poverty rate for female-householder families (25.7%) was higher in 2017 than that for male-householder families (12.4%) or married-couple families (4.9%). None of these poverty rates registered a discernible change from 2016. Among the working-age population (18 to 64 year olds), the poverty rate fell to 11.2% in 2017, down from 11.6% in 2016. Neither children (people under 18) nor the aged (people ages 65 and older) had discernible changes to their poverty rates over the period. Of the three age groups—children, the working-age population, and the aged—the latter used to have the highest poverty rates but now has the lowest: 28.5% of the aged population was poor in 1966, but 9.2% was poor in 2017. People under 18, in contrast, have the highest poverty rate of the three age groups: 17.5% were poor in 2017. Poverty is not equally prevalent in all parts of the country. The poverty rate for Mississippi (19.8%) appeared to be the highest but was in a statistical tie with New Mexico (19.7%), Louisiana (19.7%), and West Virginia (19.1%). New Hampshire's poverty rate (7.7%) was the lowest in 2017. Criticisms of the official poverty measure have inspired poverty measurement research and eventually led to the development of the Supplemental Poverty Measure (SPM). The SPM uses different definitions of needs and resources than the official measure. The SPM includes the effects of taxes and in-kind benefits (such as housing, energy, and food assistance) on poverty, while the official measure does not. Because some types of tax credits are used to assist the poor (as are other forms of assistance), the SPM may be of interest to policymakers. The poverty rate under the SPM (13.9%) was about 1.6 percentage points higher in 2017 than the official poverty rate (12.3%). Under the SPM, the profile of the poverty population is slightly different than under the official measure. Compared with the official measure, poverty rates under the SPM were lower for children (15.6% compared with 17.5%) and higher for working-age adults (13.2% compared with 11.2%) and the population age 65 and older (14.1% compared with 9.2%). While the SPM reflects more current measurement methods, the official measure provides a comparison of the poor population over a longer time period, including some years before many current anti-poverty assistance programs had been developed. In developing poverty-related legislation and conducting oversight on programs that aid the low-income population, policymakers may be interested in these historical trends.

When Congress passed the Reciprocal Trade Agreements Act (RTAA) of 1934, it reflected an important transition in national trade policy away from "protectionism" toward greater "trade liberalization." This shift continues to be the dominant, but hardly uncontested, trade policy of the United States. The substantial national gains from trade have long been recognized, yet trade liberalizing legislation often faces strong political opposition because related costs, although much smaller, affect a vocal and concentrated constituency. Congress first addressed this inherent tension with legislation that allowed higher tariffs and other trade barriers to be reimposed when domestic industries were threatened or hurt by imports. In 1962, however, Congress adopted an additional approach by providing trade adjustment assistance (TAA) directly to trade-affected firms and workers. It remains a much-debated, but enduring pillar of U.S. trade policy today. TAA program authorizations are scheduled to expire on December 31, 2013, and the Trade Adjustment Assistance Extension Act of 2013 ( S. 1357 ) would extend them through 2020. President Obama also has supported TAA reauthorization, linking it to renewal of Trade Promotion Authority (TPA). This report discusses the role of TAA in U.S. trade policy, from its inception as a legislative option in the early 1950s, to its core role as a cornerstone of modern trade policy that many argue has served to promote the long-term U.S. trade liberalization agenda. It will also consider the extent to which TAA has been linked to both renewal of trade agreements authority (now TPA) and trade agreement implementing legislation. Understanding the origins of TAA, the historical economic and congressional debate, and legislative options considered by Congress over the past 50 years may help inform the recurring discussion on TAA reauthorization. TAA was first authorized in 1962, with two programs covering workers (e.g., retraining, relocation allowances, extended unemployment benefits) and firms (e.g., loans, loan guarantees, technical assistance, tax benefits). Congress added a communities program (e.g., loans and grants) in 1974, subsequently terminated in 1982, and a farmers program (technical assistance and cash benefits) in 2002. Congress authorized another communities program in 2009, but discontinued it two years later. All TAA programs are usually reauthorized in one bill, although administered by three different federal agencies. This discussion does not address details of the TAA programs, which are available in other CRS reports. Rather, it takes a holistic policy approach to the economic issue of federal assistance for adjustment to import penetration, with occasional reference to the large workers and much smaller firms programs, which have formed the core of TAA since its inception. Nearly eight decades after the RTAA became law, passage of three FTAs in the 112 th Congress and President Obama's National Export Initiative stand as reminders of the importance that the United States places on trade expansion, particularly of exports. The pursuit of export growth, however, generally cannot be done without conceding to a reciprocal increase in imports, and the tradeoff does not affect stakeholders equally. While freer trade can benefit exporters, consumers, and the economy as a whole, it can place hardship on some industries facing increased competition from imports. Freer trade is not entirely free, but bears the cost of economic adjustment. Supporters of TAA argue that workers (especially the permanently displaced) and firms hurt by imports, due in part to changes in trade policy, have more severe adjustment problems than others affected by different types of economic dislocation. Following this reasoning, these firms and workers deserve their own category of assistance, rather than relying on broader programs designed to address all types of economic dislocation. The issues raised by TAA were identified early on in the postwar economic policy debate. Justification rested on arguments for (1) economic efficiency, by speeding the adjustment process and returning idle resources to work more quickly; (2) equity, by compensating for lost income while spreading the cost of freer trade to society as a whole; and (3) political pragmatism, by defusing opposition to trade liberalizing legislation. Additionally, the costs of trade liberalization were at first managed through temporary protection (e.g., escape clause and peril point provisions—see next section) to maintain a coalition in favor of freer trade. TAA was offered as a more constructive alternative. It would provide for positive adjustment rather than negative reaction to tariff reduction, with expectations that costs would be temporary for an adjustment period, and much less harmful than protectionist measures. TAA skeptics challenged the logic of these claims. They argued that economic efficiency was far from guaranteed given that subsidies can operate to reduce worker and firm incentives to relocate, take lower-paying jobs, or in other ways seek a solution to being idled. Equity issues arose because many economic groups hurt by changing economic circumstances caused by other than trade policies were not afforded similar economic assistance. A frequently cited alternative argues that if society has a responsibility to help all those dislocated by economic change, then policies should not be narrowly restricted to trade-related or other categories of harm. Administrative hurdles and costs were also considered high. Economists, among others, pointed to the methodological difficulties in defining and measuring injury from tariff reduction, arguing that solutions would be inexact, if not arbitrary. Previous studies suggest that many firms, even smaller ones, could adjust on their own, and that workers could just as well rely on more broadly available unemployment and retraining programs. In addition, over time, the costs of TAA would rise, diluting political support. Political accommodation proved to be another factor for congressional support of TAA. Many Members concerned with the negative effects of trade have insisted on TAA to support trade liberalizing legislation, and TAA skeptics often conceded in order to advance the broader trade agenda. TAA provisions in the Trade Expansion Act of 1962 and the Trade Act of 1974 are often cited as providing the support necessary to conclude ground-breaking trade agreements like the General Agreement on Tariffs and Trade (GATT) Kennedy and Tokyo Rounds of the 1960s and 1970s. TAA was also a quid pro quo for providing President Bush with TPA in 2002, and for passage of free trade agreement (FTA) implementing bills in the 112 th Congress (see Appendix for legislative chronology). TAA was a product of a time when U.S. domestic and foreign economic policies were shifting to address dire economic situations. The seeds for change were planted with the RTAA, a reaction to the tariff-raising Smoot-Hawley Act of 1930. The shift from protectionism toward greater trade opening was rooted partly in the prevailing belief that to escape the Great Depression, the domestic economy would be best served by boosting demand worldwide. In addition to the benefits of export expansion, trade policy embraced the idea that restricting imports ran the risk of mutually destructive global retaliation. The RTAA provided time-limited authority to the President to enter into reciprocal tariff-reducing agreements, without the need for congressional approval afterward. It was the early precursor to the now-expired Trade Promotion Authority (TPA). Still, the legislation was controversial, prompting resistance not only to the trade provisions, but to what some considered to be a concession to the President of traditional congressional authority over tariffs. Within a few years, trade liberalization took on a stronger foreign policy rationale, as well. By 1940, President Franklin D. Roosevelt's State of the Union address had elevated U.S. trade policy to an "indispensible part of the foundations for any stable and durable world peace," a view expressed in the shadows of an approaching world war that would soon devastate international commerce. As a result, the President had positioned trade policy as a key ingredient to reconstruction of the post-war economic system, both as a pillar of international stability, and a counterweight to encroaching Soviet communism. This stance took on even greater importance as the United States became the undisputed leader of the "free world" during the Cold War. Nonetheless, trade liberalization remained contentious in Congress because the foreign policy imperative of supporting international stability ran headlong into concerns over protecting domestic industry from imports. Congressional testimony in the 1940s emphasized the renewed tilt toward protectionism, even as public opinion appeared more indifferent for two reasons. First, U.S. imports in a war-torn world were not large enough to present a serious threat to U.S. jobs and production. Second, trade was viewed as a key element of the Cold War strategy. And so, the lack of public concern over liberalizing commerce provided Congress with a window to take on multilateral trade negotiations (MTNs) under the newly created GATT. Over time, however, as trade liberalization expanded, the need to address the concerns of import-competing industries also grew. Two policies at the time dominated: the escape clause, first instituted by executive order under President Truman and later established in legislation; and the peril point provision. The escape clause allowed for the temporary reimposition of tariffs when fairly priced imports were proven or threatened to harm domestic industry. The peril point provision required the United States Tariff Commission (USTC) to evaluate the effects of tariff reductions, and determine a point at which tariffs might be reduced without doing harm to domestic producers. Although President Eisenhower would continue to receive renewed trade agreements authority that allowed him to pursue tariff-reducing agreements, domestic pressure resulted in shorter extensions and more limited tariff cuts. Trade as foreign economic policy again found itself in tension with a domestic policy aimed at securing and maintaining the economic welfare of U.S. citizens at home. This policy tension opened the door to the earliest legislative vestiges of TAA in the early 1950s. While it would take more than a decade to become law, TAA legislation would eventually serve, at least in part, to reconcile these sometimes competing foreign and domestic economic policy priorities. At the end of the Truman Administration, the Public Advisory Board for Mutual Security (the Bell Committee) made first mention of assistance to firms and workers facing increased competition from imports. Although little came from this proposal at the close of the Truman presidency, a year later TAA hit the spotlight in the report prepared by the 1953 Commission on Foreign Economic Policy, created by Congress as part of a one-year extension of the trade agreements authority legislation. Known as the Randall Commission, its appointed task was to recommend a long-term strategy for U.S. foreign economic policy. In addition to recommending a three-year extension of the Trade Agreements Act, it evaluated a proposal for "government assistance to communities, employers, and workers." The report found TAA noteworthy in theory, but criticized and ultimately rejected it as too narrow an approach to economic dislocation by limiting assistance to groups affected only by lower import tariffs. The proposal, drafted by commissioner David J. McDonald, president of the United Steel Workers, expressed concern that "unemployment caused by government action, as in the lowering of tariffs, should be of particular concern to the government," particularly in times of economic slowdown. The plan called for temporary assistance to communities, companies, and workers threatened by imports, to be given in the form of technical and financial assistance. This approach would presumably encourage import-affected industries to diversify their output, and encourage communities to explore ways to expand employment opportunities with additional financing for privately supported industrial development corporations. In a formal critique of the Randall Commission report, a group of noted economists acknowledged the historical precedent for government assistance in cases of policy-induced economic change, but reiterated a preference for responses that addressed the larger problem of economic dislocation rather than just the tariff issue. They also raised a number of pragmatic questions related to operating TAA programs. Two important legislative initiatives emerged from this effort. First, a report evaluating TAA was called for in legislation extending trade agreements authority to the President. Second, the following year, the first of a series of TAA bills would be introduced in the 83 rd Congress. Senator John F. Kennedy, who would eventually see TAA put into practice during his presidency, was an avid supporter of assistance to those negatively affected by trade. In the 83 rd Congress, he introduced the Trade Adjustment Act of 1954 (S. 3650). The bill acknowledged the importance of international trade, but also the potential for localized adjustment problems, even when trade benefited the nation as a whole. The 83 rd Congress did not act on this bill, but Senator Hubert Humphrey introduced an identical version in the 84 th Congress. Originally introduced as a stand-alone bill, it was subsequently attached as an amendment to H.R. 1. The bill extended trade agreements authority to the President, linking TAA to the authority of the President to enter into reciprocal trade agreements. The Kennedy/Humphrey bills, among others, proposed that where a reduction in tariffs on competing articles "have been found either to threaten or to have caused serious injury to a domestic industry," that a board consider application for assistance from firms, communities, industrial development corporations, employees, or organizations representing employees. Aid would be limited to a period of adjustment and was not to be considered a permanent subsidy. The goal was to respond to negative effects of a liberal trade policy without resorting to protectionist policies. As would be the fate of future TAA bills in the 1950s, Congress took no action, but TAA became increasingly solidified as part of the U.S. trade policy debate. Both the Democratic and Republican platforms of the 1960 presidential election placed foreign economic relations at the center of their agendas. The Democratic platform included a specific appeal for TAA as part of an expanded trade policy. The Republican platform, by contrast, had no such proposal, giving added weight to the escape clause and peril point provision. The GATT Dillon Round was concluded in 1961, in which the United States agreed to cut the tariffs on 61 items below their peril point. This development marked a departure from earlier, more cautious negotiated positions which, coupled with high U.S. unemployment, created a policy environment conducive to assisting trade-affected constituents. The global market expanded briskly following World War II, and the growing importance of the then-European Economic Community (EEC) nudged U.S. policy further toward trade liberalization. Forming a trade pact with one of the most important markets in the world was not only considered an economic imperative, but central to achieving lasting world peace by defusing tension over protectionist policies. The United States also faced balance of payments pressures, modest unemployment, and the growing Communist threat, so trade policy had become an essential ingredient of foreign economic policy. In this light, many considered the Trade Expansion Act of 1962 to be the most important legislative initiative of the 87 th Congress. The 1962 Trade Act not only gave the President unprecedented "tariff-cutting authority," particularly with respect to a critical trade partner, but added a whole new approach to dealing with domestic resistance to trade liberalization—trade adjustment assistance. TAA stood in contrast to the escape clause and peril point (the latter dropped in the 1962 act). These options were well honed in the 1950s, despite pressure by the executive branch to limit their use. TAA was also a different and more highly targeted approach than the escape clause, focusing on specific firms and workers, rather than an entire industry, hurt by "concessions granted under trade agreements." TAA was offered in the form of increased and extended unemployment benefits, retraining and relocation allowances, loans and technical assistance for firms, and special tax deductions. TAA shifted the trade debate by acknowledging more fully in legislation the costs of trade liberalization. It was also politically effective, generating support from labor constituencies without turning to more protectionist responses. It is notable that a relatively lengthy and broad "negotiating authority" was achieved in a bill that also included TAA for the first time. Despite passage with bipartisan support, it was, nonetheless, the most controversial aspect of the bill. The House mounted stiff resistance to TAA from Republicans and some conservative Democrats, who objected to special treatment for tariff-affected workers and firms, and who sought a separate vote on TAA. Despite this effort, the bill was debated under a closed rule, prohibiting amendments, and passed with bipartisan support, despite a majority of House Republicans voting against it. The Senate rejected attempts to delete or modify the TAA provisions, and proceeded to pass the bill with broad support and only minor amendments. The 1962 Trade Act also changed the nature of trade legislation. In recognizing the need to address domestic concerns as part of trade liberalization, Congress and President Kennedy incorporated TAA into broader trade policy. Previously, Congress concerned itself with (1) conveying a specific trade agreements authority to the President, which in turn (2) would lead to new trade agreements, without the need for further congressional action. After 1962, it would become difficult to consider new trade agreements authority without taking up TAA, and it became increasingly likely that prospects for congressional support for new trade agreements would also hinge on such an accommodation. TAA initially achieved one goal: greater support from labor groups for trade liberalization. By 1971, as the U.S. balance of trade turned to deficit for the first time since 1888, and perceptions of lost income and jobs to foreign competition grew, this support began to erode. The failure of TAA to provide significant relief from imports in its first decade of operation added to labor's concerns. From 1963 until 1969, not one of the 6 worker or 12 industry-wide petitions for TAA led to assistance. The eligibility criteria were tough to meet, requiring demonstration that the imported article was increasing, that the increase "was caused in major part" by the tariff reduction, and that the increase was the "major cause" of injury to the firm or worker. The multistep process also took months to complete and was costly for the applicants. In hindsight, the inability to demonstrate injury and the laborious administrative procedures combined with strict U.S. Tariff Commission (USTC) rulings led to a deepening dissatisfaction with TAA. Although USTC adjudication would become more relaxed in the early 1970s, and the number of affirmative rulings would rise, they were still only a fraction of total petitions, and the political tide had already turned on TAA. Pressure mounted to address programmatic deficiencies, but by 1972 organized labor formally rejected the program for the time being. In hearings before the House Subcommittee on Foreign Economic Policy of the House Committee on Foreign Affairs, leaders of the AFL-CIO came out against the program, as well as trade liberalization in general. The sentiment is reiterated by one trade expert: "So in the first 30 postwar years, import-affected industries that played the trade policy game by the legal rules generally lost out" and pressure mounted for Congress to intervene directly for constituents, an option that the trade remedy rules "were intended to avoid." Critics called for major adjustments to the TAA eligibility criteria and administrative procedures, but the Nixon Administration offered a trade bill that actually diminished TAA. As the bill wound its way through Congress, however, both the House and the Senate not only restored all TAA benefits, but increased them and made changes that would facilitate program implementation. This was accomplished in the Trade Act of 1974, one of the most far-reaching trade bills in U.S. history. Unlike in 1962, TAA was not the most controversial trade issue in 1974, although Congress still paid it considerable attention. Despite intentions to the contrary, TAA had so far done little to encourage retraining or relocation of workers, and few firms capable of recovery received meaningful assistance. Providing additional unemployment insurance was its most noted accomplishment, and not one deemed by some as particularly effective in addressing injury from imports. Although numerous bills were introduced that would address many of TAA's perceived weaknesses, Congress passed none of them until TAA was once again united with the major 1974 trade bill providing for renewal of trade agreements authority. Originally crafted by the Nixon Administration, the draft trade bill acknowledged the deficiencies of the TAA program, and effectively gutted it. Congress, however, decided to retool rather than retire the program. Among the major changes, the eligibility criteria were made less stringent so that imports no longer had to be the "major factor" of threatened or actual dislocation, meaning more important than all other causes combined. Congress replaced this test with criteria requiring demonstration that a significant number of workers had lost their jobs, that a firm's sales had decreased, imports had increased, and that the imports "contributed importantly" to the declines. Determinations also were moved to the U.S. Department of Labor and the U.S. Department of Commerce for workers and firms, respectively, leaving escape clause determination to the newly named U.S. International Trade Commission (USITC). Requiring the two departments to act within 60 days versus six months for the USITC often made the TAA option preferable to escape clause action. Other notable changes included adding a new program for communities, increasing worker and firm benefits, and providing special assistance for older displaced workers, or those who tend to make up a larger portion of plant closings compared to layoffs. Congress also included strong language indicating its intent that the program be used as a meaningful form of relief from imports. In the end, the Trade Act of 1974, known for its dramatic changes in how trade agreements would be considered under new expedited procedures, also provided a congressional imprint of support for TAA by carefully considering ways to enhance the program, and ensuring its prominence by linking it to the major trade bill providing renewed trade agreements authority to the President. In 1979, U.S. trade policy took a major step with ratification of the GATT Tokyo Round of multilateral trade negotiations. For TAA, however, it marked the beginning of a long period of decline. Separate legislation to extend and expand the program passed the House, but failed to move through the Senate. Although Congress eventually reauthorized the program, by the early 1980s, TAA had become a victim of its own growth, negative program evaluations, and changing political and economic priorities. The declining automobile industry proved to be one catalyzing factor in its demise. The slowing economy and increased Japanese imports led to large layoffs and related "explosion of TAA claims," which at the time resulted in historically generous benefits. This combination multiplied TAA program costs to the extent that President Carter, generally a supporter, expressed concern over the budgetary impact. Although he agreed to a two-year extension, TAA could not escape the impending deep budget cutting of the incoming Reagan Administration. Congress extended TAA in the Omnibus Budget Reconciliation Act of 1981, but the act reduced benefits and eliminated $2.6 billion from the budget. Detractors cited as cause a General Accounting Office (GAO) report that challenged the program's effectiveness to bring about adjustment rather than simply pay out additional benefits. High unemployment provided a reason for Congress to support TAA, but Congress extended it only through FY1983, again with much diminished finances and tightened standards for eligibility, particularly for unemployment benefits. By 1983, the Reagan Administration openly sought to terminate the program (as did his successor President George H. W. Bush), which was spared in reduced form by a congressional extension through FY1985. After two very short extensions and a three-month lapse, TAA was finally extended for six years, through FY1991, as part of deficit-reduction legislation passed in 1986. Its programs were again trimmed with, for example, the elimination of all loans, loan guarantees, and other direct financial assistance to firms, providing only technical assistance, the basis of the firm program today. It received additional extensions first through FY1993 in the Omnibus Trade and Competitiveness Act (OTCA) of 1988, and second, through FY1998 in the budget reconciliation bill of 1993 (see the Appendix ). The lengthy extensions appeared to be inversely proportional to the budgetary effort in the bills. In short, beginning in the 1980s, TAA came under severe pressure. Evaluations criticized the program's effectiveness and rising costs, making it more difficult to support, even as a form of leverage to promote trade liberalization. TAA was also caught up in the deficit reduction negotiations, losing much of the clout it may have had years before, when it was part of finding compromise in broader trade and foreign policy debates. Two of its longest extensions were for much reduced program commitments, both done in budget rather than trade bills, where it was divorced from its primary policy rationale. But even within the trade policy debate, emphasis was shifting back toward import relief, as seen in the rise of special protection in the form of voluntary export restraints (VERs), and countervailing duty (CVD) and antidumping (AD) petitions. These became core negotiating objectives during future GATT rounds, temporarily relegating TAA to the back seat of the trade policy debate. The major trade events of the 1990s, occurring relatively early in the decade, were passage of the North American Free Trade Agreement (NAFTA) and the GATT Uruguay Round. Negotiations to implement NAFTA were well underway during the 1992 presidential campaign and were highlighted in the debates. Newly elected President Clinton oversaw the implementation of NAFTA, but did so only after a number of conditions were attached, including TAA. NAFTA reinvigorated TAA by including a separate program (NAFTA-TAA) that applied only to dislocation related to increased trade with Mexico and Canada. This limited case was the only time that a TAA program has been authorized in an FTA implementing bill, which Congress passed in December 1993. Four months earlier, Congress had already extended the general TAA programs for a five-year period as part of the omnibus budget reconciliation bill. In 1999, Congress extended TAA through 2001, at which point it lapsed until reauthorized for five years as part of the Trade Act of 2002. TAA played a major role again in the 2002 debate over the extension of trade agreements authority to President Bush (renamed Trade Promotion Authority—TPA). President Bush and the Republicans pushed hard to renew the long-expired authority, but Democrats were unwilling to provide it unless TAA was reauthorized. With the apparent need for a quid pro quo, the House Ways and Means Committee, under Republican leadership, offered a TAA bill first. The Senate Finance Committee drafted its own TAA bill, and agreement was tentatively struck to keep the votes separate on TAA and TPA. After a lengthy and exhaustive legislative process, however, the final bill that would become the Trade Act of 2002 incorporated TAA, TPA, and a host of other trade issues. Despite Republican opposition to the TAA language, Congress revised and expanded TAA programs for five years, through September 30, 2007. Among the key new features, the bill merged NAFTA-TAA with the general program, created government-subsidized health insurance (Health Coverage Tax Credit) for dislocated workers, altered eligibility criteria to include secondary or downstream workers affected by imports, and added a new program for farmers. The bill as a whole passed in a tense, close, and some have argued, a bipartisan vote. At this juncture, TAA had once again worked its way into the center of the trade policy debate and trade-related legislation. In the intervening years since the Trade Act of 2002, Congress debated TAA reform with an eye on making it more responsive to the complex economic challenges of "globalization." Congress did not complete legislative action intended to reauthorize and revise TAA programs prior to their expiration on September 30, 2007. As an interim measure, on September 25, 2007, it passed a simple extension through the end of the calendar year ( P.L. 110-89 ). Competing visions along party lines, however, prevented more comprehensive legislation from passing in either the 110 th or 111 th Congresses. In the 110 th Congress, House Democrats drafted the Trade and Globalization Assistance Act of 2007 ( H.R. 3920 ). It offered a revised approach to TAA that emphasized expanding eligibility to services workers and firms, public sector workers, and industry-wide applicants. It would have eliminated the 2002 requirement that shifts in production be related to specific trade agreements and provided more flexible training opportunities, as well as stricter evaluation requirements. The bill also would have raised program benefits, including higher authorizations for all TAA programs and increased health coverage tax credit and longer income support. Many House Republicans and the Bush Administration supported TAA reauthorization, but came out against the Democratic option, offering a substitute version instead. They took issue with both the expanded eligibility and spending levels, arguing that they failed to make the needed reforms in efficiency, flexibility, oversight, and program delivery that would make TAA more useful and cost effective. The Republican position also pressed for tying TAA reauthorization to legislation that would renew TPA and implement bills for the then-pending FTAs with Colombia, Panama, and South Korea, whereas the Democrats argued that TAA should be reauthorized apart from these issues. The House Ways and Means Committee reported favorably on the bill, but the votes on the chairman's language and multiple amendments offered by Republicans were taken along party lines. The full House passed H.R. 3920 on October 31, 2007. The bill was sent to the Senate for consideration, where a companion (but not identical) bill ( S. 1848 ) had been introduced. The Senate, however, did not take up a TAA bill and program authorizations expired on December 31, 2007. In not reauthorizing TAA, the 110 th Congress instead provided short-term funding through consolidated appropriation bills to keep the TAA programs running (see Appendix for legislative chronology). In the 111 th Congress, consideration of TAA reauthorization coincided with the U.S. economy falling into a deep recession following an unprecedented financial crisis. Congress responded with passage of the American Recovery and Reinvestment Act (ARRA) of 2009. This act became the legislative and budgetary vehicle to move TAA revisions that had been developed over the previous years. Basic disagreements over the substance of the TAA bill remained, but Congress reauthorized the Trade and Globalization Adjustment Assistance Act (TGAAA) of 2009 as part of the larger ARRA bill. It extended the programs through December 31, 2010, and revamped them using a revised version of the framework developed in the 110 th Congress. This framework included eligibility for service workers and firms, a new communities program, an increased Health Coverage Tax Credit for dislocated workers, and additional funding for all programs, among other changes. At the close of 2010, as TAA programs were about to expire again, Congress extended them through February 12, 2012, as part of the Omnibus Trade Act of 2010. Higher authorization levels and expanded provisions of the ARRA, however, were only extended through February 12, 2011, although TAA programs continued to operate at their pre-ARRA levels until early February 2012. When the ARRA provisions expired, a basic controversy reopened, largely along partisan lines. Supporters of the expanded TAA saw the TGAAA-passed reforms as long-sought permanent changes needed to modernize TAA for the 21 st Century. TAA detractors viewed the lapsed expansion of TAA reforms as the appropriate outcome of a limited-life stimulus bill. The debate took on new life early in the next Congress. At the beginning of the 112 th Congress, TAA program authorizations were set to expire on February 13, 2012. Basic disagreements over TAA remained entrenched in Congress, with a strong Democratic base arguing for continued revision and expansion, and many Republican Members voicing either strong opposition to the concept and programs, or support for a different set of reforms. TAA proponents reiterated the need to assist those hurt by "trade and globalization," while opponents increased their critique of TAA for its lack of effectiveness and high costs. Budgetary considerations loomed in the background of all these discussions, as did intensifying debate over passage of implementing legislation for free trade agreements (FTAs) with Colombia, Panama, and South Korea (KORUS). Despite many partisan disagreements, the desire to find a path forward on passage of TAA and the FTA implementing bills gained momentum. As in times past, TAA became the linchpin for legislative action on major trade bills. Two issues had to be resolved if legislation was to move forward. First, Congress had to write a TAA bill that would garner sufficient bipartisan support in both houses. Second, because of strong differences of opinion and increasing distrust between legislative and executive branches, a legislative path was needed that would ensure passage of all three implementing bills and the TAA legislation, in tandem. TAA reauthorization was first attached to the Senate draft implementing bill for the KORUS agreement as a way to ensure that TAA would pass with the FTA implementing bills. As a legislative vehicle, however, this approach presented a number of complications. First, FTA implementing bills considered under TPA legislation require that they contain only provisions changing laws or providing new statutory authority that are "necessary or appropriate" to implement the agreement, raising the question for some as to whether the TAA provisions met this standard. Second, many Members in both parties and houses of Congress had varying viewpoints on each of the FTAs and TAA, and so preferred four separate votes. These fundamental disagreements revealed themselves in a party-line vote on approval of the KORUS agreement in the Senate Finance Committee "mock markup." The House version of the draft implementing bills for the FTAs did not include a TAA provision, leading to another round of party line votes in the Ways and Means Committee "mock markup." To address myriad concerns and the potential for deadlock, congressional leaders and the White House developed an elaborate alternative that virtually ensured expeditious passage of all four bills. Congress settled on introducing four separate bills: TAA reauthorization ( H.R. 2832 ); Colombia FTA implementation ( H.R. 3078 ); Panama FTA implementation ( H.R. 3079 ); and South Korea FTA implementation ( H.R. 3080 ). Moving the bills involved fast-paced and highly nuanced procedures. The process began on September 7, 2011, with House passage of a bill to reauthorize the Generalized System of Preferences ( H.R. 2832 ). The bill was sent to the Senate, where it was amended with the addition of what would become Title II, the Trade Adjustment Assistance Act of 2011. On September 22, 2011, the Senate agreed to the amended bill, 70-27, after which it was sent to the House. In separate action, President Obama sent the three FTA implementing bills to both houses of Congress. The House Ways and Means Committee favorably reported out the three FTA implementing bills on October 3, 2011. On October 6, 2011, the House Committee on Rules issued a closed rule covering all four bills. On October 12, 2011, both the House and the Senate acted to complete passage of all trade bills. The House passed the three implementing bills in quick succession, sending them to the Senate for approval later that evening. The House then took up H.R. 2832 , as amended and passed in the Senate. It was considered under a rule that waived all points of order and allowed for one hour of debate. The House passed H.R. 2832 by a vote of 307-122, approving TAA reauthorization with bipartisan support. President Obama signed the bill into law on October 21, 2011 ( P.L. 112-40 ). Congressional leaders and the White House agreed on a compromise TAA bill (the Trade Adjustment Assistance Act of 2011) that found a middle ground between the provisions in the Trade Act of 2002 and the TGAAA. Despite lingering opposition by some, it was broadly understood that TAA was essential to move the FTA implementing bills, so both parties and houses of Congress eventually came to accept this solution and passed them all. The TAA bill reauthorized the workers, firms, and farmers programs through December 31, 2013. TAA for communities was discontinued because it was considered duplicative of other federal programs, but one component, the trade adjustment assistance community college and career trading grants, was retained. Many, but not all, of the enhanced programs and funding levels contained in the ARRA were reauthorized, including renewing eligibility for services workers and firms, increasing income support for workers undergoing job training, setting the Health Coverage Tax Credit at 72.5%, expanding funding for training benefits, and reinstituting more detailed program reporting and evaluation requirements. There were some funding reductions from ARRA levels for job search, relocation assistance, and wage insurance for older workers. Public sector workers were dropped as eligible for benefits. Eligibility is retroactive to the expiration date of the ARRA enhancements. The firms and farmers TAA programs were reauthorized at annualized levels $16 million and $90 million, respectively, less than in ARRA, but comparable to current (and historical) appropriated levels. Although many opponents of expanding TAA programs spoke out against the reauthorizing legislation, its ultimate passage once again suggests that TAA remains an integral part of the debate over trade liberalization. Without providing assistance to those hurt by trade liberalization, moving ahead with the trade policy agenda remains a difficult proposition, an outcome consistent with congressional voting trends on trade legislation since 1962. Some 50 years after its inception, TAA remains a hotly debated topic in Congress and this debate was renewed with President Obama's request to link TAA reauthorization with renewal of TPA reauthorization. In addition, the Trade Adjustment Assistance Extension Act of 2013 was introduced in the 113 th Congress on July 24, 2013. It would extend the TAA programs through 2020 at current funding levels. Nonetheless, a lingering disagreement exists as to whether TAA and TPA should be tied together in legislation. One perspective argues that TPA should include TAA renewal. History could be interpreted as supportive of this notion. TAA began and, for its first two decades of existence, received its staunchest support when included in trade agreements authority legislation. This was also the case for the Trade Act of 2002. In part, reauthorizing legislation for TAA has varied in type for many reasons. Although TAA has been an important component of the "national trade policy" debate, TAA reauthorization bills have not always coincided with the granting of trade agreements authority or TPA. For example, at times when there has either been a long renewal of TPA (e.g., 1979-1988), or no renewal for an extended period of time (e.g., 1993-2002), Congress has reauthorized expiring TAA programs independent of TPA. On the other hand, 50 years of history suggest that the debate on TAA tends to return to congressional consideration of broader trade liberalizing legislation—the granting of TPA. Congress often takes this as the appropriate time to amend or extend TAA, in no small part because of the fundamental need to find a balanced political outcome on legislation that gives rise to the basic issue of the cost of freer trade. The reverse, attaching TPA to TAA legislation, has not been common. TAA, however, has also been reauthorized in standalone and appropriations bills in addition to major trade legislation. Nonetheless, with TAA receiving relatively short extensions in recent years, the current trade policy debate likely will see these two issues reunited. By comparison, TAA has generally not been included as part of the debate over the consideration of implementing legislation for reciprocal free trade agreements. Often such legislative action occurs in a period following lengthier extensions of both TPA and TAA, and so there is little or no need to address TAA in an implementing bill. The lengthy delay from signing the three FTAs to consideration of implementing legislation in the 112 th Congress is one factor that altered this particular legislative situation. In the end, Congress decided that the easier course was to keep the implementing bills free of provisions that might be challenged as extraneous under TPA rules.

Congress created Trade Adjustment Assistance (TAA) in the Trade Expansion Act of 1962 to help workers and firms adjust to dislocation that may be caused by increased trade liberalization. It is justified now, as it was then, on grounds that the government has an obligation to help the "losers" of policy-driven trade opening. TAA is also presented as an alternative to policies that would restrict imports, and so provides assistance while bolstering freer trade and diminishing prospects for potentially costly tension (retaliation) among trade partners. As in the past, critics strongly debate the merits of TAA on equity, efficiency, and budgetary grounds. Nonetheless, finding agreement on TAA remains important for forging a compromise on national trade policy. TAA program authorizations are scheduled to expire on December 31, 2013. The Trade Adjustment Assistance Extension Act of 2013 (S. 1357) was introduced in the 113th Congress. It would extend TAA programs through 2020. President Obama also supports TAA reauthorization, linking it to renewal of Trade Promotion Authority (TPA), which Congress may also take up this year. This report discusses the role of TAA in U.S. trade policy from its inception as a legislative option in the early 1950s to its core role as a cornerstone of modern trade policy that many argue has served to promote the long-term U.S. trade liberalization agenda. When TAA was reauthorized through December 31, 2013 in the 112th Congress, Democratic leaders and the Obama Administration considered TAA a quid pro quo for passage of three implementing bills for free trade agreements (FTAs) with Colombia, Panama, and South Korea. There was, however, considerable partisan debate over the direction TAA should take. Congress had expanded TAA in the American Recovery and Reinvestment Act (ARRA) of 2009 from an earlier version in the Trade Act of 2002. The issue before the 112th Congress was how to craft a compromise TAA bill that would receive bipartisan support in the both houses, and assure its passage along with the three implementing bills. Such an understanding was developed and became part of H.R. 2832, a bill to reauthorize the Generalized System of Preferences (GSP). In an elaborate legislative procedure, both chambers passed the four trade bills on October 12, 2011. TAA reauthorization in the 113th Congress will likely revive a historical debate over the role of TAA as part of broader trade policy. Legislation introduced so far reflects a status quo extension of existing programs through the end of 2020, including reauthorization at existing levels of $16 million and $90 million, respectively, for the firms and workers programs. Nonetheless, Congress may take up a broader debate on the issue, if history provides any guidance.

Recent Congresses have considered legislation to establish a national water commission modeled after the 1968-1973 National Water Commission (NWC). Interest in a commission stems from basic concerns about how water is being used to support the nation's people, economy, and environment, as well as the appropriate role of the federal government in water resources management. Questions about whether a commission would be effective at addressing the nation's water resources challenges and what topics it would be charged with have raised interest in assessing the status of recommendations in the NWC's 1973 final report, Water Policies for the Future . In its report, the Commission made more than 200 recommendations for improving federal and state water resources actions. As Congress considers whether to establish a new "Twenty-first Century Water Policy Commission," questions arise about the scope and effect of the 1973 NWC report. After a brief introduction to U.S. water policy and the NWC, this report presents a general summary of the NWC report, its recommendations, and how these issues have evolved since 1973. The issues are organized into five categories: (1) " Governance and Institutional Issues "; (2) " Water and the Natural Environment "; (3) " "Users Pay" or "Beneficiary Pays" Approach "; (4) " Improvements to Water Quality "; and (5) " Water Rights ." The remainder of this CRS report provides greater detail on issues that fall under each of the five broad categories. The report provides an overview of key issues and recommendations identified by the NWC; it neither covers the entire NWC report nor provides an exhaustive assessment of progress made on Commission recommendations. The responsibility for development, management, and allocation of the nation's water resources is spread among federal, state, local, tribal, and private interests. The federal government has been involved in water resources development since the earliest days of the nation. From improvements first to facilitate navigation, and later to reduce flood damages and expand irrigation in the West, the federal government has been called upon to assist with and pay for a multitude of water resource development projects. In recent decades, it also has regulated water quality, protected fish and wildlife, and facilitated water supply augmentation. However, the federal role also has limits. For example, Congress has generally deferred to the states' primacy in intrastate water allocation. While local municipalities have largely been responsible for developing and distributing water supplies, the federal government in limited cases also has been authorized to assist communities with water supply development. Land use planning and zoning are almost always within the purview of local governments; however, federal and state actions and interests may run counter to local interests and actions, and vice versa. Nearly two centuries of water resource project development, environmental and resource management activities, and population shifts have resulted in a complex web of federal and state laws and regulations, local ordinances, tribal treaties, contractual obligations, and economies based on existing water use patterns and infrastructure. These laws have been enacted for diverse purposes, including to allocate, manage, and regulate water use, protect its quality, develop its energy potential, contain its destructive powers, and restore or maintain its biological integrity. Development of these laws has required the action of numerous congressional committees and federal agencies. At the congressional level, this interest has resulted in a set of diverse and sometimes overlapping committee jurisdictions dealing with various aspects of water policy. At the executive branch level, this interest and congressional direction has resulted in many agencies and organizations being involved in different but related aspects of federal water policy. This dispersed arrangement complicates management of large river systems (e.g. Missouri, Mississippi, Columbia, and Colorado River basins) and estuaries (e.g. Chesapeake Bay and the San Francisco Bay and Sacramento-San Joaquin Rivers Delta (California Bay-Delta)), especially where anadromous fisheries or threatened or endangered species are involved. For example, fishes navigating some of these large river systems must pass through waters and facilities managed by multiple state and federal agencies and are affected by state, federal, local, and tribal water and land management decisions. Multiple laws and responsibilities also confuse entities looking for assistance with local water projects or other related activities, as well as those seeking to increase recreational opportunities, fish and wildlife protection, and scenic enjoyment. For example, multiple federal programs exist to help communities with rural water supply, wastewater treatment, drinking water quality, and other water-related needs. At the state level, concern arises any time the federal government is perceived to be infringing on the concept of state primacy in water allocation or controlling water management decisions. This federal-state tension is mirrored in executive-legislative tensions over water resources development and management. Thus, in responding to the former concern, many experts have called for a "national" (i.e., not federal) commission or other mechanism that would involve states and localities in development of a national water policy "vision." Complicating matters further is the dynamic nature of water itself. The basic hydrologic cycle, climate variability—including floods and droughts—and the chemical, physical, and biological nature of surface and ground waters are in a constant state of flux. Criticism of the fractured nature of federal water policy has been a recurrent theme for decades. Historically, countless commissions, councils, and studies have called for new directions in water policy and better planning, evaluation, and coordination of federal actions. Options used in the past have included formal and informal coordination entities within the executive branch, non-governmental commissions tasked with reviewing past policies and laws, and a legislative branch committee made up of key committee leaders. Congress has not enacted any comprehensive—or overarching—change in federal water resources management or national water policy since enactment of the 1965 Water Resources Planning Act (P.L. 89-80; 42 U.S.C. §1962). The Water Resources Planning Act was the direct result of recommendations of the Senate Select Committee on National Water Resources, a congressional committee established to review national water resources policy. Although an assessment of the nation's water resource conditions was last conducted in 1975 and several entities have studied selected aspects of water policy and management, the last systematic and comprehensive review of nationwide federal water policy was the 1973 NWC report. Congress, which represents local interests, often has reacted to proposals to change or reorganize water organizations and institutions as attempts to exert federal control over state and local matters or as attempts to concentrate power and decision-making in the executive branch. Congress arguably has been comprehensive (in the aggregate) in its approach to legislating on many different aspects of water law and policy, but it has not done so in a coordinated or overarching way. Any attempt to untangle the complexities of current water policy involves many constituencies with differing interests, and becomes politically difficult to sustain. Instead of comprehensive or overarching legislation, Congress has enacted numerous incremental changes, agency by agency, statute by statute. Both the executive and judicial branches have responded to these changes and, over time, have developed policy and planning mechanisms largely on an ad hoc basis. When coordination of federal activity has occurred, it has been driven largely by pending crises, such as potential threatened or endangered species listings, droughts, floods, and hurricanes; and by local or regional initiatives. Concern about water supply and its development, however, has bolstered recent interest in legislation to establish a national water commission to assess future water demands, study current management programs, and develop recommendations for a comprehensive strategy. The National Water Commission was created by Congress in 1968 to "provide for a comprehensive review of national water resource problems and programs ... " Congress specifically tasked the Commission to (1) review present and anticipated national water resource problems, including making projections of water "requirements" and alternative ways of meeting such requirements, giving consideration to a host of interests and technological approaches; (2) consider economic and social consequences of water resource development; and (3) advise on such specific water resource matters as might be referred to it by the President and the then-existing Water Resources Council (WRC). (See box, " Brief History of the Water Resources Council .") Creation of the Commission stemmed largely from congressional debate over development of dams and related irrigation infrastructure in the Lower Colorado River Basin, which in total "would use more water than the river could supply." Members of Congress from the Pacific Northwest, including the chairman of the Senate Interior and Insular Affairs Committee, objected to proposals to transfer water from the Columbia River Basin to supply the needs of states in the Southwest, and a political compromise was reached to create a commission to study water resource problems—a suggestion originally proposed by the Bureau of the Budget. Passage of legislation authorizing the National Water Commission was a direct result. The Commission was made up of seven members appointed by the President. Although none was allowed to be a federal employee, some, including chairman Charles F. Luce, had formerly held senior positions in the federal government. Members were chosen largely for their expertise in a variety of fields related to water resource management. Together, they represented a range of geographic regions and backgrounds in government, industry, and law. Unlike the common practice of today, no special interests were required to be represented. While progress has been made on addressing many of the problems identified by the Commission, particularly through successive enactment of many Water Resource Development Acts, Reclamation laws, and amendments to water quality legislation, few actions can be directly traced to the Commission's 1973 recommendations. Aside from immediate oversight hearings by the Senate Interior and Insular Affairs Committee and Senate Public Works Committee, and references in appropriations hearings, the report received no direct follow-up action. In 1978, the Commission's executive director, Theodore Schad, noted that the report had remained in "limbo," awaiting mandated action from the WRC and final transmission from the President to the Congress. Schad went on to note: It appears these actions [WRC comments and recommendations from the President to Congress] will never be taken. President Nixon became preoccupied with his defense against the Watergate scandals which ultimately led to his resignation. The Ford administration occupied itself with the Section 80 study of water policy. And the Carter administration appears to have accepted Santayana's comment as its precept [that "those who cannot remember the past are condemned to repeat it"]. Instead of direct action to implement the Commission's recommendations, it appears that water policy has continued to evolve—in some areas, much as the Commission predicted—and that this evolution has had many drivers, including but not limited to the Commission findings. For example, a shift from federal grants to loans for local water quality activities is consistent with the Commission's recommendation for an end to such grants; however, the change was not a direct response to the Commission's recommendations. Changes in Reclamation law in 1982 and federal cost-share policies in 1986 also reflected Commission recommendations. Again, however, it is doubtful that these changes were a direct response to Commission recommendations; rather, they reflect the culmination of many forces to bring about change. Despite the evolution in water policy, many of the problems identified by the Commission remain today. Often, what makes these problems so intractable is the difficulty in reaching agreement among varied stakeholders as to the proper and respective roles and responsibilities of federal, state, local, tribal, and nongovernmental entities in water management and the distinct dichotomy between agencies, institutions, and constituencies dealing with various aspects of water resource issues on the one hand and water quality issues on the other. Whether a new commission could succeed in promoting direct responses where others have found difficulty is uncertain. Expectations for a commission to directly achieve changes in a complex system resistant to transformation may be unreasonable; instead, the influence of a commission may lie in how its recommendations combine with other drivers to create support for an evolution in policy. In June 1973, the National Water Commission completed its five-year term and published its final report, Water Policies for the Future . The Commission found that many of the country's water policies were based on outdated goals and objectives (e.g., settlement of the West, territorial expansion of navigation) and on flawed assumptions about future water needs. The Commission viewed itself as being at the cusp of a shift in water resources management, as the era of large dam construction and other large-scale development investments tapered off; this put the Commission in a unique position to take stock of past policies, assess implementation of then-current programs, and make recommendations for future federal, state, and local policies in water resource and water quality management. The report was based on hundreds of documents, special studies contracted by the Commission, eight public hearings, and other meetings conducted since its inception in 1968. Early chapters of the report describe the long history of water resource development and federal activities related to water supply and water quality, as well as water demand projections. The final Commission report included 17 chapters and supporting appendixes and 232 recommendations. It articulated seven basic themes, which together provided the foundation for the Commission's conclusions and recommendations: The demand for water in the future is not predetermined and does not follow an inexorable growth pattern, but depends on policy decisions that society controls. A change in emphasis from water development to preservation and enhancement of water quality and environmental preservation is underway and will continue into the future. Water development planning must be tied more closely to water quality planning, and all water planning to land use planning. Meeting future demands necessitates conservation, increased efficiency, and better use of water for agriculture, industry, and domestic and municipal purposes. Sound economic principles, such as consumers' willingness to pay, should be used to encourage better use of water resources, but tempered by governmental attention to protection of environmental values. Updated laws and legal institutions are needed to implement future water policies. The level of government (federal, regional, state, or local) nearest the water resource problem and capable of adequately representing all interests should control water resource development, management, and protection. In analyzing the above themes, the text of the report, historical analysis of the Commission's work, and congressional statements and hearings following the release of the 1973 report, CRS has identified several broad issues areas: a need for reevaluation of federal project planning and evaluation, as well as relationships among federal, state, local and tribal entities with respect to water management and water rights; concern about the effects of water resources management on the natural environment; a movement toward recovering from direct beneficiaries the costs of federal investments in water projects; and concern over degraded water quality. These issues are summarized in the following five sections: (1) " Governance and Institutional Issues "; (2) " Water and the Natural Environment "; (3) " "Users Pay" or "Beneficiary Pays" Approach "; (4) " Improvements to Water Quality "; and (5) " Water Rights ." A fundamental and overarching issue area addressed by the NWC was governance and related institutional mechanisms to address water management and planning. In particular, the Commission recommended numerous changes to the institutional structure through which water resources actions were planned, evaluated, and managed. Specific governance and institutional topics covered by the Commission included (1) water resources project planning and evaluation; (2) accounting for the environment in project development; (3) public participation in water resources planning; (4) federal water resources coordination; and (5) water resources authorizations, budgets, and appropriations. Although the basic functioning of the authorization, budgeting, and appropriations processes for water resources has not changed significantly since 1973, a few major changes in organizations and focus have altered the institutional landscape affecting water resources management. These include disbandment of the executive-level Water Resources Council (WRC) and most of the federal river basin commissions, and increased emphasis on state responsibility for water management and development. These changes largely moved water resources planning and evaluation in the opposite direction from Commission recommendations. (See box, " Brief History of the Water Resources Council .") The Commission also predicted (accurately) that large-scale federal development would play a less significant role than in the past, and instead identified joint or coordinated management of multipurpose water facilities, water quality, and local and nonfederal uses as more pressing. The predictions of less large-scale development and the increasing challenges of managing rivers for multiple uses have largely come to fruition. While the federal government has constructed many multipurpose projects, multi-objective federal planning—that is, planning for multiple objectives such as national and regional economic development, environmental quality, and other social and safety concerns—has not been implemented widely or consistently since the mid-1980s. The 1983 federal water resources planning guidance moved away from the 1970s planning guidance of multi-objective planning, and reverted to a focus on national economic development. This 1983 guidance remains in effect, although Congress recently enacted legislation requiring its update. Notwithstanding the current planning guidance's focus on economic criteria, the environment has received greater attention in federal water resources project planning and operations, due in large part to implementation of environmental laws, in particular the National Environmental Policy Act (NEPA; P.L. 91-190, 42 U.S.C. §4321 et seq.) and the Endangered Species Act (ESA; P.L. 93 - 205 , as amended; 16 U.S.C. §§ 1531-1543). The Commission found that budgeting procedures neither reflected nor promoted regional or long-term water resources development, and projects were often presented to Congress and considered individually. Considering project authorizations and appropriations as part of comprehensive river basin and regional development plans, as recommended by the Commission, has not been an option since the early 1980s, when most larger-scale federal water resources planning efforts were halted. Budgeting for the two largest federal water resource agencies (the Corps and the Bureau of Reclamation) also has remained largely project-specific, while federal funding for water quality infrastructure is largely done via formula-based funding to state revolving fund programs. In terms of federal appropriations for water programs, a shift from development to preservation indeed occurred; where once water resource development was predominant in water program spending, federal water quality spending significantly increased in the 1970s and has remained well above pre-1970s levels, while water resources development spending has experienced a modest decline (see Figure 1 ) . With regard to water resources program focus, development has slowed and federal water resource agencies now must take into account the environment in planning, constructing, and operating projects. Still, the degree to which development and environmental protection are evaluated and weighted remains central to many current water resources conflicts. The Commission found that by 1973, the best sites for dams and other water resource development projects had been used, that many projects had heavily affected the environment, and that the public had turned its support from development to environmental and water quality preservation. The Commission recommended a similar shift from development (construction of dams, irrigation ditches, channels, etc.) toward preservation and improvement of water quality. Its recommendations ranged across numerous fields, including (1) reservoir development; (2) flood policy; (3) estuaries and the coastal zone; (4) channelization; and (5) fish and wildlife protection. Many of the water and natural environment concerns raised by the NWC have been addressed via implementation of environmental laws at their infancy in 1973—for example NEPA, ESA, and the Clean Water Act (P.L. 92-500; 33 U.S.C. §1251 et seq.). Further, many of the largest current federal water actions are attempting to address environmental or species concerns through ecosystem restoration and stream rehabilitation (e.g., Everglades restoration, San Joaquin River restoration, and San Francisco Bay/San Joaquin River and Sacramento Delta (Bay-Delta) restoration); whether these recent efforts will perform as planned and whether the federal-nonfederal collaboration central to many of them will function effectively and efficiently remains in question. As a consequence, whether these changes and efforts adequately address the Commission's concerns is a matter of disagreement. The Commission also supported greater application of "users pay" and "beneficiary pays" approaches, which are founded on the concept that those directly benefitting from federal investment ought to pay the for investment. The twin goals of this approach were to improve equity and efficiency . These goals were the focus of several chapters in the final report, and the users pay and beneficiary pays policies were woven throughout the report. The Commission focused on (1) increasing (or establishing) general nonfederal cost shares of projects by federal water resource agencies (e.g., the Corps of Engineers and the Bureau of Reclamation); (2) establishing inland waterway user charges; (3) changing federal irrigation policy and implementing reforms to the Reclamation program (i.e., reducing federal irrigation subsidies and complexities); and (4) addressing appropriate pricing of water and wastewater services. At congressional hearings, the Commission stated that heavy federal investment in water resources development made sense in the early part of the nation's history and through the first half of the 20 th century, but changing federal priorities necessitated changes in water policies. The needed changes included improving cost recovery and eliminating program duplication and cross-purpose policies. Cost recovery remains part of the ongoing discussions of the proper federal role in water policy. For example, ongoing tensions between successive administrations and recent congresses over funding for federally supported water reuse and rural water projects have revolved mostly around what the proper federal role is in financing local municipal and industrial water supply projects. Federal program duplication also generates federal investment concerns; on the other hand, congressional supporters often justify new projects and programs as fulfilling an unmet social purpose. Regarding costly cross-purpose programs, numerous studies since 1973 have questioned the incentives created by federal assistance for flood damage reduction infrastructure (like levees and floodwalls). Specifically, if this infrastructure encourages commercial, residential, and industrial development in floodplains, the social and economic costs are generally greater when flooding occurs. Increasing or changing nonfederal cost shares or establishing special fees for beneficiaries of water projects consistently proves politically difficult. Nonetheless, some progress has been made in addressing the Commission's recommendations related to containing costs—most notably through increased cost shares for certain port development, flood projects, and establishment of a barge fuel tax. Some economists, however, argue that these steps have been insufficient to address the full range of inefficient cost share and water pricing policies. The elements of the final report that addressed water pollution control were some of the most controversial, chiefly because the Commission rejected some key concepts that Congress had recently adopted in the Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500; 33 U.S.C. §1251 et seq., commonly referred to as the Clean Water Act (CWA)). The draft final report was released one month after enactment of that major law, and the final report barely eight months after enactment. The Commission rejected the zero discharge goal and the core regulatory approach central to the CWA. The CWA is viewed today as one of the most successful environmental laws in terms of achieving its statutory goals, and the CWA programs have been widely supported by the public. The Commission made observations that remain valid about the extent of water pollution problems, despite water quality improvements that have occurred since then. Issues on which the Commission focused some recommendations, such as planning, federal and state roles, and enforcement through discharge permits, have been and remain basic elements of implementing water quality programs. The need to adequately fund pollution control activities, highlighted in several recommendations, also remains a challenge for policymakers. The Commission also focused on the scarcity of water as a resource and adapting to more efficient use and allocation. It suggested that procedural mechanisms and legal regulations, including adjustments to water rights, be implemented to ensure that water was used efficiently and effectively. Congress has enacted legislation protecting social and noneconomic values while respecting the state-based water rights frameworks; many states also have modified their water rights systems to protect social values. The Commission described water supply in the West as limited and near full appropriation, and it framed the Indian water rights issue as a conflict in the West between Indian rights to water and water development, on the one hand, and the potential harm to extensive non-Indian water development and use, on the other. As is the case today, Indian water rights claims were largely unquantified. The Commission found that resultant uncertainties created an urgent need to resolve Indian water rights claims; many perceive this as still being the case. The following sections provide an overview and analysis of the Commission's recommendations. Each section includes a brief discussion of issues identified by the Commission, a listing of key recommendations, and a discussion of whether certain recommendations have been implemented. In many cases, a discussion of how issues identified may have evolved is also included. The Commission found that future water requirements could not be fully assessed without taking into account how water resources are governed and what institutional structures guide their management, use, and allocation. The Commission emphasized that policy choices would greatly influence future water use and water "needs" or "requirements"—that future water "demands" would depend on multiple factors and future polices. A persistent tendency of water resources planning has been the issuance of single valued projections of water use into the future under a continuation of present policies, leading to astronomical estimates of future water requirements.... The amount of water that is actually used in the future will depend in large measure on public policies that are adopted. The National Water Commission is convinced that there are few water "requirements."... But there are "demands" for water and water-related services that are affected by a whole host of other factors and policy decisions, some in fields far removed from what is generally considered to be water policy. With regard to government programs and institutions affecting water policy, the Commission made many recommendations related to (1) water resources project planning and evaluation; (2) accounting for the environment in project development; (3) public participation in water resources planning; (4) federal water resources coordination; and (5) water resources authorization, budget and appropriations. The NWC predicted a less significant role for large-scale federal project development (e.g. construction of locks, dams, levees, and diversion facilities) than in the past. The Commission instead identified joint or coordinated management of multipurpose water facilities, water quality, and local and nonfederal uses as more pressing. It concluded that comparisons of alternative water uses would become increasingly important as demands increased on limited supplies. The Commission believed that estimating the values of various uses and pricing policies would be important to achieve efficient water allocation. It concluded that federal investment in water resources projects was inefficient for achieving regional economic development, and cautioned that careful development and assessment of project proposals were necessary to enhance their effectiveness and offset losses in other regions. The Commission found water resource project planning insufficient in its integration with land-use planning, water quality and environmental concerns, and the interests of the general public. The Commission criticized large river basin and watershed plans as avoiding needed prioritization, being unrealistically ambitious, and failing to capture the issues significant to metropolitan areas. It noted that important non-quantitative issues and judgments were buried in the analysis of some plans, and that federal planning requirements for states were costly while producing unclear state benefits. The Commission supported broadening traditional objectives of water resources plans, but was uncertain how to properly evaluate multi-objective plans and their alternatives. The Commission determined that society was not only concerned with national economic consequences, but also with water projects' nonmarket and regional effects. It found that a bias toward construction projects and projects within agency mission areas resulted in inappropriately narrow alternative formulation during the early phases of planning. In particular, the Commission found that there was a bias against alternatives for no action, delayed investments, and nonstructural measures (e.g., pricing, metering, conservation, evacuation, floodproofing). It found that the evaluation of alternatives seldom adequately treated adverse, indirect, social, and non-monetized effects. The Commission commented on the bias caused by the dominance of benefit-cost analyses in evaluation and selection, in particular the often overriding weight given the benefit-cost ratio in identifying the preferred alternative. The Commission also identified municipal water supply and wastewater treatment; recreation use; water quality and pollution control; and power plant siting and licensing as significant planning challenges. The Commission's planning recommendations focused on these issues as they relate to water resources planning. The discussion below similarly focuses on water resources planning, rather than water quality and other planning issues. To improve planning, the Commission recommended: integrating land-use and water planning at the state, federal, and local levels, and in coordinating institutions such as river basin commissions; increasing federal funds for state water planning, and access to these funds by local and interstate planning entities; authorizing federal-state-local planning organizations if there is a federal interest, and giving more intensive and continued attention to water management needs of smaller basins and metropolitan areas; estimating values for alternative water uses as part of basin plans, as appropriate; analyzing water resources as hydrologic systems (i.e., accounting for quantity, quality, timing, resource location, and subsequent uses); and judging fish, wildlife, and aesthetic values indirectly (i.e., not by economic evaluation), and basing decisions on the value of uses preserved exceeding the value of the uses foregone. For evaluating alternatives, the Commission recommended: approving the multi-objective planning approach in the WRC's (then-proposed) Principles and Standards for water resources planning; not relying solely on benefit-cost analysis for decision-making; determining nonfederal sponsors' willingness to pay for a project, and to consider that a measure of its attractiveness as an investment; and basing the discount rate for projects on average yield rates for long-term Treasury obligations. Significant shifts have occurred in water resources planning since 1973. In the early 1970s, water resource agency planning Principles and Standards incorporated environmental, regional, and social effects, as well as national economic development factors. Consistent with the Commission's recommendations, the WRC revised the Principles and Standards. New, extensive Principles and Standards were published under the Carter Administration in 1979. Soon thereafter, the Reagan Administration replaced this guidance with the "Principles and Guidelines" just as the WRC disbanded in 1983, which revised the Principles to focus decision-making on economic criteria but left out the analytic provisions. The Principles and Guidelines moved away from the 1970s Principal and Standards' use of a multi-objective planning and evaluation framework, thus reverting back to a focus on national economic development. As the Commission envisioned, regional development and resource development projects continued their decline after 1973. Much of the post-Commission federal planning has been concentrated at the Corps and at a smaller scale in USDA watershed programs. In the early 1980s, President Reagan also dissolved the majority of the large-scale river basin commissions. As with other areas addressed by the Commission, the advent of new environmental laws (e.g., NEPA and ESA) has also significantly shaped federal water resources planning since 1973. (See " Accounting for the Environment in Project Development " and " Public Participation in Water Resources Planning " for more information.) The 1983 Principles and Guidelines remain in effect. How they focus planning, evaluation, and selection of the preferred federal project alternative on national economic benefits (NED) has been widely criticized, particularly as interest and support for aquatic ecosystem restoration and environmental protection has grown. Furthermore, Hurricane Katrina drew national attention to concerns about the incorporation of public safety in planning. In a Water Resources Development Act of 2007 (WRDA 2007, P.L. 110-114 ) provision, Congress called for the Secretary of the Army to update the Principles and Guidelines by the end of 2009. The same provision also stated a national water resources planning policy. It is the policy of the United States that all water resources projects should reflect national priorities, encourage economic development, and protect the environment by—(1) seeking to maximize sustainable economic development; (2) seeking to avoid the unwise use of floodplains and flood-prone areas and minimizing adverse impacts and vulnerabilities in any case in which a floodplain or flood-prone area must be used; and (3) protecting and restoring the functions of natural systems and mitigating any unavoidable damage to natural systems. How this provision is implemented (i.e., how the Corps, Reclamation, NRCS, and the TVA will conduct their planning) and the oversight it receives remain to be seen. For instance, it is unknown how a revised planning framework will address tradeoffs across national economic effects, environmental benefits, and public safety, as well how regional economic and social effects might be weighed. Whether the WRDA 2007 provision results in greater consideration of nonstructural measures and broadening of planning to include alternatives outside of an agency's mission, as recommended by the Commission, also remains unknown. Numerous already enacted provisions supporting nonstructural measures have produced little shift toward their full consideration and selection in water resources planning, thus indicating that authorizing provisions and statements of planning policy, without oversight and funding, may not be sufficient to produce significant change. With some exceptions, water resource and water quality planning and implementation efforts continue to be performed separately. Although the NWC discussed preservation, it did not predict the evolution of ecosystem restoration as a significant water resources planning challenge. The growth of ecosystem restoration has precipitated a deviation from the economic basis of the 1983 Principles and Guidelines; the basic justification for restoration is not economic but environmental. For example, the Corps has developed its own guidance, which often broadly assumes that the environmental benefits exceed their economic costs, thereby negating the need for a benefit-cost analysis to justify undertaking a project based on national economic benefits. In order to evaluate and select a restoration alternative, the analysis is based on cost-effectiveness, which instead identifies which alternative provides a unit of environmental benefit at least cost. Cost-effectiveness, therefore, helps determine the efficient project design given unlimited fiscal resources, but provides little insight into whether, given constrained fiscal resources, the nation should invest in a particular restoration effort compared to other restoration opportunities. Whether implementation of WRDA 2007 provisions may assist in integrating water resources and water quality planning, and in structuring the planning and evaluation of restoration projects, is unknown. Consistent with the recommendation by the Commission, Congress in the Water Resources Development Act of 1974 ( P.L. 93 - 251 ) made the discount rate for federal water projects the one-year average yield of long-term government securities. This discount rate remains controversial. Some economists argue that the rate should reflect displacement of private investment, which is usually higher than long-term government securities. Recently, the Treasury-based rate has been lower than the rate of return on private investments or the Office of Management and Budget's base rate of 7%. The benefits of moving to a different rate, which may affect the evaluation and selection of a project, and federal participation in it, continue to be debated. Following the 1965 Water Resources Planning Act (P.L. 89-80; 42 U.S.C. §1962), the federal government supported federal, state, and river basin planning in numerous ways. By the late 1970s, federal watershed and river basin commission planning was both positively received and criticized for its costs and usefulness. Federal funding for state planning efforts began to decline. The early-1980s abandonment of the WRC and river basin commissions, as well as detailed planning standards, shifted federal project planning away from coordinated watershed-based decision making. Since then, most federal agency planning has been project-specific with some exceptions. The exceptions in the last decade include large-scale ecosystem restoration efforts at Reclamation and the Corps, and long-standing planning assistance programs like the Corps' Planning Assistance to States. Other exceptions include the NRCS small watershed program, EPA watershed activities (see "Federal Water Quality Planning Activities," below), and congressional funding of five Corps pilot watershed studies; these pilot studies are two-year, 100% federally funded, multi-jurisdictional regional and watershed efforts. WRDA 1986 authorized the Corps to assess water resource needs of river basins and watersheds; this authority, however, has gone largely unused and unfunded. In the late 1990s, the Western Water Policy Review Advisory Commission (WWPRAC) reviewed existing planning for and coordination of federal water resource projects by recommending a pilot program using a tiered or "nested" approach to water resources governance based on watersheds and river basins. The WWPRAC recognized the many watershed initiatives, watershed councils, and other partnerships that had developed over the years and believed they held "much promise." Along with a new governance structure based on hydrologic systems and linking basin and watershed activities, the WWPRAC recommended new coordination of basin-level federal activities, in part via appointment of a key official at the presidential or secretarial level to coordinate agency activities. These suggestions were not well received by committee leaders in Congress. In a letter expressing "strong opposition to [the final WWPRAC] report," the chairmen of the Senate Appropriations Committee and House Resources Committee postulated that such recommendations would result in more bureaucracy and less state and local control. Thus, the WWPRAC recommendations were not implemented; however, state and local action watershed activities and some partnerships with the federal government continue to occur. In recent years, there has been a trend toward congressional support for technical assistance, in particular using federal agencies' engineering and design expertise to support water supply and treatment. For example, since 1992, Congress has authorized and funded the Corps to provide technical assistance for municipal water and wastewater projects in selected locations. Also in 1992, Congress created a Reclamation program to investigate opportunities for water reuse in the West, including the design and construction of demonstration and permanent facilities. These planning and related construction activities have raised questions regarding the use of federal staff and funds for design of projects that are managed separately from the agencies' typical planning framework and that support municipal and industrial water supply, which typically has been treated as a local responsibility. (See " General Water Resource User Fee and Cost-Share Policies " for a discussion of questions raised by these authorizations related to uniformity across federal agencies and project purposes.) Some states and basins have found themselves in conflict particularly during droughts, as demands on water resources have increased. Some states, such as California, Texas, and Florida, have undertaken their own planning efforts. In recent years, these efforts have often been geared toward water supply augmentation, restoration of significant ecosystems, and drought management. Federal agency participation in state and local planning efforts, much less creating federal-state-local planning organizations as recommended by the Commission, has been constrained by the focus of the budget and appropriations process on specific projects, rather than broader planning efforts. Provisions in WRDA 2007 (e.g., Corps assistance for update of the Oklahoma state water plan) and other legislation (e.g., DOI water supply needs assessment for Alaska in P.L. 110 - 229 , the Consolidated Natural Resources Act of 2008) illustrate ongoing examples of occasional congressional support for federal assistance with state and local planning, albeit on an ad hoc basis. In summary, in 1973, regional and watershed planning was embedded within the executive branch water resource mission agencies, the WRC, and the federal river basin commissions and supported by a program of federal grants to develop state planning capacity. Now federal planning is primarily project-specific, with the most notable exception being large-scale ecosystem restoration efforts. Federal support for watershed and state planning is now largely ad hoc and congressionally directed. While Principles and Guidelines apply to the four federal water resource agencies (Corps, Reclamation, NRCS, and TVA), other laws address water quality and pollution control planning. (See, for example, the planning subsection under " Improvements to Water Quality .") However, because the federal government does not construct water quality projects receiving funding from EPA, there is no comparable planning and evaluation guidance to the water resource project Principles and Guidelines. The Commission, in Chapter 6 of its final report, discusses issues associated with the need to balance water resources project development and environmental values. The Commission found that project development needs tended to dominate over concerns about the potential environmental impacts of a project (see also " Water and the Natural Environment ," below). A mechanism identified to help achieve a balance was the integration of the environmental review requirements of the National Environmental Policy Act (NEPA; 42 U.S.C. §§ 4321-4347) with the project development process. Although the Commission recognized NEPA as a potential tool to include environmental concerns in the decision-making process, it also identified how certain elements of the NEPA process could contribute delays, uncertainty, and challenges to project development. For example, it identified challenges associated with appropriately determining all "reasonable" project alternatives. To understand the Commission's recommendations on this issue it is important to understand some of NEPA's requirements, particularly as they were understood and being implemented in 1973. A brief explanation of these requirements is found in the Appendix of this report. (See also, CRS Report RL33152, The National Environmental Policy Act (NEPA): Background and Implementation , by [author name scrubbed] and CRS Report RL33267, The National Environmental Policy Act: Streamlining NEPA , by [author name scrubbed].) The Commission recommendations reflect the NEPA compliance difficulties that many agencies were facing in the early 1970s. The NWC identified processes intended to clarify NEPA requirements and expedite the environmental review process for water projects. Generally, the recommendations specify: how elements of the NEPA process should be integrated into the licensing process; certain measures regarding public and congressional participation; and the need for hearings on challenges associated with determining the appropriate range of reasonable projects. Many of these recommendations were subsequently addressed, particularly through NEPA-related case law and promulgation of regulations to implement NEPA's EIS requirements in 1978. Specifically, since the Commission report was issued, a host of court decisions, the promulgation of Council of Environmental Quality's (CEQ's) NEPA regulations, and the implementation of NEPA regulations by individual agencies have contributed to the development of a now-mature NEPA process for water resources projects. Elements of that process address many of the recommendations made by the Commission. For example, CEQ's regulations were intended to foster better decision-making and reduce the paperwork and delays associated with NEPA compliance. Also, among other requirements, NEPA regulations: defined and specified the roles of "lead agencies" (those responsible for preparing the NEPA documentation) and "cooperating agencies" (agencies that participate in or contribute to the preparation of the NEPA documentation); allowed lead agencies to set time limits on milestones in the NEPA process and page limits on documentation; specified environmental review procedures and documents applicable to projects that had uncertain or insignificant environmental impacts; specified how an agency was to involve the public in the NEPA process (e.g., specified at what points public input should be solicited and accepted); and specified criteria that must be addressed when providing an analysis of project alternatives. Also, the CEQ regulations specified the required elements of an EIS, which include: a brief statement, developed by the lead agency, specifying the underlying purpose of a project and the need to which the agency is responding; a discussion of the range of alternatives, including the proposed action, that will meet the project's purpose and need—a discussion that should explore and objectively evaluate all "reasonable" alternatives; a succinct description of the environment of the area(s) to be affected by the alternatives under consideration; and an analysis of impacts of each alternative on the affected environment, including a discussion of the probable beneficial and adverse social, economic, and environmental effects of each alternative. The degree to which the CEQ regulations have expedited the NEPA process is still debated. Since 1973, NEPA's procedural requirements may have become clearer, but the overall process is more complicated for reasons that have little to do with NEPA itself. For example, water resources projects are likely to be large, complex projects that may involve compliance with a host of other environmental requirements (many promulgated after June 1973). To integrate the compliance process and avoid duplication of effort, NEPA regulations specify that, to the fullest extent possible, agencies must prepare the EIS concurrently with any environmental requirements. The EIS must list any federal permits, licenses, and other government certification required to implement the proposed project. In this capacity NEPA functions as an "umbrella" statute, meaning that any study, review, or consultation required by any other environmental law should be conducted within the framework of the NEPA process. NEPA's overarching nature often leads to confusion as to how it relates to other laws. As an umbrella statute, NEPA forms the framework to coordinate or demonstrate compliance with other environmental requirements. NEPA itself does not require compliance with them. If, theoretically, the requirement to comply with NEPA were removed, compliance with each applicable law would remain. For example, a required element of the EIS is to determine whether biological consultation is required under ESA. The requirement to comply with ESA would simply be identified by the NEPA process; the obligation to comply with the law remains under the ESA. Some environmental review issues identified by the Commission remain at issue. For example, for individual projects, agencies may still have challenges in sufficiently identifying all "reasonable" project alternatives. Although there are more specific criteria to make that determination, it is something that must be determined on a project-by-project basis. It may form the basis of litigation if project stakeholders feel that an alternative they would prefer is not considered but, to them, is reasonable. Also, the threat of litigation is sometimes an issue in EIS preparation. Agencies may prepare NEPA documentation that is overly inclusive and lengthy in an attempt to avoid litigation challenging the sufficiency of the analyses or review of alternatives. The Commission, in a section of Chapter 10, addressed concerns regarding public participation in water resources planning. It discussed deficiencies in public participation and acknowledged certain limits and requirements to avoid delays in project implementation. The NWC sought to clarify public participation requirements as well as set parameters to avoid excessive delay. The Commission made a number of recommendations: Federal water resources agencies should adopt procedures and issue appropriate directives to field entities to provide opportunities for broad public participation in water planning activities "from the inception of the planning process on." As a prerequisite to project authorization, Congress should require agencies to report on public participation with respect to particular projects, showing compliance with agency public participation procedures, describing the questions considered and the viewpoints expressed, and providing supporting information for the decisions reached on controversial points. Water resources planning agencies should structure their planning procedures to promptly resolve and conclude issues by timing the public participation and defining issues to be addressed. Water resources planning agencies should help compensate for the lack of financial, technical, and manpower resources of participants by providing timely, well-publicized information, scheduling at least one public hearing near the proposed project, and making basic data readily available. Federal and state governments should require advance public disclosure on the pre-license planning of major nonfederal projects expected to have an impact on water resources. Licensing agencies should seek to develop the interests of all participants affected by agencies' decisions. Many of the public participation concerns raised by the Commission have been addressed through the current NEPA process. For example, as the law has been interpreted, one of NEPA's primary goals is to allow the public a meaningful opportunity to learn about and comment on the proposed federal actions before decisions are made and actions taken (e.g., during the project planning and evaluation process). To meet this goal, CEQ's regulations require agencies to encourage and facilitate public involvement in decisions that significantly affect the quality of the human environment (i.e., projects that require an EIS). Specifically, agencies are required to provide public notice of NEPA-related hearings, public meetings, and the availability of environmental documents. Documentation of public participation must be included in the final EIS. Although the Corps and other agencies had some processes requiring public review prior to NEPA, NEPA greatly expanded the public review and input process. CEQ has guidance educating the public on its rights with regard to participation. Generally, public participation opportunities are available during the initial project scoping process and after a draft EIS has been produced (not throughout the entire project planning and development process). If stakeholders have concerns about a proposed plan's impacts, their comments may be directed at virtually any element of that plan, the NEPA process, or related documentation. If stakeholders believe their concerns have been inadequately addressed, they may sue. To avoid conflict after a project has reached an advanced stage of planning, CEQ recommends that continuous contact with non-agency stakeholders be maintained from the earliest planning stages up to the decision to select a particular alternative. CEQ regulations specify public involvement requirements only for federal actions requiring an EIS. Agencies may devise their own public involvement policies for environmental assessments (which are an allowable alternative to an EIS under certain circumstances) or in making a categorical exclusion determination. If a project does not require an EIS but still has garnered public attention, agencies generally involve the public in ways similar to its EIS methods. The Commission recommended federal organizational changes to improve efficiency and to meet future challenges for the planning, development, and management of the nation's water and related land resources. The Commission found the then-active WRC an important and useful mechanism; however, it recommended changes to help the WRC better fulfill its roles of coordinating and appraising water policies and programs and of planning the conservation and development of the nation's water resources. The Commission cited and agreed with numerous previous studies in supporting the independent review of federal water development proposals. The Commission found three areas in which the functions of federal agencies needed modifying. The Commission recommended for the WRC's structure: creation of an independent, full-time chairman on the staff of the White House reporting directly to the President; placement in the Executive Office of the President; and expansion of statutory membership to add the Secretaries and Administrators of Commerce, Housing and Urban Development, EPA, and Atomic Energy Commission, and eliminate the membership of the Secretary of Health. The Commission recommended the following actions to facilitate the WRC's task: authority to distribute planning funds; extension of the authorization and removal of the appropriations cap on its grant program to support state water planning; submission of a consolidated grant application for each state seeking funds from federal agencies for water planning and programs; authority for the WRC chairman to coordinate federal participation in the river basin and water management compacts; and authority for the WRC chairman to chair an independent review board examining federal water development proposals, river basin plans, and grant programs and make recommendations on their need, feasibility, and utility to the President and Congress. The Commission recommended eliminating duplication in the collection and distribution of basic water data; better managing the similar engineering functions in federal water resources agencies, and concentrating dispersed water technology efforts. Specifically, it recommended: combining NOAA and USGS into a new DOI agency responsible for water resources data, moving NOAA's fisheries functions to the FWS, and having NOAA's coastal zone management functions be part of the land planning functions of the federal government; shifting USDA water engineering functions (e.g., reservoir design, channelization) to nonfederal entities; shifting Reclamation from a construction agency toward an agency operating federal facilities efficiently in water-short regions; limiting the Corps to only design and construction that cannot be efficiently performed by nonfederal entities and increase its nonstructural and nonfederal assistance actions; and creating an Office of Water Technology by combining existing water research offices and activities placed in the DOI with a charter broad enough to meet other federal research needs. Since 1973, significant shifts have occurred in the federal water resources institutional arrangements and organizations; however, the federalist division of responsibilities has remained largely intact. As recommended by the Commission, the WRC was located in the Executive Office of the President and membership was expanded in 1975 to include the Secretaries of Commerce, Housing and Urban Development, and Transportation, and the EPA Administrator. The WRC has not been funded or active since 1983; however, the authorization for the WRC still exists. By 1973, implementation of the Water Resources Planning Act of 1965 (P.L. 89-80; 42 U.S.C. §1962) had increased the coordination and planning of federal actions, particularly through the creation of the WRC. The 1965 act created the WRC and numerous river basin commissions charged with watershed planning. There has been no legislation comprehensively changing federal water resources since that act. Instead, the shifts in organizations and institutional arrangements came about from executive branch actions and incremental changes through legislation. Their cumulative effect has been a decrease since the 1970s of coordination of federal water agency activities and planning. Following years of decreasing support for river basin commission efforts, President Reagan in Executive Order 12319 ordered the termination in 1981 of six of the commissions created by the 1965 act and the transition of their activities to the member states. This effectively eliminated the federal river basin and broad-based watershed planning efforts. During this time, federal grants for state planning activities also largely disappeared. Since these changes, federal agency participation in planning and negotiation efforts within watersheds and between states has been constrained by the focus on specific projects. What remains of the federal planning assistance generally is a few programs scattered among several agencies. (See " Water Resources Project Planning and Evaluation ," above, for additional analysis.) Review of federal water projects also has experienced many shifts since 1973. There is no entity that independently reviews water projects by all federal agencies. The Corps has maintained its construction program, although not at its 1960s level, and may continue to have significant construction responsibilities as it improves aging infrastructure, retools earlier projects to balance environmental needs, and is called on to provide flood and hurricane storm risk reduction projects. However, changes in the late 1980s and early 1990s reduced the level of review of Corps projects. For example, Congress eliminated the Corps-staffed Board of Engineers for Rivers and Harbors, which had reviewed the civil works plans from 1902 until WRDA 1992. Review continued to occur under the 1981 E.O. 12322, which requires that a Corps feasibility report be reviewed by the Office of Management and Budget (OMB) for consistency with the policies and programs of the President, planning guidelines, laws, and regulations. Following criticisms of a number of Corps planning studies for faulty analysis and New Orleans floodwall failures in 2005, Congress created in WRDA 2007 a process for external independent review of many Corps planning studies and for ongoing safety reviews during construction of significant flood and storm damage projects. How these provisions are implemented is still being determined. The WRDA 2007 reviews are limited to technical analysis and do not include a policy review. As the Commission predicted, Reclamation too has moved more toward management and has a less substantial construction function than it did in the 1950s and 1960s. In 1987, Reclamation formally adopted a new mission statement recognizing its increased role in water resources management vis-à-vis construction. Recent Reclamation efforts have included working with other DOI, federal agencies, and nonfederal parties, including Tribes, to resolve water conflicts through settlement agreements and assisting with water supply augmentation technologies (e.g., Reclamation's water reuse program and its desalination research program). The NWC recommendations that NOAA's responsibilities be divided among other agencies were not implemented. The challenge of accomplishing organizational changes like the Commission's NOAA recommendations was seen when the Secretary of the Interior in the mid-1990s attempted to consolidate the biological research being conducted by DOI's various agencies into a single agency. The effort was met with much resistance and skepticism, eventually being scaled back to creating a new biological division within the U.S. Geological Survey. While the channelization program at the USDA largely disappeared, USDA watershed efforts have continued. Specifically, USDA's NRCS cooperates with states and local agencies to carry out engineering works to improve flood control and water use, including dam rehabilitation. Dam repair and safety remain areas of growing engineering and construction not only for NRCS but also for Reclamation and the Corps. The Commission's recommendation to limit Corps design and construction activities to those that cannot be efficiently performed by nonfederal entities generally has not been a criterion used during authorization and appropriations. For example, Congress has authorized and appropriated funds for Corps participation in design and construction of municipal drinking water and wastewater projects. In the United States, drinking water and wastewater systems generally are the responsibility of municipalities; their design and construction are performed by the municipalities or their private engineering consultants (albeit sometimes with federal financial support). In an effort to define the scope of the Corps' involvement in the growing area of ecosystem restoration, the G. W. Bush Administration in recent budgets used as one of its criteria for restoration projects that the Corps be uniquely well suited to perform the work. The Commission's recommendation to increase the Corps' nonfederal assistance actions has not been implemented. The Corps has retained its Planning Assistance to States program and its Flood Plain Management Service, which in recent years have averaged roughly $6 million each in annual appropriations. However, this funding level represents a decline in federal support for these activities. In the mid-1970s, the Corps received roughly $30 million (in 2007 dollars) for regional planning and planning assistance to states, with another $30 million (in 2007 dollars) for its Flood Plain Management Service. In 1974, the Office of Water Research and Technology was formed in DOI through consolidation of some of the offices identified by the Commission. The Office of Water Research and Technology was abolished in 1982 and the desalination research program transferred to Reclamation. Since the 1960s and 1970s, the topical balance of the federal water research has shifted from social science topics (e.g., water demand, water institutions) and water supply augmentation and conservation (e.g., desalination), to water quality. Also since the early 1970s, the amount of the federal budget dedicated to all types of water research has been halved. Aspects of water resources have remained scattered across congressional committees, in a pattern generally similar to the fragmented arrangement in 1973, which the Commission did not find particularly problematic. Since 1973, other institutional and organization changes that are not specific to water resources, yet affect water resources, have occurred. For example, executive branch oversight and management direction in the water resources field has evolved. In particular, the Office of Management and Budget in 1973 functioned as an agency with dual management and budget missions. A reorganization in the 1990s reduced the distinction between management staff and budgetary staff; this resulted in less management oversight and in the administrations' budget policy influencing both the short and long-term guidance provided to water resources agencies. Without the WRC, CEQ at times and other ad hoc mechanisms have been used to arbitrate and coordinate among federal agencies on water issues; however, there is no institutionally recognized system for conducting such coordination. The organizational landscape of water management also has shifted as a result of increased consideration of environmental issues; the Environmental Protection Agency (EPA), created in 1970, has the lead federal role in protecting the quality of the nation's environment. In selected cases, EPA has influenced the implementation of federal water resources projects. EPA has also become a significant force in shaping a wide range of state, local, and private project planning and design through the agency's implementation of its water quality and wetlands permitting responsibilities. The Commission found that the steps by which separate branches of government conceived and executed water resources projects needed to be closely linked, or coordinated, to efficiently use the nation's water and fiscal resources. According to the Commission, the budgeting procedures neither reflected nor promoted regional or long-term water resources development. The Commission instead found that projects often were presented and considered individually. The Commission concluded that an annual appropriations process unnecessarily subjected construction completion to uncertainty as well as to both cost and lengthening of schedules ("schedule growth"). It found that a backlog of projects planned and evaluated under obsolete guidance and criteria overburdened the appropriations process and allowed initiation of projects that no longer merited the required investment. The Commission concluded that congressional politics and behavior tended toward particularized and fragmented decision-making. The Commission recommended: using comprehensive river basin and regional development plans as the basis for authorization and appropriations for both individual projects and broader programs; incorporating into budgeting the 20 major regions used by the WRC for planning; moving from an annual construction appropriations process to full-cost budgeting; giving federal program administrators authority to contract in advance of appropriations for programs meeting national objectives; requiring five-year agency programs for existing and new construction projects; requiring a five-year national budget for the multi-agency federal water program; deauthorizing construction not begun within 10 years of authorization; and reevaluating plans authorized more than five years before construction. Although some of the Commission's recommendations have been attempted, the basic functioning of the authorization, budgeting, and appropriations processes for water resources has not changed significantly since 1973. The consideration of project authorizations and appropriations as part of comprehensive river basin and regional development plans has not been practiced since the early 1980s, when most of those larger-scale federal water resources planning efforts were halted. (See " Water Resources Project Planning and Evaluation " for more information.) Project authorizations and appropriations generally still are considered on a project-specific basis. For example, although there is regular congressional consideration of an omnibus WRDA, the legislation consists mostly of authorizations of individual Corps study and construction projects. While there have been provisions in WRDAs that address policy issues, the authorizations generally are not considered as part of a comprehensive plan or review of Corps or federal water resources activities. The same is true for occasional omnibus Reclamation legislation. Budgeting for water resource projects also has remained project-specific, with some exceptions for large-scale restoration efforts such as some Everglades restoration funding. For example, Reclamation budgets consist of projects grouped by regions, but budgeting is not founded on regional resource plans. In recent years, the G. W. Bush Administration proposed funding the Corps operations and maintenance account based on hydrologic regions; however, this approach has not been adopted in enacted appropriations, due largely to concerns about a lack of transparency in how the regional requests were developed and about transparency in how regional appropriations would be implemented. Full-cost budgets and appropriations for water resources projects generally have not been used. A significant exception is the full funding via supplemental appropriations of the repair and strengthening of coastal storm protection facilities in New Orleans after Hurricane Katrina. Congress has used general contract authority to varying degrees for different programs. For many water programs since 1973, Congress has tightened its controls of contract authority in an attempt to preserve the congressional role in guiding appropriations. For instance, Congress recently has enacted more stringent rules for Corps multi-year contracts. Water resource agencies, along with many other agencies, have produced five-year strategic plans in response to the Government Performance and Results Act of 1994 ( P.L. 103 - 62 ). These plans are not capital budgeting plans, instead they focus on agency mission, goals, and performance. There have been few efforts at capital budgeting by water resource agencies, and no sustained effort for coordinated budgeting for the entire federal water program. Congress has passed legislation requiring deauthorization of Corps construction projects that have not received appropriations for six years. Without other changes being enacted and with the continuation of authorization of individual projects, this deauthorization process has neither quelled the construction backlog nor ensured that construction activities satisfy current planning requirements. Reclamation has no general deauthorization process for unfunded projects; however, in limited cases, Reclamation authorizations contain a "sunset" provision. Because the G. W. Bush Administration had a "no new start" policy in recent Corps budgets, the vast majority of new construction projects have been initiated by congressional appropriations. There has been no requirement that new construction starts that were authorized many years prior be re-evaluated. The backlog of construction authorizations created tension between the G. W. Bush Administration, whose Corps budget concentrated funding on a smaller set of projects, and Congress, which applied a more distributed approach by appropriating to a larger set of projects and activities. An argument for concentrated appropriations is that the lower funding levels that individual projects receive under the distributed approach delay construction progress, resulting in increased cost and schedule growth, which represent lost economic efficiency. Those supporting a more distributed appropriations process, however, assert that a geographical and jurisdictional dispersal of projects maintains the currency and relevance of the Corps' mission. Furthermore, tradeoffs in economic efficiency, equity, and political feasibility have implicitly occurred to some degree during the development of the Corps' annual construction appropriations. Data on cost and schedule growth of Corps civil works projects may help clarify the tradeoffs between the two approaches and identify improved opportunities for project management; however, little aggregated or systematic data about cost or schedule growth is available. Annual federal appropriations (not including supplemental appropriations) for water resources projects followed a declining trend after the mid-1960s, as a percentage of both gross domestic product (GDP) ( Figure 2 ) and discretionary spending. During the 1970s and 1980s, nonfederal spending increased ( Figure 3 ) in response to numerous forces including new federal standards for water quality and related municipal water and wastewater infrastructure investments. Environmental litigation and resource constraints have focused much of the new authorization and appropriation for water resources efforts on resolving multi-use resource conflicts and addressing new and instream demands. Safety and rehabilitation of aging federal infrastructure is a growing part of the agencies' budgets and appropriations. Aging local infrastructure and interest in nonfederal dam removal are currently addressed, often on an ad hoc basis, by Congress through individual authorizations and annual appropriations for water resources agencies. The shift in federal water resources spending from construction to maintenance is evident in Figure 4 . The Commission's report (primarily in Chapter 2) addressed the environmental impacts of water projects and water resource agency activities. The Commission noted negative impacts (e.g., alteration of stream habitat) as well as positive ones (e.g., recreational benefits of a reservoir). It found that the federal government insufficiently addressed ecological processes and environmental values in its water project and permitting decisions. Yet the Commission also noted that economic values and public safety often were at stake when choosing among water resource alternatives. The Commission identified three areas for improvement: understanding and predicting the primary environmental impacts of water programs, uses, projects, and their alternatives; assessing the secondary and broader environmental effects of these actions; and incorporating environmental values and processes into decision-making. The report specifically discussed the environmental effects of reservoir development, flood policy, water development in estuarine and coastal ecosystems, water project effects on fish and wildlife, and channelization. A related topic is the Commission's recommendations for addressing fish and wildlife values in project planning. The Commission's overarching concern that environmental impacts be analyzed in the decision-making process also is addressed in "Accounting for the Environment in Project Development," above, which discusses implementation of NEPA. Since 1973, water resources development has slowed, and federal appropriations shifted from development to environmental preservation and operation and maintenance of infrastructure. Many of the concerns raised by the NWC have been addressed via implementation of environmental laws. Many large federal water actions are for ecosystem restoration and stream rehabilitation. Whether these changes and efforts have adequately addressed the Commission's concerns is a matter of disagreement. The degree to which development and environmental protection tradeoffs are evaluated and weighed remains central to many current water resources conflicts. Chapter 2 of the Commission report includes a section on reservoir development. Creating a reservoir, by impounding water behind a dam or diverting it to an off-stream storage site, generally alters a river's aquatic and riparian ecosystems, sometimes benefitting some species and ecosystems while harming others. Reservoirs inundate habitat and alter ecosystem properties by changing flow regimes, water temperature, and water quality. Changes in ecosystems due to reservoir construction can result in biodiversity loss and changes in species composition. Downstream of reservoirs, altered flows can change native fisheries and habitat. Dams creating reservoirs also can prevent the migration of fish species up- or downstream. The Commission also noted the social effects of reservoir development; reservoirs change the types of recreation opportunities available and the aesthetics of the landscape. The Commission believed that these alterations or effects should be considered when contemplating water resource decisions. The Commission's recommendations for reservoir development were to: develop a comprehensive database of the condition of the nation's waters that encompasses water quality and quantity, ecological processes, and environmental attributes; further research environmental impacts of water resource development; adopt planning techniques that account for ecological processes and environmental values; analyze environmental impacts of proposed projects and their alternatives; promote decision-making in the face of uncertainty; and monitor environmental consequences of projects post-construction. Neither a national-level data set documenting the extent to which waterways have been channelized and impounded (and the effects of these measures) nor a national database of ecological and environmental conditions of waterways has been implemented. Although there is not a national database, understanding of how reservoirs and their operations affect fisheries and habitat is much improved, and significantly more information on the state of the nation's waters is available today than in 1973. The Commission's recommendations regarding accounting for ecological values and analyzing environmental impacts today are considered largely through implementation of NEPA and ESA during project planning and evaluations necessary for major changes in project operations. Both NEPA and the ESA require extensive assessment of project impacts on the environment and consideration of alternative actions; however, there is no requirement to protect the overall function of such ecosystems and some argue that full accounting of ecosystem effects in project planning could still be improved. Few new large-scale U.S. reservoirs are currently under construction, although some are being considered, particularly in the West. Consequently, reservoir planning in recent decades has largely focused on balancing competing objectives in operation and management of existing reservoirs (as opposed to planning new projects), and in some cases managing for new objectives. For example, actions required to protect threatened or endangered species listed under the ESA have been significant drivers for many changes in operating plans. Conflicting objectives of operating Missouri River locks and dams—namely, maintaining flows for navigation and restricting or otherwise changing flows to protect seasonal needs of some bird species—required controversial updates to the Missouri River reservoir control manual to provide for barge traffic and other purposes. Similar operational changes are occurring with salmon runs in the Sacramento and Columbia River basins and fishes in the California Bay-Delta, sometimes pitting one species against another. The Commission called for collecting and organizing a broad range of data on the condition of the nation's water. The Commission report suggested including not only water quantity and quality factors but also geological attributes, soil properties, riparian vegetation, fisheries and climate factors, aesthetics, related land uses, and recreation use. Although a national database was never developed, broad data sets have been developed in some regions with high data demands due to resource conflicts. For example, some federal restoration initiatives, such as in the Florida Everglades and the Bay-Delta in California, have resulted in the documentation and monitoring of a wide range of ecosystem and environmental conditions. Nonetheless, according to many experts, improvements in understanding, modeling, and predicting the interaction of water project operations and ecosystem health continue to be needed and pursued. Some basic water flow data are being collected on a national level. As in 1973, water flows in streams and rivers continue to be measured by a network of roughly 7,500 stream gages and are reported through the National Streamflow Information Program administered by the U.S. Geological Survey (USGS). Many of the gages use collection and communication technologies that have significantly improved since 1973. For example, most report real-time stream flows, thus improving their usefulness for forecasting river conditions, issuing flood warnings, and planning reservoir releases or water withdrawals. However, the streamflow program is based on partnerships with local sponsors and is not comprehensive. Additionally, the program is often a target of budget-cutting efforts. While Congress typically restores funding in annual appropriations, overall levels of federal funding and the number of stream gages have declined in recent years. The USGS also works with states to estimate water withdrawals and assess water quality in various water bodies. Data on trends in freshwater fisheries are available, but generally are reported on a species-specific basis rather than by watershed or ecosystem, unless they are part of a specific plan. Data are also collected on wetland losses due to human activities such as agriculture, urban development, and water resources projects. Attempts have been made to better coordinate data collection and improve the quality of information collected. For example, OMB Circular No. 92-01 established a national "Advisory Committee on Water Information" to coordinate and improve data collection. The committee is made up of federal agency representatives, state interests, academics, and industry professional organizations. The committee meets regularly to advise federal government officials on federal water information programs. The Commission recommended analyzing the environmental impacts of water resources proposals and their alternatives as part of its 1973 final report. This recommendation was not new. NEPA, which became law in early 1970, required documentation of the environmental impacts of federal actions, but its implementation remained in its infancy at the time of the NWC report. Since then, NEPA implementation has resulted in a more comprehensive environmental analysis of project plans, similar to what the NWC and others had recommended. Implementation of the ESA has also been a significant driver in incorporating species and some habitat issues into the analysis of reservoir plans and operations. Taken together, these laws have fundamentally changed the way in which project impacts are evaluated. Non-federal interests play a much larger role than previously, and in some cases have become active "partners" in the decision-making process. Even so, water resource planning continues to be criticized for a narrow focus on national economic development benefits or specific development objectives and insufficient evaluation and weighing of environmental and social concerns (such as public safety and social equity). The 110 th Congress, in the Water Resources Development Act of 2007 (WRDA 2007, P.L. 110 - 114 ), called for the Secretary of the Army to update water resources planning principles and guidelines to better account for the environment and for projects to be justified based only on public benefits. The updated planning principles and guidelines would apply only to those planning studies begun after issuance and only to Corps projects. There remains no review process for previously authorized projects or projects undertaken by other federal water resource agencies. (See also " Water Resources Project Planning and Evaluation " and " Accounting for the Environment in Project Development .") In general, reservoir planning efforts and other water resources planning have responded to environmental concerns by trying to minimize and mitigate harm, rather than avoiding harm and improving existing environmental conditions. A major exception has been the planning of ecosystem restoration projects. Even so, many of the largest ecosystem restoration projects are at least in part aimed at restoring habitat and other conditions degraded by past water resource development projects. How to evaluate the costs and benefits of ecosystem projects remains a challenge; a current debate is whether and how to value losses and gains in ecosystem services during water resource project evaluation and decision-making. The Commission contended that research will not always result in a definitive understanding of the environmental impacts of water projects. It recommended that planners reach a decision on a project based on the best available science, even if uncertainties exist. Tension remains over when there is sufficient research, monitoring, and modeling to make decisions on whether and how to proceed with a project or operational change. Some recent planning efforts have used adaptive management as a tool to address decision-making in the face of environmental uncertainty. Adaptive management is the process of incorporating new scientific and programmatic information into the implementation of a plan. It is a management approach that allows flexibility to adjust strategies during implementation if goals are not being met or if new circumstances arise. The flexibility inherent in adaptive management, however, remains controversial. Concerns with using adaptive management include the potential for cost growth of restoration efforts, the delegation of decisions to agency staff or even nonfederal parties, the water supply or water flow uncertainty for other water users, and the level of investment risk if the restoration effort fails. The use of adaptive management in water resources to date has largely been limited to select restoration efforts and has yet to be used across all types of projects and their operations. The Commission stated that a project's environmental effects should be monitored post-construction. In general, federal agencies typically do not analyze the cumulative effects of a project's impacts or multiple dams on a river system until directed to do so or possibly when a significant operational change is being considered. There are some examples of trying to address ecosystem and species health through monitoring and actions prior to such a review and any required mitigation—actions to reduce or reverse damage—that might result. However, monitoring river systems and tracking effects on species raise challenging issues for rivers in which reservoirs and other development were begun prior to the enactment of most environmental laws. Such monitoring is also costly. Adaptive management techniques have been used in some cases where operational changes are necessary. In such cases, monitoring and ongoing assessment are key components used to inform decision makers. Yet, because it is often difficult to predict how much projects will cost and when they might be completed under adaptive management approaches, the use of adaptive management is particularly difficult for legislative decision makers who are accountable to the public and must justify agency expenditures and actions. While a national program specifically targeted at monitoring the environmental impacts of water projects does not exist, WRDA 2007 includes numerous provisions that augment monitoring for newly authorized Corps of Engineers (Corps) projects. For example, WRDA 2007 required that each project have a plan for monitoring implementation and ecological success of mitigation. It also required that Corps ecosystem restoration project plans include a plan for monitoring the success of restoration efforts for 10 years after project completion, with the costs shared by the federal government and the nonfederal project sponsor. WRDA 2007 also added monitoring as an authorized activity for many specific Corps projects, including some dredged material disposal projects and coastal sediment management efforts. The impact of these provisions remains unknown, due to the early stage of their implementation. The Corps and the Federal Emergency Management Agency (FEMA) are the principal federal agencies involved in programs to reduce riverine and coastal flood damages and risk. Other federal agencies, such as the U.S. Department of Agriculture's Natural Resources Conservation Service (NRCS), the Department of the Interior's Bureau of Reclamation (Reclamation), and the Tennessee Valley Authority (TVA), also are involved with flood damage reduction projects. In the United States, flood-related roles and responsibilities are shared; local governments are responsible for land use and zoning decisions that shape floodplain and coastal development, but state and federal governments also influence community and individual decisions on managing flood risk. For example, the federal government constructs some of the nation's flood control infrastructure, supports hazard mitigation, offers flood insurance, and provides emergency response and disaster aid for significant floods. However, state and local governments largely are responsible for making land use decisions (e.g., zoning decisions) that allow or prohibit development in flood prone areas. In addition to constructing flood damage reduction infrastructure, state and local entities operate and maintain most of the flood control infrastructure and have initial flood-fighting responsibilities. The Commission found that despite significant investments to reduce flood damages, annual flood losses grew and people continued living in harm's way. The Commission called for a fundamental reorientation in national flood policy, and for Congress, relevant agencies, and the public to commit to the broad goal of putting floodplain lands to their best use rather than allowing unfettered flood-prone development. The Commission recommended federal efforts that: encourage floodplain management that maximizes national economic, social, and environmental welfare; reform federal programs for flood damage reduction; improve state floodplain management capabilities; encourage public, typically nonfederal, acquisition of floodplain lands for which the best use is recreation or open space; restrict federal construction assistance in floodplains or for flood-damaged structures until steps have been taken to avoid future damages; require federal programs and actions comply with floodplain plans; improve flood forecasting and community emergency response action plans; require the (then-active) WRC to develop a unified national program for basic flood data and flood damages; encourage coordinated land-use and floodplain planning; and independently appraise the National Flood Insurance Program (NFIP, P.L. 90-448, 42 U.S.C §4001 et seq.). Federal efforts since 1973 have not been guided by a clearly defined flood policy or floodplain vision, as recommended by the Commission. However, many incremental changes to improve flood policy consistent with the Commission's recommendations have been enacted or adopted at all levels of government. Nonetheless, the nation's riverine and coastal flood vulnerability has increased. Incremental policy and program improvements were overwhelmed by incentives to develop floodplains and coastal areas and population and other demographic trends, or were never fully implemented or enforced. Other federal actions produced some indirect flood risk reduction benefits; for example, Congress has supported conservation efforts on agricultural lands and wetlands protection that may reduce flood damages by slowing down or temporarily storing flood waters. Whether these benefits are overwhelmed by changes in flood-prone land use (e.g., conversion of agricultural land behind levees to residential or commercial development) remains largely unknown because regional-scale and multi-agency plans and evaluations have been rare. The fundamental reorientation for floodplain management called for by the Commission has not occurred. The institutional arrangements that in 1973 provided avenues for more coordinated federal efforts have diminished (see box, " Brief History of the Water Resources Council "). The WRC was disbanded in 1983; the Federal Interagency Task Force on Floodplain Management, which had continued some of the WRC's flood-related functions after 1983, stopped convening in the late 1990s. Federal support and opportunities for local capacity building decreased with the loss of these institutions. However, WRDA 2007 may be an early step in a reorientation of flood policy if its provisions are implemented. The legislation calls for a report describing flood risk and comparing regional risks. The report also is to assess the effectiveness of flood efforts and programs, analyze whether programs encourage development in flood-prone areas, and provide recommendations. The challenge may be less to develop the report's content and more to achieve action on its findings and recommendations. Numerous reports have recommended reducing flood vulnerability, especially following the devastating 1993 Midwest floods and significant hurricanes. Generally, these reports' narrower recommendations, rather than their broader calls for change, are the only ones implemented. Since 1973, numerous legislative provisions and administrative actions have addressed flood risk. These actions include supporting nonstructural flood damage reduction, augmenting hazard mitigation activities, fostering floodplain regulation, and guiding federal actions in floodplains (e.g., E.O. 11988). Many of these, however, have seen only marginal implementation, enforcement, and funding. This marginal action to reduce risk has been overwhelmed by the growth of the number of lives, property, and infrastructure in flood-prone areas; significant outlays for disaster relief; and increased potential for social and economic disruption from hurricanes and floods. (For more information, see CRS Report RL33129, Flood Risk Management and Levees: A Federal Primer , by [author name scrubbed] and [author name scrubbed].) Generally, congressional oversight, administrative implementation, and federal appropriations have reflected a reactive and fragmented approach to flooding. Flood policy continues to be dominated by structural flood damage reduction investments (e.g., levee building), the NFIP, and federal disaster aid, rather than a comprehensive flood risk and floodplain management approach (e.g., restricting unnecessary development in floodplains). Current arrangements of aid, insurance, and water resources projects are criticized for providing disincentives to "wise use" of flood-prone areas. This is in contrast to the Commission's support for a focused and coordinated effort to reduce the cost of flooding on the economy, improve public safety, and promote state and local capacity and responsibility for flood management. In WRDA 1986, consistent with the Commission's recommendations, Congress increased the nonfederal cost-share requirements for local Corps flood control and coastal storm projects from none at all to 35%. Bureau of Reclamation construction actions with flood control benefits, however, continue to be 100% non-reimbursable. How to fairly address and account for private gains from federal projects continues to be debated, with the private benefits and development incentives in flood- and erosion-prone coastal areas created by Corps beach replenishment receiving particular scrutiny. The 110 th Congress, in WRDA 2007, called for the Secretary of the Army to update water resources planning guidance. The update is to be consistent with actions being justified solely on the basis of public benefits. How this provision, as well as other WRDA 2007 provisions related to a national policy for wise use of flood-prone areas, will be implemented remains unknown (See " Water Resources Project Planning and Evaluation " for more information). Some of the more significant enacted changes in flood-related policy have consisted of efforts to improve the NFIP (e.g., improvements to increase participation in the program and better manage repetitive loss properties) and reorganization of federal emergency response and recovery following the 9/11 attacks and Hurricane Katrina's impact on New Orleans. Considerable concerns continue to be raised about the degree of subsidization under the NFIP and the financial foundation of the program. Numerous Government Accountability Office (GAO) studies have reviewed various aspects of the NFIP; some of the recommendations have been implemented. In 2006, an independent review working group released its evaluation of the NFIP; the recommendations are among other changes that have been considered, but not enacted, as part of recent NFIP legislation. Reorganization of emergency response, in particular the placement of FEMA within the Department of Homeland Security, remains a topic of much debate. Hurricane Katrina, levee breaks in California and Nevada, and the 2008 Midwest floods have increased the recent debate about how to manage flood, coastal, and aging infrastructure risks, what is an acceptable level of risk—especially for low-probability, high-consequence events—and who should bear the costs to reduce these risks (particularly in the case of levees and coastal development). The policy issue is how to use limited fiscal resources to address a wide range of concerns, including protecting concentrated urban populations, reducing risk to the nation's public and private economic infrastructure, reducing vulnerability by investing in natural buffers, and equity in protection for low-income and minority populations. The challenge is how to structure actions and programs so they provide incentives to limit flood-prone lands to their best use; to tackle this challenge would require significant adjustments in the flood insurance program, disaster aid policies and practices, and programs for structural and nonstructural measures and actions, without infringing on private property rights or usurping local decision making. Hurricane Katrina also raised the sensitive question of whether and how federal agencies can raise concerns, particularly as they relate to public safety, about actions directed by Congress. In the early 1990s, Congress overrode the Corps' analysis of how to reduce flooding from hurricanes in New Orleans in favor of a locally preferred floodwall option; these floodwalls were the site of significant failures during Hurricane Katrina. Damage caused by Hurricane Katrina and other coastal storms illustrate the growing flood and erosion risks of the nation's coastal developments. Hurricane-prone states have increasingly dominated NFIP outlays. Since the mid-1960s, the federal role in hurricane storm protection also has become more prominent; the Corps, with nonfederal sponsors, builds structures and places sand periodically for beach renourishment to reduce flooding. Hurricane Katrina also brought national attention to the issue of levee and floodwall reliability and different levels of protection provided by flood damage reduction structures—some of which were built by the federal government, but most of which have been constructed by local entities. Levee overtopping and failure contribute to approximately one-third of all flood disasters, and a large percentage of locally built levees are poorly designed and maintained. How to address levee reliability and various levels of protection is a current issue that did not receive much attention in the Commission's report. WRDA 2007 builds on some post-Katrina actions that supported developing a levee inventory; it requires the Corps to establish and maintain a database with an inventory of the nation's levees by 2009 and to inspect federally constructed and other levees. WRDA 2007 also created a National Committee on Levee Safety to make recommendations to Congress for a national levee safety program. It also requires Corps planning to consider the risk that remains behind levees and floodwalls, upstream and downstream impacts, and equitable analysis of structural and nonstructural alternatives. How these provisions and the recommendations by the National Committee on Levee Safety are implemented over the next few years may affect the nature of the federal and local investment in flood and storm damage infrastructure and mitigation measures. Drought in many parts of the country also is drawing attention to options for capturing and treating urban stormwater as a potential water supply. Stormwater is increasingly being seen as a resource (e.g., for reuse), rather than only for its negative effects on water quality and urban flooding. Estuaries—formed at the confluence of freshwater flows (e.g., rivers and streams) and the ocean—are considered some of the most biologically rich areas on earth. Many animal species rely on estuaries for habitat, especially for places to spawn or nest and for nurseries to support early life stages and juveniles. Human communities rely on estuaries and nearshore areas for direct benefits such as food and recreation and indirect benefits such as filters of pollutants and as buffers from floods and intense storms. Over half of the U.S. population now lives in coastal watershed counties. The Commission found that the nation's estuaries and shorelands had been "subjected to massive physical modification, threatening the ecological balance and the maintenance of high biological productivity." The Commission further noted that the federal government had played a large role in the physical modification of estuaries and shorelands, primarily through water resource projects undertaken by the Corps, as well as many federal agency activities in major river basins that empty into the nation's estuaries. For example, modifications on the Mississippi River, in part, have caused reduction of sediment load that is necessary for maintaining coastal wetlands in Louisiana; and agricultural pollution has reduced water quality in the Chesapeake Bay and along the Gulf Coast. The Commission found that decisions about where, whether, and how to dredge and fill waterways and harbors, develop real estate, preserve natural systems, locate industries, and dispose of wastes determine to a large extent the uses and health of the waters and shorelands of the coastal zone, including wetlands. An overarching NWC recommendation on estuaries and the coastal zone called for coastal zone planning to be handled in coordination with general land use and water resources planning at all levels of government. In addition, the Commission specifically recommended that: water resources and development plans should include measures to protect estuaries and coastal zones; and costs of protection should be included in project costs and borne by project beneficiaries, except when benefits are widespread, national in scope, or cannot be tied to beneficiaries. Several pieces of legislation have been enacted and programs implemented to protect the coasts and estuaries since 1973. Coastal programs and legislation established since 1973 generally represent targeted treatment of estuaries and coastal zones; however, they do not represent an integration of coastal zone planning with general land use plans and broad water resource plans. The type of integration envisioned by the Commission was constrained by the contraction of large-scale water resource planning efforts in the 1980s. Without these larger planning efforts, federal water resource projects are planned and evaluated largely as individual projects. Consequently, the cumulative impacts of multiple and existing projects in a basin or ecosystem on coastal and estuarine resources often are not fully examined. In contrast, the impacts of individual projects on estuarine and coastal resources generally are examined and environmental mitigation measures are developed during individual project planning. Mitigation costs are generally shared between the federal and nonfederal sponsor based on the primary purposes of the project. Implementation of the Coastal Zone Management Program, established by the Coastal Zone Management Act of 1972 and the National Estuary Program (NEP), which was created in amendments to the CWA in 1987, arguably have caused the most significant movement toward the Commission's recommendation that water resources and development plans protect coasts and estuaries, and be integrated with land use planning. The Coastal Zone Management Program supports the creation of state plans that encourage coastal development while protecting resources. The NEP focuses conservation, management, and restoration efforts on estuaries of national significance, many of them in proximity to coastal development (e.g., Puget Sound, which borders Seattle and Tacoma, WA). It currently covers 28 estuaries located throughout most of the coastal continental United States and Puerto Rico. The Chesapeake Bay Program, although not a part of the NEP, is managed by a similar approach with federal-state partnerships; the program develops and participating agencies implement plans to improve water quality. NEP programs have financed projects targeted at protecting and restoring habitat, conducting outreach, upgrading municipal stormwater infrastructure, and implementing other priority actions in their management plans. Several other programs and laws are closely related to coastal zone management. For example, the Coastal Nonpoint Pollution Control Program, established by the Coastal Zone Act Reauthorization Amendments of 1990 ( Section 6217 of P.L. 101 - 508 ; 16 U.S.C. 1455b), is intended to strengthen links between state coastal zone management and water quality programs by requiring coastal states to develop a nonpoint pollution control program to restore and protect coastal waters. Further, the Coastal and Estuarine Land Conservation Program (Title II of P.L. 107 - 77 ; 16 U.S.C. 1456d) provides matching grants to eligible states and local governments to acquire property or easements on coastal property. Projects have protected coastal habitats, reduced coastal water pollution, and improved access for coastal recreation. The Coastal Barrier Resources Act, enacted in 1982 (16 U.S.C. 3501, et seq., P.L. 97 - 348 ), prohibits federal financing of development in areas designated as part of the coastal barrier system. The system includes 585 units and nearly 1.3 million acres of land and associated aquatic areas. Although coastal zone planning has expanded since 1973, the stress on coastal and estuarine ecosystems has not lessened as more intense development and population growth and increased water use have occurred in these sensitive environments. Some of the environmental consequences have worsened (e.g., expansion of the size and number of dead zones in coastal waters, especially the Gulf of Mexico). In 2004, the U.S. Commission on Ocean Policy noted that, as more people come to coastal areas to live, work, and visit, the nation has lost millions of acres of wetlands, seen the destruction of seagrass and kelp beds, and faced a significant loss of mangrove forests. The Commission focused largely on protection of estuaries and coasts. In some locations, water resources planning has moved beyond protecting these areas from incidental impacts associated with water resources projects. Restoration of estuaries, in particular, has become the core of a number of large-scale restoration planning efforts, such as the Chesapeake Bay, coastal Louisiana wetlands, and the California Bay-Delta. Aquatic ecosystem restoration has been added as a primary mission area for the Corps. The cost-share arrangements for these larger-scale efforts often are decided on a case-by-case basis, reflecting the uniqueness of each effort and of the federal responsibility in each effort. One aspect of estuarine and coastal health that has received much policy attention since the Commission's report is coastal wetlands. Wetlands are critical to a clean, properly functioning environment and to ecosystem and species health. Federal data indicate that historic trends of inland wetland acreage loss due especially to urban and rural development have been substantially slowed and even slightly reversed nationally in recent years. A number of federal, state, and local programs involving regulation, protection, and conservation contribute to the recent national trend of net gain. However, the same trends are not occurring in coastal areas, where data indicate that coastal watersheds have been losing a substantial amount of wetlands and will continue to do so because of continuing development in those areas. The Commission identified the negative environmental effects of channelization—the straightening of streams—as an issue. It found that evaluations of channelization investments had given insufficient weight to environmental harm from channelization relative to channelization's drainage, flood control, navigation, and erosion control benefits. The Commission found that evaluation tools often ignored or underestimated negative effects on groundwater infiltration, fish and wildlife habitat, downstream sedimentation and flooding, and aesthetic value. The Commission recommended: improvements to the evaluation procedures in channelization plans; a user pay approach for costs that increase the value of private lands; and review of probable effects of already authorized channelization plans, and provision of funds only to those with national benefits exceeding all costs. Since the Commission's report, most federal channelization efforts, such as those at USDA and the Corps, have been abolished or gone unfunded. Some plans using channelization are still developed as components of flood damage reduction, navigation, and other federal projects. For these efforts, the detrimental effects of channelization are evaluated and addressed pursuant to federal and state environmental laws, fish and wildlife mitigation requirements, and species protection measures. The dredged material produced during construction and maintenance of channels previously was disposed as waste; now, it is often put to beneficial environmental use, such as island building and wetland restoration. (See also " Water Resources Project Planning and Evaluation .") The Commission found that water projects often had been planned and developed with little regard for fish and wildlife impacts, resulting in harm to these resources. Specifically, it noted: [t]housands of miles of natural stream channels were relocated or altered; some streams were dried up; estuaries and marshes suffered from drainage and landfill operations; and estuarine habitat essential for shellfish and other species was destroyed by dredging and channel deepening. Water quality deterioration and water temperature alteration have also adversely affected fish and wildlife resources in both marine and fresh waters. The Commission expressed concern that state and federal legislation at the time might not fully address these impacts. However, the NWC found that federal protections under the Fish and Wildlife Coordination Act (FWCA; Act of March 10, 1934, as amended (16 U.S.C. §§661-666(e)) and NEPA "seem to be adequate to prevent unreasonable or unnecessary damage to [fish and wildlife] resources under future projects constructed or licensed by the Federal Government." To better address fish and wildlife impacts, the Commission recommended that fish and wildlife agencies jointly participate in initial water project planning, as opposed to reacting at later stages. The NWC argued that the FWCA requires this collaboration, and that this collaboration should be continued and strengthened. The Commission also was concerned that the FWCA did not cover nonfederal entities. It recommended that all states enact legislation to protect fish and wildlife resources from impacts of nonfederal water projects. The Commission recommended having the WRC supervise and coordinate the resolution of stakeholder disagreements. NEPA also was a concern for the NWC because, in 1973, implementation of NEPA was just beginning. The Commission also called for more research and data on the effects of water projects on fish and wildlife, and for steps to reduce water-related conflicts by reducing uncertainty and producing scientifically defensible results. Water resources planning and project development practices now give significantly more attention to fish and wildlife than in 1973. Many of the fish and wildlife accomplishments have been achieved through wetlands conservation under the CWA, fish and wildlife agency consultation pursuant to ESA, assessment requirements of NEPA, and site specific legislation. Federal fish and wildlife agencies still appear largely to operate in a reactive mode, responding to plans already formulated and when species have already declined to low levels. In sum, improvements have been made, but the sufficiency of these improvements is debated. The NWC may have contributed to improvements, but indirectly. Today, there are many more threats to fish and wildlife resources than impacts from federal water project development. These threats include destruction of habitat due to other development, invasive non-native species, climate variability and change, and pollution. Despite past achievements, fish and wildlife resources continue to decline. Specifically, the FWS notes that "aquatic resources in the United States are in decline, and habitat destruction and modification are the principal culprits." Consistent with the NWC recommendation, attempts were made to establish regulations to implement the FWCA in the late 1970s and early 1980s, but they were abandoned during the Reagan Administration. FWCA currently is applied to water activities through each agency's planning process. For example, the Corps and Reclamation consider FWCA requirements when preparing NEPA documentation. However, FWCA, like NEPA, imposes procedural requirements, not substantive obligations on the "action agency" to avoid adverse affects on fish and wildlife. According to one source, the FWCA has "largely [been] overshadowed by NEPA, and undercut by a series of disabling judicial interpretations. Its promise, once viewed with considerable optimism, remains largely unfulfilled." The role of WRC as arbitrator became moot when this coordination mechanism was disbanded in 1983. The NWC recommendation supporting more fish and wildlife research at a national level has not been implemented. There is, however, greater understanding than existed in 1973 of how certain types of water projects such as reservoirs can affect fisheries and other species. For example, in the Columbia River Basin, considerable research has been done on the effects of water infrastructure on fisheries and habitat. Similarly, much research has been done on fisheries affected by Reclamation projects in California and elsewhere. As the NWC predicted, fish and wildlife data are central to several current conflicts. Insufficient scientific understanding of when, how much, and the quality of the water needed to sustain fisheries and habitat, and how this affects the quantity available for water supply, continues to plague some conflicts and at times is used to support delay in protections for fish and wildlife. The Commission recommended that states provide protection for fish and wildlife resources on non-federally managed waters, similar to the FWCA on federal projects. Analyzing state programs and resources for conserving and protecting fish and wildlife in detail is beyond the scope of this report. State efforts, however, are aided by federal programs, some of which have been strengthened since 1973. For example, amendments enacted in 1984 (also known as Wallop-Breaux or Dingell-Johnson Act; 16 U.S.C. 777, et seq.) increased the funds available via the Federal Aid in Sport Fish Restoration Act of 1950, by extending its tax to a wider set of sporting equipment; this increased the amount of funding available to assist states in carrying out projects for management of sport fishery resources, conservation, and restoration. Chapter 15 identified a host of negative effects associated with what the Commission termed "deficiencies" in federal cost-share policies. Taken together, effects of the identified deficiencies can best be described as inefficiencies in federal water resources management. Specific federal cost-share issues identified by the Commission include: inconsistencies among cost-share policies within certain agencies for accomplishing similar purposes (e.g., different cost-share policies for Corps of Engineers' federal flood control reservoirs, levees, and floodwalls); inconsistency in cost-share policies across federal agencies for similar projects (e.g., different policies and repayment schemes for Corps, NRCS, and Reclamation water supply projects); non-uniform repayment terms for nonfederal cost shares; lack of taxpayer equity due to favorable cost-share and/or repayment mechanisms for nonfederal project beneficiaries; and unnecessary expansion of the federal role (and cost) in water resource development, and project development without "compelling social purpose" at federal expense. The negative effects of these issues were found to be numerous. For example, the Commission noted that inconsistent federal flood control policies (in contemporary terms known as flood risk or flood damage reduction policies) resulted in some types of flood projects being favored financially by local sponsors over others, even though another approach might be more economically or technically efficient or effective. Similarly, different cost-share policies across federal agencies were found to result in confusion, distortion of best approaches to resolve problems, and in local sponsors "shopping around" the agencies for the best financial deal. The Commission also found that non-uniform repayment terms for construction costs resulted in misallocation of taxpayer resources, and that differences in discount rates used to evaluate projects and interest rates used for repayment purposes also resulted in inefficiencies. Additionally, the Commission noted that overly favorable cost-share policies resulted in project beneficiaries seeking projects they were unwilling to pay for without federal support, which in turn led to "unwise" development in areas "prone to periodic flooding and hurricane hazards." Finally, the Commission contended that easily accessible favorable cost-share policies had led "in many instances to Federal construction of projects that could just as well have been built by nonfederal interests" resulting in an unnecessary expansion of the federal role and a tendency "to move control over water resources to Washington officials" at increasing federal expense. The Commission recommended many changes in federal cost-share policies. Specific recommendations include recovery of federal costs and ensuring that project beneficiaries pay proportional development and operating costs for water programs or activities. The recommendations are too numerous and context-specific to address in this analysis; however, a few major topics (inland navigation, irrigation water supply, and municipal water and wastewater treatment) are discussed in separate sections below. In addition, the Commission also made other, more general, recommendations that better lend themselves to analysis in today's context. The following more general recommendations were offered by the Commission: establish uniform cost-share policies for all alternatives for a given water purpose (e.g., for different approaches, such as levees, floodwalls, flood storage reservoirs, and nonstructural measures); allow agencies to broaden the scope of what is an acceptable project or alternative (e.g., relocation of floodplain communities, conjunctive use of surface and groundwater supplies); establish uniform or consistent cost-share policies across federal agencies (i.e., Corps, Reclamation, and NRCS should have same cost-share policies for water supply and flood damage reduction projects); utilize interagency coordination mechanisms to "channel" water project applications to a single agency for negotiation; require uniformity in the cost share embedded in construction cost repayment mechanisms; require use of the same discount and interest rates for project evaluation and repayment (an interest rate reflecting the yield on long-term U.S. bonds); charge interest during construction and development (i.e., eliminate interest-free development periods); establish "beneficiary pays" payment systems through pricing and charges (i.e., taxes, special assessments, and fees); and ensure that direct project beneficiaries pay all costs of projects unless there is some social benefit to a federal "subsidy." Overall, the Commission concluded that "appropriate cost-sharing policies should provide incentives for the development of efficient projects in harmony with other National programs and policies." Other chapters repeated this overarching theme of users pay—or beneficiary pays. (See " Inland Waterway User Charges ," " Federal Irrigation Policy—Reclamation Reform ," and " Pricing of Municipal and Industrial Water and Wastewater Services ," below.) Some "users pay" changes consistent with the Commission report were adopted in the late 1970s and 1980s (e.g., Reclamation reform, and transportation cost share changes in WRDA 1986); however, they did not come easily. Disagreement over whether and how to raise the local cost share for Corps projects held up authorizations from the mid-1970s until 1986. Similar disagreements occurred over increasing prices or repayment policies for irrigation programs. Concerns over appropriate levels of nonfederal and federal cost share, their consistency across agencies and water resource purposes, and their effect on other important federal policies, remain today. While some cost-share issues identified by the Commission were addressed in WRDA 1986, consistency in federal financing has not been achieved. Cost-share policies for the Corps and Reclamation flood projects differ. The agencies also differ significantly in financing for irrigation water supply. Standardization of cost shares across the projects of an agency also has not been maintained, primarily due to the continued congressional practice of authorizing individual projects. Although several actions have been attempted to address inconsistencies in federal financing, WRDA 1986 was perhaps the most fundamental accomplishment in this area. It contained several incremental changes in Corps cost-share policies and established limited local sponsor requirements—most notably for deep draft navigation, inland waterways, and flood control—but contained few incentives for lower-cost, nonstructural alternatives for flood control. Other efforts to address cost-share issues and adequate assessment of benefits and costs included the 1977 Carter water plan and the development of Principles and Standards for project evaluation (later Principles and Guidelines). These efforts were ultimately abandoned or overtaken by other events. (See also " Water Resources Project Planning and Evaluation " for information on assessment of project benefits and costs and discussion of consistent planning evaluation and selection.) In sum, the determination of appropriate cost shares for federal water resource projects, and to some degree for water quality infrastructure, continues to be an issue in federal water policy and management. While it may be an efficient way to allocate scarce federal resources, instituting "beneficiary pays" or "users pay" fee policies remains difficult politically. Twelve thousand miles of commercially active U.S. inland and intracoastal waterways support barge traffic carrying roughly 15% of the national volume of intercity cargo. Coal, petroleum, farm products, chemicals, minerals, and aggregates for construction are the primary products carried on the inland waterway system. The Commission found that, while federal funding of the inland waterway system was appropriate as a means to encouraging settlement and economic activity in regions served, these goals had been achieved. It concluded that identifiable users of the inland waterway system should bear its costs. The Commission argued that this would be more efficient, that is freight would be allocated to its true least-cost transportation mode, rather than freight being diverted to modes with greater federal support. The Commission's recommendation was not a new idea; legislation proposing the same changes had been introduced since the 1930s, and many administrations, beginning with Roosevelt in 1940, have advocated for waterway user charges. The Commission recommended that inland waterway users, both freight and pleasure craft, be charged a user fee set to recover all operation and maintenance costs. The Commission recommended a uniform fuel tax plus a lockage fee to be phased in over ten years. Regarding new inland waterway construction, the Commission recommended that project beneficiaries also repay the full cost over a period of years unless the national defense benefits of the project justified some federal cost share. Congress has enacted an inland waterway user fee that recovers about one-tenth of the federal cost associated with the system. Efforts supporting a full cost-recovery user fee have failed. Congress only partially acted on the Commission's recommendations for inland waterway user charges: the current user charge scheme consists only of a fuel tax; does not include lockage fees; is only imposed on freight barges and not pleasure craft; and the fuel tax recovers only 10% of the federal costs associated with the inland waterway system, rather than recovering 100% of the costs. In 1978, Congress enacted the Inland Waterways Revenue Act ( P.L. 95 - 502 , §202; 26 U.S.C. 4042) which imposed a 4 cents per gallon fuel tax on freight barges beginning in 1980, with a gradual increase to 10 cents per gallon beginning in 1985. These fuel taxes were to be deposited in an Inland Waterway Trust Fund (IWTF) and used to pay for a portion of the federal cost of new construction and major rehabilitation projects. With each project authorization, Congress decides what portion of the cost will be paid with General Funds versus IWTF monies, but the split thus far has generally been 50-50. All operation and maintenance costs on the inland waterway system are funded with General Funds. In WRDA 1986 ( P.L. 99 - 662 , §1404), Congress imposed another gradual rate increase in the fuel tax over a five-year period, from 11 cents per gallon beginning in 1990 to 20 cents per gallon beginning in 1995. The current tax rate is 20 cents per gallon. Congress has resisted attempts to raise inland waterway user charges. Congress considered a nearly full-cost recovery proposal before enacting the 1978 Act. Senator Domenici's initial proposal ( S. 790 , 95 th Congress) called for a system of tolls and license fees raising about $200 million per year to recover 100% of the Corps operations and maintenance expenses on the inland waterways and half of the construction expenses. The Carter Administration advocated for a 42 cent per gallon fuel tax, which was thought to be the rate needed to raise the same amount. The railroads suggested a tax of 64 cents per gallon, while the barge industry suggested a one cent per gallon charge. The barge industry supported the fuel tax bill because the bill also authorized replacement of Lock and Dam 26 on the Mississippi River at Alton, Illinois, a long-standing industry priority. When Congress enacted a 10 cent increase in the fuel tax over a five year period in the 1986 act, it once again debated the level of user fees. Equity and economic arguments can be made for imposing a full cost-recovery user fee. As the 1973 Commission argued, inequities among freight modes in the provision of infrastructure diverts cargo to the most subsidized mode. The rail and pipeline industries, which compete with the barge industry for large shipments of dry and liquid bulk commodities, finance their infrastructure without public funds. The trucking industry, which competes with the barge industry in certain segments, pays fuel and other taxes into the Highway Trust Fund; these user fees for the heaviest trucks cover 50%-80% of their infrastructure costs. If barge rates are subsidized, the nation incurs a higher overall cost for freight. The inequity also extends to shippers. If bulk and other commodity producers with access to barge transport can ship at artificially low prices, it could retard the production of these goods in regions without waterway access. A second efficiency argument for increasing user charges is that waterway users will demand that their contributions be spent on investments with the greatest economic returns. The Commission recommended a lockage fee in addition to a uniform fuel tax to account for the fact that long segments of waterways, like the lower Mississippi River, have no need for locks. Because the present fee is uniform on all inland waterways, cross-subsidization takes place between heavily used waterways with relatively low infrastructure costs to lightly used waterways with relatively high costs. It can be argued that this is appropriate within a waterway network like the Mississippi system, where branch waterways feed traffic into main channels, but the argument does not hold across disparate waterways that do not share traffic, such as the Columbia/Snake River system and the Mississippi system. Continued consolidation of the barge industry, in which some companies are owned by or affiliated with large agricultural and energy product conglomerates (such as Archer Daniels Midland, Cargill, American Electric Power, and Marathon Ashland), has raised the ire of taxpayer groups, asking why these major corporations need continued public assistance in the form of heavily subsidized waterways. The barge industry notes that they are the only waterway users that pay a fee. Other beneficiaries of the system, such as recreational users, do not share in the cost. In addition to the 1973 Commission report, many economic studies have evaluated and analyzed the trade-offs among alternative user charge schemes, such as system-wide versus segment-specific fees, annual license fees versus per-use fees, congestion tolls, lockage fees, per ton-mile fees, and combinations of these alternatives. While economic and equity arguments can be made for increasing the share of costs borne by waterway users, Congress has thus far not been persuaded to increase fees beyond what was accomplished in WRDA 1986. The Reclamation Act of 1902 authorized the construction of projects to provide water for irrigation in western states. Pursuant to the act, as amended, Reclamation (Department of the Interior) has built and now manages hundreds of dams, canals, and related facilities in 17 western states. Overall, these facilities serve a population of approximately 31 million, delivering a total of nearly 30 million acre-feet of water annually (an acre foot is enough to cover one acre of land one foot deep, or 325,851 gallons) for agricultural and municipal and industrial (M&I) use. Originally, Reclamation projects were to be financed through the sale of public lands; however, early on, this funding source proved to be too limited to support the Reclamation program. Instead, Reclamation projects historically have been constructed with federal funds, with water and power users entering contracts to "reimburse" or "repay" the federal government for the portion of construction costs that can be allocated to different project purposes. Repayment requirements are typically 100% of federal costs, with interest, for M&I users; repayment requirements are generally 100%, with no interest, for agricultural users, unless repayment is reduced per users' "ability-to-pay." Further, to avoid land and resource speculation, the original act limited to 160 acres the amount of land any one person could own and still receive reclamation water (known as the 160-acre limit, or acreage limitation). The Commission identified the Bureau of Reclamation's irrigation program as one of several programs contributing to inefficient water management. It found that irrigation subsidies and antiquated residency and ownership requirements inefficiently allocated water supplies in the West. The Commission cited population pressures, fish and wildlife needs, and surplus agricultural production as reasons for reexamination of the Reclamation irrigation program. The Commission made several recommendations related to Reclamation's irrigation program. These recommendations were aimed largely at reducing irrigation interest subsidies and eliminating or reducing the acreage limit. In the Commission's view, these changes would increased economic and water allocation efficiencies in the Reclamation program. With respect to authorization of future irrigation projects, the Commission recommended that: new irrigation projects should not be subsidized as in the past; direct beneficiaries of irrigation projects should pay the full costs of new projects; and Congress should abolish the (then-existing) 160-acre land ownership limit for new projects, provided that direct beneficiaries pay full irrigation construction costs. The Commission also recommended that for existing Reclamation projects, Congress enact legislation to exempt irrigation districts and landowners from the 160-acre limitation. It further recommended that Congress authorize several actions, including the following: a lump-sum payment on irrigation repayment obligations; payment of interest on remaining irrigation repayment obligations; retention of land above the limit (excess acreage) if a landowner formally agrees to sell excess acreage and makes a lump-sum payment or pays interest on costs assigned to all land owned, including the original 160 acres; and use of project water on new acquisitions of excess acreage if new owners make a lump-sum payment or pay interest on costs assigned to all land owned, including the original 160 acres. The Commission's recommendation for a reduction of irrigation subsidies and the linkage of this recommendation to acreage limitation were addressed in part via Reclamation legislation in 1982 and 1992, as discussed below. These recommendations, which were to become known as "Reclamation reform," were among the report's most controversial proposals. Almost immediately upon release of the NWC's draft report, and upon its final release in June of 1973, several Members of Congress denounced these recommendations. Most of their statements argued that such changes would have disastrous effects on irrigators in the West and the nation's food supply. There was support, however, for change in some quarters. Specific challenges to the program were epitomized by a series of lawsuits against Reclamation for its implementation of the excess acreage provisions of reclamation law, beginning in the mid-1970s. Counter lawsuits also ensued. Congress enacted Reclamation reform legislation in 1982, and made further attempts at reforming the reclamation program in the late 1980s and early 1990s. 1982 Reclamation Reform Act . Congress enacted the Reclamation Reform Act of 1982 (RRA; P.L. 97 - 293 , 43 U.S.C. 390aa) after several years of administrative review and congressional oversight of reclamation acreage limitation and irrigation subsidy issues. The RRA directly addresses some of the acreage limitation issues and in part addresses the interest subsidy issues raised by the Commission. In particular, the RRA increases the acreage limitation for water districts and water users who chose to comply with the new law, while allowing others to remain under "prior law." For those electing to comply with the new law, the acreage limit was raised from 160 acres under the original 1902 Reclamation Act to 960 acres for individuals and groups of 25 or less, and 640 acres for legal entities benefitting more than 25 persons. The RRA also addresses the interest rate subsidy in part by establishing a penalty for individuals and entities electing to remain under prior law. Those remaining under prior law are to be charged "full cost" for reclamation water delivered to land leased in excess of 160 acres. Full cost is defined within the act as the allocable irrigation capital repayment obligation and any operations and maintenance deficit, plus interest on both accruing from the date of RRA enactment. This provision (Section 203(b)) is popularly known as the "hammer clause." Additionally, recognizing the complex ownership, landholding, and farm operations arrangements, some reclamation water users had used to effectively extend the delivery of water to more than 160 acres, the RRA also includes provisions charging full cost for water delivered to landholdings above the new acre limit. Finally, Section 213 of the RRA explicitly provides that the ownership and full cost pricing limitations would not apply to project lands after irrigation repayment obligations have been meet, including under lump sum or accelerated payments. One could argue that Congress took steps to address the recommendations of the Commission regarding linking increases in acreage limits to increased fees for reclamation water; however, one could also argue that the Commission's vision of a simplified reclamation program based on elimination of the acre limit for efficiency's sake and for better allocation of water via pricing became much more complex and cumbersome under the RRA. 1990s Reclamation Reform . Further attempts by Congress to address acreage limitation and irrigation subsidy issues were made in the late 1980s and early 1990s. "Reclamation reform" bills were introduced and debated, as was legislation to address the use of interest-free Reclamation water on "surplus crops"—crops deemed to be in surplus by the U.S. Department of Agriculture and for which growers receive commodity payments under USDA programs. Reclamation reform provisions were eventually dropped from omnibus reclamation legislation in the 102 nd Congress when compromise language was reached on "reform" of Reclamation policy related to the Central Valley Project (CVP) in California—the Central Valley Project Improvement Act (CVPIA; Title 34 of P.L. 102 - 575 ; 106 Stat. 4600). Some new pricing provisions were included in CVPIA, as well as new fees to support fish and wildlife restoration and mitigation; however, these provisions apply only to the CVP. Tiered water pricing provisions of the CVPIA—intended to encourage water conservation—remain particularly controversial. In sum, while Congress addressed some aspects of both acreage limitation and the interest subsidy in 1982, these issues remain "third-rail" policy issues when it comes to Reclamation oversight. For example, 25 years after the 1973 NWC report, the Western Water Policy Review Advisory Commission made similar recommendations regarding recouping taxpayer investments and instituting something closer to full cost pricing. These recommendations met with stiff opposition from key Members of Congress and were criticized by the then-Chairman of the Senate Appropriations Committee, Senator Ted Stevens, and the then-Chairman of the House Resources Committee, Rep. Don Young, as "decidedly biased against irrigated agriculture and commodity production." Congress has not directly addressed these issues since attempts in the early 1990s to amend the RRA to address circumvention of the acreage limitation provisions of reclamation law and project beneficiary receipt of dual water and crop "subsidies." Appropriate pricing of municipal and industrial water and wastewater services was an issue before publication of the NWC report and continues to be debated. Research and case studies indicate that both rate structure and rate level can encourage more efficient water use. At the federal level, the CWA requires that utility recipients of federal assistance for capital projects charge user fees covering the full costs of operation, maintenance, and replacement, but does not dictate local utility rates and charges. These are matters under the jurisdiction of state or local regulatory authorities. The Commission addressed the important role of full cost pricing and user charges in the delivery of water and sewer services to customers. It noted that proper pricing would conserve scarce water supplies, discourage or delay investment in water infrastructure projects, and make the use of resources more efficient. The Commission recognized that utility regulation may be aimed at accomplishing multiple objectives, and only incidentally be concerned with conserving and efficiently using water supplies. Still, it recommended that water and sewerage charges should be based on the costs that users impose upon the system and the costs imposed on society from the loss of the use of the resource for other purposes. According to available information, water utilities and systems vary widely in adoption of conservation- or efficiency-oriented rate and pricing policies. The issue remains a concern for federal policymakers, as reflected in the fact that the Senate Environment and Public Works Committee approved legislation ( S. 3500 , 110 th Congress) with a provision calling for a study by the National Academy of Sciences on cost of service. Among other topics, the study would determine whether rates set by U.S. public water systems and waste treatment works were established using a full-cost pricing model; would identify a set of best industry practices for use in establishing rates structures that address full cost of service and water conservation while taking into consideration disadvantaged individuals and communities; and assess the extent to which affordability affects the decision of a utility to increase rates. The Commission made a number of recommendations related to water pollution control. Initially, the Commission identified the range of sources then contributing to U.S. water quality impairments—municipal sewage, industrial wastes, stormwater runoff, animal wastes from commercial feedlots, and nonpoint sources (sediment, chemicals and fertilizers, abandoned mine drainage). It noted that existing monitoring and surveillance programs were inadequate to provide the data required for a comprehensive analysis of water quality conditions. Nevertheless, water quality trends, drawn from available data, showed a mixed picture, with water quality improving in some areas but deteriorating elsewhere. These observations could just as well be made today. Considerable progress has been made toward improving water quality, especially in controlling conventional pollutants (suspended solids, bacteria, and oxygen-consuming materials) discharged by industries and sewage treatment plants. However, progress has been mixed in controlling discharges of toxic pollutants (heavy metals, inorganic and organic chemicals), which are more numerous and can harm human health and the environment even when present in very small amounts. Nonpoint sources of pollution are believed to be responsible for the majority of water quality impairments nationwide. Overall, data reported by the Environmental Protection Agency (EPA) and states indicate that 45% of river and stream miles assessed by states and 47% of assessed lake acres do not meet applicable standards and are impaired for one or more desired uses. The Commission's recommendations covered several areas: Clean Water Act (CWA) goals; water quality standards; subsidies and other economic inducements; planning; and federal and state roles. Many of these recommendations have been addressed through implementation of the CWA; however, some concerns identified by the Commission remain valid today. The water pollution chapter was controversial at the time because it rejected some of the fundamental concepts that Congress had recently adopted in the 1972 Federal Water Pollution Control Act Amendments (FWPCA; P.L. 92-500, also commonly referred to as the CWA), especially the zero discharge goal and the core regulatory approach of the legislation, which remain central to the law. The CWA is viewed today as one of the most successful environmental laws in terms of achieving its statutory goals, which have been widely supported by the public. The Commission made observations that remain valid about the extent of water pollution problems, despite water quality improvements that have occurred since then. Issues on which the Commission focused some recommendations, such as planning, federal and state roles, and enforcement through discharge permits, have been and remain basic elements of implementing water quality programs. The need to adequately fund pollution control activities, highlighted in several recommendations, also remains a challenge for policymakers. The Commission acknowledged that decisive action was needed to shift away from water development to water quality management in order to achieve the nation's water quality objectives and meet a high standard of water quality. Nevertheless, the Commission rejected the ultimate objective of the 1972 FWPCA amendments, namely, the goal of zero discharge of pollutants into the nation's waters by 1985. The Commission termed this goal unrealistic and unsound and recommended that cleanup requirements should be based on local water use designations and water quality standards. Absolutely pure water is not necessary for many uses, it said. Moreover, the Commission rejected the core regulatory premise of the 1972 act, which requires that all industrial and municipal dischargers achieve minimum technology-based pollution control performance standards in order to accelerate water quality improvements nationwide. It favored tailoring requirements according to an analysis of the social and economic benefits and costs of compliance. The fundamental policy and programmatic approach to water pollution control adopted in P.L. 92-500 remains central to the CWA. A National Commission on Water Quality, established by Congress in P.L. 92-500 to assess early implementation of the law, generally endorsed the overall approach of the 1972 law while recommending that Congress redefine the goal of zero discharge of pollutants by 1985 to stress conservation and reuse of resources, while also striving to achieve the act's objective of restoring and maintaining the chemical, physical, and biological integrity of the nation's waters. The zero discharge goal was not attained by 1985, nor has it been achieved since then. Neither was the statutory goal modified or removed from the law; as an aspirational objective, "zero discharge of pollutants" remains in place. Rather than basing cleanup requirements on nationally uniform performance standards of waste removal and a goal of zero discharge of pollutants, the Commission said that the goal of water pollution control programs should be to regulate human-induced alteration of water quality to achieve and maintain a quality sufficient to sustain the uses people wish to make of the water now or in the future. Thus, the Commission urged reliance on water quality standards as the basis for pollution control requirements. However, this recommendation would have reversed the policy approach that Congress had just enacted in the 1972 FWPCA amendments and returned to the policy that had prevailed prior to then. Prior to P.L. 92-500, federal law required the development of water quality standards for interstate waters, and such standards were to be used to determine actual pollution levels and to allocate pollution reductions. However, assigning waste loads among all dischargers within a stream segment was an immense technical and scientific exercise that seriously hampered regulatory and enforcement actions. By 1972, there was a widespread perception that the water quality standards approach was flawed and that a tougher set of standards and enforcement procedures should be developed. The Commission apparently assumed that the new statutory approach based on performance standards meant that water quality standards would no longer have a role in pollution control decisions, but that assumption was incorrect then and now. In fact, Congress intended that water quality standards would remain the backbone of such decisions, and so they have. Once industrial and municipal dischargers achieve minimum nationally uniform performance standards, water quality standards determine where additional pollution controls are required to attain and protect designated water uses. Again, the National Commission on Water Quality established pursuant to P.L. 92-500 endorsed the law's regulatory approach of requiring minimum performance standards and relying on water quality standards as backup to establish more stringent pollution control limits, where necessary to meet stringent water uses. Today, these types of water quality-based requirements are central to program implementation. The chapter mentioned several types of economic inducements that could be used to encourage pollution control activities (such as tax incentives, R&D grants to industries, and loans), but focused on subsidies for municipal wastewater treatment—that is, the CWA's construction grants program. The Commission was generally skeptical about subsidies that distort good local decision-making by removing the investment burden from the local level and that can blur important cost-benefit decisions. However, it said that for municipal wastewater treatment, subsidies in the form of grants to communities to construct sewage treatment plants are appropriate, where the national interest finds that necessary in order to achieve clean water on a national scale within a relatively short time. P.L. 92-500 greatly expanded what previously had been a fairly small program of grants to aid construction of municipal sewage treatment plants. The federal assistance effort should terminate after 10 years, according to the Commission. It recommended that Congress provide $13 billion per year for 10 years and that after 1983, state and local governments should bear all responsibility to build, operate, and maintain wastewater treatment facilities. Federal subsidies have continued long after the termination date that the Commission recommended. Moreover, Congress never provided the level of funding in any single year that the Commission recommended; the highest in any single year was $4.5 billion in 1978. Nationally, estimated funding needs for water quality projects remain very large (more than $200 billion), and an end to federal financial assistance seems unlikely soon. The grants program continued through 1989, and it has now been replaced by a revolving loan fund program in which the federal government provides seed money to states, states make loans to communities for needed projects, and communities repay loans to states. This shift from a grant program to loans provides a smaller subsidy and is less economically distorting than the subsidized grant program that the Commission recommended be limited in duration. The issue of how large the federal assistance role should be and how long it should continue remains contentious. Much of the discussion and several recommendations in the pollution control chapter emphasized planning. Planning too often has a narrow focus, the Commission said. To be effective, planning must be done on a regional or areawide basis, ideally incorporating water quality, water supply, other resource planning, and land use planning. The Commission recommended that expanded planning of regional water quality management be coordinated with planning carried out by the WRC and river basin commissions (under the Water Resources Planning Act) and that there be a major investment in water quality planning. From a water quality perspective, the CWA contains several planning mechanisms. One is the so-called 208 program, which the National Water Commission endorsed because it called for waste management planning to be done comprehensively and on a larger scale than purely local bases. Although that planning effort was not implemented as the Commission (and others) anticipated or hoped, more important today in this context is the act's requirement that states carry out a continuing planning process (CWA Section 303(e)). The Commission's recommendation that water quality planning take place in coordination with the WRC did not occur and, of course, the Council no longer exists. States today are at the forefront in establishing long-term water management plans for the protection and development of the resources under their jurisdiction. Typically, these plans are developed in close consultation with regional or local agencies of the states. The Commission advocated shared federal and state responsibility for designing and implementing water pollution control policy, with the federal government establishing national policy, and states (and localities) carrying out day-to-day implementation. The level of government closest to a problem should deal with it, if competent to do so. In fact, a cooperative partnership among governmental levels is precisely what the CWA envisioned, and it is the system that has operated in practice for more than 35 years (despite some inevitable friction at times). Monitoring . The Commission identified a need for vigorous monitoring and data collection to aid understanding of water quality trends and to inform better decisions in the future. The Commission saw roles for all levels of government in this effort, and it particularly recommended a major role for the U.S. Geological Survey (USGS) through a comprehensive water quality monitoring surveillance network. Few would disagree with or reject a recommendation for more and better water quality monitoring, even today. Monitoring activities today are carried out by all levels of government and nongovernmental entities, and USGS oversees a national surveillance network and many specific programs and projects. Information gleaned from these data are used to inform policymakers and the public about the status and trends of water quality. Still, environmental monitoring generally, and water quality monitoring specifically, receive less priority and funding than do regulatory or capital improvement programs. Research and Development . The Commission also identified needs for research in several areas, such as technology development, alternative waste treatment and disposal methods, and methods of controlling nonpoint sources of pollution. As with the preceding issue, few would disagree with or reject a recommendation for more and better research, today as in 1973. Similarly, resources and manpower allocated to research and development—especially applied R&D—historically have had low priority and been underfunded. Adequate Funding . The Commission said that whatever goals are adopted, Congress and the President should be prepared to fully fund all activities. Similarly, states and localities should fully fund their activities, the Commission said. Shortages of adequate resources are a chronic problem for implementation of public policies. The Commission made a number of other observations and related recommendations in areas that were fully addressed in the 1972 FWPCA and have been integral to CWA programs since then (for example, requiring that federal wastewater treatment construction grants be contingent on adoption of local user charges, and utilizing uniform enforceable discharge permits to impose facility-specific pollution limits). It is unclear why these issues drew the Commission's attention, unless the Commission anticipated that the new statutory provisions would not be implemented. Water rights traditionally are regulated by states, rather than the federal government. Depending on individual state resources and historic development, it may use one of three water rights doctrines: riparian, prior appropriation, or a hybrid of the two. Under the riparian doctrine, a person who owns land that borders a watercourse has the right to make reasonable use of the water on that land. Traditionally, users in the riparian system are limited only by the requirement of reasonableness in comparison to other users. Under the prior appropriation doctrine, a person who diverts water from a watercourse (regardless of his location relative thereto) and makes reasonable and beneficial use of the water may acquire a right to use of the water. Typically, under a prior appropriation system of water rights, users apply for a permit from a state administrative agency which manages the acquisition and transfers of such rights. The prior appropriation system limits users to the quantified amount of water the user secured under the permit process with a priority based on the date the water right was conferred by the state. Because of this priority system, appropriative rights are often referred to by the phrase "first in time, first in right." Some states have implemented a dual system of water rights, assigning rights under both doctrines. Generally speaking, states east of the Mississippi River follow a riparian doctrine of water rights, while western states follow the appropriation doctrine; however, some western states have hybrid systems. The distinction between appropriation and riparian doctrines arises primarily from the historic availability of water in these geographic areas. In the generally wetter, eastern riparian states, where water availability historically did not pose a problem to settlement and land development, water users share the water resources without the strict limits imposed by appropriation systems. The western states typically are drier and experience regular water shortages. The prior appropriation system allows water users to acquire well-defined rights to water as a limited resource that requires planning to avoid scarcity. Over time, these systems have been the subject of debate as to the most effective way to manage water resources to minimize shortages in both eastern and western states. The Commission's examination of water law led to recommendations intended to account for the fact that water supply is limited and "should be deployed in such a fashion as to yield the highest return to social well-being." The Commission's focus on the scarcity of water as a resource and the importance of adapting water usage and allocation to promote efficiency led to recommendations that were intended to improve the accountability of water uses. That is, the recommendations suggested that certain procedural mechanisms and legal regulations be implemented to ensure that water was being used efficiently or effectively. The Commission's water rights recommendations fell into three categories: (1) transfer of water rights under the appropriation doctrine; (2) recognition of social values in water; and (3) permit systems for riparian states. The Commission's recommendations stemmed from its assertion that the reallocation of water rights from low-value users to high-value users "would increase the benefits gained from the use of water and would tend to delay or make unnecessary the construction of new sources of supply." The Commission outlined several areas in which water laws might be improved to meet the goal of more efficient reallocation, including (1) improving states' water rights records; (2) simplifying transfer procedures; (3) modifying legal constraints and prohibitions on transfers of water rights; and (4) evaluating federal water supply projects. Improving water rights records and simplifying transfer procedures are matters left for the states under their authority to regulate water rights, and no federal action would be taken to implement the recommendations with regard to those categories. However, the Commission's recommendations regarding legal reforms on transfers and supply projects was directed in part at federal activity. The Commission recommended "the repeal of laws that forbid transfer, and the clarification of laws that obscure the power of water rights holders to make transfers." According to the Commission's report, the law is unclear about the nature of the title that Reclamation holds to the water it supplies for irrigation use in the West. Thus, the Commission recommended that Congress "remove the uncertainties and complexities in Federal ... law concerning title to water rights." To achieve that end, one recommendation suggested that Congress declare a national policy that would permit and facilitate the transfer of water rights, particularly through the authorization of transfer of rights without the consent of the federal agency supplying the water so long as financial obligations have been repaid. The suggested federal action would allow blanket consent for transfers if the government had no financial claims against the users. In cases where financial obligations were not satisfied, the Commission recommended that the federal agency consent to water rights transfer so long as arrangements are made for payment to the United States either in lump sum or through assumption of contractual repayment obligations. In its final recommendation for improvement of water supply management, the Commission recommended that Congress require every report for proposed water projects include a study detailing the supplies available to the area, the value of the water presently used in the area, the estimated value of the use to be supplied by the projects, and the feasibility of meeting demand for new supply by transferring rights from old uses to new uses. The Commission believed it would be "likely that construction of new water supply projects can be postponed in some areas for considerable lengths of time, that an economic incentive will be provided for saving water ... , that water will be put to better use as to maximize the economic yield to society, and that accordingly, the allocation of resources will be made more efficient." The Commission recommendations were critical of the ability of both water rights systems, especially the appropriation system, to give "adequate recognition to social (that is, noneconomic) values in water." Specifically, the Commission explained that the appropriation system developed under a preference "for economic development over protection of such social values as esthetics, recreation, and fish and wildlife propagation." Although the Commission recognized that riparian systems allowed for greater protection of such values, it recommended that states using either system seek to improve the protection of these values. The Commission noted two specific problems with the appropriation system, the lack of preservation of instream values and the inability of users to acquire rights for noneconomic purposes. Accordingly, it recommended that all states authorize water rights "for all social uses, noneconomic as well as economic." It also recommended that states authorize and expand public water rights to protect streamflows, improve navigability, and prevent abuse. These recommendations were directed toward state governments, as states regulate water rights. The riparian system of water rights developed in areas where water scarcity was not a problem. However, over time, these areas have faced new climate conditions including drought and flooding, which have spurred debate over whether the riparian system can adequately deal with increased populations and decreased security of water resources. Critics of the riparian system argue that the system does not plan for water shortages and thus does not provide an efficient system of water resources management as a permit system does. The Commission's recommendations regarding modifications to the riparian system included a requirement for withdrawal permits in all cases, removal of restrictions on who could use water or where it must be located, issuance of temporal permits, and authorization for administrative agencies to act with consideration to social values in water use. Because water supply and water rights issues are generally addressed and resolved at the state level, the transfer and permitting of water rights has not been implemented at the federal level. The federal government has taken more steps in recognizing social values in water. Although the Commission's recommendations were directed at state governments, Congress has enacted legislation over the last several decades that recognizes social values in decisions pertaining to waters regulated by federal water projects or otherwise under federal jurisdiction. The legislation has been both of general application and specifically targeted to certain federal water projects. The Wild and Scenic Rivers Act of 1968 (P.L. 90-542, 82 Stat. 906) allowed the federal government to ensure protection of certain waters from development. Although the Wild and Scenic Rivers Act was enacted prior to the Commission's recommendations, Congress has continued to designate rivers for protection over the past four decades, in addition to those originally protected by the act. Designation under the act allows the federal government to recognize aesthetic and recreational values of the rivers and prevent uses that would diminish those values, principles reflected in the Commission's recommendations. In 1992, Congress enacted the CVPIA, which amended the original authorization for the Central Valley Project—a major federal water supply project in California—to include consideration of fish and wildlife preservation. The CVPIA also specifically allocated 800,000 acre-feet of project water for fish and wildlife purposes, giving additional support to some of the goals highlighted by the Commission's recommendations. Regarding Commission recommendations aimed at state law, many states have developed legal systems that recognize social values in the water resources of the state. However, specific analysis of state actions following the Commission's report are beyond the scope of this analysis. The Commissions' recommendations regarding a federal role in water rights transfers in an appropriation system have not been implemented. While there has been limited action to encourage water transfers, no blanket national policy has been declared in accord with the Commission's recommendations. With respect to the commission's other federal recommendations regarding water supply management, the federal government has not implemented a uniform requirement for water use and supply reports on federal projects. This information may be gathered for other purposes under federal law, though. A number of traditionally riparian states have modified their systems to account for permitting concerns. The modified versions of the riparian system are generally referred to as regulated riparianism, and although these systems vary greatly by state, they generally include an administrative permitting requirement. Because the law of water rights, including the specific system that a state uses, is a matter of state discretion, the federal government's action is limited by principles of federalism—general deference to the states, primacy in water allocation—and there has been no relevant federal action in modifying the riparian system according to the Commission's recommendations. The Commission's chapter on Indian water rights framed the issue as a conflict in the West between Indians' rights to water and water development, on the one hand, and the potential harm to extensive non-Indian water development and use on the other. The Commission described a situation in the West in which the water supply was limited and nearly all appropriated; Indian water rights claims were probably valid and were large but unquantified; Indian claims threatened to harm current non-Indians' water use and impede future water development; and the resultant uncertainties created an urgent need to resolve Indian water rights claims. Many perceive this as still being the case. (For information on Indian reserved water rights, see CRS Report RL32198, Indian Reserved Water Rights: An Overview , by Yule Kim and Cynthia Brougher.) The Commission recommended general solutions for the entire West regarding Indian water rights, embodied in six official recommendations (some including multiple recommendations) for federal executive, congressional, and judicial actions. Chief among the recommendations were: that the executive branch should "define and quantify Indian water rights"; that Congress should pass legislation to "provide a substitute water supply or pay just compensation" to off-reservation owners of water rights harmed by Indian water resource projects; and that Congress should pass legislation placing "[j]urisdiction of all actions affecting Indian water rights" in federal courts, not state courts. Other Commission recommendations included: Interior Department quantification of existing water uses on Indian reservations; prior final adjudication of Indian water rights for federally assisted water projects, where the rights might impair water supplies, before authorization of the project; a law creating a standing federal offer to lease Indian tribes' water, at fair market rates, on all fully appropriated streams; federal initiation and funding of litigation to adjudicate tribes' water rights; and federal funding to assist tribes to develop their water. While some Commission recommendations have been followed (at least in part), in general what has developed in the West are case-by-case settlements of specific Indian water rights claims, not broad solutions applied to all claims. This Commission recommendation has been addressed, although perhaps not as completely as the Commission envisioned and not necessarily because of the Commission's recommendation. The Interior Department's Bureau of Indian Affairs (BIA) began inventorying and quantifying Indian water rights in 1971 (two years before the Commission's recommendations were announced), for purposes of contemporary and future litigation as well as reservation development. Some tribes, and the two leading national Indian organizations, opposed BIA's quantification, fearing that "quantification may impose limits on the extent of their water rights entitlement, precluding future reservation water claims" and that a final quantification "is inconsistent with the openendedness of the right itself." BIA continued quantifying water rights despite limited funding (although not if the tribe on a reservation objected) and BIA currently still assists tribes in technical studies, including quantification, for purposes of water rights negotiations and litigation. Complicating the Commission's recommendation for executive quantification, however, are the facts that: the technological, economic, environmental, climatological, social, and evidentiary factors underlying a quantified amount may change over time; BIA or tribal quantifications must compete with other parties' calculations; and a "final" quantification must be determined among all parties through negotiations, the judicial process (as the Commission recognized), or both. The Commission foresaw that Indian water resource development, based on confirmed Indian water rights, might well "take, destroy, or impair" off-reservation water users' rights to, and supply of water. In response, the Commission recommended that the United States "provide a substitute water supply or pay just compensation" to the off-reservation users (provided the off-reservation users did not know of the conflicting Indian water rights) at no cost to the Indian projects. Tribes, the BIA, and non-Indian water users opposed this recommendation, and it was never carried out. One commentator states that "Congress never even pretended to take [this and the other] recommendations seriously; none ever became law or even came close." The BIA in 1973 considered the recommendation inequitable, because it created a legal protection for those who had ignored Indian water rights for years after the Supreme Court's 1908 Winters decision, and because "it would make the development of projects for the use of water on Indian reservations economically impossible." The National Tribal Chairmen's Association echoed these objections in 1974, testifying that "if the cost of 'buying off' junior appropriatees must be included in the total costs of an Indian water development project ..., such Indian development will be financially hopeless." The Commission's recommendation that the federal district courts should have sole "jurisdiction of all actions affecting Indian water rights" has not been implemented. Because of the U.S. Supreme Court's 1976 ruling in Colorado River Water Conservation District v. United States , federal courts no longer hear Indian water rights claims if there are concurrent state proceedings available. In that case, the Supreme Court determined that the primary policy goal of the McCarran Amendment, which allowed federal reserved water rights claims to be addressed by state courts, was to designate state courts as the primary adjudicatory forums to resolve these issues. The Supreme Court concluded that providing a federal forum to address water rights claims would adversely affect the finality of the state proceedings since the two courts could contradict each other. Thus, the Supreme Court ruled that federal courts should defer to state courts by abstaining from these cases. Among the other Commission recommendations, those for federal initiation and funding of litigation to adjudicate tribes' water rights, for federal funding to assist tribal water development, and for BIA quantification of existing Indian water uses were already being carried out and continue to be carried out. The Commission recommendation that federally assisted water projects be put on hold until relevant Indian water rights were adjudicated has not been implemented. Given the wide geographic distribution of Indian reservations and potential water rights claims in the West, it is likely that such a moratorium would affect a large number of federal, state, and private water projects, making its enactment into law problematic. On the other hand, federal assistance for water supply projects slowed considerably after publication of the Commission report in 1973. The Commission recommendation involving leasing has also not been implemented. The Commission recommended that Congress enact legislation providing that, on fully appropriated streams to whose water Indians have a valid claim, the federal government make a standing offer to the Indian rights owners to lease their water or water rights at fair market value. Given the widespread and unquantified nature of Indian water rights, the costs of making this recommendation a federal policy would be difficult to calculate (and might be quite high). While progress has been made on many of the problems identified by the Commission, few actions can be directly traced to the Commission's 1973 recommendations. Instead, it appears that water policy has continued to evolve—albeit in some areas, much as the Commission predicted—and that this evolution has had many underlying drivers, including but not limited to the findings of the Commission. Many of the problems identified by the Commission remain today. Project planning has moved away from the recommended multi-objective or river basin planning approach recommended by the Commission. Water resource projects today are still largely authorized in piecemeal fashion, and water programs are rarely coordinated. Shifts in organizations and institutional arrangements since 1973 have reduced coordination of federal water agencies and planning. Available funding and political clout in some cases appear to be the significant factors in successfully pursuing projects, instead of overall benefits to the nation. State-federal tensions over proper and respective roles and responsibilities in water resource development, management, and allocation, continue to cloud resolution to the most difficult water resource issues. Expectations for a commission to directly achieve changes in a system resistant to transformation may be unreasonable. Instead the influence of a commission may be how its recommendations combine with other drivers to create sufficient support for an evolution in policy. Signed into law on January 1, 1970, the National Environmental Policy Act (NEPA; P.L. 91-190, 42 U.S.C. §4321 et seq.) declared a national policy to protect the environment. To implement this policy, NEPA requires federal agencies to provide a detailed statement of environmental impacts, subsequently referred to as an environmental impact statement (EIS), for every recommendation or report on proposals for legislation and other major federal action significantly affecting the quality of the human environment. Although NEPA also created the Council on Environmental Quality (CEQ) in the Executive Office of the President, it did not authorize CEQ to promulgate regulations to implement the EIS requirement or to enforce the law. NEPA establishes the basic framework for integrating environmental considerations into federal decision making. However, the law itself does not detail how this process should be accomplished. With an initial absence of regulations specifying implementation procedures, and no agency authorized to enforce its requirements, federal agencies reacted in different ways to NEPA's requirements. In the 1970s, many agencies had difficulty complying with the law. In addition to the courts, CEQ played a significant role in determining how NEPA would be implemented although it had no enforcement authority. During the 1970s, CEQ issued non-binding guidelines for basic requirements of EIS preparation. CEQ left NEPA implementation largely to the federal agencies, which were to use the CEQ guidelines to prepare their own procedures. During the early 1970s, there were frequent complaints regarding the delays that the NEPA process was perceived to cause. Some observers attributed these problems to a lack of uniformity in NEPA implementation and uncertainty regarding what was required of federal agencies. Also, in response to increasing NEPA-related litigation, agencies often produced overly lengthy, unreadable, and unused EISs. In an effort to standardize an increasingly complicated NEPA process, President Carter directed CEQ to issue regulations that would be legally binding on federal agencies; final regulations became effective on July 30, 1979. The CEQ regulations were intended to be generic in nature. Each federal agency was required to develop its own NEPA procedures that would be specific to typical classes of actions undertaken by that agency. Separately, CEQ regulations directed federal agencies to review their existing policies, procedures, and regulations to ensure that they were in full compliance with the intent of NEPA.

Concern about the availability and use of water to support the nation's people, economy, and environment has bolstered interest in establishing a national water commission. The commission structure proposed in recent legislation (e.g., H.R. 135) is similar to that of the 1968-1973 National Water Commission (NWC or Commission). As proposed in H.R. 135, the commission would assess future water demands, study current management programs, and develop recommendations for a comprehensive water strategy. Questions about a commission as an effective model and which topics a commission might consider have raised interest in assessing what the NWC recommended in its 1973 report, Water Policies for the Future, and how the issues that it identified have evolved. The NWC recommended addressing the interconnection between water development and the natural environment, implementing a "users pay" or "beneficiary pays" approach, accomplishing water quality improvements, and adapting governance and organizations to meet water challenges. Since 1973, progress has been made in some of these areas; however, few actions can be traced directly to the NWC's recommendations. Nonetheless, the influence of the NWC on the evolution of water policy cannot be dismissed. Many of the problems that the Commission identified remain today, and some actions since 1973 have moved water policy toward alignment with NWC recommendations; others have moved it in the opposite direction of NWC recommendations. Shifts in institutional arrangements in general have reduced coordination of federal water agency activities and in many ways have moved away from NWC-recommended multi-objective or river basin planning. State-federal tensions over proper and respective roles continue to cloud resolution of difficult water resource issues and complicate coordination efforts. While many support better coordination of federal water activities and a clearer national "vision" for water management, Congress has not enacted overarching water policy legislation since the 1965 Water Resources Planning Act. Instead, water policy has largely evolved through executive and judicial actions, in many cases in response to piecemeal legislation. Congress continually modifies federal water projects through amendments to existing projects and programs through Water Resources Development Acts (WRDAs), Reclamation acts, water quality legislation, and appropriations decisions. Incremental and ad hoc evolution of water policy, however, is not surprising. Water management is complicated by past decisions and investments affecting a wide range of stakeholders pursuing different goals. Specifically, federal and state laws and regulations, local ordinances, tribal treaties, contractual obligations, and economies dependent on existing water use patterns and infrastructure all affect water management. Attempts to untangle such complexities involve many constituencies with differing interests, and success is difficult to achieve. Expectations for a commission to achieve change in a complex system resistant to transformation may be unreasonable; instead, the influence of a commission may lie in how its recommendations combine with other drivers to support policy evolution. This CRS report presents the NWC's recommendations and analyzes how issues targeted by the recommendations have evolved during the intervening years. The report focuses on key federal-level recommendations, thereby targeting what has been accomplished since 1973, what issues remain unresolved, and what additional concerns have developed.

Federal agencies adopt rules to implement statutes that Congress has enacted. These rules, although established by an administrative agency, maintain the force of law. As such, agencies have considerable power to establish and interpret federal law. However, for an agency to promulgate rules, Congress must first grant that agency the power to do so through statute. To control the process by which agencies create these rules, Congress has enacted statutes such as the Administrative Procedure Act (APA) that dictate what procedures an agency must follow to establish a final, legally binding rule. Other statutes govern issues such as how agencies must operate internally with respect to hiring and labor practices, the maintenance of federal records, financial management, and a diverse range of other topics. In order to understand these statutes, one must know to which entities these laws actually apply. Congress has not provided one all-encompassing definition of an agency. Instead, the term "agency" can mean different things in different contexts, depending on what statute is at issue. For example, the definition of agency under the APA differs from its definition under the Freedom of Information Act (FOIA). Furthermore, some statutes and executive orders distinguish between executive agencies and "independent agencies." This report will explain the differences between executive agencies and independent agencies, briefly discuss legislative and judicial agencies, and explore various statutory definitions of "agency." Federal agencies in the executive branch may be divided into two broad categories, executive agencies and independent agencies. Generally speaking, executive agencies are subject to direct presidential control, while independent agencies are typically designed by statute to be comparatively free from presidential control. Typically, to ensure this level of independence, Congress provides the independent agency with certain structural characteristics that limit the President's control over the agency's actions. While there is no strict definition of what qualifies an agency as "independent," this section looks at six indicia of independence that independent agencies often have in common: (1) for cause removal protection; (2) multi-member board or commission structure; (3) exemption from Office of Management and Budget (OMB) legislative clearance requirements; (4) exemption from presidential review of agency rulemaking procedures; (5) direct or concurrent budget submissions to Congress; and (6) independent litigating authority. Importantly, as will be shown throughout this section, while many independent agencies share many of these characteristics, an agency need not possess all of these characteristics to be considered independent. One of the characteristics that often indicates agency independence from executive control is the President's ability to remove the head of an independent agency only "for cause." Therefore, unlike the heads of a typical executive agency—who serve at the pleasure of the President —the President may only remove the head of an independent agency for some form of misconduct. The Supreme Court has upheld such restrictions on the President's authority to remove officers. For example, many statutes that establish independent agencies provide that the head of the agency shall serve a fixed term and may only be removed for "inefficiency, neglect of duty, or malfeasance in office." Other statutes simply state that the agency head is removable "for cause." Courts have not clearly established the threshold for removing an agency head for cause; however, Congress has indicated that removal for cause must be predicated on "some type of misconduct," as opposed to merely having policy disagreements with the President or refusing to take action that the President thinks is most prudent. This removal protection, at least in theory, gives the independent agency more flexibility when making decisions because the President cannot remove the agency head simply because he disagrees with the agency's policy choices. The Supreme Court has held that some officers enjoy "for cause" removal protection even if the statute is silent on removal procedures. In Wiener v. United States , the Court held that the structure of the War Claims Commission (WCC), specifically that the members of the commission served for a specific term of office, and the WCC's role as a quasi-judicial entity prevented President Eisenhower from removing members of the WCC at will despite the lack of specific for cause removal protection in the statute. These features prompted the Court to note that the War Claims Commission was similarly situated to other entities, such as the Federal Trade Commission, that enjoy for cause removal protection. The Court determined that Congress did not intend for the President to be able to remove these members without good cause. Lower courts, after following rationales similar to Wiener , have indicated that the commissioners of the Securities and Exchange Commission (SEC), the Federal Election Commission (FEC), and the members of the National Credit Union Administration (NCUA) Board all enjoy for cause removal protection despite statutory silence regarding removal. Ultimately, numerous agency administrators, commissioners, and board members enjoy for cause removal protection, which may be the most notable characteristic of an independent agency. The Supreme Court has established some limits on removal protections. Notably, the removal protection must not "interfere impermissibly with [the President's] constitutional obligation to ensure the faithful execution of the laws." Under such an analysis, the Court has held that a double layer of for cause protection is per se unconstitutional—that is, an inferior officer may not enjoy for cause removal protection if the principal officer in charge of him has for cause removal protection from the President. Another characteristic of independent agencies is that the agency may be directed by a multi-member board or commission, rather than a single administrator. Arguably, if an agency is led by a single administrator that the President appoints, the agency head will likely have policy preferences that reflect the views of the appointing President. Therefore, in order to curb the amount of influence that one administrator may have upon an agency, Congress may provide that an independent agency be administered by a multi-member board. In this manner, multiple views may be voiced on particular policy decisions. In addition to having a multi-member agency head, Congress sometimes places additional restrictions on the composition of a commission or board. For example, Congress often requires a board to have no more than a simple majority from one political party serving on the commission. In this manner, Congress seeks to ensure that the minority party has a voice in the agency's decision-making process. Furthermore, officers' terms are often staggered in order to prevent multiple vacancies arising at one time. Although many independent agencies share these structural characteristics, some independent agencies are headed by a single administrator. Examples include the Social Security Administration, the U.S. Office of Special Counsel, and the Consumer Financial Protection Bureau. A presidential order requires agencies to submit their legislative proposals, congressional testimony, and comments on proposed legislation that will be presented to Congress to the Office of Management and Budget (OMB), which is within the Executive Office of the President, for review. This process is known as "legislative clearance," and allows the President to ensure that agency communications to Congress reflect the President's priorities. The Obama Administration has stated that this requirement "[h]elps the agencies develop draft bills that are consistent with and that carry out the President's policy objectives." In some instances, Congress may exempt certain agencies from having to undergo OMB legislative clearance prior to submitting their views or proposals to Congress. For example, one such statute provides that No officer or agency of the United States shall have any authority to require the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Housing Finance Board, or the National Credit Union Administration to submit legislative recommendations, or testimony, or comments on legislation, to any officer or agency of the United States for approval, comments, or review, prior to the submission of such recommendations, testimony, or comments to the Congress if such recommendations, testimony, or comments to the Congress include a statement indicating that the views expressed therein are those of the agency submitting them and do not necessarily represent the views of the President. This exemption from OMB legislative clearance requirements arguably may provide an agency with greater independence from the President by allowing the agency to express its own view on a certain policy or program without the President's input. However, if a statute does not specifically exempt an agency from the legislative clearance process, the agency is generally expected to comply, as OMB Circular A-19 provides that the term "agency" includes "[a]ny executive department or independent commission, board, bureau, office, agency ... including any regulatory commission or board." Independent agencies also are exempt from centralized review of agency rulemaking under Executive Order 12866. Executive Order 12866, promulgated by President Clinton in 1993, requires executive agencies to submit their proposed and final "significant" regulations to the Office of Information and Regulatory Affairs (OIRA) within OMB for approval prior to publication in the Federal Register . The agency's submission must include, among other things, an assessment of the costs and benefits of the regulation, an explanation for the need of the regulation, and a statement explaining how the regulation "promotes the President's policy priorities." When OIRA reviews an agency's proposed significant regulation, OIRA must "provide meaningful guidance and oversight so that each agency's regulatory actions are consistent with applicable law, the President's priorities, and the principles set forth in [the] Executive order." Therefore, one of OIRA's functions is to help ensure that regulations promulgated by federal agencies promote the Administration's policy priorities. However, pursuant to Executive Order 12866, independent agencies—as defined by the Paperwork Reduction Act —are not required to submit their proposed and final regulations for centralized review. This exemption arguably further insulates independent agencies from presidential influence because OIRA does not necessarily have the opportunity to suggest changes to proposed regulations in order to bring those rules into conformance with the President's policy priorities. Notably, it is by the terms of the Executive Order, not by statute, that independent agencies are exempt from these review procedures. Therefore, independent agencies may elect to have their rules reviewed by OIRA if they so choose. Furthermore, other provisions of the order are applicable to the independent agencies. For example, independent agencies are required to submit to OIRA a "regulatory plan" that outlines the "most important significant regulatory actions that the agency reasonably expects to issue in proposed or final form in that fiscal year or thereafter." Another characteristic that may indicate the level of an agency's independence is how the agency's budget requests are submitted to Congress. Generally, agencies do not directly submit their budget proposals to Congress. Instead, most agencies are required to submit their budget proposals to OMB. The President, through OMB, may modify such requests prior to submitting them to Congress. Therefore, the President's budget does not necessarily reflect the agencies' budget proposals, but, instead, reflects the President's policy priorities. However, Congress has prohibited OMB and the President from revising the budget requests of certain agencies. For example, the Social Security Act provides that the "Commissioner shall prepare an annual budget for the [Social Security] Administration, which shall be submitted by the President to the Congress without revision, together with the President's annual budget for the Administration." Such a provision allows the agency to appeal directly to Congress for its budget priorities and arguably provides the agency with some insulation from the President's influence during the appropriations process. In other statutes, Congress has authorized certain agencies to submit their budget requests directly to Congress and OMB at the same time—a practice known as concurrent budget submission. This provides Congress with the opportunity to hear directly from the agency while still allowing OMB to review and revise the proposal prior to inclusion in the President's budget. Congress, therefore, can see what the agency directly requested along with the President's request for the same agency. An agency's ability to litigate independently from the Department of Justice (DOJ) also may provide the agency with some insulation from presidential influence. Unless otherwise provided by statute, the DOJ is responsible for conducting litigation on behalf of the federal agencies. This allows the President, through the Attorney General, to control the litigation positions of agencies generally. The Attorney General may choose when to file claims or defend agency policies. However, Congress has provided some agencies with varying degrees of independent litigating authority. For example, the Executive Director of the Architectural and Transportation Barriers Compliance Board is permitted to "appear for and represent the Access Board in any civil litigation" except for cases before the Supreme Court. Other agencies only have independent litigating authority with respect to certain types of cases. For example, the NCUA may litigate independently of the DOJ only when it is seeking to dissolve a federal credit union. Likewise, although the Solicitor General handles most litigation on behalf of the United States in front of the Supreme Court, Congress has enabled some agencies to represent themselves before the Supreme Court under certain circumstances. For example, the Federal Trade Commission (FTC) may represent itself before the Supreme Court if the Solicitor General authorizes the FTC to do so or if the Solicitor General refuses to represent the Commission. Again, this provision permits the FTC to litigate its position on a case without necessarily relying on the President for legal representation. While most federal agencies can be divided into two broad categories—executive agencies and independent agencies—there are also agencies within the legislative and judicial branches. As a general matter, legislative agencies, such as the Government Accountability Office (GAO) and the Architect of the Capitol, are distinct from executive branch agencies in that they aid Congress in its legislative capacity, and do not "execute the laws." Likewise, judicial agencies, such as the Administrative Office of the United States Courts and the Sentencing Commission, neither execute the laws nor promulgate laws that "regulate the primary conduct of the public." Instead, judicial agencies usually engage in functions that are "attendant to a[n] ... element of the historically acknowledged mission of the Judicial Branch," such as issuing sentencing guidelines for the federal courts. Perhaps the most important definition of "agency" is found in the Administrative Procedure Act (APA). This is because the APA provides the "default" procedures that agencies must follow when conducting rulemaking and adjudications—that is, unless an agency's organic statute provides for other procedures, the agency must follow the requirements in the APA. The APA also provides standards for judicial review of agency actions. It is, therefore, arguably the most important statute to understand in administrative law. Furthermore, the definition of "agency" provided in the APA is often referenced in other statutes that govern the rulemaking process. For example, the Negotiated Rulemaking Act, the Regulatory Flexibility Act, and the Congressional Review Act all define agency by reference to the APA's definition. The APA states that "agency" means each authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include— (A) the Congress; (B) the courts of the United States; (C) the governments of the territories or possessions of the United States; (D) the government of the District of Columbia; or except as to the requirements of section 552 of this title— (E) agencies composed of representatives of the parties or of representatives of organizations of the parties to the disputes determined by them; (F) courts martial and military commissions; (G) military authority exercised in the field in time of war or in occupied territory. The APA definition of agency includes all executive branch agencies, including the independent regulatory agencies, but specifically excludes Congress and the judiciary, as well courts martial, military commissions, and military authorities in time of war or in the field. Aside from these exceptions, all "authorities" of the federal government are apparently included, even those that are within or under another authority or agency. For example, the DOJ is an agency composed of a number of subunits, such as the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Federal Bureau of Prisons. Each of these divisions is an agency insofar as it is an "authority" of the government. Exactly what an "authority" is, however, is not defined. A legislative report released before the passage of the APA described the term as "any officer or board, whether within another agency or not, which by law has authority to take final and binding action with or without appeal to some superior administrative authority." Courts have given this language a "broad, inclusive reading" to apply the APA to both executive agencies and independent agencies; and have generally interpreted the APA definition of agency to include "any administrative unit with substantial independent authority in the exercise of specific functions." The relevant test is "whether the arm [of government] has the authority to act with the sanction of the Government behind it." Accordingly, even though "the primary purpose of the APA is to regulate the processes of rule making and adjudication ... even those administrative entities that perform neither function" can be considered agencies if they enjoy " substantial independent authority in the exercise of specific functions ." In this vein, an entity with purely advisory functions—such as a panel of nongovernmental consultants who advise an agency but do not make binding decisions—would not qualify as an authority. Given the wide variety of organizational structures in the government, whether an agency enjoys the necessary "authority" to qualify is largely a question of fact. For example, the President-elect's transition staff is not an agency because it is, by definition, outside the control of the sitting President, and therefore incapable of exercising government authority. In the same way, the National Academy of Sciences, while responsible for conducting investigations for the government, only enjoys authority derived from "a respect for the qualifications of the members of the Academy rather than on any delegation of federal authority." As such, it is not an agency for the purposes of the APA. Likewise, the APA does not apply to state-level agencies, or a private firm that provides services to a federal agency, because these entities do not exercise the power of the federal government. It is worth mentioning that Congress may establish entities that are explicitly not "agencies" exercising the power of the federal government, such as the Legal Services Corporation. In addition, Congress may establish entities that exercise government authority and are subject to constitutional constraints, but are not agencies for the purposes of the APA. For example, the Public Company Accounting Oversight Board is subject to the Constitution's Appointments Clause, but is not a government agency "for statutory purposes." In contrast, Congress can direct an entity otherwise not subject to the APA to comply with its provisions. For example, while most entities in the judicial branch are not agencies for the purposes of the APA, pursuant to statute, the United States Sentencing Commission, an independent agency in the judicial branch, must comply with the APA when it promulgates sentencing guidelines for federal judges. Finally, entities that might appear at first glance to operate somewhat independently of the federal government can sometimes fall within the APA's definition of agency. For example, even though the Federal Reserve Banks "are independent, privately owned and locally controlled corporations," because they "perform[] important governmental functions and exercise[] powers entrusted to it by the United States government," some courts have held that they are agencies for purposes of the APA. Likewise, the Board of Governors of the Federal Reserve System, though somewhat insulated from political influence as it receives no funding through the congressional appropriations process, must comply with the APA when it imposes civil penalties on private parties or promulgates certain regulations. As explained above, generally speaking, if an agency exercises the authority of the federal government, it qualifies as an agency under the APA. However, at least one major exception applies. The Supreme Court has held that the President is not an "agency" under the APA. In Franklin v. Massachusetts , the Commonwealth of Massachusetts brought a claim under the APA's abuse of discretion standard against, inter alia , the President, challenging the apportionment of congressional seats. Reviewing the APA's definition of agency, the Court noted that while the President was not "explicitly included" in the statutory definition, he was "not explicitly excluded, either." Therefore, "out of respect for the separation of powers and the unique constitutional position of the President," the Court ruled that the absence of language either way was not sufficient to subject the President to the APA. Nevertheless, entities within the Executive Office of the President can qualify as agencies under the APA. For example, the OMB is an agency under the APA because although its central duty is advising the President, it also functions as an "'instrument of presidential and policymaking control over the executive bureaucracy,'" and has various "'management, coordination, and administrative functions.'" Another important definition of agency is found in the Freedom of Information Act (FOIA), which provides the public with access to certain agency records. Unless a request for information falls under one of FOIA's nine exemptions, an "agency," under the act, must provide the requesting party with the relevant records. FOIA's current definition of an agency was intended to be broader than the APA's. It covers "each authority of the Government of the United States," including "any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency." FOIA does not, however, apply to Congress, the courts, or the government of United States territories. Accordingly, the "entire legislative branch" and the "entire judicial branch" are "exempted." Nevertheless, the legislative history accompanying amendments to FOIA in 1974 indicated that Congress aimed to "expand" upon the definition of agency in the APA. Congress intended the definition to include government corporations like the Tennessee Valley Authority, government-controlled corporations like the National Railroad Passenger Corporation (Amtrak), and "other establishments" like the U.S. Postal Service. The language was also meant to include "functional entities" in the Executive Office of the President, such as OMB. Congress did not intend corporations that receive federal funds but are not chartered or controlled by the government, such as the Corporation for Public Broadcasting, to be covered under the statute. However, records located at certain "government owned contractor operated" (GOCO) entities can be subject to FOIA if an agency—otherwise subject to FOIA—effectively controls those records. Despite its broad scope, this definition of agency also has limits. Even though the statute specifically mentions the "Executive Office of the President," the Supreme Court has determined that the term agency does not include "'the President's immediate personal staff or units in the Executive Office whose sole function is to advise and assist the President.'" Accordingly, in Kissinger v. Reporters Committee for Freedom of the Press , the Supreme Court ruled that Henry Kissinger's telephone records while he served as an assistant to the President did not qualify as agency records subject to FOIA. In this vein, circuit courts have found that entities that only act in an advisory role to the President, like President George H. W. Bush's Task Force on Regulatory Relief, the White House Counsel's Office, the National Security Council, and the Council of Economic Advisers, are not agencies subject to FOIA. In contrast, entities within the Executive Office of the President that have "power to issue formal, legally authoritative commands to entities or persons within or outside the executive branch" are agencies under the act. Finally, courts have found that certain entities, even if established by Congress, may not be agencies for the purposes of FOIA because the government does not exercise sufficient control over the establishment. For example, the American National Red Cross, which has a number of its governors appointed by the President, operates under a congressional charter, and is subject to federal financial reporting and audit requirements, is not an agency for FOIA purposes because it is "not subject to substantial federal control or supervision." Likewise, the National Academy of Sciences, though established by an act of Congress and paid by the government to conduct research, is not an agency because it is a private entity that "merely contract[s] with the government to conduct studies," rather than participating in a government function. A somewhat broader definition of agency can be found in the Federal Records Act (FRA). Congress enacted the FRA to create "standards and procedures to assure the efficient and effective" management of federal agency records. The act applies to federal agency records made or received under federal law or connected to public business. Government records subject to the statute are eventually sent to the Archives. The FRA defines the term "federal agency" as " any executive agency or any establishment in the legislative or judicial branch of the Government (except the Supreme Court, the Senate, the House of Representatives, and the Architect of the Capitol and any activities under the direction of the Architect of the Capitol)." The statute, in turn, defines the term "executive agency" as (A) an executive department or independent establishment in the executive branch of the Government; and (B) a wholly owned Government corporation. In contrast to FOIA's scope, therefore, the FRA covers not only executive agencies, but also entities in the legislative branch and the lower federal courts. However, just as FOIA's reach does not extend to executive branch units close to the President who only engage in an advisory role, the FRA's coverage of executive branch agencies does not extend to units that simply advise the President and do not enjoy independent authority. Such records are instead subject to the Presidential Records Act. A number of statutes concerning personnel laws for the civil service define "agency" by reference to 5 U.S.C. Section 105. Section 105 of Title 5 of the United States Code defines the term "Executive agency" as an "Executive department, a Government corporation, and an independent establishment." The same chapter of the United States Code defines each of those terms, in turn. In other words, an entity within the scope of Sections 101, 103, or 104 is an executive agency for the purposes of Section 105. The definition appears to exclude agencies located in the judicial branch. First, Section 101 defines "Executive departments" as the cabinet level departments. Courts have interpreted this particular provision to not include independent establishments like the Atomic Energy Commission, the Federal Reserve Banks, and the Postal Service, or entities within an executive department, like the Internal Revenue Service, which is located inside the Treasury Department. Section 103 defines a government corporation as "a corporation owned or controlled by the government of the United States." For example, the Pension Benefit Guaranty Corporation, a government-controlled corporation within the Department of Labor, and the Federal Prison Industry, a government-owned corporation created to provide work for federal inmates, are both government corporations and are, therefore, considered an "Executive agency" for the purposes of 5 U.S.C. Section 105. Section 104 defines "independent establishment" as an "establishment in the executive branch (other than the United States Postal Service or the Postal Rate Commission) which is not an Executive department, military department, Government corporation, or part thereof, or part of an independent establishment; and ... [the] Government Accountability Office." Some courts have interpreted this provision to mean that if an entity is contained within an "Executive department," then Section 104 does not apply to it. One practical result of this distinction is that some statutes regulating the civil service will not be enforceable, at least in some jurisdictions, against the immediate "agency" employing a claimant. For example, under 5 U.S.C. Section 7114(a)(2), which entitles federal employees to the presence of a union representative when being questioned on disciplinary matters, one court ruled that because the statute's definition of agency incorporated 5 U.S.C. Section 105, the relevant defendant was not the Defense Logistics Agency, but the Department of Defense as a whole. Similarly, under the Federal Labor-Management Relations Act, one court ruled that the appropriate defendant is the Department of Justice, rather than the Department's Office of Inspector General. Congress enacted the Paperwork Reduction Act to reduce the paperwork burden for individuals and businesses resulting from the collection of information by or for the federal government. Whenever an agency requests information from 10 or more nonfederal persons, an agency must get approval from OIRA before putting out the request for information. The Paperwork Reduction Act defines the terms "agency" and "independent regulatory agency." Other statutes and executive orders define "agency" or "independent regulatory agency" by referencing the definitions provided in the Paperwork Reduction Act. The term "agency" is defined as any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency, but does not include— (A) the Government Accountability Office; (B) Federal Election Commission; (C) the governments of the District of Columbia and of the territories and possessions of the United States, and their various subdivisions; or (D) Government-owned contractor-operated facilities, including laboratories engaged in national defense research and production activities The term "independent regulatory agency" is defined by listing 19 agencies and including "any other similar agency designated by statute as a Federal independent regulatory agency or commission." The scope of the definition of "agency" under the Paperwork Reduction Act appears to be broad, but, by its terms, limited to the executive branch. Indeed, one commenter notes that the statute "applies to virtually the entire executive branch." Nevertheless, the United States Court of Appeals for the Tenth Circuit, after reviewing the structure and purpose of the U.S. Postal Service (USPS), determined that the USPS is not an agency for the purposes of the Paperwork Reduction Act. President Clinton promulgated Executive Order 12866—which remains in effect today—to "reform and make more efficient the regulatory process." The Executive Order contains numerous guidelines and procedures that agencies are expected to follow during the rulemaking process. The Order defines "agency" as follows: "Agency," unless otherwise indicated, means any authority of the United States that is an "agency" under 44 U.S.C. 3502(1), other than those considered to be independent regulatory agencies, as defined in 44 U.S.C. 3502(10)." Thus, Executive Order 12866 defines "agency" by referencing the definition provided in the Paperwork Reduction Act, described above. The independent regulatory agencies, listed in the Paperwork Reduction Act, are excluded from the definition. However, some provisions of the Executive Order, such as the requirement to submit planned regulations for publication in the Unified Agenda , specifically are made applicable to both independent regulatory agencies and executive agencies. Notably, the Executive Order states that it "does not create any right or benefit ... enforceable at law or equity"—thus, judicial review is not available for actions taken pursuant to the Order. Therefore, there are no judicial decisions that determine the scope of the term "agency" for the purposes of Executive Order 12866.

Congress has created a variety of federal agencies to execute the law. To this end, agencies may adopt rules to implement laws and adjudicate certain disputes arising under such laws. As such, agencies enjoy considerable power to regulate different industries and affect the legal rights of people. In order to control the manner in which agencies operate, Congress has passed numerous statutes that impose procedural requirements on federal agencies. The Administrative Procedure Act, for example, dictates the procedures an agency must follow to establish a final, legally binding rule. Other statutes govern how agencies must operate internally with respect to hiring and labor practices, the maintenance of federal records, financial management, and a diverse range of other topics. However, Congress has not provided one definition of an agency. Rather, the term "agency" can mean different things in different contexts, depending on which statute is at issue. In order to understand how different statutes operate, therefore, one must know to which entities these laws actually apply. Aside from judicial and legislative branch agencies, most agencies can be broadly divided into two general categories—executive agencies and independent agencies. The former are considered to be under direct presidential control, and the latter are designed to be comparatively more independent from the President. To ensure this level of independence, Congress often provides an independent agency with structural characteristics designed to protect it from presidential interference. This report will first examine six common indicia of independence that such agencies often have in common. Next, the report will explore several important statutes that regulate agencies and these statutes' respective definitions of "agency." These statutes include the Administrative Procedure Act, the Freedom of Information Act, the Federal Records Act, statutes governing federal employees, and the Paperwork Reduction Act. In interpreting the reach of these statutes, courts have sometimes limited their application based on an agency's operational proximity to the President, or how much control the executive branch has over the entity.

The Federal Pell Grant program, authorized by Title IV-A-1 of the Higher Education Act of 1965, (HEA; P.L. 89-329), as amended, is the single largest source of federal grant aid supporting undergraduate students. The program provided approximately $29 billion in aid to approximately 7.2 million undergraduate students in FY2017. Pell Grants are need-based aid that is intended to be the foundation for all federal need-based student aid awarded to undergraduates. In award year 2015-2016, Pell Grants represented 72% of all federal undergraduate grant aid; 53% of federal, state, and institutional undergraduate need-based grant aid; and 28% of total grant aid for undergraduates coming from federal, state, institutional, and private sources. The discretionary statutory authority for the Pell Grant program was authorized through FY2017. The discretionary authorization was extended through FY2018 under the General Education Provisions Act (GEPA), although the program has continued to receive appropriations. HEA also provides permanent mandatory program appropriations. This report provides descriptions of key elements of the Pell Grant program and information on recipient demographics, award levels, award value, program costs, and program funding. The first section of the report addresses how the program works and describes the basic process for awarding Pell Grants including the application process, student eligibility requirements, award rules and calculations, and the role of the institution of higher education (IHE) in the process. This section is followed by sections on recipient characteristics and the role the program plays in relation to other student aid. The report explains the complex Pell Grant funding streams and their implications. Finally, program costs and estimates are presented. In addition, the appendices provide historical Pell Grant award amounts (Appendix A), Pell Grant recipient counts (Appendix B), recent and future program funding (Appendix C), surplus and shortfall levels (Appendix D), and acronyms commonly used in the report (Appendix E). This section of the report provides an overview of the structure of the Pell Grant program and the process through which grants are made to students. It describes student eligibility, underlying concepts and award rules for determining students' grants, and the role played by postsecondary institutions in the program. Briefly, the Pell Grant program provides grants (i.e., aid that does not have to be repaid) to financially needy undergraduates. To apply for a Pell Grant or any HEA Title IV student aid, students must complete and submit the Free Application for Federal Student Aid (FAFSA), providing requested financial and other information. When the FAFSA is processed, the individual's expected family contribution (EFC) is calculated. The EFC is the amount expected to be contributed by the student and the student's family toward postsecondary education expenses for the upcoming academic year. After processing, each applicant receives a Student Aid Record (SAR). Each institution of higher education (IHE) designated by the applicant on the FAFSA receives an Institutional Student Information Record (ISIR). The SAR and ISIR contain the information submitted on the FAFSA and the individual's EFC. Institutions that receive valid SARs or valid ISIRs for eligible Pell Grant applicants are required to disburse Pell Grant funds to students who successfully enroll in approved coursework. Pell Grants are portable aid , that is, the grant aid follows students to the eligible postsecondary education institutions in which they enroll. In addition, the Pell Grant program is often referred to as a quasi-entitlement because for the most part eligible students receive the Pell Grant award level calculated for them without regard to available appropriations (for more on program funding, see the " Program Funding " section). The size of each student's grant is based, principally, on EFC, the total maximum Pell Grant for the award year, and the student's enrollment rate, but may not exceed the student's cost of attendance. To be eligible for a Pell Grant, a student must meet requirements that apply to HEA Title IV student aid programs in general as well as requirements specific to the Pell Grant program. Among the requirements generally applicable to the HEA Title IV student aid programs for award year (AY) 2018-2019 are the following: Students must be accepted for enrollment or enrolled in an eligible program at an eligible institution for the purpose of earning a certificate or degree. Students must not be enrolled in an elementary or secondary school and must have a high school diploma (or equivalent). Students must meet citizenship requirements. Males must have registered with the selective service system when 18-25 years of age. Students must maintain satisfactory academic progress while enrolled. Satisfactory academic progress requires a minimum grade point average (or its equivalent) and passing a minimum percentage of attempted credits or hours. Students must not be in default on a Title IV student loan, or have failed to repay or make an arrangement to repay an overpayment on a Title IV grant or loan, or be subject to a judgment lien for a debt owed to the United States. Students must have repaid any Title IV funds obtained fraudulently. Students may be disqualified for an unusual enrollment history —receiving HEA Title IV aid at multiple schools in the same semester, or receiving aid and withdrawing before earning any credit. Students may be disqualified for a period of time for a federal or state conviction for possession or sale of drugs while receiving HEA Title IV student aid. Specific eligibility requirements for the Pell Grant program include the following: Students must not have already completed the curriculum requirements of a bachelor's or higher degree. Students must be enrolled in non-foreign institutions. Students must be financially needy students as determined under the program's award rules (see below). Students must not be incarcerated in a federal or state penal institution. Students must not be subject to an involuntary civil commitment following incarceration for a sexual offense (as determined under the FBI's Uniform Crime Reporting Program). Students with a significant intellectual disability must be accepted for enrollment or enrolled in a comprehensive transition and postsecondary program. The amount of an eligible student's Pell Grant award is determined on the basis of a set of award rules. In general, these award rules are designed to ensure that the neediest students (as determined by their EFC) receive the highest Pell Grant awards in each award year. As need decreases or EFC increases, Pell Grant awards decrease until they phase out completely. Students who demonstrate a level of need that falls between these two extremes are awarded Pell Grant aid on a sliding scale. Additionally, Pell Grant awards are prorated for students who attend on a less-than-full-time, full-year basis. An important feature of the Pell Grant award rules is that the grant is determined without consideration of any other financial assistance a student may be eligible to receive or may be receiving. This reflects the intention to make the Pell Grant the foundation of federal need-based aid in a financial aid package. The Pell Grant award level is calculated without regard to other aid that may be awarded. Other HEA federal aid is added to the aid package after the Pell Grant is awarded. Some of the underlying concepts associated with the Pell Grant program, as well as the program's award rules, are discussed below. In general, provisions are discussed as in effect for AY2018-2019. The HEA Title IV award year begins the first day of July in a given year and ends the last day of June the following year. For example, award year (AY) 2018-2019 begins July 1, 2018, and ends June 30, 2019. The HEA Title IV academic year is an IHE-determined instructional unit. For credit hour programs, the academic year requires a minimum of 30 weeks of instructional time. For a clock hour program, the academic year requires a minimum of 26 weeks of instructional time. A full-time, full-academic-year student is expected to complete at least 24 semester hours, 36 quarter credit hours, or 900 clock hours. Each IHE establishes an academic year for each educational program. There may be more than one academic year within an award year. The payment period is an academic period or period of enrollment for which Pell Grant aid is disbursed. Each academic year must have at least two payment periods. For example, an IHE on a standard semester calendar may disburse Pell Grant funds two times, once for each of two semesters: fall and spring. The discretionary base maximum award is the amount specified in annual appropriations laws. For AY2018-2019, the discretionary base maximum award is $5,035. The annual appropriations laws also establish the amount of discretionary funding available to fund the discretionary base maximum award for the program for the corresponding award year. Table 1 presents the discretionary base maximum award for the last five years, and Table A-1 provides a history of discretionary base maximum award amounts since AY1973-1974. The mandatory add-on award is an amount established by the HEA. For AY2018-2019, the mandatory add-on award is $1,060. The HEA provides permanent and indefinite mandatory appropriations to fund the mandatory add-on award. From AY2013-2014 through AY2017-2018, statutory provisions established a formula to annually modify the mandatory add-on amount to account for inflation. For AY2017-2018 and all subsequent award years, the mandatory add-on amount remains the same in accordance with statutory provisions. Table 1 presents the mandatory add-on award for the most recent five years, and Table A-1 provides a history of mandatory add-on award amounts when provided since AY1973-1974. The total maximum award amount is the maximum Pell Grant amount that a student may receive in an academic year. The total maximum award is the sum of the discretionary base maximum award and the mandatory add-on award. For AY2018-2019, the total maximum award is $6,095. Table 1 presents the total maximum award for the last five years, and Table A-1 provides a history of total maximum award amounts since AY1973-1974. The EFC is a number calculated in accordance with an HEA-defined methodology that is used to establish how much the student's family is expected to contribute to the student's educational costs. The EFC is used in conjunction with COA to determine whether a student is eligible for Title IV need-based aid (aid based on the student's and the student's family's financial need). Generally, a student with an EFC greater than the maximum Pell Grant will not be eligible for a Pell Grant and a student with an EFC higher than their COA will not qualify for any federal need-based aid. The EFC calculation methodology differs for dependent students, independent students with no dependents other than a spouse, and independent students with one or more dependents other than a spouse. Generally speaking, an independent student is an individual who is 24 years old or meets another criterion specified in the HEA. A student under the age of 24 cannot qualify as independent on the basis of being financially independent of his or her parents or not being claimed on the parents' tax return. The lowest EFC is $0, and there is no maximum EFC. The EFC is determined utilizing family and financial (income and asset) information submitted by the aid applicant on the FAFSA. Students who apply for federal student aid and meet certain qualifications automatically receive a zero EFC ($0). The qualifications are based on either the family's reporting income being below a specified threshold or meeting other criteria. Dependent students and independent students with dependents other than a spouse can qualify for an automatic zero EFC based on an AGI below a specified level and meeting other criteria. To qualify for an auto zero, the parents of the dependent student or the independent student (and spouse, as appropriate) must have an adjusted gross income (AGI) below a specific threshold and meet one of three additional criteria. The AGI threshold is $25,000 for AY2018-2019. The additional criteria are receipt of means-tested benefits from other federal programs, eligibility to file or having filed certain federal income tax returns, and having been a dislocated worker. Independent students without dependents other than a spouse are not eligible for an automatic zero based on their financial situation. An otherwise Pell Grant-eligible student whose parent or guardian was a member of the U.S. Armed Forces and died as a result of performing military service in Iraq or Afghanistan after September 11, 2001, receives an automatic zero EFC provided the student was under 24 years old or was enrolled at an IHE at the time of the parent or guardian's death. In cases where a student does not qualify for an automatic zero, the student may still qualify for a calculated zero EFC on the basis of the full EFC formula and information provided on the FAFSA. For Pell Grant award purposes, the cost of attendance (COA) is an IHE-determined measure of educational expenses for a student enrolled full-time for a full academic year. In general, it is the sum of (1) tuition and fees; (2) an allowance for books, supplies, transportation, and miscellaneous personal expenses; (3) an allowance for room and board; and (4) for a student with dependents, an allowance for costs expected to be incurred for dependent care. Institutions may use average costs for students at their school, rather than calculating actual expenses for each student. Average COA amounts must be based on the same category of students. For example, institutions may establish separate averages by residency: in-state or out-of-state, or housing: on-campus or off-campus. The scheduled award is the maximum Pell Grant aid a full-time, full-academic-year student can receive. In accordance with the HEA, the scheduled award is the least of (1) the total maximum Pell Grant minus the student's EFC, or (2) Cost of Attendance (COA) minus EFC. Most students are awarded Pell Grant aid based on the first condition of this rule (i.e., Pell Grant Award = Total Maximum Pell Grant – EFC), since the total maximum Pell Grant award available to a student in an award year is typically less than the student's COA at the attending institution. For example, a student with a zero EFC would be eligible for a scheduled Pell Grant award that is equivalent to the total maximum award, as long as the amount did not exceed the student's COA. The annual award is the maximum Pell Grant aid a full-academic-year student can receive at the student's enrollment rate. The HEA requires ED to annually publish a schedule of annual award amounts that are proportionally reduced scheduled awards for students who are not enrolled full-time for the full academic year. In practice, ED publishes four disbursement schedules: full-time; less than full-time, but at least ¾ -time; less than ¾-time, but at least ½-time; and less than ½-time. Each schedule provides a table of annual award amounts by COA increments and EFC increments. The annual award for a student enrolled at least ½-time in a clock-hour or non-term credit-hour program is taken from the full-time disbursement schedule. The minimum Pell Grant award is the smallest annual award amount for which a student must qualify to receive a Pell Grant award. In other words, a student must qualify for at least this minimum amount to be eligible for the program. The minimum award is 10% of the total maximum award. For AY2018-2019, the minimum Pell Grant award is $610, or 10% of $6,095. Alternatively, the minimum Pell Grant award may be conceptualized as a maximum EFC. To qualify for a Pell Grant award, a student's EFC must be no more than 90% of the total maximum award. In AY2018-2019, a student with an EFC above $5,486, or 90% of $6,095 rounded to the nearest whole number, would not be eligible for a Pell Grant. Pell Grant aid awards are disbursed in each payment period for which a student is eligible. Pell Grants must be paid out in installments over the academic year. In general, the annual award amount is proportionally divided among each payment period in the academic year. Each academic year must have at least two payment periods. For example at an IHE on a traditional semester calendar in AY2018-2019, a full-time, full-academic-year student with a zero EFC could receive $3,047.50 in the fall semester and $3,047.50 in the spring semester. See Figure 1 for an example of Pell Grant award disbursements. Since award year 2017-2018, qualified students may receive up to 1½ scheduled Pell Grants, or up to 150% of the scheduled award, in each award year. To qualify for the additional funds, a Pell Grant-eligible student must be enrolled at least ½-time in a payment period after receiving most or all of the student's scheduled award in previous payment periods of the award year. For example at an IHE on a traditional semester calendar in award year 2018-2019, a full-time, full-academic-year student with a zero EFC could receive $3,047.50 in the fall semester, $3,047.50 in the spring semester, and $3,047.50 in the summer semester. Figure 2 provides an additional example. The HEA establishes a maximum cumulative lifetime eligibility cap on Pell Grant aid. Over her lifetime, a student may receive the value of no more than 12 full-time semesters (or the equivalent) of Pell Grant awards or six scheduled awards. Pell Grant lifetime eligibility used (LEU) at a closed school from which the student did not graduate does not count toward the lifetime cap—the eligibility used is restored. To be eligible for the HEA Title IV programs, including the Pell Grant program, an IHE must meet several statutory and regulatory eligibility criteria. For a description of institutional eligibility requirements, see CRS Report R43159, Institutional Eligibility for Participation in Title IV Student Financial Aid Programs . The IHE may be a public or private nonprofit IHE, a private for-profit (sometimes referred to as proprietary) postsecondary institution, or a postsecondary vocational institution. An eligible institution's role in administering the Pell Grant program primarily involves reviewing and verifying information submitted by students on the FAFSA, calculating awards, disbursing awards, adjusting awards to ensure students do not receive more assistance than they are eligible for, record keeping, and reporting to ED. An eligible institution calculates a student's Pell Grant disbursement using the award rules. Generally, institutions credit a student's account with the Pell Grant disbursement payment to meet unpaid tuition, fees, room, and board; any remaining Pell Grant funds are paid directly to the student to cover other living expenses. ED makes funds available to schools so that they can disburse Pell Grant awards. In addition, the Pell Grant program pays participating institutions an administrative cost allowance of $5 per enrolled recipient. This section provides descriptive statistics of Pell Grant recipients (numbers and characteristics) and the institutions that they attend. The data may inform discussion regarding the extent to which the program achieves the policy goal of improving access to higher education for financially needy individuals. The Pell Grant program reaches a significant portion of undergraduates each year. In AY2015-2016, the latest year for which data are available, 39% of all undergraduates were estimated to have received Pell Grants. Table 2 shows the number of Pell Grant recipients over the most recent five years, from AY2011-2012 to AY2015-2016, as well as the annual change and annual percentage change during this time. The number of Pell Grant recipients has declined from almost 9.5 million in AY2011-2012 to over 7.5 million in AY2015-2016. Table B-1 displays Pell Grant recipients since AY1973-1974. It is important to note that myriad factors, including the labor market, can affect the number of Pell Grant recipients in any given award year. Since Pell Grant awards are heavily dependent on EFC levels and the complex EFC formula can yield different EFCs for students with similar incomes, there is no absolute income threshold that determines who is eligible or ineligible for a Pell Grant award. Nevertheless, Pell Grant recipients are primarily low-income. In AY2016-2017, an estimated 95% of Pell Grant recipients had a total family income at or below $60,000. Independent Pell Grant recipients' income is generally lower than their dependent counterparts. As a point of reference, median household income for all U.S. households with or without students was $57,230 in 2015 and $59,039 in 2016. It is important to note, however, that a small percentage of Pell Grant awards go to mid- and high- income families. For the most part, these awards are smaller than the average Pell Grant award for all students and are typically provided to dependent students from families who have multiple students enrolled in postsecondary education at the same time. The types of institutions in which Pell Grant recipients enroll may not reflect the overall enrollment patterns of undergraduate students who do not receive Pell Grants. For example, a larger proportion of Pell Grant recipients attend private for-profit institutions than do students not receiving Pell Grants. Table 3 shows the AY2015-2016 enrollment distribution by institutional sector of undergraduates who do not receive a Pell Grant and undergraduates who do receive Pell Grants. Each group is disaggregated for dependent and independent students. For both independent and dependent students, the share of Pell Grant recipients attending private-for profit institutions was more than double the share of undergraduate students who do not receive Pell Grants attending such institutions. One possible explanation for this disparity is that for-profit institutions may target marketing to low-income students. Most undergraduates, whether receiving Pell Grants or not, attend public four-year or public two-year institutions. For example, over half of independent Pell Grant recipients attend either public four-year (22.0%) or public two-year (32.5%) institutions. The Pell Grant is intended to function as the foundation of federal need-based aid for financially needy undergraduates. As described earlier, other financial aid received by a student is not taken into account in determining a student's Pell Grant. This section explores the role Pell Grants and other sources of aid play in helping students meet postsecondary costs. The total maximum Pell Grant, available to students with a zero EFC who enroll on a full-time, full-year basis, is often used as a gauge of the Pell Grant program's level of support in each year. Figure 3 compares the total maximum grant to average undergraduate tuition, fees, room, and board charges (base educational costs) at public two-year, public four-year, private two-year, and private four-year institutions between AY1973-1974 and AY2016-2017. It is evident that the maximum was at its peak relative to these average charges during the 1970s. Since the 1990s, the extent to which the total maximum Pell Grant covers average base educational costs has been variable; however, despite some increases, the total maximum Pell Grant has lost ground relative to average base educational costs at public four-year institutions. In AY2016-2017, the total maximum grant ($5,815) covered approximately 58% of the average base educational costs at public two-year institutions, 30% at public four-year institutions, 23% at private two-year institutions, and 14% at private four-year institutions. It is also important to note that in all sectors of higher education, published tuition, fees, and room and board have consistently risen more rapidly than average prices in the economy for a number of years. An analysis of the purchasing power of the Pell Grant maximum award, therefore, could also include an examination of why published prices at institutions of higher education have risen at such a rapid rate and what is the role of federal student aid, including Pell Grants, in contributing to rising published prices. The Pell Grant is intended to be the foundation of federal need-based student aid from Title IV of the HEA. In AY2015-2016, an estimated 16% of Pell Grant recipients relied on a Pell Grant as their only source of aid from all sources, and 34% of Pell Grant recipients did not receive other HEA Title IV aid funds. Most Pell Grant recipients (84%) participate in other student aid programs. For those Pell Grant recipients with a zero EFC, Table 4 shows estimates of the average percentage of cost of attendance (COA) covered by their Pell Grant award, their loans from all sources, and their total aid package in AY2015-2016, by total family income. This table allows for examination of the extent to which Pell Grants and other aid helped Pell Grant recipients with a zero EFC meet their COA. Table 4 shows, for example, that among all Pell Grant recipients, Pell Grant aid covered, on average, 27.1% of the COA and all loan sources covered, on average, an additional 20.3% of the COA for these recipients. For Pell Grant recipients, total aid from all sources supplies less than two-thirds (62.9%) of the COA, on average. This section of the report reviews the latest Pell Grant program funding trends and reviews Pell Grant funding sources and procedures. As a quasi entitlement that makes grant payments to eligible students who apply for aid and enroll in eligible programs notwithstanding the appropriation level available in any one year, the program may operate with a surplus or shortfall of discretionary funding. Funding provided for the Pell Grant program is exempt from sequestration, pursuant to provisions included in Section 255(h) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, Title II of P.L. 99-177 , as amended). Given the somewhat unique funding characteristics of this program, this section of the report explores funding concepts, funding levels, and insight into how shortfalls and surpluses of discretionary funding in the program have been addressed. The Pell Grant program since approximately FY2008 has been funded through three funding streams. A discretionary appropriation is the primary source of funds for the discretionary award amounts. There are two mandatory funding streams. The smaller mandatory funding stream augments the discretionary appropriations to fund the discretionary award level. Therefore, a portion of the discretionary award level is funded through mandatory appropriations. A larger mandatory appropriation funds the mandatory add-on award amounts. Recent and historical discretionary maximum award levels and mandatory add-on award levels are shown in Table 1 and Appendix A , respectively. Appendix C presents the three distinct funding streams and enacting legislation since FY2008. Annual discretionary appropriation bills provide the largest portion of funding for the Pell Grant program, and this funding typically remains available for use for two fiscal years. An annual appropriation is usually available for obligation on October 1 of the fiscal year for which the appropriation is made and remains available for obligation through September 30 of the following fiscal year. Thus, while FY2018 funds are provided with the purpose of supporting awards made from July 1, 2018, to June 30, 2019, these funds are available for obligation from October 1, 2017, to September 30, 2019, and may support multiple award years. This multiyear availability allows the discretionary appropriation to operate at a surplus or shortfall in any given year. As mentioned earlier, annual discretionary appropriation bills also establish the base discretionary maximum grant for each applicable award year. The SAFRA Act (enacted as part of the Health Care and Education Reconciliation Act of 2010; P.L. 111-152 ), the FY2011 Continuing Appropriations Act ( P.L. 112-10 ), the Budget Control Act of FY2011 ( P.L. 112-25 ), and most recently the FY2012 Consolidated Appropriations Act ( P.L. 112-74 ) amended the HEA to provide specified mandatory appropriations for the Pell Grant program to augment current and future discretionary appropriations. That is, these funds, while mandatory from a budgetary perspective, can be used to pay for costs in the program for which annual discretionary appropriations are typically provided. The concept of providing advance mandatory funding to augment or supplant discretionary funding in the program is relatively new. Prior to FY2007, mandatory funding had been infrequently provided for the Pell Grant program, but usually to supplement discretionary funding to pay for accumulated funding shortfalls. The SAFRA Act also established permanent, indefinite mandatory appropriations for the program to provide for the mandatory add-on award amount in FY2010 and beyond. Although the mandatory appropriations that fund add-on award amounts are available permanently for such sums as necessary , the amount provided for each year will be determined based on actual costs associated with the applicable add-on amount. Table 5 provides a summary of recent and projected Pell Grant program funding from FY2012 through FY2021. A distinction is made between discretionary appropriations, mandatory appropriations provided to augment discretionary appropriations, and mandatory appropriations provided to fund add-on award amounts. Table 5 also displays the mandatory appropriations that have been provided through FY2021. From a budgetary perspective, these recent mandatory appropriations have been offset largely by enacted provisions that were estimated to have resulted in savings from the federal student loan programs, which are classified as mandatory programs. Additionally, some of the mandatory appropriations provided for the program in the FY2011 Continuing Appropriations Act and FY2012 Consolidated Appropriations Act were offset by enacted provisions that resulted in mandatory savings in other aspects of the Pell Grant program. Mandatory appropriations that will be necessary to fully fund the add-on award amount are available permanently, but the specific amount required in each year cannot be reported until the add-on amount is determined and all funds are disbursed to eligible students. ED does, however, estimate the amount of mandatory appropriations provided required to fund add-on award amounts for the current and subsequent fiscal years. The Pell Grant program is often referred to as a quasi-entitlement and has for the most part been operated as an appropriated entitlement. An appropriated entitlement is a program that receives mandatory funding in the annual appropriations acts, but the level of spending is not controlled through the annual appropriations process. Instead, the level of mandatory spending for appropriated entitlements, like other entitlements, is based on the benefit and eligibility criteria established in law, and the amount provided in appropriations acts is based on meeting this projected level. The Pell Grant program is not an entitlement because the program is primarily funded through discretionary appropriations. In addition in the past, statutory benefit and eligibility criteria were adjusted so that spending would not exceed appropriations. Finally, annual Pell Grant discretionary appropriations are determined on the basis of estimates of program costs and other policy considerations. To the extent that the annual appropriation may be higher or lower than actual program costs, the program may operate at a surplus or shortfall. The surplus or shortfall may accumulate over more than one year. The HEA requires that the Secretary of Education, when she has determined that the appropriated funds are insufficient to satisfy all Pell Grant entitlements, notify each chamber of Congress of the funding shortfall, identifying how much more funding is needed to meet those entitlements. The Secretary can respond to a shortfall in Pell Grant funding by allocating funds from the most recently enacted appropriation to pay for obligations incurred in previous award years. For example, although the FY2019 appropriation is expected to fund award year 2019-2020 program costs, the appropriation may fund award year 2018-2019 costs since obligations for these costs occur in FY2019. This permits ED to use funds from multiple fiscal years' appropriations to meet one award year's cost. The misalignment between estimated program costs (appropriations) and actual expenditures is often related to economic and statutory changes. When the general economy weakens, postsecondary enrollment often increases and thus Pell Grant participation and cost increases. Table 6 provides a 10-year history of funding of estimated shortfall or surplus levels, funding for the discretionary award amounts, and estimated expenditures (Appendix D provides data from FY1973 to FY2018). Although discretionary award amounts are funded by discretionary and mandatory appropriations, the surplus or shortfall is accounted for using only discretionary funding. The annual funding shortfall or surplus differs from the cumulative shortfall or surplus, which may accumulate over multiple award years. It is also important to note that Congress may have provided a reduced appropriation level in a given year when a funding surplus was available for use from the previous year. Conversely, Congress may have provided additional appropriations in a given year to pay for an estimated funding shortfall from the previous year. Table 6 shows a high cumulative shortfall of $9.569 billion at the end of FY2010 and high cumulative surplus of $11.082 billion at the end of FY2013. The FY2010 cumulative shortfall was transformed into a surplus by a complicated mix of increased funding levels that exceeded $30 billion annually and declining expenditures. The FY2013 cumulative surplus of $11.082 billion has decreased to an estimated $7.410 billion surplus at the end of FY2018. Since FY2014, the annual funding has hovered near $23 billion despite generally higher expenditures. The two subsequent sections of the report describe the policy implications of shortfalls and surpluses and the measures to address them. For the most part, funding shortfalls in the Pell Grant program have been recognized as common occurrences. Persistent or high funding shortfalls, as in FY2010, may be viewed as fiscally irresponsible. In essence when there is a shortfall, the program is in debt, and eventually the debt must be paid. The higher the debt level, the more difficult it is to resolve. Generally speaking, with input from the Administration and other stakeholders, Congress adopts legislation that controls spending across the federal government and for specific programs. Through the budget resolution process, a 302(b) allocation is established for each of the 12 appropriations bills. These allocations, referred to as 302(b) subdivisions, establish the maximum discretionary amount that can be spent through each bill. Therefore generally but with exceptions, individual program-level discretionary appropriations within the annual Departments of Labor, Health and Human Services, and Education, and Related Agencies appropriations bill must be balanced within its established 302(b) allocation. In other words, increased discretionary appropriations for one program may coincide with decreased discretionary appropriations for one or more other programs. Resolving a Pell Grant program shortfall may lead to a difficult decision about which program(s) to reduce discretionary funding. Over the years, federal policymakers and Congress have taken a variety of measures to address the vexing issues associated with funding shortfalls in the Pell Grant program. The measures have included modified budget scoring, reductions in students' awards, recipient caps, reductions in program costs, and supplemental appropriations. From the inception of the program in 1972 until the enactment of the Higher Education Amendments of 1992 ( P.L. 102-325 ), the Secretary of Education had statutory authority under the HEA to reduce awards to respond to a shortfall in appropriated funds. Reductions were made in awards in eight years using this authority (the last in AY1990-AY1991). After this HEA authority was repealed, appropriations legislation for FY1994-FY2001 continued to provide the Secretary with reduction authority, but that authority was not used. FY2002 and subsequent appropriations legislation have not included such language. Congress took steps in FY2006 to limit the possibility of large accumulated funding shortfalls in the future. H.Con.Res. 95 (109 th Congress) established a permanent rule that applies to the scoring of the Pell Grant program by the Congressional Budget Office (CBO). The rule provides that if the appropriation of new discretionary budget authority enacted for the program is insufficient to cover the full estimated costs in the upcoming year—including any funding surplus or shortfall from prior years—the budget authority counted against the bill for the program will be equal to the adjusted full cost (i.e., total need). The full estimated costs must be based on the maximum discretionary award amount and any changes to the eligibility criteria. For most discretionary programs, CBO equates the budget authority to the level provided in each appropriation bill. As a result of the scoring rule, Congress cannot fund new programs or increase the funding of existing programs subject to discretionary appropriations while providing less funding than required for the Pell Grant program. The scoring rule, however, cannot fully account for the challenges of estimating the cost of the program. Discretionary program costs are estimated in advance of the award year they are intended to support, and based on the chosen discretionary base maximum award level and estimated program participation. The scoring rule does constrain the accumulation of the funding shortfall by requiring Congress to annually reconcile previous years' appropriation levels with updated estimates of previous years' program obligations. Given the CBO scoring rule, there are several levers that have been used to reduce or prevent an increase in Pell Grant program costs and thus reduce or eliminate a shortfall. The discretionary maximum award level has been reduced or not increased. Statutory provisions that establish Pell Grant award rules have been modified to reduce the amount of funds that some students may receive. For example, year-round Pell Grants were eliminated beginning in AY2011-2012. Statutory provisions that establish Pell Grant eligibility have been modified to reduce the number of recipients. For example, the qualifying minimum award amount was increased beginning in AY2012-2013. Statutory provisions that establish the calculation of EFC have been modified to reduce the numbers of students eligible for Pell Grants and other HEA Title IV need-based financial aid. For example, the income threshold for an automatic zero EFC was increased beginning in AY2012-2013 in order to reduce the number of students receiving an automatic zero EFC. Statutory provision that establish student eligibility for any HEA Title IV aid programs have been amended to reduce eligibility. For example, the ability of new students without a high school diploma (or equivalent) to qualify for HEA Title IV aid was temporarily eliminated from July 1, 2012, through June 30, 2014. In addition to reducing program costs or in lieu of reducing program costs to reduce or eliminate a funding shortfall, legislation has provided supplementary appropriations to address the CBO scoring rule. Supplementary mandatory appropriations have been provided for general use in the program, often by generating savings in the Direct Loan program that is funded by mandatory budget authority. Supplementary discretionary appropriations have been provided during periods of expansionary fiscal policy such as through the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ). In addition to supplementary appropriations, the regular discretionary appropriations amount may be increased. The policy implications of a funding surplus are very different from those of a shortfall. An increasing or high cumulative surplus may be viewed as presenting a potential opportunity. The surplus may be viewed as representing a pot of available funding. The surplus may be invested back into the Pell Grant program or it may be used to pursue other policy priorities. There are several approaches for investing the surplus into the program. Appropriations levels and statutory provisions may be maintained under the assumption that Pell Grant program costs would eventually use the surplus. For example as the U.S. population grows, postsecondary enrollment and Pell Grant participation may grow. Award levels for Pell Grant recipients may be increased in order to increase the size of a Pell Grant. For example, the discretionary base maximum award was increased from $4,860 in FY2009-FY2017 to $5,035 in FY2018. Student eligibility for Pell Grants may be expanded. For example, increasing the discretionary base maximum award from $4,860 in FY2009-FY2017 to $5,035 in FY2018 also increases the number of students who are eligible. Statutory provisions that establish Pell Grant award rules may be modified to increase the amount of funds that some students may receive. For example, year-round Pell Grants were reauthorized beginning in AY2017-2018. Statutory provisions that establish the calculation of EFC may be modified to increase the numbers of students eligible for Pell Grants and other HEA Title IV need-based financial aid. Statutory provision that establish student eligibility for any HEA Title IV aid programs may be amended to increase eligibility. Alternatively, the surplus may be used to fund or increase funding for other programs or to reduce a budget deficit. All or a portion of the surplus may be rescinded in an appropriations act. For example, the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) included a rescission of $1.3 billion from the Pell Grant program surplus. The rescission offsets the cost of appropriations in the act. Grant payments are made to eligible students who apply for aid and enroll in eligible programs notwithstanding the prescribed appropriation levels in any one year in such a way that some liken the program to a quasi entitlement . Costs for the Pell Grant program are award year-specific and are primarily affected by the number of eligible students who apply for aid and enroll in eligible programs, the total maximum award amount, and award rules. The number of eligible students may be affected by economic conditions and legislative changes to the federal need analysis methodology and award rules. As discussed earlier, the total maximum award amount is determined by both the annual appropriations act and the HEA. Other factors that contribute to changes in program costs include the cost of higher education. The Congressional Budget Office reports and estimates program costs at least annually. Table 7 provides a summary of current and future estimated Pell Grant program costs from AY2012-2013 through AY2021-2022, as of April 2018. Costs associated with the discretionary base maximum award and costs associated with the mandatory add-on award are specified. Table 7 shows that the total program cost has declined from AY2012-2013 to AY2016-2017 and is estimated to increase thereafter. From AY2012-2013 to AY2015-2016, the number of Pell Grant recipients decreased annually ( Table 2 ) although the total maximum award amount increased annually since AY2013-2014 ( Table A-1 ). Declining undergraduate enrollment in degree-granting postsecondary institutions from 28.2 million in AY2011-2012 to 26.3 million in AY2015-2016 is reflected in a reduction of Pell Grant recipients. The decrease in the number of Pell Grant recipients from AY2012-2013 to AY2015-2016, which is particularly evident in the decrease in costs related to the discretionary award level, outweighs the increase in the total maximum award, which is demonstrated in increased costs associated with mandatory award levels. Program costs after AY2016-2017 are estimated to increase ( Table 7 ). The increase would primarily be a result of an estimated increase in the number of Pell Grant recipients and the awarding of year-round Pell Grants. The CBO baseline does not account for any potential a change in the total maximum Pell Grant award after the AY2018-2019 discretionary maximum award increase included in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). Appendix A. Historical Pell Grant Award Amounts Appendix B. Federal Pell Grant Recipients, AY1973-1974 to AY2015-2016 Appendix C. Program Funding: FY2008-FY2021 Appendix D. Annual and Cumulative Discretionary Funding Shortfalls and Surpluses in the Pell Grant Program, FY1973-FY2018 Appendix E. Glossary/Acronyms

The federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. Pell Grants, and their predecessor, Basic Education Opportunity Grants, have been awarded since 1973. The program provided approximately $29 billion in aid to approximately 7.2 million undergraduate students in FY2017. Pell Grants are need-based aid that is intended to be the foundation for all need-based federal student aid awarded to undergraduates. To be eligible for a Pell Grant, an undergraduate student must meet several requirements. One key requirement is that the student and his or her family demonstrate financial need. Financial need is determined through the calculation of an expected family contribution (EFC), which is based on applicable family financial information provided on the Free Application for Federal Student Aid (FAFSA). Although there is no absolute income threshold that determines who is eligible or ineligible for Pell Grants, an estimated 95% of Pell Grant recipients had a total family income at or below $60,000 in academic year 2015-2016. Other requirements include, but are not limited to, the student not having earned a bachelor's degree and being enrolled in an eligible program at an HEA Title IV-participating institution of higher education for the purpose of earning a certificate or degree. The maximum annual award a student may receive during an academic year is calculated in accordance with the Pell Grant award rules. The student's scheduled award is the least of (1) the total maximum Pell Grant minus the student's EFC, or (2) Cost of Attendance (COA) minus EFC. For a student who enrolls on a less-than-full-time basis, the student's maximum annual award is the scheduled award ratably reduced. For FY2019 (academic year 2019-2020), the total maximum Pell Grant is $6,195. The COA is a measure of a student's educational expenses for the academic year. Qualified students who exhaust their scheduled award and remain enrolled beyond the academic year (e.g., enroll in a summer semester) during an award year receive a year-round or summer Pell Grant. With year-round Pell Grants, qualified students may receive up to 1½ scheduled grants in each award year. Finally, a student may receive the value of no more than 12 full-time semesters (or the equivalent) of Pell Grant awards over a lifetime. The program is funded primarily through annual discretionary appropriations, although in recent years mandatory appropriations have played an increasing role in the program. The total maximum Pell Grant is the sum of two components: the discretionary maximum award and the mandatory add-on award. The discretionary maximum award amount is funded by discretionary appropriations enacted in annual appropriations acts, and augmented by permanent and definite mandatory appropriations provided for in the HEA. For FY2019, the discretionary appropriation is $22.475 billion and the augmenting mandatory funds total $1.370 billion. The mandatory add-on award amount is funded entirely by a permanent and indefinite mandatory appropriation of such sums as necessary, as authorized in the HEA. The mandatory add-on is estimated to require $6.077 billion in FY2019. Funding provided for the Pell Grant program is exempt from sequestration. The Pell Grant program is often referred to as a quasi-entitlement because for the most part eligible students receive the Pell Grant award level calculated for them without regard to available appropriations. In a given year, the discretionary appropriation level may be smaller or larger than the actual cost to fund the discretionary maximum award, despite the augmenting mandatory appropriation. When the discretionary appropriation is too small, the program carries a shortfall into the subsequent fiscal year. When the discretionary appropriation is too large, the program carries a surplus into the following fiscal year. Since FY2012, the program has maintained a surplus. The surplus has variably been used to increase Pell Grant awards, expand eligibility, and either fund other programs or reduce the national deficit.

In February 2002, the Bush Administration announced two air quality proposals to addressthe control of emissions of sulfur dioxide (SO 2 ), nitrogen oxides (NOx), mercury (Hg), and carbondioxide (CO 2 ). (1) The firstproposal, called "Clear Skies," would amend the Clean Air Act (CAA) to place emission caps onelectric utility emissions of SO 2 , NOx, and Hg. Implemented through a tradeable allowanceprogram, the emissions caps would be imposed in two phases: 2010 (2008 in the case of NOx) and2018. As part of a complete rewrite of Title IV of the Clean Air Act, Clear Skies was introduced inthe 108th Congress on February 27, 2003, as H.R. 999 and S. 485 . (2) In the 109th Congress, amodified version of Clear Skies ( S. 131 ) has been introduced by Senator Inhofe and hasbecome the focus of congressional hearings and potential markup. (3) Much of the debate surrounding the Administration's Clear Skies proposal has focused onits cap-and-trade implementation scheme. For example, EPA states: "The Clear Skies approachwould deliver guaranteed emissions reductions of SO 2 , NOx, and mercury at a fraction of commandand control costs, increasing certainty for industry, regulators, consumers and citizens." (4) In some ways, the proposal'scap-and-trade provisions are its least significant aspects in terms of the proposal's interaction withthe structure of the Clean Air Act. EPA has already promulgated regulations using a regionalcap-and-trade program to control NOx emissions over the eastern United States (called the NOx SIPCall) under existing Clean Air Act authority, and has proposed other cap-and-trade regulations toachieve Clear Skies' level of reductions over 28 eastern states and the District of Columbia for bothSO 2 and NOx. (5) Inaddition, EPA has proposed other cap-and-trade regulations to achieve similar Clear Skies mercuryreductions, although their legality has been subject to some question. (6) Far more important to the fabric of the Clean Air Act are the various provisions in ClearSkies to alter, delete, or hold in abeyance for some time existing sections of the Clean Air Act withrespect to affected electric generating units and industrial sources that choose to opt into theprogram. The Administration has made it clear that with Clear Skies, it believes certain CAAprovisions are no longer necessary. As stated by then-EPA Administrator Whitman before theSenate Environment and Public Works Committee, as EPA was developing Clear Skies legislation: Well, it is our feeling that right now that depending onwhere you set the targets, that New Source Review is certainly one of those regulatory aspects thatwould no longer be necessary -- the regional haze, the BART, as I mentioned before, the MACTstandards, the NOx SIP Call, the 126 Rule, acid rain -- all of those could be eliminated and combinedinto one regulatory process under a new piece of legislation that would be vastly simplified. Itdepends where they go on those for utilities -- we are talking for utilities now -- as far as most ofthose are concerned. But where you go depends on what level is set in the final legislation, how faryou can go to eliminate the additional regulations that we have in place now. (7) This report examines the potential impact Clear Skies legislation would have on the structureof the Clean Air Act with respect to electric generating units and other industrial sources that chooseto opt into the program. Many of the changes in the Clean Air Act proposed by Clear Skies would occur with respectto Title I. Within its general regulatory structure, several distinctions arise that affect utility planningand operations -- for example, whether the facility is located in clean or dirty air areas, whether afacility is existing or new, and what fuel it burns. And while the underlying regulatory structuregenerally applies to SO 2 , NOx, and particulate matter (PM), the specific requirements for each differ. Despite changes made in the 1990 Clean Air Act Amendments, specifically the addition of acap-and-trade program to control SO 2 emissions (Title IV), the basic structure designed in 1970 andexpanded in 1977 remains the backbone of the Act. The addition of Title IV in 1990 did not changeany of the basic requirements of the Act; Title IV was a supplemental provision, not a substitute forexisting provisions. National Ambient Air Quality Standards / New SourcePerformance Standards / Lowest Achievable Emissions Rate. As enacted in 1970,the CAA established a two-pronged approach to protect and enhance the quality of the nation's air. First, the Act established National Ambient Air Quality Standards (NAAQS), which set limits onthe level of specified air pollutants in ambient air. Second, the Act required national emission limitsto be set for major new polluting facilities; these are called New Source Performance Standards(NSPS). NAAQS have been established for six "criteria" pollutants, including SO 2 , NOx, andPM. (8) Under the law, EPAsets primary NAAQS (9) toprotect the public health with an "adequate margin of safety." (10) EPA periodically reviewsNAAQS to take into account the most recent health data. NAAQS are federally enforceable withspecific deadlines for compliance, but states are primarily responsible for actually implementing thestandards, through development and enforcement of State Implementation Plans (SIPs). In general,these plans focus on reducing emissions from existing facilities to the extent necessary to ensure thatambient levels of pollution do not exceed the NAAQS. For areas not in attainment with one or more of these NAAQS, the 1970 CAA mandatesstates to require new sources to install Lowest Achievable Emissions Rate (LAER) technology. Along with "offset" rules, (11) LAER ensures that overall emissions do not increase as a resultof a new plant's operation. LAER is based on the most stringent emission rate of any stateimplementation plan or achieved in practice without regard to cost or energy use. (12) Existing sources in anonattainment area are required to install less stringent Reasonably Available Control Technology(RACT), a state determination based on federal guidelines. The 1970 CAA also established New Source Performance Standards (NSPS), which areemission limitations imposed on designated categories of major new (or substantially modified)stationary sources of air pollution. For fossil fuel-fired electric generating facilities, EPA has setNSPS for SO 2 , NOx, and PM 10 (particles smaller than 10 microns), and is required by the Act toreview the standards every eight years. A new source is subject to NSPS regardless of its locationor ambient air conditions. Recognizing that pollutants are no respecters of state boundaries, the CAA has establishedseveral mechanisms for addressing interstate pollution that may contribute to noncompliance witha NAAQS. These mechanisms include regional commissions, such as the Ozone TransportCommission, state petitions under Section 126, and other provisions for regional groups. The largestof these interstate regulatory regimes is the NOx SIP Call, which controls NOx emissions from 20states and the District of Columbia. Under the NOx SIP Call, the affected states are given emissionbudgets that they can achieve in whatever manner they choose. Noting the regional nature of theozone problem in the eastern United States, EPA successfully encouraged states to implement therule through an EPA-coordinated cap-and-trade program. In summary, under this overall regulatory regimen, existing sources in nonattainment areasare subject to controls determined by the state as necessary to meet NAAQS; existing sources inattainment areas are essentially free from controls. And major new sources, including fossilfuel-fired electric generating facilities, are subject to NSPS as the minimum requirement,anywhere. (13) Prevention of Significant Deterioration / New Source Review /Best Available Control Technology. The 1977 CAA broadened the air qualitycontrol regimen with the addition of the Prevention of Significant Deterioration (PSD) and visibilityimpairment provisions. The PSD program (Part C of Title I of the CAA) focuses on ambientconcentrations of SO 2 , NOx, and PM in "clean" air areas of the country (i.e., areas where air qualityis better than the NAAQS). The provision allows some increase in clean areas' pollutionconcentrations depending on their classification. In general, historic or recreation areas (e.g.,national parks) are classified Class I with very little degradation allowed, while most other areas areclassified Class II with moderate degradation allowed. States are allowed to reclassify Class II areasto Class III areas, which would be permitted to degrade up to the NAAQS. (14) New sources in PSD areas must undergo preconstruction review (called New Source Reviewor NSR) and must install Best Available Control Technology (BACT) as the minimum level ofcontrol. State permitting agencies determine BACT on a case-by-case basis, taking into accountenergy, environmental, and economic impacts. BACT cannot be less stringent than the federalNSPS, but it can be more so. More stringent controls can be required if modeling indicates thatBACT is insufficient to avoid violating PSD emission limitations, or the NAAQS itself. A complement to the PSD program for existing sources is the regional haze program (Section169A of the Act), which focuses on "prevention of any future, and the remedying of any existing,impairment of visibility" resulting from manmade air pollution in national parks and wildernessareas. (15) Among thepollutants that impair visibility are sulfates, organic matter, and nitrates. Sources built between 1962and 1977 are required to install Best Available Retrofit Technology (BART). In 1999, the EPApromulgated a regional haze program, which would entail more stringent controls on NOx and SO 2 . Table 1 summarizes the current air quality control requirements imposed on fossil fuel-firedelectric generating facilities by Title I. Separate from the Title I requirements for criteria pollutants, Section 112 of the Actestablishes a two-phase federal regulatory program for 188 hazardous air pollutants (HAPs) listedin the Act. Among the HAPs is mercury. In the first phase, Maximum Achievable Control Technology (MACT) standards are to bepromulgated for all major sources of the pollutants. MACT is determined by the EPA Administrator,but it must be at least as stringent as the best controlled similar source for new sources or (with someexceptions) the average of the best performing 12% for existing sources. In the second phase, eightyears after promulgation of MACT, additional regulations may be promulgated to address any"residual risks" from HAPs after the implementation of MACT. Electric utilities were given special treatment under Section 112. In Section 112(n), the Actrequired that EPA report to Congress on the hazards to public health from electric generating units'emissions of HAPs and make an affirmative finding that regulation under Section 112 is "appropriateand necessary" for such units before proceeding to issue MACT standards. EPA made this findingin December 2000; but in January 2004, it proposed to rescind its conclusion that the MACTstandard was necessary, instead proposing a cap-and-trade program under Section 111 as itspreferred approach. Table 1. Implementing Title I: Simplified Structure for Electric Generating Units Source: CRS, modified from Electric Power Research Institute, NOx Regulatory Changes and the ElectricUtility (September 1981), pp. 2-3. Table 2. Implementing Section 112 for Mercuryand Other HAPs from Electric Generating Units and OtherSources Source: CRS. Under current law, states are allowed to implement standards for HAPs thatare more stringent than the federal ones, and several (including Massachusetts,Connecticut, New Jersey, and Wisconsin) have already done so. Table 2 summarizes the current requirements imposed on fossil fuel-firedelectric generating facilities by Section 112. Clear Skies would change numerous provisions of current law. Some of thesechanges add new authorities or programs -- for example, the establishment ofnational cap-and-trade programs for utility emissions of NOx and mercury, and theextension and revision of the Title IV cap-and-trade program for SO 2 . Other changesremove existing authority (e.g., the hazardous air pollutant provisions of Section 112,as they relate to mercury emissions from utilities and from opt-in facilities in otherindustries). And other changes modify and/or hold in abeyance certain provisions forseveral years (e.g., BART, Section 126, conformity). A list of the additional authorities would include (1) the cap-and-tradeprograms for SO 2 , NOx, and Hg; (2) statutory national emission standards for newand reconstructed electric generating units (EGUs); (3) authority for sources in otherindustries to opt into the cap-and-trade program; and (4) establishment of an optional"transitional area" category in place of the traditional nonattainment area designationsunder Sections 107 and 110. A list of the authorities removed (or limited in new ways) would include (1)provisions for major sources (i.e., affected EGUs and opt-in units would no longerbe considered major sources); (2) changes to the hazardous air pollutant provisionsof Section 112, removing utilities and opt-in units from the sources whose mercuryemissions can be controlled under Maximum Achievable Control Technology(MACT) and residual risk provisions; (3) changes to Section 126, establishing amoratorium on the use of petitions to control interstate air pollution, and establishingsubstantially more stringent requirements for acceptance of such petitions after themoratorium; (4) reduction of the noncompliance penalties under the new SO 2 cap-and-trade program; (5) effective preemption of more stringent state requirementsfor NOx and mercury; (6) elimination of New Source Review (NSR) formodifications of major sources; (7) elimination of Best Available RetrofitTechnology (BART) requirements under Section 169A (which concerns visibilityprotection); (8) establishment of a statutory 50 km zone around Class I areas forimposition of the Prevention of Significant Deterioration (PSD) requirements(replacing a current regulatory 100 km zone); (9) exempting affected units locatedin PSD Class II areas from Class II limitations on pollution increments; (10)extension of deadlines for meeting the ozone and PM 2.5 NAAQS; (11) a de facto moratorium on the provisions of Subpart 2 dealing with ozone nonattainment in mostareas; and (12) a de facto moratorium on the conformity requirements (for highwaysand other projects) under Section 176 in most ozone and PM 2.5 nonattainment areas. 1. Cap and Trade Program for SO2, NOx, andMercury. Much of Clear Skies consists of detailed provisions thatwould replace Title IV of the Clean Air Act, the acid precipitation title, with a revisedand expanded version establishing a multi-pollutant cap-and-trade program. Theproposal would place caps on emissions of SO 2 , NOx, and Hg in two phases, andwould set up trading programs to provide flexibility in meeting the three caps. For the version introduced as S. 131 , Phase 1 would establishcaps for EGUs of: 2.19 million tons of NOx in 2008; 4.5 million tons of SO 2 in 2010; and 34 tons of mercury in 2010. The S. 131 Phase 2 caps, which would take effect in 2018, are set at: 1.79 million tons of NOx; 3.0 million tons of SO 2 ; and 15 tons of mercury. (17) The allowance trading program provisions are generally similar to those ofthe existing Title IV program. As specified under S. 131 , allowanceswould be allocated free to EGUs based on historic fuel usage. For the new NOx andHg programs, the allocation would be adjusted by factors specified in the bill (e.g.,EGUs fueled by lignite would receive three times as many Hg allowances as wouldcomparable EGUs fueled by bituminous coal). Unlike the existing program, a smallpool (7% of the SO 2 and 5% of the NOx and Hg allowances) would be set aside fornew units. 2. National Emission Standards for SO2, NOx, andHg Emissions from New and Reconstructed EGUs. Clear Skieswould establish statutory standards for emissions of SO 2 , NOx, and Hg from new andreconstructed EGUs. The standards are generally more stringent than current NSPS(e.g., for NOx, the standard would be 1.0 lb/MWh for coal-fired EGUs versus thecurrent NSPS of 1.6 lb/Mwh (18) ; for particulate matter, the standard would be 0.20lb/MWh, about one-third less than the current NSPS). The Hg standard (0.015lb/GWh) is more stringent than the proposed MACT for subbituminous, lignite, andIGCC units -- especially the lignite units -- but it would allow two and a half timesas much emissions as the proposed MACT for bituminous-fired EGUs. Compared to the current NSPS, the National Emission Standards would applyto fewer units (as discussed further in item 6 under "Authorities Removed orLimited," below). The National Emission Standards would be reviewed and, ifappropriate, revised at least every eight years following their promulgation, the sameas the requirement for existing NSPS. 3. Authority for Non-Utility Sources to Opt into theCap-and-Trade Program. S. 131 would allow units thatare not affected EGUs and whose emissions of SO 2 , NOx, and Hg are vented onlythrough a stack or duct to opt into the cap-and-trade program. The proposalestablishes alternative methods of determining allowances for these units based ona unit's heat input or product output and its emissions during one of several optionalbase periods. In the case of S. 131, a unit would receive allocations equalto 70% of its baseline SO 2 and NOx emissions beginning in 2010, and 50%beginning in 2018. Mercury allocations, beginning in 2010, would be equal to theemissions allowed under federal or state hazardous air pollutant standards (generally,the standards for industrial boilers and process heaters promulgated by EPA inSeptember 2004). In return for opting into the cap-and-trade program, units would be exemptfrom compliance deadlines for all hazardous air pollutants under four broadcategories of regulations (industrial boilers, process heaters, combustion engines andturbines, and plywood) as soon as they apply for acceptance, (19) and wouldbe permanently exempt from the regulations if EPA accepts their application to optin. In addition, units that opt in would no longer be considered a major sourceor a major emitting facility or major stationary source for purposes of Part C (PSD)and Part D (nonattainment) of the Act for 20 years. As discussed later (see item 1under "Authorities Removed or Limited," below), this would exempt opt-in unitsfrom several requirements provided the owner/operator properly operated,maintained, and repaired the unit's pollution control equipment to limit particulateemissions and used good combustion practices to minimize carbon monoxideemissions. 4. Establishment of an Optional "TransitionalArea" Category in Place of Nonattainment Designations. ClearSkies would amend Section 107 of the Clean Air Act to allow areas to be designated"transitional" rather than "nonattainment" for the new 8-hour ozone and PM 2.5 standards, if EPA or state modeling demonstrate that the area will attain the newstandards by December 31, 2015. EPA modeling demonstrates that 88% of the ozoneand about two-thirds of the PM 2.5 nonattainment counties would qualify for thistransitional status; (20) other areas could qualify by adopting additionallocal controls. The effects of this change (as discussed in more detail in items 10, 11,and 12 under "Authorities Removed or Limited") are to extend the deadlines forreaching attainment and remove numerous statutory requirements for nonattainmentareas under Part D until after 2017. 1. Exemption from Major Source RequirementsUnder Parts C and D. Clear Skies would provide that affected units(including both EGUs and facilities in other industries that opt into the cap-and-tradeprogram) would not be considered major emitting facilities or major stationarysources of air pollution for purposes of Parts C (PSD provisions) and D(nonattainment provisions) of Title I of the Clean Air Act for a period of 20 yearsafter the date of enactment. For the PSD program, this would exempt them from therequirements of NSR and BART, as well as BACT. Unless an affected unit waslocated within 50 km of Class I areas (158 designated national parks and wildernessareas), it would not be subject to the ambient air protections (i.e., increments) of thePSD program. If the unit is located within 50 km of a Class I area , however, it wouldremain subject to the PSD requirements in Part C of Title I. (21) (See furtherdiscussion under items 7, 8, and 9, below.) For nonattainment areas, Clear Skies would exempt affected units fromnonattainment NSR, LAER, and offset requirements. This would limit the ability ofnonattainment areas to impose additional controls on existing EGUs and opt-infacilities under their State Implementation Plans. To qualify for the exemptions, an existing affected unit (or opt-in unit asnoted above) must show that it "operates, maintains and repairs pollution controlequipment to limit emissions of particulate matter" and "uses good combustionpractices to minimize emissions of carbon monoxide" within three years of the dateof enactment. 2. Changes to the Hazardous Air PollutantProvisions of Section 112. Clear Skies would revise Section 112 ofthe Clean Air Act to preclude regulation of any hazardous air pollutants emitted byelectric utility steam generating units through either MACT or residual riskstandards, with the following exception. The Administrator would retain theauthority to address any non-mercury hazardous air pollutants from EGUs providedthat any determination to do so is based on public health concerns and, on anindividual source basis, considers the effects of emission controls installed oranticipated in order to meet 2018 emission requirements under the cap-and-tradeprogram. A determination to impose such controls would also need to be based ona peer-reviewed study with notice and opportunity to comment, to be completed notbefore January 2015. Any such standards could not take effect before January 1,2018. As noted earlier, S. 131 as introduced also exempts units that optinto the cap-and-trade program from compliance deadlines under four sets ofhazardous air pollutant regulations already promulgated under Section 112 once theunits apply to opt in; it would permanently exempt them from compliance with thefour MACT standards if EPA accepts their application. 3. Changes to Section 126Petitions. Clear Skies would add a new Section 110(q) to the CleanAir Act, establishing a moratorium on the use of petitions to control interstate airpollution from affected units (under Section 126 of the Act) and establishing morestringent requirements for acceptance of such petitions after the moratorium. Undercurrent law, Section 126 authorizes downwind states or political subdivisions topetition the Administrator to find that certain upwind sources emit air pollutants inamounts that contribute significantly to the petitioner's nonattainment. If theAdministrator grants the finding, the upwind sources must either shut down orimplement controls that the Administrator may mandate, within a specified period,but no later than three years from the date of the finding. The amendment wouldprovide that the Administrator may not require submission of SIPs subjectingaffected units to Section 126 requirements with an effective date prior to December31, 2014. In reviewing a petition under Section 126, the Administrator would have toconsider, among other factors, any emissions reductions required to occur by theapplicable attainment dates of any relevant nonattainment areas. In addition, asconditions for making a finding concerning affected units, the Administrator wouldhave to determine that the required emission reductions from the affected units (1)are at least as cost-effective as emission reductions from each other principalcategory of sources in areas upwind of the petitioner (including on-road and off-roadmobile sources), and (2) will improve air quality in the petitioner's nonattainmentareas at least as cost-effectively as other emission reductions, if a methodology isreasonably available to make such determinations. 4. Change in Noncompliance Penalties Under TitleIV. Clear Skies would replace the Clean Air Act's existing Section411 beginning in 2008, effectively reducing the penalties for noncompliance with thesulfur dioxide cap-and-trade program provided in current law. Under current law,noncompliance penalties were set at $2,000 per ton of excess emissions in 1990. Theamount is adjusted for inflation: in 2004, the adjusted amount would have been$2,890.59, according to the Bureau of Labor Statistics. Section 406 of the bill wouldset the penalties at $2,000, with no further inflation adjustments, thus cutting thepenalty by about one-third initially, and more in subsequent years. 5. Preemption of StateRequirements. Like current law, Clear Skies states that it does notpreempt the right of any state or political subdivision thereof to adopt or enforcelimits more stringent than those provided in the bill. Under the cap-and-tradeprograms, however, " notwithstanding any other provision of this Act, " states andtheir political subdivisions would be prohibited from interfering with the transfer,sale, or purchase of allowances. The net effect of these provisions would be to allowincreased emissions in another jurisdiction by an amount equal to any reductionachieved in a more stringent state for each of the three covered pollutants. Since thebill also limits the ability to file Section 126 petitions to control out-of-statepollution, a more stringent standard enacted by a state might have no effect onnational levels of a pollutant, but would burden a state's economy with additionalcontrol costs. 6. Elimination of New Source Review forModifications of EGUs. As noted earlier, Clear Skies wouldexempt EGUs and opt-in facilities from NSR for a period of 20 years. The bill does,however, establish National Emission Standards for new EGUs (also describedabove). These new standards would not apply to "modified" units, but would applyto "reconstructed" units. Reconstruction is defined as the replacement of componentsto such an extent that the fixed capital cost of the new components exceeds 50% ofthe fixed capital cost to construct a comparable new unit. Also, the standards wouldnot apply to reconstructed units unless it is technologically and economically feasibleto meet the standards. Under current law and subsequent regulation, there is no specific costcriterion for what qualifies as a modification requiring an affected source to undergoNSR, but it is considered to be well below a 50% threshold. EPA's October 2003attempt to establish a 20% threshold was criticized as exempting virtually every plantmodification from the existing requirement, and was stayed by the U.S. Court ofAppeals for the D.C. Circuit on December 24, 2003. (22) 7. Elimination of Best Available RetrofitTechnology (BART) Requirements. Under Section 169A of PartC of the Clean Air Act, major sources that were in operation between 1962 and 1977are subject to BART. BART is intended to assure reasonable progress toward thegoal of visibility protection in Class I national park and wilderness areas. Clear Skieswould exempt EGUs and opt-in facilities from BART for a period of 20 years afterenactment. 8. Class I PSD Areas. As notedabove, S. 131 as introduced provides that an affected unit to be locatedwithin 50 km of a Class I area on which construction or reconstruction begins afterthe date of enactment would remain subject to PSD requirements. PSD currentlyrequires that all major new and modified sources with the potential to affect airquality in a Class I area obtain a new source permit that assures no adverse impacton the area's visibility. The statute does not specify a specific distance limit, but theregulations require permit applicants to identify Class I areas within 100 km of theunit's location. (23) 9. Class II PSD Areas. Under thePSD program, areas classified as Class II are permitted to increase moderatelyambient concentrations of SO 2 , NOx, and PM by a statutorily determined increment(regulatorily determined in the case of NOx). Clear Skies would exempt affectedunits located in Class II areas from having to offset or otherwise further control theiremissions in order to maintain ambient air quality within the Class II increments. 10. Extension of Deadlines for the Ozone andPM2.5 NAAQS. Under current law, nonattainment areas mustgenerally demonstrate that they will attain the new standards for ozone and fineparticles (PM 2.5 ) by 2007, 2009, or 2010 (depending on EPA's classificationscheme). (24) As noted earlier, Clear Skies would create a new"transitional" area classification in place of nonattainment, for areas that candemonstrate through modeling that they will attain the standards by December 2015. Until that date, transitional areas would not incur penalties or face additionalrequirements beyond those identified in the EPA or state modeling (generally theClear Skies controls and already promulgated federal standards for mobile sources).After 2015, if an area failed to achieve the standard, it would be designatednonattainment by June 2017, and would then have to impose controls to reachattainment by 2022. Meanwhile, until 2017, the ozone transitional areas would beexempt from statutory requirements spelled out in Subpart 2 of Part D of the Act(described below). 11. Elimination of the Provisions of Subpart 2 forOzone Nonattainment. Subpart 2 (Sections 181 and 182) of theClean Air Act spells out numerous specific requirements for areas that are classifiedin Marginal, Moderate, Serious, Severe, or Extreme ozone nonattainment. These caninclude LAER standards and offset requirements for new stationary sources,imposition of RACT on existing stationary sources, inspection and maintenanceprograms for motor vehicles, vapor recovery at gas stations, use of reformulatedgasoline, and $5,000 per ton penalties on some emissions if an area ultimately failsto meet the standard. EPA has proposed to keep these requirements in place for areasthat have failed to meet the 1-hour ozone standard, but it would appear that suchareas might be able to qualify as "transitional" under Clear Skies. (25) Transitional areas would not be considered in nonattainment. If the areas do qualifyas transitional, they would appear to be able to roll back statutory requirements towhich they are now subject, provided that they can demonstrate attainment by 2015. 12. Elimination of the ConformityRequirements. Under Section 176 of the Clean Air Act, ozone andPM 2.5 nonattainment areas are required to demonstrate that new federally fundedprojects (e.g., for highways, transit, or airports) conform to the area's SIP for cleanair. Failure to demonstrate transportation conformity can lead to a suspension offederal transportation funds until conformity is demonstrated. By reclassifying mostozone and PM 2.5 nonattainment areas "transitional," Clear Skies would eliminate theapplication of conformity in those areas until 2018. Proposed Clear Skies legislation would make numerous changes to thestructure of Title I with respect to electric generating units (EGUs) covered by theproposed legislation and those industrial sources that choose to opt into the proposedprogram. Table 3 attempts to provide an overview of what Title I would look likeunder Clear Skies with respect to EGUs and industrial sources that chose to opt in. The most significant structural change would be the elimination of location as avariable for controlling EGUs (unless within 50 km of a PSD Class I area). Theemission limitations envisioned under Clear Skies are not based on whether an EGUis in an attainment or nonattainment area. This situation extends to the allowancesystem, which is allowed to operate regardless of an EGU's location or a state or localgovernment's desires to restrict trading in order to help the area come into compliancewith NAAQS. Because EGUs would no longer be major sources under the meaningof Part C and Part D, states' ability to set stringent LAER or offset rules on EGUs innonattainment areas would be eliminated. Table 3. Summary of EGU Requirements under Title I If Clear Skies Is Enacted Source: CRS. Likewise, the inability to restrict trading by EGUs within nonattainment areaswould prevent state and local governments from influencing the actual emissions ofsuch EGUs. Finally, the state's enforcement mechanism, NSR, is eliminated forEGUs covered by Clear Skies. If states chose to set stringent state standards under their own Clean Air Actor equivalent statute, those standards would not be completely controlling. Bypreventing states from restricting allowance trading, any extra reductions achievedby state legislation designed to help achieve attainment (or protect local habitat orscenic areas under Part C) would create additional allowances that the utility couldsell to upwind utilities not covered by the state's legislation. The state could neitherprevent the sale nor obtain relief under a Section 126 petition forcing the neighboringutilities to reduce emissions (until after 2014 under strict conditions). For the 8-hour ozone and PM 2.5 NAAQS, Clear Skies attempts to eliminatethe need for stronger state and local standards (at least the "need" in a regulatorysense) in most cases by establishing a new "transitional" designation for areas thatdo not currently meet ambient air quality standards. Areas would be designatedtransitional if EPA or state modeling showed that Clear Skies and other measuressuch as the recently promulgated controls on mobile sources would bring an area intoattainment by December 2015. Transitional areas would not be considerednonattainment in a regulatory or legal sense, obviating the need and the statutorypretext for additional controls. With respect to PSD, Clear Skies attempts to protect Class I areas byproviding for Part C requirements for facilities within 50 km of an Class I area. Whether this is sufficient is debatable. In terms of protecting areas that states deemworthy of protection but that do not meet Clear Skies' Class I requirement, states andlocalities are basically in the same situation as with respect to nonattainment -- thatis, they are severely constrained in being able to meet requirements by the inabilityto impose additional controls on EGUs and opt-ins. The distinction that has been the source of the most substantial controversyover the years, EGU age, is not fully resolved by Clear Skies. Both Title I and TitleIV of the CAA place the most stringent requirements on new sources, allowingexisting sources to operate with fewer controls. Clear Skies would reduce thisdisparity by setting up allowance reserves for new sources. However, although allallowances would be allocated free, the allocation formulas for existing sourceswould be more generous than for new sources. In addition, the allowances for newsources are on a first-come, first-serve basis. Once the reserve is exhausted, nofurther allowances are available, and no existing allocations may be reassigned byEPA to future new sources commencing operation. Thus, existing units wouldcontinue to have an advantage over new facilities, which would receive either fewerallowances than existing sources, or none at all. Table 4. Control of Mercury and Other HAPsfrom Electric Generating Units (and Opt-Ins) If Clear Skies IsEnacted Source: CRS. Table 4 provides an overview of the regulation of mercury and otherhazardous air pollutants under Clear Skies. Maximum Achievable ControlTechnology standards and residual risk standards would no longer be applicable tonew or existing EGUs; nor would they apply to other industrial sources that opt intothe cap-and-trade program. The absence of such unit-specific standards would makeit more difficult to address "hot spots," areas where concentrations of mercury aregreater than elsewhere. As with the PSD and nonattainment provisions, if states chose to set morestringent state standards under their own Clean Air Act or equivalent statute, thosestandards would not be completely controlling. By preventing states from restrictingallowance trading, any extra reductions achieved by state legislation designed toregulate mercury would create additional allowances the utility could sell to upwindutilities not covered by the state's legislation. The state could not prevent the sale. The Administrator would retain the authority to address non-mercury HAPsfrom EGUs under stringent conditions, including a requirement for a peer-reviewedstudy of public health concerns on an individual unit basis with notice andopportunity to comment. Any such standards could not be implemented before 2018. In some ways, former Administrator Whitman has identified the central issuein Clear Skies' interaction with the Clean Air Act: Are the targets stringent enoughto permit the relaxing or removal of some provisions of the Clean Air Act designedto achieve the same thing with respect to electric utilities? In terms of utility controls designed to achieve the NAAQS, it must be statedthat Clear Skies will not achieve either the 8-hour ozone NAAQS or the fineparticulate NAAQS within the current CAA compliance deadlines, neither in termsof the reductions necessary to achieve those standards nor the timing of thereductions Clear Skies would achieve. EPA's analysis indicates that somenonattainment areas will need additional controls and time to reach attainment. (26) Clear Skies,as currently drafted, would effectively remove additional electric utility control fromthe suite of options available to states to achieve that additional level of control. Inaddition, the opt-in provision means that the reach of Clear Skies is unclear. In someareas, the removal of an industrial source from Part C or Part D could greatly reducethe options state and local authorities would have to achieve NAAQS attainment orto maintain PSD increments. Similar problems are anticipated for Clear Skies' mercury controls. Atpresent, 45 states have issued fish consumption advisories because of mercurycontamination. In about half the cases, the advisories affect every water body in thestate. Clear Skies proposes relatively modest controls on mercury from electricutilities, (27) and most other sources of mercury are alreadysubject to more stringent controls. (28) As currently drafted, Clear Skies wouldeffectively remove additional electric utility controls from the suite of optionsavailable to the states to further reduce mercury emissions. The ability of industrialsources to opt into the Clear Skies program would further reduce state mercurycontrol options. The response of the Administration is to argue that reductions will beachieved sooner and less expensively under Clear Skies than under the Clean AirAct, (29) even though Clear Skies would extend compliance deadlines 5 to 15 years for statesto achieve air quality standards. The record of Title IV suggests that substantialovercontrol may be achieved in the early years of a market-based cap-and-tradeprogram. However, as the program also illustrates over the past couple of years,those early reductions can be used later to increase emissions in a given year over themandated cap. (30) Thus, achieving reductions early under acap-and-trade program does not mean achieving more reductions over the longerterm. For state and local authorities, this additional flexibility allowing sources touse banked allowances can further complicate compliance strategies.

The 109th Congress, like the two before it, is expected to consider proposals to controlemissions of multiple pollutants from electric power plants. The bills include anAdministration-based proposal, the Clear Skies Act (S. 131), which would control emissions ofsulfur dioxide (SO 2 ), nitrogen oxides (NOx), and mercury, and other bills that would control thethree pollutants plus the greenhouse gas carbon dioxide. Much of the debate surrounding the Administration's Clear Skies proposal has focused onits cap-and-trade implementation scheme. But in some ways, the proposal's cap-and-trade provisionsare its least significant aspects in terms of the proposal's interaction with the structure of the CleanAir Act. EPA has already promulgated regulations using a regional cap-and-trade program to controlNOx emissions over the eastern United States (the "NOx SIP Call") under existing Clean Air Actauthority, and has proposed other cap-and-trade regulations to achieve Clear Skies' level ofreductions over 28 eastern states and the District of Columbia for both SO 2 and NOx (in the CleanAir Interstate Rule). In addition, EPA has proposed cap-and-trade regulations to achieve mercuryreductions similar to those in Clear Skies, although the legality of these regulations is morequestionable. Critical to the fabric of the Clean Air Act are the various provisions in Clear Skies to alteror to delete existing sections of the Act with respect to both electric generating units (EGUs) andindustrial sources that choose to opt into the program. The Administration has made it clear that withClear Skies' comprehensive approach to EGUs and opt-ins, it believes certain CAA provisions needno longer apply to them, in some cases permanently, in others for as long as 20 years or under certainconditions. These include most statutory requirements for Prevention of Significant Deteriorationand attainment of National Ambient Air Quality Standards under Title I of the Act, as well as mostcontrols on hazardous air pollutants as they apply to EGUs and opt-ins. These changes woulddiminish the suite of options states currently have to achieve compliance with air quality standards. In July 2001 testimony, then-EPA Administrator Whitman identified the central issue inClear Skies' interaction with current law: Are the emission reduction targets stringent enough topermit the relaxing or removal of current provisions of the Clean Air Act designed to achieve thesame thing with respect to electric utilities? EPA's analysis indicates that Clear Skies will notachieve either the 8-hour ozone or the fine particulate ambient air quality standards that the agencyrecently implemented within current CAA compliance deadlines. Some nonattainment areas willneed additional controls and time to reach attainment. Clear Skies addresses these issues in part byproviding 5 to 15 years of additional time, while effectively removing additional electric utilitycontrol from the suite of options available to states to achieve the standards. Similarly, withmercury, Clear Skies proposes relatively modest controls on electric utilities, and, as currentlydrafted, would effectively remove additional electric utility controls from the suite of optionsavailable to the states. The ability of industrial sources to opt into Clear Skies could further reducestate control options for both mercury and criteria pollutants. This report will not be updated.

Levels of pay for congressional staff are a source of recurring questions among Members of Congress, congressional staff, and the public. Senators set the terms and conditions of employment for staff in their offices. This includes job titles and descriptions, rates of pay, subject to minimum and maximum levels, and resources available to them to carry out their official duties. There may be interest in congressional pay data from multiple perspectives, including assessment of the costs of congressional operations, guidance in setting pay levels for staff in Member offices, or comparison of congressional staff pay levels with those of other federal government pay systems. Publicly available information sources do not provide aggregated congressional staff pay data in a readily retrievable form. The most recent publicly available Senate staff compensation report was issued in 2006, and relied on anonymous, self-reported survey data. Data in this report are based on official Senate reports, which afford the opportunity to use consistently collected data from a consistent source. Pay information in this report is based on the Senate's Report of the Secretary of the Senate , published semiannually, in periods from April 1 to September 30, and October 1 to March 31, as collated by LegiStorm, a private entity that provides some congressional data by subscription. Additionally, this report provides annual data, which allows for observations about the nature of Senators' personal staff compensation over time. This report provides pay data for 16 staff position titles that are typically used in Senators' offices. The positions include the following: Administrative Director Casework Supervisor Caseworker Chief of Staff Communications Director Counsel Executive Assistant Field Representative Legislative Assistant Legislative Correspondent Legislative Director Press Secretary Scheduler "Specials Director," a combined category that includes the job titles Director of Projects, Director of Special Projects, Director of Federal Projects, Director of Grants, Projects Director, or Grants Director Staff Assistant State Director Senators' staff pay data for FY2001-FY2015 were derived from a random sampling of Senators' offices in which at least one staff member worked in a position in each year. For each fiscal year, FY2001-FY2015, a random sample of 25 Senators' offices was taken for each position. In order to be included, Senate staff had to hold a position with the same job title in the Senator's office for the entire fiscal year examined, and not receive pay from any other congressional employing authority. For some positions, it was not possible to identify 25 offices that employed staff for an entire year. In circumstances when data for 14 or fewer staff were identified for a position, this report provides no data. Every recorded payment ascribed in the LegiStorm data to those staff for the fiscal year is included. Data collected for this report may differ from an employee's stated annual salary due to the inclusion of overtime, bonuses, or other payments in addition to base salary paid in the course of a year. Generally, each position has no more than one observation per Senator's office each fiscal year. Pay data for staff working in House Member offices are available in CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2014 . Data describing the pay of congressional staff working in House and Senate committee offices are available in CRS Report R44322, Staff Pay Levels for Selected Positions in House Committees, 2001-2014 , and CRS Report R44325, Staff Pay Levels for Selected Positions in Senate Committees, FY2001-FY2014 , respectively. There may be some advantages to relying on official salary expenditure data instead of survey findings, but data presented here are subject to some challenges that could affect findings or their interpretation. Some of the concerns include the following: Data are lacking for first-term Senators in the first session of a Congress. The periods of time covered by the Report of the Secretary of the Senate overlap the end of one Congress and convening of the next. This report provides no data for first-term Senators in the first nine months of their service. Pay data provide no insight into the education, work experience, position tenure, full- or part-time status of staff, or other potential explanations for levels of compensation. Staff could be based in Washington, DC, state offices, or both. Potential differences might exist in the job duties of positions with the same title. Aggregation of pay by job title rests on the assumption that staff with the same 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 their levels of pay. Acknowledging the imprecision inherent in congressional job titles, an older edition of the Senate Handbook states, "Throughout the Senate, individuals with the same job title perform vastly different duties." Tables in this section provide background information on Senate pay practices, comparative data for each position, and detailed data and visualizations for each position. Table 1 provides the maximum payable rates for staff in Senators' offices since 2001 in both nominal (current) and constant 2016 dollars. Constant dollar calculations throughout the report are based on the Consumer Price Index for All Urban Consumers (CPI-U) for various years, expressed in constant, 2016 dollars. Table 2 provides available cumulative percentage changes in pay in constant 2016 dollars for each of the 16 positions, Members of Congress, and salaries paid under the General Schedule in Washington, DC, and surrounding areas. Table 3 - Table 18 provide tabular pay data for Senators' staff positions. The numbers of staff whose data were counted are identified as observations in the data tables. Graphic displays are also included, providing representations of pay from three perspectives, including the following: a line graph showing change in pay, depending on data availability, in nominal (current) and constant 2016 dollars; a comparison at 5-, 10-, and 15-year intervals from FY2015, depending on data availability, of the cumulative percentage change in pay of that position to changes in pay, in constant 2016 dollars, of Members of Congress and federal civilian workers paid under the General Schedule in Washington, DC, and surrounding areas; and distributions of FY2015 pay, in 2016 dollars, in $10,000 increments. Between FY2011 and FY2015, the change in median pay, in constant 2016 dollars, ranged from a 9.86% increase for press secretaries to a -26.05% decrease for specials directors. Of the 16 positions, half saw pay increases, while the other half saw pay decreases during the five-year period. This may be compared to changes in the pay of Members of Congress, -5.1%, and General Schedule, DC, -3.19%, over approximately the same period (calendar years 2011-2015). Between FY2006 and FY2015, the change in median pay, in constant 2016 dollars, ranged from a 15.69% increase for field representatives to a -18.96% decrease for executive assistants. Of the 16 staff positions, 4 saw pay increases while 12 saw declines. This may be compared to changes in the pay of Members of Congress, -10.41%, and General Schedule, DC, -0.13%, over approximately the same period (calendar years 2006-2015). Between FY2001 and FY2015, the change in median pay, in constant 2016 dollars, ranged from a 27.09% increase for state directors to a -19.64% decrease for press secretaries. Of 15 staff positions for which data were available between FY2001 and FY2015, 7 positions saw pay increases while 8 saw declines. This may be compared to changes in the pay of Members of Congress, -10.4%, and General Schedule, DC, 7.36%, over approximately the same period (calendar years 2001-2015).

The level of pay for congressional staff is a source of recurring questions among Members of Congress, congressional staff, and the public. There may be interest in congressional pay data from multiple perspectives, including assessment of the costs of congressional operations; guidance in setting pay levels for staff in Member offices; or comparison of congressional staff pay levels with those of other federal government pay systems. This report provides pay data for 16 staff position titles that are typically used in Senators' offices. The positions include the following: Administrative Director, Casework Supervisor, Caseworker, Chief of Staff, Communications Director, Counsel, Executive Assistant, Field Representative, Legislative Assistant, Legislative Correspondent, Legislative Director, Press Secretary, Scheduler, "Specials Director" (a combined category that includes the job titles Director of Projects, Director of Special Projects, Director of Federal Projects, Director of Grants, Projects Director, or Grants Director), Staff Assistant, and State Director. Tables provide tabular pay data for each of the selected staff positions in a Senator's office. Graphic displays are also included, providing representations of pay from three perspectives, including the following: a line graph showing change in pay; a comparison at 5-, 10-, and 15-year intervals from FY2015, depending on data availability, of the cumulative percentage change in pay for that position to changes in pay of Members of Congress and federal civilian workers paid under the General Schedule in Washington, DC, and surrounding areas; and distributions of FY2015 pay in $10,000 increments. In the past five years (FY2011 and FY2015), the change in median pay, in constant 2016 dollars, ranged from a 9.86% increase for press secretaries to a -26.05% decrease for specials directors. Eight of the 16 positions experienced increases in pay, while the remaining eight positions saw declines in pay. This may be compared to changes to the pay of Members of Congress, -5.10%, and General Schedule, DC, -3.19%, over approximately the same period (calendar years 2011-2015). Pay data for staff working in House Member offices are available in CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2014. Data describing the pay of congressional staff working in House and Senate committee offices are available in CRS Report R44322, Staff Pay Levels for Selected Positions in House Committees, 2001-2014, and CRS Report R44325, Staff Pay Levels for Selected Positions in Senate Committees, FY2001-FY2014, respectively. Information about the duration of staff employment is available in CRS Report R44683, Staff Tenure in Selected Positions in House Committees, 2006-2016, CRS Report R44685, Staff Tenure in Selected Positions in Senate Committees, 2006-2016, CRS Report R44682, Staff Tenure in Selected Positions in House Member Offices, 2006-2016, and CRS Report R44684, Staff Tenure in Selected Positions in Senators' Offices, 2006-2016.

The primary legislative function of standing committees in the House of Representatives is to evaluate the thousands of bills and resolutions that Members introduce during each two-year Congress, which are normally referred upon introduction to the appropriate committee or committees. This evaluation process typically begins with an initial screening in which the majority-party committee leaders and staff, perhaps in conjunction with majority-party leadership, identify the relatively small number of measures referred to a committee that may merit more consideration. A committee or one of its subcommittees might conduct one or more days of public hearings to receive testimony on the policy issues in legislation selected for action and the merits of legislation proposed to address it. Hearings might also be a part of a committee's oversight and investigations. The House depends on its committees to undertake oversight and investigations as another principal part of the legislative authority granted Congress under the Constitution, and to inform the House on the need and options for further legislative action. If a committee wants to recommend that the House take action on legislation, hearings are followed by one or more markup meetings at which committee members propose and vote on amendments to a measure (or the draft of a measure). These meetings are called " markups " because committee members "mark up" the legislation before them as they debate and decide what amendments to recommend to the House. Finally, the committee votes to approve the bill or resolution with the amendments agreed to in the markup and to report the measure to the House for chamber consideration, with the recommended amendments. This report examines in text and tables how committees implemented House rules in their individual committee rules for the 114 th Congress. The variety as well as consistency in committee rules is analyzed as these rules relate to legislative activities, principally hearings, oversight, and markups. Administrative provisions in House and committee rules are not analyzed in this report. Provisions of committee rules applicable to legislative activities are clustered by topic, rather than by House rule number. The rules of the House of Representatives are not consistently specific concerning the procedures that committees are to follow. There is detail in House rules on questioning of witnesses at a committee hearing, for example, but there is little guidance in House rules on the conduct of a markup. The House, however, requires its committees to adopt rules. Rule XI, clause 2(a)(1) directs each standing committee to adopt "written rules governing its procedure." This paragraph continues: "Such rules … (B) may not be inconsistent with the Rules of the House or with those provisions of law having the force and effect of Rules of the House…." Rule XI, clause 1(a)(1)(A) in addition states: "The Rules of the House are the rules of its committees and subcommittees so far as applicable." Finally, Rule XI, clause 1(a)(1)(B) subordinates subcommittees to the committee of which they are a part: "Each subcommittee is a part of its committee and is subject to the authority and direction of that committee and to its rules, so far as applicable." Many House rules applicable to committee procedures are contained in Rule XI, which includes at clause 3 a statement on the authority and specific procedures of the Committee on Ethics. There are three other House rules that are specifically relevant to committees. Rule X contains the legislative and oversight jurisdiction of each standing committee, several clauses on committee procedures and operations, and a clause specifically addressing the jurisdiction and operation of the Permanent Select Committee on Intelligence. Rule XII concerns the referral of legislation and other matters. Rule XIII addresses the filing and content of committee reports, and addresses privileged reports, with individual provisions applicable to privileged reports of the Committee on Rules. (Clause 1 of this rule names the legislative calendars of the House (Union, House, Private, and Discharge Calendars), and clause 7 applies to committee reporting of resolutions of inquiry. ) This report analyzes House Rules X, XI, XII, and XIII, and relevant provisions of other House rules, such as Rule XXI, applicable to committees' legislative activities. It analyzes committees' rules for the 114 th Congress based on and implementing these House rules. House rules and precedents and committee rules are important to the majority and the minority, whether that is a party majority or minority or a policy majority or minority, and to committee leaders of both parties and to individual committee members. The rules allow the party majority to set committees' agendas and conduct hearings of their design, and normally allow the party majority to reach a conclusion in markup when it has the votes for its legislative policy. The rules allow the minority to present its views in hearings and markups and to seek changes in a legislative text being marked up. Adherence to established rules allows all members of a committee to understand that they have been treated fairly, and that they were able to represent their district and constituents and their political point of view, even if the positions they favored did not garner the support of a majority of the committee's members. In addition, majority-party leaders expect their committee chairs to acquit themselves positively. Having conducted hearings and a markup with adherence to House rules and precedents and committee rules, a committee presents its leadership with a clean parliamentary record in anticipation of floor action. Alternatively, although a committee vote to report a measure largely wipes clean the parliamentary record that was created during committee consideration of a measure, decisions and rulings during the markup process could have compromised the majority-party leadership's strategy. The Rules Committee, acting at the reporting committee's or the leadership's behest, might believe it is compelled to include in a special rule waivers of rules and other provisions that could add procedural issues to the policy debate. If a committee does not acquit itself well procedurally, it might erode the majority-party leadership's and the minority's trust in the committee's leadership. The majority-party leadership could assign leading roles on future legislation important to the majority to other committees or to the leadership itself. The minority of the committee, if it feels that it has been treated unfairly, could become intransigent and challenge procedurally future actions of the majority, both in committee and on the floor. A committee adopts its rules at its first meeting, soon after a new Congress convenes and committee members are elected. House committees are required by Rule XI, clause 2(a)(1) to adopt their own internal rules of procedure in an open committee meeting. These rules must incorporate the provisions of Rule XI, clause 2, which are numerous, "to the extent applicable." Committee rules must be published in the Congressional Record and made publicly available in electronic form not later than 30 days after the election of the committee chair at the beginning of a new Congress. As already noted, Rule XI, clause 1(a)(1) also states: "The Rules of the House are the rules of its committees and subcommittees so far as applicable…." Committee rules generally restate the many requirements of Rule XI, but also modify or add new provisions consistent with the intent or meaning of Rule XI and other House rules. The effect of Rule XI is that committees have not only direction on hearing and markup procedure but also discretion in creating their own rules, procedures, and customary practices. Neither House nor committee rules are self-enforcing, and it is left to each committee to enforce House rules and precedents and committee rules governing hearings and the process of debate, amendment, and reporting in a markup. A committee member must make a point of order if he or she believes that a House or committee rule is being violated. A committee typically adopts the committee rules that were in effect in the previous Congress, with any changes agreed to being, usually, incremental. A committee's rules develop over time, fit the jurisdiction, practices, and culture of a committee, and favor the majority, leaving little reason for wholesale change, even when the House majority changes. A committee's chair might consider potential changes in light of the major policy issues the chair anticipates the committee to consider in that Congress and the political environment in which they will be debated, including the committee's party ratio and the ideological makeup of the majority-party members. A chair might also consider his or her party's leadership expectations for how committees will operate, for example, an enhanced or diminished role for subcommittees or the ability to report key legislation aligned with party political objectives. Among the aspects of committee rules that a committee member or staff member might examine to understand a committee's procedures are the following: the role and authority of the committee's chair in scheduling meetings, referring legislation to and discharging it from subcommittees, issuing subpoenas, and taking other actions; the role and authority of the ranking minority member, for example, whether the chair may take specific actions without any involvement of the ranking minority member, after "notice" to that member, after "consultation" with that member, or with the "concurrence" of that member; the role and authority of the committee vis-à-vis the chair—whether specific actions by the committee may be taken only "by majority vote"; the role and authority of the minority party, for example, whether the presence of one or more members of the minority party will be required for a quorum for specific business; and the implementation of changes to House rules affecting committees, such as the change in the 112 th Congress (2011-2013), which required committee chairs to make available to committee members and the public at least 24 hours in advance of the markup the text of legislation to be marked up. As already noted, Rule XI, clause 1(a)(1)(B) states: "Each subcommittee is a part of its committee and is subject to the authority and direction of that committee and to its rules, so far as applicable." A number of committees repeat this provision or a variation on it in their own rules. Some provisions of Rule XI and other rules governing committee activities apply specifically to subcommittees (e.g., subpoenas), although other provisions of these rules do not (e.g., committee reports). Subcommittees do not have the power to report legislation directly to the House without specific authority granted by the House to do so. Within the parameters of House rules, committees in their own rules may grant authority to or withhold it from their subcommittees. Some committees' rules and practices provide extensive guidance concerning the prerogatives of subcommittees, while other committees' rules do not. Some committees grant a degree of autonomy and authority to their subcommittees, but the Committee on Small Business formally limits its subcommittees to the conduct of hearings. A rule of the Foreign Affairs Committee retains a number of legislative topics for the committee's consideration, but another rule of the committee disallows committee consideration of a matter in the absence of a subcommittee's recommendation, except in "extraordinary circumstances" to be determined by the chair in consultation with the ranking minority member. A committee's rules do not likely reflect all practices in a committee or within the committee's subcommittees. Some committees' rules require measures referred to the committee to be referred to a subcommittee, although other committees' rules leave the decision to refer a measure to subcommittee to the committee chair's discretion (see Table 1 ). Several committees' rules state explicitly that the subcommittee service of a measure's author may not be a factor in referring a measure to a specific subcommittee. The rules of a number of committees restrict subcommittees' scheduling. (See, below, " Scheduling Subcommittee Hearings and Meetings ," under " Scheduling Committees' Meetings and Hearings .") A few committees provide funding or staff to subcommittees, while most committees require subcommittees to obtain funding and staff from the committee chair or ranking minority member to carry out their responsibilities. The Small Business Committee in its rules states that separate staff is not assigned to subcommittees. Rule X, clause 5(d) limits most committees to 5 subcommittees. If a committee establishes an oversight subcommittee, however, the limit is increased to 6 subcommittees. This rule contains different limits for 2 committees: the Appropriations Committee may have not more than 13 subcommittees, and the Oversight and Government Reform Committee may have not more than 7 subcommittees. Rule X, clause 2(b)(2) requires standing committees of more than 20 members, other than the Appropriations Committee, to establish an oversight subcommittee or to require its subcommittees to conduct oversight. The rule nonetheless requires any subcommittee with legislative jurisdiction to carry out oversight. Nine committees in their rules allow explicitly for the creation of ad hoc task forces and other committee subunits. These rules may grant or deny the subunits authority to report legislation to the full committee. Several of these rules contain detail on the creation and organization of these subunits. The Ethics Committee's rules contain special provisions applicable to investigative and adjudicatory subcommittees, reflecting ethics procedures in House rules. The Budget Committee's rules mention "task forces" in several places, but the committee does not have a rule on task forces. Committee rules, except Appropriations' and Ethics', name subcommittees. Four committees have rules requiring only that subcommittee ratios reflect full committee party ratios. Five committees' rules go further and in addition list ratios for their subcommittees. Two committees have different rules on ratios: the rules of the Energy and Commerce Committee and the Homeland Security Committee require subcommittees to reflect the committee party ratio but to have at least two more majority-party members than minority-party members. House rules provide for equal party representation on the Ethics Committee; House rules also require equal representation on the committee's investigative and adjudicatory subcommittees. Ethics Committee rules require equal representation on all other subcommittees. Under most committees' rules, the chair and ranking minority member of the full committee may serve as "regular" or "assigned" members of one or more of the committee's subcommittees. Under these rules, they may also serve as ex officio members of all other subcommittees. In their rules, committees may address whether ex officio members of subcommittees may vote, be counted when establishing a quorum, or affect the ratio of majority to minority members. Six committees allow ex officio members to vote on matters before a subcommittee; Nine committees prohibit ex officio members from voting on subcommittees; Four committees allow ex officio members to be counted when determining a quorum; Eight committees prevent ex officio members from being counted for this purpose; Three committees count ex officio members of subcommittees when determining the ratio of majority to minority members; Three committees do not count ex officio members for this purpose; One committee does not address these matters related to ex officio subcommittee service; and Five committees did not explicitly address the issue of ex officio membership of subcommittees. Nine committees allow other members of the committee to sit with a subcommittee on which the committee member does not serve. Six allow committee members to join subcommittee hearings and meetings; three allow committee members to join only subcommittee hearings. For hearings, these committees allow committee members to ask questions of witnesses—by committee rule, with the permission of the subcommittee by vote, with permission of the subcommittee by unanimous consent, with the agreement of the subcommittee chair in consultation with the subcommittee ranking minority member, or with the chair's permission. Seven committees' rules proscribe committee members who are sitting with a subcommittee from voting, being counted for a quorum, or raising a point of order. Two committees' rules in addition disallow committee members from offering amendments at markups. Under some committees' rules, committee members might also be temporarily assigned to a subcommittee. The Education and the Workforce Committee allows its chair to make temporary assignments to subcommittees for field hearings so that a quorum may be made or to allow a member not on a subcommittee to participate in a hearing. The Oversight and Government Reform Committee also allows its chair to make temporary assignments to subcommittees for field hearings so that a quorum may be made. The rule disallows a member with a temporary assignment to vote. Several committees' rules state that a subcommittee vacancy does not interrupt the work of the subcommittee. The Agriculture Committee's rules state that the committee chair may set the dates of a subcommittee's hearings and meetings during a vacancy of the subcommittee chairmanship. Four committees have rules applicable to participation on the committee of Representatives who are not committee members. The Foreign Affairs and Veterans' Affairs Committees allow Representatives who are not committee members to sit with subcommittees at hearings by unanimous consent of the subcommittee. The Member may question witnesses after all subcommittee members have done so. The Small Business Committee requires a Representative who would like to participate in a hearing to notify the chair and ranking minority member 24 hours in advance of the hearing. The Science, Space, and Technology Committee allows Representatives not on the committee to ask questions of witnesses at hearings with the permission of the chair. Several committees' rules contain a specific provision requiring a subcommittee chair to report promptly or to notify the committee or the committee's chair and ranking minority member of the subcommittee's action on a matter. In addition, a rule of the Agriculture Committee states that the majority staff director must notify all committee members of a subcommittee reporting. A rule of the Education and the Workforce Committee allows a majority of a subcommittee to force the subcommittee chair to file a bill or other matter favorably reported by the subcommittee. A rule of the Homeland Security Committee treats a tie vote in subcommittee on a motion to report or forward a measure to the full committee as a vote to order a measure reported without recommendation. A rule of the Foreign Affairs Committee requires a majority of a subcommittee to be "actually present" to report a measure or recommendation to the full committee. The Education and the Workforce Committee requires a subcommittee to provide a section-by-section analysis of a reported bill. The chair may also direct the subcommittee to provide a Ramseyer-type analysis (a comparative analysis showing proposed changes to existing law). The Transportation and Infrastructure Committee's rules require, where practicable, both of these analyses to accompany a subcommittee-reported measure. The Science, Space, and Technology Committee explicitly allows the chair to direct a subcommittee on the form of a report to the committee. Several committees' rules direct subcommittees to provide the committee with records of roll-call votes and other documentation. The Ways and Means Committee requires four analyses to accompany a measure reported by a subcommittee: a Ramseyer-type analysis, a section-by-section analysis, a section-by-section justification, and a draft statement of the measure's budget effects consistent with the requirements for committee-reported measures. In addition, some committees' rules contain a layover period before the committee may consider subcommittee recommendations. The Agriculture Committee has a two-day layover requirement that may be waived by the chair or a committee majority. The Ways and Means Committee also has a two-day layover rule, but the rule does not contain a waiver provision. The Armed Services Committee has a three-day layover that may be waived by a committee majority vote. The two-day layover rule of the Natural Resources Committee prohibits committee consideration before every committee member who requests it has a copy of the subcommittee-reported measure. The committee by majority vote may waive tis requirement. The Education and the Workforce and Transportation and Infrastructure Committees have 48-hour layover rules that begin to toll once all committee members receive the reported measure or matter. The chair of the Transportation Committee may waive the layover rule. The Science, Space, and Technology Committee also has a 48-hour layover rule. The rule in addition requires printed hearings to be made available to committee members, although the chair in consultation with the ranking minority member may waive that provision. Table 1 compares committee rules in the 114 th Congress across the 21 standing House committees on referring measures or matters to subcommittees. Committees are listed in alphabetical order in the left column, except for the Permanent Select Committee on Intelligence, which appears last. The first two rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that a committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are also footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules. The following list explains the headings in Table 1 : Chair Must/May Refer to Subcommittee—indicates whether a chair must refer measures or matters to the subcommittee(s) of jurisdiction or whether the chair may decide to retain a measure or matter for consideration by the committee. Time Allowed before Referral—indicates whether committee rules require that a chair decide to refer or retain legislation within two weeks of receipt by the committee, or if the referring or retention may simply be done "expeditiously." Chair May Refer to ____ Subcommittee(s)—indicates whether committee rules explicitly grant a chair authority to refer legislation to one or more than one ("several") subcommittees; authority to refer to several subcommittees includes the authority to refer to one subcommittee. Authority to Reassign or Discharge—refers to whether authority to reassign measures or matters, or discharge a subcommittee of its consideration of a measure or matter, rests with a chair or with the majority of a committee. A check in both boxes indicates that both the chair and the committee have this authority. Committee rules pertaining to scheduling hearings and meetings of subcommittees appear below at " Scheduling Subcommittee Hearings and Meetings ," under " Scheduling Committees' Meetings and Hearings ." Committees meet pursuant to House and individual committee rules regarding notice, the availability of documents, open-meeting requirements, and quorums (see " Quorum Requirements " below). Rule XI, clause 2(i) prohibits committees from meeting while the House and Senate are in a joint session or during a recess when a joint meeting is in progress. Rule XI, clause 2(m)(1)(A) authorizes committees to meet and hold hearings, whether the House is in session or has recessed or adjourned, providing the meeting is in the United States. Rule XI, clause 6 allows business to be carried over to a successive session of Congress, normally to the second session from the first session. Rule XI, clause 2(b) requires standing committees to establish regular meeting days not less frequently than monthly for the consideration of committee business. Clause 2(b) also provides that a committee is to meet on its regular meeting day to consider legislation pending before the committee or for transacting other committee business if notice is given as provided in clause 2(g)(3). Nearly every committee has given the chair the authority to cancel a meeting at his or her discretion. Clause 2(c) grants the chair authority to call additional meetings, which make up the majority of committee meetings and might be held several times a month. A committee may also adopt rules pertaining to additional meetings. (See, below, " Notice and Documents .") Committees' rules implementing these House rules are analyzed in Table 2 . Although there is no requirement that committees meet on their regular meeting day, an established day might provide a determined minority an opportunity to seek to force a meeting. Clause 2(c) also establishes a procedure by which committee members, including minority members, may request or call additional meetings. (See, below, " Members' Initiative to Meet to Consider a Measure .") Rule XI, clause 2(d) directs committee chairs to designate vice chairs of their committee and its subcommittees, and authorizes a vice chair to preside in the absence of a chair. A committee or subcommittee member appointed as a vice chair does not have to be the most senior member. In the absence of both a chair and vice chair, the ranking majority member present is authorized to preside. Table 2 compares committee rules in the 114 th Congress across the 21 standing House committees for regularly scheduled meetings, scheduling additional meetings, and cancelling meetings. Committees are listed in alphabetical order in the left column, except for the Permanent Select Committee on Intelligence, which appears last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules. The following list explains the headings in Table 2 : Day—refers to the day of the week a committee rule establishes as the committee's regular meeting day. The numbers in the third row of the headings indicate, for example, the first Tuesday of the month, second Tuesday of the month, and so on. Committees with a check in every box for one weekday are scheduled to meet weekly. Committees' rules may formally dispense with the regular meeting if the House is not in session. Time—for committees that specify a meeting time in their rules. Additional—refers to the authority that rests with the chair in a committee's rules to call additional meetings. Cancel—refers to committee rules that allow a chair to cancel meetings at his or her discretion. The committees indicated in the second column have rules that state the chair should determine that there is no business to be considered in canceling a scheduled meeting. If a chair has not called a meeting on a measure or matter, Rule XI, clause 2(c)(2) allows a majority of a committee's membership to convene a meeting. Under this rule, any three members of a committee in a letter to the chair may request a meeting of the committee to consider a specific measure or matter. The chair has three calendar days to call the requested meeting, which must be scheduled within seven calendar days after the request is filed. If the chair does not act, a majority of committee members may file a written notice in the committee offices ordering the meeting to occur and specifying the time of the meeting and the subject matter. If a majority files the notice, the committee clerk is then required to inform all committee members of the meeting, which will be held at the time identified in the notice. Many committees repeat or reference this rule in their own rules. This authority may be employed as a tactic by the minority, or by members having a minority policy viewpoint, in seeking action on a measure or matter. Such a tactic is unlikely to be successful if the chair has the backing of his or her party's members on the committee, but it might prove suasive in obtaining an assurance from the chair to schedule the desired business at a future date. A chair might also act if he or she believes that his own party's members are sympathetic to action on the subject at issue. Rule XI, clause 2(c)(1) authorizes committees to adopt procedures for scheduling "additional and special" meetings; many committee meetings are scheduled pursuant to these committee rules. Under this authorization, committees minimally adopt "notice requirements" in their rules to inform committee members of a meeting a certain number of hours or days in advance of a meeting and of the agenda for the meeting. In implementing House rules, committees distinguish between meetings , including markups, and hearings in their rules' notice requirements. Rule XI, clause 2(g)(3) states that "a committee meeting may not commence earlier than the third day on which members have notice thereof." This time is a minimum requirement; committees may adopt a rule requiring notice of more than three days. Rule XI, clause 2(g)(3) also requires a committee chair to publicly announce the date, place, and subject matter of a hearing at least one week in advance of the hearing. Pursuant to this same subparagraph (3), should a chair determine that there is "good cause" to shorten the notice for a meeting or hearing, he or she may do so either by obtaining the concurrence of the ranking minority member or by obtaining a majority vote of the committee, a quorum being present. A few committees' rules specifically allow only one of these options. A number of committees provide for waivers of their rules on distributing agendas and other documents, or alternate schedules for doing so, when notice is shortened. A notice of a meeting or hearing is to appear "promptly" in the Daily Digest of the Congressional Record and to be published electronically. The notice requirement in a committee's rules might spell out a role for the ranking minority member, such as his or her concurrence in the chair's initiative or a requirement that the chair consult with or notify the ranking minority member. Committees might also allow for emergency meetings to be scheduled at the chair's discretion, such as the Rules Committee; or at the chair's initiative with the concurrence of the ranking minority member, such as the Judiciary Committee; or after the chair's consultation with or notification to the ranking minority member, such as the Veterans' Affairs Committee. Under their rules, committees by vote might also make scheduling decisions. Some committees have specific scheduling requirements applicable to their subcommittees, as discussed immediately below. Committees have turned by practice to electronic notification in addition to or instead of written notification. Although some committees' rules do not make a distinction, committee chairs may clarify what a committee's practice will be, in the course of approval of the committee's rules or in a later committee meeting. If a committee is not of one understanding, a member could make a point of order of insufficient notice based on a violation of a committee's rules. Committee rules might also list specific documents to be made available with the notice. For example, in order to avoid reading in its entirety a bill or resolution to be marked up, committees must supply a copy of a listed measure. With electronic notification, a committee might provide an electronic link to the measure to be marked up rather than a copy of it. Rule XI, clause 2(g)(4) specifies that the text of legislation to be marked up must be available at least 24 hours in advance of the markup and must be publicly available in electronic form. If a meeting is held sooner than 24 hours, with the concurrence of the ranking minority member or by a majority vote of the committee as provided in Rule XI, clause 2(g)(3)(B), the legislative text must accompany the announcement. Committees have added interpretative provisions or requirements to the notice requirements of House rules. A rule of the House Administration Committee states that advance availability also applies to resolutions and regulations to be considered by the committee. A rule of the Budget Committee provides that the markup text is the chair's mark (or other material that will be considered by the committee) for a concurrent resolution on the budget. This rule also allows the chair with the concurrence of the ranking minority member to waive the 24-hour requirement for bills and resolutions. The Appropriations Committee's notice rule requires texts, including those of reports, to be made available three days in advance, excluding weekend days and holidays unless the House is in session. The chair and ranking minority member may concur to waive this requirement. A rule of the Homeland Security Committee requires markup texts to be made available 48 hours in advance and a substitute for an amendment in the nature of a substitute, to be available 24 hours in advance. A rule of the Veterans' Affairs Committee also requires markup texts to be made available 48 hours in advance, and requires all amendments to be provided 24 hours in advance. Amendments not so submitted are not in order, although the requirement may be waived by unanimous consent. The Science, Space, and Technology Committee also makes markup texts available 48 hours in advance and requests that amendments be submitted to the chair and ranking minority member at least 24 hours in advance of a meeting. The rule indicates that the chair may oppose any amendment not submitted in advance. A rule of the Judiciary Committee also requires markup texts to be made available 48 hours in advance and, by committee rule rather than practice, requests that amendments be submitted to the chair and ranking minority member at least 24 hours in advance of a meeting, to which the chair may give priority in a markup. The Education and the Workforce Committee and the Oversight and Government Reform Committee have the same rule applicable to amendments. The Education and the Workforce Committee also requires reports that will be considered to be available to committee members 48 hours in advance of a meeting. A rule of the Small Business Committee makes the provision of markup texts 48 hours in advance a target, but indicates the committee rule is to provide the texts 24 hours in advance. A rule of the Agriculture Committee allows chairs of the committee and its subcommittees to request amendments and motions to be submitted 24 hours in advance and asks the cooperation of members. Rule XI, clause 1(a)(2)(A)(ii) allows a privileged, nondebatable motion in committee to dispense with the first (full) reading of a measure on the agenda if printed copies of the measure are available. Committees typically interpret the availability criterion to be met by distributing the measure (or link to the measure) with the meeting notice. A committee might also have a rule on documents to be made available to committee members prior to a hearing. For example, a rule of the Natural Resources Committee requires that, in addition to a tentative witness list made available as soon as practicable, the majority staff make publicly available to the extent practicable a memorandum explaining the subject matter of the hearing, including relevant legislative reports and other necessary material. The rule continues that the chair make available to committee members department and agency reports on the subject matter "as they are received." The Transportation and Infrastructure Committee's rule is similar. The Small Business Committee rule requires the chair 48 hours in advance to provide a memorandum to committee members on the subject matter of the hearing and to also provide related reports from departments and agencies. These reports may be withheld by the chair in consultation with the ranking minority member. A rule of the Agriculture Committee also requires, to the extent practicable upon the announcement of a hearing, a summary of the subject matter, including legislative reports and relevant department and agency reports, to be distributed to committee members. A rule of the Energy and Commerce Committee requires a memorandum on the purpose of a hearing and the list of witnesses be distributed to members 48 hours prior to the hearing. The Education and the Workforce and Homeland Security Committees also require their witness lists to be available 48 hours prior to a hearing. The Oversight and Government Reform Committee's rule requires a memorandum on the purpose of a hearing, a list of witnesses, and the reasons for witnesses' appearance to be distributed to committee members 3 days prior to a hearing. A rule of the Financial Services Committee prohibits a witness list to be modified less than 24 hours before a hearing, unless the ranking minority member concurs in the change. (See also, below, " Advance Testimony and "Truth in Testimony" " under " Hearings Procedures .") A defective notice provides opponents with an opportunity to employ procedural roadblocks to a chair's desired action and schedule. Committees' rules vary greatly in how they address scheduling of subcommittees' hearings and meetings. Most committees, however, express at least a desire to avoid subcommittee hearings and meetings that conflict with the schedules of other subcommittees or, in particular, the parent committee. Some committees' rules do more than exhort subcommittees to coordinate: six committees' rules indicate that subcommittees may not meet when the full committee is meeting; one committee's rules, those of Education and the Workforce, provide that the full committee chair designate dates on which specific subcommittees could meet; and six committees' rules require the full committee chair to approve scheduling of subcommittee meetings. The rules of a number of committees that do not require the committee chair's approval to schedule a subcommittee hearing or meeting provide for consultation by a subcommittee chair with the committee chair before a subcommittee meeting is scheduled, and may require additional consultation as follows: seven committees require the consultations by a subcommittee chair with the full committee chair and all subcommittee chairs; one committee, Agriculture, requires the full committee and the subcommittee chair to consult with other subcommittee chairs and relevant ranking minority members; another committee, Foreign Affairs, delegates this breadth of consultation to the subcommittee chair; one committee, Armed Services, requires a subcommittee chair to consult the committee chair, other subcommittee chairs, and the subcommittee ranking minority member; and two committees' rules require a subcommittee chair to consult with the full committee chair. One committee's rules, those of the Oversight and Government Reform Committee, require a subcommittee chair to notify the full committee chair two weeks in advance of a hearing and to provide details on witnesses. An Ethics subcommittee meets at the discretion of its chair. To schedule a field hearing, the Agriculture Committee requires a subcommittee chair to consult the committee chair, other subcommittee chairs, and the subcommittee's ranking minority member. To schedule a field hearing, or any hearing or meeting during a recess or adjournment of the House, the Education and the Workforce Committee requires the committee chair's authorization. Such subcommittee meetings are also subject to a 14-day notice rule. A subcommittee chair on the Foreign Affairs Committee must consult the subcommittee's ranking minority member to schedule a field hearing or to schedule a hearing in Washington, DC, before the first House vote or after the last House vote of the legislative week. The Small Business Committee permits subcommittees to hold field hearings, the scheduling of which is overlapping. Pursuant to Rule XI, clause 2(g)(1), committee and subcommittee meetings , including markups, must be open to the public and to media coverage. To hold an executive, or closed, markup session, a committee or subcommittee must vote in open session, with a majority present and by recorded vote, to close a meeting on "all or part of the remainder of the meeting on that day. " (Emphasis added.) A motion to close a committee meeting is not debatable. The rule states that a meeting may be closed only for one of four reasons: "disclosure of matters to be considered would endanger national security"; "disclosure of matters to be considered … would compromise sensitive law enforcement information"; "disclosure of matters to be considered … would tend to defame, degrade, or incriminate any person"; or "disclosure of matters to be considered … otherwise would violate a law or rule of the House." Rule XI, clause 2(g)(1) also lists persons permitted at an executive session as members of the committee and others "as the committee may authorize": other Members, including the Delegates and Resident Commissioner, not on the committee; congressional staff; and departmental representatives. Several committees' rules contain additional detail to this House rule; for example, the Armed Services Committee specifies staff who may attend a closed hearing or meeting. Rule XI, clause 2(g)(2) applies the same requirements to hearings , with a different procedure applicable to the third reason listed above. First, if it is asserted by a committee member that testimony may "tend to defame, degrade, or incriminate any person" or by a witness that evidence may "tend to defame, degrade, or incriminate the witness," the committee by a majority vote makes a determination in executive session under Rule XI, clause 2(k)(5) of that assertion, the number of members required under committee rules for the receipt of testimony being present. If the vote determines that the testimony would tend to defame, degrade, or incriminate any person, the testimony must be received in executive session. If the committee determines, a majority being present, that the testimony will not tend to defame, degrade, or incriminate any person, then the testimony must be received in open session. (See also " Closing a Hearing Based on a Witness's Testimony ," below, under " Hearings Procedures ".) In implementing House Rule X, cl. 11(d)(2) in its rules, the Intelligence Committee allows a vote to close a hearing so long as one member of the minority is present and votes. The committee's rules also state that briefings are closed to the public. A Member, Delegate, or the Resident Commissioner may not be excluded from a hearing as an observer or nonparticipant unless the House by a majority vote closes one or more hearings to the membership (Rule XI, clause 2(g)(2)(C)). (See, above, " Subcommittee Ratios and Ex Officio Membership " under " Subcommittees .") A committee by the same procedure may also vote to close a hearing for one additional day, although the Committees on Appropriations, Armed Services, and Intelligence may vote to close up to five "additional, consecutive" days of hearings. There are generally three nondebatable motions available to close a committee's business: (1) a motion to close; (2) a motion to close pending discussion; and (3) a motion to close proceedings for an additional day. There may be unanimity among committee members on the need for an executive session. However, tactical use could be made of any of these motions to delay proceedings, to identify differences among committee members, or for another purpose. Rule XI, clause 2(k)(7) allows testimony received in an executive committee session to be released only by a vote of the committee, a majority being present. (See also " Record Keeping and Public Access ," below.) In response to campaigns for openness and changes in technology, House rules have been regularly amended over several decades to increase public access to hearings and meetings. Media access has been an important component of public access. Rule XI, clause 4 regulates audio and visual coverage of open committee meetings and hearings and establishes procedures to be followed in the conduct of such coverage. Committees are directed to adopt rules implementing provisions in this clause, which most committees accomplish by referencing the clause or by duplicating it in their rules. Some features of this rule include— radio and television recordings made under the authority of this rule provision are not to be used for partisan political campaign purposes; individuals at meetings where audio and visual coverage is allowed are to conduct themselves with "dignity, propriety, courtesy, and decorum" so as not to "distort the objects and purposes" of the meeting or to "cast discredit" on the House, committee, or members; meetings open to the public are open to audio and visual coverage; generally, not fewer than two television cameras and two still cameras must be allowed; live coverage must be presented without commercial sponsorship; television cameras may not obstruct the line of vision between any witness and any committee member; equipment may be installed only before a meeting commences and removed only after it concludes; television media may install additional lighting, but other supplemental lighting is not allowed; photographers may not occupy the space between the witness table and committee members during a meeting; media representatives must be accredited by the appropriate congressional correspondents committee; and allocation of television media positions and of photographers' positions is made in accordance with guidelines of the appropriate congressional correspondents committees. Committee quorum rules are most often expressed as a portion of a committee's (or subcommittee's) membership or as a specific number. A point of order would lie in committee against a committee or subcommittee proceeding in the absence of a quorum. A chair beginning or continuing a hearing, or, especially, a markup with a quorum but with a majority of minority members, could allow challenges to be mounted by the hearing's or markup's opponents. The failure of a committee to have a majority present to report a measure or matter, as required by House rule, will likely necessitate the committee reassembling with the proper quorum to vote again on the motion to report. Rule XI, clause 2(h)(3) sets the minimum quorum for committees (except the Appropriations, Budget, and Ways and Means Committees) to conduct business at not less than one-third of a committee's members and allows committees in their rules to set a higher quorum. Most committees have explicitly or implicitly adopted the House rule as their quorum rule for business meetings such as markups, although the Education and the Workforce Committee, Ethics Committee, and Natural Resources Committee require a majority to amend the committee's rules, and the Transportation and Infrastructure Committee requires a majority for approval of five specific business items. A rule of the Natural Resources Committee contains a procedure for conducting a call of the roll when the committee needs to ascertain the presence of a quorum. The Budget, Ethics, Rules, Veterans' Affairs, and Ways and Means Committees require a majority of their members to conduct business. Pursuant to Rule XI, clause 2(h)(1), however, a majority of any committee must be "actually present" to report a measure or recommendation. Pursuant to Rule XI, clause 2(g)(1), a majority must also be present to close a business meeting, as explained above (see " Open and Closed Meetings "), or, pursuant to Rule XI, clause 2(k)(7), to release testimony received in executive session. Pursuant to Rule XI, clause 2(m)(3), a majority must be present to authorize and issue a subpoena, unless, as allowed by this rule, a committee has in its rules delegated this authority to its chair. (See, below, " Subpoenas .") All committees but one have adopted the House quorum rule of two members to take testimony and receive evidence (Rule XI, clause 2(h)(2)). The Rules Committee has a quorum requirement of five members to receive testimony on requests for special rules and three members to receive testimony on measures or matters within the original jurisdiction of the committee. Several committees require or encourage the participation of minority-party members in achieving a quorum for a hearing. The Small Business Committees requires the presence of a minority-party member, although the requirement may be waived after a waiting period. The Ways and Means and Foreign Affairs Committees have rules that encourage the presence of minority-party members. The Intelligence Committee's rules require that at least one member present to receive testimony be a member of the majority party. A rule of the Homeland Security Committee requires consultation between the majority and minority staff on the scheduling of meetings and hearings to "ensure that a quorum ... will include at least one Minority Member of the Committee." Quorums that are no greater than required by House rules tend to favor the majority, whose Members generally have more committee assignments than minority Members have. Such quorums also allow committees to proceed with business with less risk of being unable to assemble or keep a quorum. Requiring or encouraging minority-member participation in a hearing favors the minority, and might be seen as contributing to comity among the membership of a committee. A refusal by any minority member of a committee to attend a hearing could also be a tactic available to the minority if it disputes the subject, witnesses, or other attributes of a hearing. Committee rules, supplemented by committee practices and ad hoc unanimous consent agreements, typically allow and regulate opening statements—short, initial statements made orally or submitted in writing by committee members on the business for which a chair has called a meeting or hearing. A committee's rules adopted at the beginning of a Congress may preclude oral opening statements or restrict them, often to oral statements made only by the chair and ranking minority member of the committee or a subcommittee. Some committees' practices also allow the relevant subcommittee chair and ranking minority member to make oral opening statements at full-committee markups, and allow a full committee's chair and ranking minority member, who serve ex officio on some or all subcommittees, to make oral opening statements at subcommittee meetings. Rules, practices, or unanimous consent agreements normally require equivalency in treatment between the majority and minority in oral opening statements where a committee allows some discretion to a chair in permitting opening statements. By committee rule or practice or by unanimous consent, other committee members are allowed to submit opening statements in writing for the record; these statements are not read aloud. Committee rules or practices may restrict oral opening statements to five minutes. Committees that allow more members than the chair and ranking minority member to make oral opening statements may restrict opening statements to less time, for example, three minutes or one minute, as the rules of Energy and Commerce Committee provide in certain circumstances. Committees as an alternative might also cap the total time for opening statements, as the rules of the Financial Services Committee and the Science, Space, and Technology Committee do. The Science Committee, nonetheless, makes five minutes available to the ex officio members of its subcommittees if such a member requests it. The Education and the Workforce Committee by rule disallows oral opening statements. If, however, the chair wishes to make an oral statement, the ranking minority member is also entitled to make one. A rule of the Natural Resources Committee is similar, but extends the prerogative of an oral opening statement to the vice chair as well. If the vice chair chooses to make an oral statement, the ranking minority member may designate a minority member to also speak. A rule of the Homeland Security Committee allows the chair with the concurrence of the ranking minority member to permit opening statements in addition to their own. At the commencement of a hearing, a chair must announce the "subject" of a hearing (Rule XI, clause 2(k)(1)). Chairs may incorporate this requirement into their own opening statements. (See also, above, " Notice and Documents " under " Scheduling Committees' Meetings and Hearings .") A standing committee is authorized in House rules to "hold such hearings as it considers necessary." (Rule XI, clause 2(m)(1)(A).) At the commencement of a hearing, a chair must announce the "subject" of the hearing (Rule XI, clause 2(k)(1)). (See also, above, " Notice and Documents " under " Scheduling Committees' Meetings and Hearings .") Pursuant to Rule XI, clause 2(k)(4), a chair is charged with keeping order in a hearing, and empowered to punish "breaches of order and decorum." A chair's enforcement may be directed at the actions of anyone in the hearing room, including the "professional ethics" of a witness's counsel. The chair may punish breaches of order and decorum by censure and by exclusion of the individual from the hearing. The committee may cite an individual to the House for contempt. (See also, above, " Media Coverage " under " Scheduling Committees' Meetings and Hearings .") Pursuant to Rule XI, clause 2(m)(2), the chair of a committee or a member designated by the chair may administer oaths to witnesses. As explained above, Rule XI, clause 2(h)(2) requires a quorum of two members to receive testimony. (See " Hearings ," under " Quorum Requirements .") Hearings rules specifically related to witnesses, including presenting testimony in executive session, are discussed below (see " Witnesses "). Additional discussion of conducting a hearing in executive session appears above (see " Open and Closed Meetings " under " Scheduling Committees' Meetings and Hearings ."). See generally the discussion above of rules applicable to meetings and hearings (" Scheduling Committees' Meetings and Hearings .") Table 3 summarizes committee-by-committee several components of committees' rules in the 114 th Congress related to hearings. These components are the quorum needed for hearings, how time allocated for questioning witnesses may be extended, and the order of recognition to question witnesses—across the 21 standing House committees. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence listed last. The first four rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject in its rules, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules. The following list explains the headings in Table 3 : Quorum (Two)—indicates that a committee has a rule requiring at least two members to be present in order to receive testimony: One Minority Member—indicates whether an "effort" must be made to have a minority member at a hearing or whether a minority member "must" be in attendance for a hearing to proceed. Extended Time to Question Witnesses—indicates how extended time for questioning witnesses may be obtained: Chair—the chair may grant a member additional time for questioning a witness: Ranking Minority Member (RMM)—the chair must "Consult" with the RMM before granting additional time for questioning witnesses or the RMM must "Concur" in the chair's request. Time—indicates the maximum amount of time that the chair may extend the questioning of witnesses: "1 Hour" or "½ Hour" for additional questioning of witnesses. Equal—indicates that committee rules state that, should extended time for questioning witnesses be granted, the time must be divided equally between the majority and minority, reflecting a provision of House rules.. Staff Questioning—some committee rules allow time for questioning of witnesses to be extended for designated staff members of each party. Order of Recognition for Questioning Witnesses—refers to how committee rules specify members will be recognized for questioning a witness: Seniority at Start—members present at the start of a hearing will be recognized in order of seniority. Arrival Order—members arriving after the start of a hearing will be recognized in order of arrival. Alternate—the chair alternates between members of the majority and minority parties when recognizing members for questioning witnesses. Consider Ratio—the chair "may" or "shall" consider the ratio of majority to minority members when recognizing members for questioning witnesses. Chair/RMM—the chair and RMM are by rule recognized to question witnesses before other members are recognized. In practice, the chair of a committee (or subcommittee) determines most or all witnesses to be invited to a hearing, and issues invitations over his or her signature. The chair also plans the order of witnesses' appearance, panels, time allocations, and other matters. Under any agreement between the chair and ranking minority member on minority witnesses, the chair invites the minority's witnesses as well. The Ways and Means Committee has a unique rule that oral and written testimony and statements will be accepted only from persons who are U.S. citizens or from entities organized under the laws of the United States (or the states or the District of Columbia), although the chair may make exceptions. In addition, the committee may accept a written statement from a non-citizen if it is submitted by written request by a Member of Congress. Prior to a witness delivering testimony, the chair introduces the witness. A chair may also allow a committee member to briefly introduce a witness from the member's state or district. A witness is entitled to a copy of a committee's rules upon request. A witness is entitled to be accompanied by counsel "for the purpose of [advice] concerning [his or her] constitutional rights." (Rule XI, clause 2(k)(2) and (3), respectively.) A witness may also submit a "brief and pertinent" written sworn statement for inclusion in the record. Whether to accept such a statement, and the determination of its pertinence, is within the sole discretion of the committee (clause 2(k)(8)). Finally, a witness may obtain a transcript of his or her testimony given in public session, but the witness may obtain a transcript of testimony given in executive session only "when authorized by the committee." (Rule XI, clause 2(k)(9).) Pursuant to Rule XI, clause 2(m)(2), the chair of a committee, or a member designated by the chair, may administer oaths to witnesses. The Committee on House Administration, in its role regulating spending by committee and Member offices, has indicated that reimbursement of travel expenses incurred by a witness is considered an "extraordinary measure" and will only be made when authorized by a committee chair. When being reimbursed by a committee, a witness travels at the government rate. If a witness resides outside of the United States, including its territories and possessions, reimbursement may be made to the witness for transportation expenses to and from the United States. The Committee on Foreign Affairs has a rule that allows witnesses to present testimony other than in person. The rule states that, if a witness is presenting testimony other than in person, the chair of the full committee or subcommittee must notify the relevant ranking minority member no later than 48 hours beforehand. Witnesses testifying remotely may not present their testimony in an audio-only medium without concurrence of the chair and ranking minority member. The relevant chair must make reasonable efforts to verify the identity of any witness participating remotely. Another rule of the committee anticipates that some witnesses may need a translator, but the rule requires the witness to identify the translator in conjunction with the submission of advance testimony. The chair of the Intelligence Committee has discretion under the committee's rules to withhold the name of a witness until a hearing or indefinitely. Rule XI, clause 2(g)(5) directs committees, to the extent practicable, to require witnesses to submit advance written statements of their testimony and to confine their oral presentation to a brief summary of their written testimony. Several committees in the 114 th Congress reiterated this language in their rules. Committees customarily allow witnesses five minutes to summarize their testimony. (See " Questioning Witnesses ," immediately below.) In addition, many committees specify in their rules that testimony must be received 24 or 48 hours in advance. The Agriculture, Energy and Commerce, Natural Resources, and Transportation and Infrastructure Committees' rules, on the other hand, express time as "two working days," and the Financial Services and Foreign Affairs Committees provide for "two business days." The Appropriations Committee's rules are silent on this matter. The Financial Services specifically requires a witness who wishes to present information in an electronic format to transmit the information one business day prior to a hearing. Some committees specifically authorize the chair, the chair after consultation with the ranking minority member, or the committee by majority vote to waive advance testimony requirements. Some committees provide waivers of various rules when there is less notice than one week. Most committees require that witnesses submit a sufficient number of copies of their advance statements for committee members, and some committees require electronic files to be submitted as well. Some committees set a goal or target for distribution of advance testimony to committee or subcommittee members, typically 24 hours in advance of a hearing. Pursuant to clause 2(g)(5), under a provision applicable to a witness who is not a government employee, a witness must submit a curriculum vitae and a disclosure of "any Federal grants or contracts, or contracts or payments originating with a foreign government, received during the current calendar year or either of the two previous calendar years by the witness or by an entity represented by the witness and related to the subject matter of the hearing." House rules require that these witness disclosures, popularly known as "truth in testimony," be made available in electronic form "not later than one day after the witness appears" before a committee. A witness's private information is to be redacted from publication. While a number of committees state in their rules that advance statements and truth-in-testimony information "shall" be submitted, seven committees further indicate that failing to comply with submission deadlines could or would result in a witness being denied the opportunity to testify. The Homeland Security and Ways and Means Committees' rules state that failure to comply with advance testimony requirements could result in a witness being denied the opportunity to testify in person. The Homeland Security Committee's rules state that the failure could result in the witness's written statement being excluded from the hearing record. The Natural Resources Committee's rules indicate that failure to comply with the truth-in-testimony requirement could result in disallowing either oral testimony or written testimony or both. A rule of the Transportation and Infrastructure Committee could result in disallowing oral or written testimony or both for failure to submit advance testimony. The Small Business Committee's rules indicate that failure to comply with either requirement could result in disallowing oral or written testimony or both. The Armed Services Committee allows a chair, with the concurrence of the appropriate ranking minority member, to exclude a witness if the witness's testimony has not been timely submitted. A rule of the Foreign Affairs Committee allows a witness who is not a federal official to seek waiver of advance submission of testimony through a written explanation. In the absence of the explanation, the witness is "released" from testifying unless a majority of the committee votes to accept the witness's testimony. Rule XI, clause 2(j)(2) provides a principal and two alternative committee procedures for questioning witnesses. The principal procedure is to allow each committee member five minutes to question a witness or panel of witnesses until each member has had five minutes' time for questioning. Under this paragraph, a committee may also adopt a rule or motion that allows a specified number of committee members longer than five minutes to question a witness, with time allocated equally between the majority and minority and not in total to exceed an hour. This paragraph also allows committees to adopt a rule or motion permitting committee staff to question a witness, with time allocated equally between the majority and minority and not in total to exceed an hour. This additional time for questioning by committee members or staff is referred to as "extended questioning" or "extended time for questioning." Committees also use unanimous consent to achieve additional variations on how members or staff question witnesses. In addition, a committee member, once recognized, might also yield to another committee member to allow that individual to jump ahead of other members in asking questions or to have more than one opportunity to question a witness or panel of witnesses. In practice, witnesses make brief oral statements—customarily five minutes—prior to questioning. These oral statements are intended to provide a summary of their written statements. Most committees provide for this practice in their rules. All committees have explicitly or implicitly adopted the House rule allowing committee members five minutes each to question witnesses, and nearly all committees with a rule include the provision that five minutes for each member is allowed until all members have had one opportunity to question witnesses. While in practice many committees do not limit the chair and ranking minority member to five minutes for questioning witnesses, only the Armed Services Committee explicitly exempts these committee leaders from the time limit. Committee rules on subsequent rounds of questioning and on extended times for questioning vary. The rules for the Agriculture, Armed Services, and Foreign Affairs Committees describe additional rounds of questioning. The Agriculture Committee's rules state that the chair of the committee or a subcommittee may allow for additional rounds after giving consideration to the importance of the subject matter and the length of time available. The rules for the Armed Services Committee give the chair of the committee or subcommittee discretion over additional rounds of questioning. The rules of the Foreign Affairs Committee suggest that rounds of questioning continue. With regard to extended time for questioning witnesses, committees' rules allow the chair to consult with the ranking minority member to permit a period of extended questioning for members or for staff, or require the chair to obtain the concurrence of the ranking minority member, or permit the committee by motion to make a decision on extended questioning. A number of committees include two or more of these options in their rules. A few committees in their rules reference the House rule, and a few committees' rules make no provision for extended questioning of witnesses. The order in which committee members are recognized to speak is addressed in many committees' rules. Ten committees explicitly give precedence to chairs and ranking minority members. Seven committees' rules require recognition by seniority of the members present when the chair convenes a hearing. Nine committees' rules base their recognition after a hearing commences on order of arrival. Ten committees' rules explicitly require that the chair to alternate recognition to question witnesses between the majority and minority, but some of these same committees' and other committees' rules require the chair to take into consideration the ratio of majority to minority members in recognizing members. Most of these rules state or suggest that the chair should consider the majority-minority ratio on the committee in order to not disadvantage the majority. New committee members on a large committee can be advantaged or disadvantaged by committee recognition rules. At hearings, committee members may ask permission to submit questions for the record to one or more witnesses, or the chair may make an announcement concerning questions for the record. A rule of the Energy and Commerce Committee provides a process for questions for the record for all hearings. A provision in the rule requires members to submit questions to the committee chair within 10 business days. The rule of the Homeland Security also requires questions for the record to be submitted in 10 business days. A rule of the Science, Space, and Technology Committee limits committee members to two weeks from the date of a hearing to submit questions for the record. A rule of the Natural Resources Committee requires materials submitted for inclusion in a hearing record to address the hearing's subject matter and to be submitted to the clerk within ten business days of the last hearing day. Rule XI, clause 2(j)(1) provides the minority a right to call witnesses of its own choosing. If a committee has held a hearing, a majority of minority committee members may request of a chair, before completion of the hearing, a day of committee hearings to call their witnesses to receive testimony on the same subject matter. The chair must comply with the request, but he or she is not constrained in setting the day or time of the hearing. Nearly all committees repeat this House rule in their own rules. In practice, a committee majority and minority normally negotiate to include minority witnesses as individual witnesses or on panels, obviating the minority's need to resort to their right under House rules. The majority and minority normally find cooperation to be beneficial to each side. The majority through cooperation can prevent its schedule from being changed. The minority normally finds it preferable to have its perspective represented at a regularly scheduled hearing than clustered at a perhaps inconvenient time and to be able to present another perspective to contrast with those of majority witnesses. When the House and the presidency are controlled by different parties, a committee majority sometimes seeks to count administration witnesses as minority witnesses, which the minority resists. Rule XI, clause 2(g)(2) applies the same requirements on open and closed committee sessions to hearings as it applies to committee business meetings (discussed above at " Open and Closed Meetings " under " Scheduling Committees' Meetings and Hearings "), with a difference concerning testimony that might defame a person: If it is asserted by a committee member that testimony may "tend to defame, degrade, or incriminate any person " (emphasis added) or by a witness that evidence may "tend to defame, degrade, or incriminate the witness " (emphasis added), the committee makes a determination in executive session under Rule XI, clause 2(k)(5) of that assertion by a majority vote, the number of members required under committee rules for the receipt of testimony being present. If the vote determines that the testimony would tend to defame, degrade, or incriminate any person, the testimony must be received in executive session. If the committee determines, a majority being present, that the testimony will not tend to defame, degrade, or incriminate any person, then the testimony must be received in open session. Clause 2(k)(5) also requires that a committee allow a witness to voluntarily appear, and that a committee must receive and dispose of requests from a witness to subpoena additional witnesses. Clause 2(k)(7) protects testimony received in executive session. Only by a vote of the committee, a majority being present, may such testimony be released to the public. A witness may also submit a "brief and pertinent" written sworn statement for inclusion in the record. Whether to accept such a statement, and the determination of its pertinence, is within the sole discretion of the committee (clause 2(k)(8)). Rule XI, clause 2(m)(1) and (3) authorizes committees and subcommittees to issue subpoenas for the attendance of witnesses and the production of documents. Clause 2(m)(3) requires authorization by a committee or subcommittee, "a majority being present." (See also " Meetings " under " Quorum Requirements ", above.) Unless otherwise provided in their rules, a quorum of one-third is required to debate a subpoena, under Rule XI, clause 2(h)(3). Rule XI, clause 2(m)(3) also allows committees to adopt rules to delegate the authorization and issuance of subpoenas to a committee's chair "under such rules and under such limitations as the committee may prescribe." Many committees in their rules have delegated authority to issue subpoenas to their chair, but have imposed requirements for consultation or notification on chairs that vary from committee to committee. This same subparagraph requires subpoenas to be signed by the chair or a member designated by the committee. Rule XI, clause 2(m)(3)(B) allows a committee or subcommittee to designate another return than at a meeting or hearing. Clause 2(m)(3)(C) allows enforcement of a subpoena only as authorized or directed by the House. If a committee meets to consider a subpoena, it meets in a markup session, and members may offer amendments and motions, make points of order, and engage the procedures and procedural strategy that could occur in a markup of legislation. The House Office of General Counsel maintains standard forms related to subpoenas to assist committees, although some committees, such as Oversight and Government Reform, have long experience with subpoenaing witnesses and documents from federal government officials and agencies and from outside of government. Table 4 compares committee rules in the 114 th Congress on whose authority a subpoena may be authorized and issued and on notifying all members of a committee that a subpoena has been issued. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence appearing last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules. The following list explains the headings in Table 4 : Committee/Subcommittee by Majority Vote—a committee or subcommittee may issue a subpoena by a majority vote. Chair—indicates under what conditions a chair may issue a subpoena: On Own Initiative—a chair may use his or her discretion in authorizing subpoenas, subject to any conditions in the committee's rules. Ranking Minority Member—indicates the role of a ranking minority member in allowing the chair to issue a subpoena: Concurs—the ranking minority member must concur with the chair before a subpoena is issued. Consulted—the chair must consult with the ranking minority member before issuing the subpoena. Three Days—a chair may issue a subpoena only when the House has adjourned for more than three days. Notification to Committee (as soon as practicable)—a chair shall notify the committee as soon as practicable that a subpoena has been issued. Committees have both legislative and oversight jurisdiction. The former refers to the authority of a committee to report legislation on subject matter. The latter refers to the authority to conduct oversight on subject matter. Although oversight jurisdiction may be the product of a specific legislative enactment, it also accrues where committees have responsibilities for broad subject areas. Hence, overlaps in oversight jurisdiction among committees are more likely to occur than overlaps in legislative jurisdiction. Rule X, clauses 2 and 3 assign oversight responsibilities to standing committees, and clause 4 assigns "additional functions" to four committees. Clause 2 requires committees on a "continuing basis" to study and review the execution of laws, departmental and agency organization, conditions that might necessitate "new or additional legislation," and "future research and forecasting." Clause 2(c) specifically allows committees to study the potential impact of tax policies on subjects within their jurisdiction. Clause 3 assigns "special" oversight functions to committees, generally clarifying that the identified committees' oversight (not legislative) jurisdiction extends to broad subject matter that is not specifically named in their jurisdictional statements in Rule X, clause 1. Thirteen committees are named. For example, the Committee on Natural Resources is given a special oversight function for "laws, programs, and Government activities relating to Native Americans." Clause 4 assigns "additional functions" to four standing committees: Appropriations, Budget, Oversight and Government Reform, and House Administration. These additional functions include directives or authority, or both, not granted elsewhere in House rules. For example, the House Administration Committee is directed to provide policy direction to the House inspector general; to conduct oversight of House officers (the clerk, sergeant-at-arms, chief administrative officer, and inspector general); to conduct oversight of the services provided to the House by the Architect of the Capitol (except those within the jurisdiction of the Committee on Transportation and Infrastructure); to accept gifts in behalf of the House, subject to named conditions, and to promulgate regulations for this activity; and to establish standards for making House and committee documents available in electronic formats. The chair and ranking minority member of the committee are also under this clause given authority to approve or disapprove proposed settlements by employing offices of the House under the Congressional Accountability Act of 1995. Clause 4 also directs every standing committee to study appropriations made for programs and activities of the federal and District of Columbia governments. The stated purpose of this activity is to ensure appropriations are made annually and consistent with program objectives. In instances where no appropriation is made, a committee is to determine whether program changes are suggested. Rule XI, clause 1(b) authorizes committees to conduct "investigations and studies" at any time. Rule X, clause 4(c)(3) provides deposition authority to the Oversight and Government Reform Committee. Other committees generally receive authority to conduct depositions through resolutions or another means. The 114 th Congress rules package, H.Res. 5 , provided deposition authority for the first session of the Congress to the Committees on Energy and Commerce, Financial Services, Science, Space, and Technology, and Ways and Means. Rule XI, clause 2(n), (o), and (p) contain additional oversight directives to committees. Clause 2(n) directs each standing committee, or a subcommittee of a committee, to hold a hearing within each 120 days (or three times a year) on "waste, fraud, abuse, or mismanagement" in federal programs authorized by a committee, specifically on the "most egregious instances" as documented by a department or agency inspector general or the Government Accountability Office (GAO). Clause 2(o) requires at least one hearing in a session of Congress by a committee or one of its subcommittees when a committee receives from an agency auditor "disclaimers of agency financial statements" of an agency within its jurisdiction. Clause 2(p) requires at least one hearing by a committee or one of its subcommittees when GAO has identified a federal program within the committee's jurisdiction as at high risk for waste, fraud, or mismanagement. Rule X, clause 2(b)(2) requires standing committees of more than 20 members, other than the Appropriations Committee, to establish an oversight subcommittee or to require its subcommittees to conduct oversight. Each standing committee is also directed by February 15 of the first session of a Congress to adopt an oversight plan for that Congress, meeting in open session with a quorum present. Clause 2 details attributes of oversight plans. Once adopted, oversight plans are submitted to the Committee on Oversight and Government Reform and the Committee on House Administration. The Committee on Oversight and Government Reform is directed to consult the Speaker, majority leader, and minority leader before reporting committees' oversight plans to the House, with any recommendations by the Oversight and Government Reform Committee or the House leadership "to ensure the most effective coordination of oversight plans and otherwise to achieve the objectives of this clause." Rule XIII, clause 3(c)(1) requires committees to include oversight findings and recommendations in reports on legislation. Rule XI, clause(1)(d) requires each committee, by January 2 of odd-numbered years, to file with the House a so-called activities report for the preceding two-year Congress. This rule also authorizes the chair of a committee to file an activities report after the sine die adjournment of Congress, or after December 15, whichever occurs first, without the committee's approval, provided that the report was available to committee members for at least seven calendar days, and it includes any committee member's supplemental, minority, additional, or dissenting views. The activities to be reported are those undertaken by the committee, with legislative and oversight activities appearing in separate sections. The requirements for the oversight section attempt to provide a measure of accountability by requiring a committee to summarize its oversight plan and additional oversight activities, and to summarize actions and recommendations made pursuant to the plan and the additional activities. This section must also list hearings held pursuant to the directives in Rule XI, clause (2)(n), (o), and (p), as explained just above (see " Authority "). Rule XI, clause 1(b) contains four procedures applicable to oversight and investigative reports. First, it allows such a report to be considered as read if it has been available to committee members for 24 hours or longer, excluding Saturdays, Sundays, and holidays if the House was not in session. In this circumstance, such a report would not have to be read for a committee to consider it. Second, such a report conducted by more than one committee may be filed jointly with the House so long as each committee individually complied with requirements for approving and filing the report. Third, such a report may be filed with the clerk of the House after the sine die adjournment of a session of Congress. Fourth, a committee filing a report after the sine die adjournment of a session of Congress must have allowed committee members, who gave timely notice, seven calendar days (rather than the otherwise required two calendar days) to file supplemental, minority, additional, or dissenting views to be included in the report. (See also, below, " Party and Staff Reports " under " Committee Records .") Committee jurisdiction is determined by a variety of factors. Paramount is Rule X, which lists the subject matter within the jurisdictional purview of each standing committee. These jurisdictional statements, however, are very broadly worded and are the product of an era in which governmental activity was not so extensive and relationships among policies not so intertwined as now. Most of Rule X was drawn from 19 th and early 20 th century precedents and codified in the Legislative Reorganization Act of 1946. Although the rule underwent modest revisions in 1974 and 1980, as well as more extensive changes in the 104 th and 109 th Congresses, topic omissions and a lack of clarity, as well as overlaps among committees in areas of jurisdiction, still exist. Accordingly, the formal provisions of Rule X are supplemented by an intricate series of precedents and informal agreements governing the referral of legislation. In general, based on precedent, once a measure has been referred to a given committee, it is within the jurisdiction of that committee, and the committee is responsible for any subsequent legislative action on it. If the measure is enacted into law, amendments to the law are presumed to be within the originating committee's jurisdiction. Relatedly, bills that are more comprehensive than the measure they amend or supersede are presumed to be within the jurisdiction of the committee reporting the more comprehensive measure. The resultant accretion of subject responsibility may broaden the range and scope of jurisdictional subjects assigned to each committee. Formal agreements, drafted among committees to stipulate their understanding of jurisdictional boundaries, are also used. House parliamentarians, in advising the Speaker, have generally considered agreements as authoritative when drafted with the assent of the Speaker and the guidance of the Office of the Parliamentarian and when they are signed by the chairs of the relevant committees of jurisdiction. Legislative jurisdiction may generate conflict between committees. Committees carefully monitor legislative referrals and committee reports to ascertain any encroachment on their jurisdiction. A committee might seek a referral whenever it believes a new measure or a reported measure has provisions that fall within its jurisdiction or seek the removal of offending provisions from a measure under another committee's consideration. Committees might also formally waive a referral with the understanding that the waiver does not detract from their jurisdiction or from the committees' participation in later congressional action, such as a conference committee. The Speaker refers legislation and other matters to committees pursuant to authority granted in Rule XII. The House might also by resolution or motion refer legislation or other matters, but referrals are made almost exclusively by the Speaker. Pursuant to Rule XII, clause 2, the Speaker— refers legislation and other matters pursuant to the jurisdictional statements of Rule X and House precedents; refers a piece of legislation or other matter to all committees with jurisdiction over one or more provisions of the legislation or matter so that to the "maximum extent feasible" each committee may consider provisions within its jurisdiction; designates a committee of primary jurisdiction, unless "extraordinary circumstances justify" two or more committees acting as though primary; may refer a measure or matter sequentially to additional committees when it is introduced ("additional initial referral") or when it has been reported ("sequential referral"); may refer portions of a measure or matter to additional individual committees ("split referral"); may refer to an ad hoc committee approved by the House; may refer with time limits; and may "make such other provision as may be considered appropriate." When a measure is introduced and referred to more than one committee, the referral language often includes the phrases "in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned" and "for a period to be subsequently determined by the Speaker." The former phrase places provisions of a measure that are clearly outside a committee's jurisdiction outside the committee's ability to report the measure with amendments to those provisions; a point of order could lie against amendments recommended by a committee to provisions outside its jurisdiction. The latter phrase allows the Speaker at a later time to impose time limits on any or all of the committees that received a referral. In some instances, when the committee of primary jurisdiction has reported, the Speaker has discharged all other committees that received a referral. In other instances, the Speaker, at the time the committee of primary jurisdiction reported, has imposed a time limit on the other committees that received a referral. For example, when the Committee on Agriculture reported H.R. 1947 in the 113 th Congress on May 29, 2013, the Speaker sequentially referred the legislation to the Committees on Foreign Affairs and on the Judiciary and imposed a time limitation of June 7, 2013, on their consideration. He later extended the time for their consideration to June 10. The Committee of the Judiciary reported the measure, while the Committee on Foreign Affairs was discharged from further consideration of the measure. As an example of a House referral decision , the House on June 19, 2002 (107 th Congress), agreed to H.Res. 449 , creating a Select Committee on Homeland Security. The resolution authorized the Speaker to refer a bill—creating a homeland security department to be introduced by the majority leader—to committees of the House; subject to any time limitation imposed by the Speaker, the resolution directed these committees to report their recommendations to the select committee. The select committee was directed to report legislation to the House. When the majority leader introduced H.R. 5005 on June 24, 2002, it was referred to 12 committees for a period set by the Speaker as not later than July 12. The other clauses of Rule XII proscribe the introduction of measures for certain purposes; govern the introduction or referral of petitions, memorials, private bills, and executive communications; and regulate the sponsorship of legislation. Committees operate within the Speaker's, or House's, referral decisions as well as House rules. House rules contain few rules on committee markups and do not state which of the chamber's rules are applicable to committees and their subcommittees in markups. House rules contain different sets of procedures that the House uses under different circumstances to consider various bills and resolutions. It would be not be possible for all of these procedures to be applicable to committees or applicable at the same time. It would also not be possible for committees to adopt rules that avoid inconsistency with all House procedures. The House parliamentarian, however, has provided important guidance relevant to committee markups in the parliamentarian's notes to Section XXX of Jefferson's Manual: "The procedures applicable in the House as in the Committee of the Whole generally apply to proceedings in committees of the House of Representatives.... " The phrase "House as in the Committee of the Whole" refers to a distinctive set of procedures that the House may, but rarely does, use to consider measures. These procedures are not listed in the House's rules; rather, they are a matter of well-established precedent. For example, the motion for the previous question is available in the House and in the House as in the Committee of the Whole, although it is not available in the Committee of the Whole. As the phrase suggests, the procedures applicable in the House as in the Committee of the Whole combine elements of the procedures that apply in the House and those that are followed in Committee of the Whole House on the state of the Union (the Committee of the Whole). Although no House rule specifically requires committees to follow these procedures in marking up legislation, committees typically do follow them—unless a committee agrees by unanimous consent to diverge from these procedures. To the extent feasible or applicable, House rules and precedents on reading measures, amending, voting, and other aspects of legislative procedures, including the authority of the presiding officer, are employed in committee and subcommittee markups. There are in addition some well-established procedures in committees that differ from the procedures of the House as in the Committee of the Whole. For example, in the House as in the Committee of the Whole, a measure is considered as read and open to amendment at any point. However, the same parliamentarian's notes that indicate that the procedures of the House as in Committee of the Whole "generally apply" in committee proceedings also state, "except that a measure considered in committee must be read (by section) for amendment…." Based on the parliamentarian's guidance and House rules, the key procedures applicable to House committees in the markup process are then as follows: First Reading. A measure is first read in full. Pursuant to Rule XI, clause 1(a)(2), this first reading may be waived by a privileged, nondebatable motion, if printed copies of the measure are available. Reading Sections (or Paragraphs) of a Measure. A section (or paragraph) of a measure must be read verbatim before committee members offer amendments to it. This reading may be waived only by unanimous consent. Reading a Measure for Amendment. A measure must be read for amendment one section (or, if so organized, one paragraph) at a time, unless the committee agrees by unanimous consent to another reading procedure. Members offer their amendments to each section of a measure after that section has been read and before the next section is read. A committee may consider a measure as open for amendment in another way (e.g., by title or at any point or by use of an amendment roster) only by unanimous consent. Reading Amendments. Each amendment must be read before debate on it begins. Reading of an amendment may be waived only by unanimous consent. Debate. All debate on amendments and the legislative vehicle is conducted under the five-minute rule. The chair normally entertains parliamentary inquiries and debate on points of order at his or her discretion. Discussion under reservations of the right to object to a unanimous consent request is by practice normally brief, but is not limited by the five-minute rule. Motion to Limit or Close Debate. A committee member may move to limit or close debate on a pending section (and all amendments thereto) or on a pending amendment (and all amendments thereto). This motion may provide that debate end immediately, at a certain time, or after a specified number of minutes or hours. A motion is not in order to close debate on an entire measure if any portion of the measure has not yet been read. Previous Question. A nondebatable motion to close debate does precisely that: it stops the debate. It does not prevent committee members from offering additional amendments. To end debate and preclude further amendments, a member may move the previous question on a pending amendment and all amendments thereto. A member may also move the previous question on an entire measure (and all amendments thereto) only after the measure has been read in full. Vote to Report. After a committee disposes of the last amendment to a measure, it votes on a motion to report the measure, together with any amendments the committee has agreed to. The committee does not vote on passing the measure, and amendments agreed to are not changes to the measure but recommendations to the House for change. A majority of a committee must be "actually present" to vote to report a measure. Additional sections, above, of this report also explain the conduct of committee markups. Regarding scheduling, see " Notice and Documents " and " Scheduling Subcommittee Hearings and Meetings ." Concerning markups being conducted as open meetings, see " Open and Closed Meetings " and " Media Coverage ." Regarding quorums, see " Meetings " under " Quorum Requirements ." See also, below, " Reports " Three motions specific to committees are authorized in Rule XI. Rule XI, clause 1(a)(2) provides a privileged motion to recess, either recessing subject to a call of the chair within a 24-hour period or recessing day to day. The motion to recess is not debatable. Pursuant to Rule XI, clause 1(a)(2), the first reading of a measure may be waived at a markup by a privileged, nondebatable motion, if printed copies of the measure are available. Rule XI, clause 2(a)(3) allows committees to adopt a rule to direct the committee's chair to offer a motion in the House under Rule XXII, clause 1 whenever the chair considers it appropriate. Such a rule provides authority for a chair at his or her discretion to initiate a request for or to agree to conference with the Senate in lieu of a specific committee authorization to a chair required by Rule XXII, clause 1. Otherwise, Rule XXII, clause 1 allows the Speaker to recognize the chair of the "primary committee" to make a motion to disagree to Senate amendments to a House proposition and to request or agree to a conference or to make a motion to insist on House amendments to a Senate proposition and to request or agree to conference. Numerous other motions and requests, based on House rules or precedents applicable to the House as in the Committee of the Whole, are available in committees. A chair and individual members might also ask for unanimous consent to take procedural actions that violate a rule or precedent; individual members might pose parliamentary inquiries to a chair; and individual members might reserve or make points of order. Motions and requests can be used to facilitate committee action, to reach agreement, or to impede or delay committee action. Rule XI, clause 1(a)(2) establishes a privileged motion to recess a committee (or subcommittee) subject to the call of the chair within a 24-hour period, or to recess day to day. This motion is not debatable. Obtaining a Record Vote Rule XX, clause 1(b) states that a recorded vote in the House, when requested by a Member, will be taken if one-fifth of a quorum supports the request. There is not a specific House rule applicable to obtaining a vote in committee. Rule XI, clause 2(h)(1) states, however, that committees may not report any measure or recommendation unless a majority of the committee is actually present. As shown in Table 5 , sixteen committees specify the procedures to obtain a recorded vote in their rules. The Ethics Committee's rules address recorded votes. Four committees do not have a rule on obtaining a recorded vote: Homeland Security, Judiciary, Ways and Means, and Intelligence. These committees may follow the House rule, requiring a quorum to be present and the support of one-fifth of the members to obtain a recorded vote; may allow an individual member to call for a roll-call vote; or may follow another practice. Proxy voting in committees is prohibited by Rule XI, clause 2(f). Rule XI, clause 2(h)(4) authorizes each committee to adopt a rule to allow its chair to postpone proceedings to take a recorded vote on an amendment or approval of a measure and to permit a chair to resume proceedings after notice. This rule also provides that such a committee rule must allow the underlying proposition to be subject to further debate or amendment to the same extent as when the question was postponed. All but three committees (Budget, Ethics, and Rules) have adopted a rule allowing votes to be postponed, as shown in Table 5 . Some committees' rules provide a role for the ranking minority member in the decision to postpone votes. In practice, most committees postpone votes to allow members to vote on the House floor or, for the convenience of members, to cluster votes in committee on amendments. Because floor votes are often clustered and might therefore consume much more time than the 15 minutes that a single vote could minimally take, committee chairs typically announce when proceedings will resume in committee after chamber votes, for example, 10 minutes following the conclusion of the last floor vote. A quorum must be reestablished when the committee reconvenes. A chair might postpone votes as a tactical move so that he or she can assemble a majority of votes on the side of the proposition that the chair is supporting. It could be that the chair wishes to persuade additional committee members, to await the attendance of committee members not currently available, or to negotiate a compromise with an amendment's sponsor. A determined minority might take tactical advantage of a recess to allow committee members to vote on the floor by not returning to committee in a timely fashion, requiring additional time for a quorum to be assembled and thereby delaying the resumption of business. They might also try to build support for their position in the interim. Rule XI, clause 2(e)(1) requires committees to keep a record of all roll-call votes, as detailed in this paragraph. With exceptions, these records must be available for inspection by Members, staff, and the general public in the committee offices. In addition, committee votes must be posted electronically within 48 hours. The text of any amendment agreed to in committee must be posted electronically within 24 hours of its adoption (Rule XI, clause 2(e)(6)). One committee in its rules (Armed Services) provides a means for members to explain their absence from a roll-call vote. (See also, above, " Subcommittee Reporting to Its Parent Committee " under " Subcommittees .") Table 5 compares committee rules in the 114 th Congress on calling for a record vote and on delaying further proceedings once a record vote has been demanded. Committees are listed in alphabetical order in the left column, with the Permanent Select Committee on Intelligence appearing last. The first three rows of the headings contain key terms describing committees' rules, as explained immediately below. A check in a box indicates that that committee adopted a rule or a closely related variation on it. An empty box indicates that a committee did not address that subject, although a footnote may appear in an otherwise empty box to explain a committee rule different from the choices exercised by other committees. Certain checks are footnoted to offer additional detail on a particular committee's rule. In some cases, a single footnote is used to offer additional detail on a rule that appears in more than one committee's rules. The following list explains the headings in Table 5 : Record Vote—indicates under what circumstances a recorded vote may be obtained: One-fifth of the Members Present—if one-fifth of the members present request a recorded vote, assuming a quorum. Upon Request of 3 or More Members—if 3 or more members request a recorded vote. Upon Request from Any Member—if any member requests a recorded vote. Any Member in the Absence of a Quorum—if it is determined that there is not a quorum present, then one member may request a recorded vote. Postponing Further Proceedings—indicates under what circumstances further proceedings may be postponed if a record vote is requested: Chair—the chair may postpone further proceedings in the event a recorded vote is requested: On Own Initiative—Discretion resides with the chair. Ranking Minority Member Consultation—the chair must consult with the ranking minority member before postponing further proceedings in the event of a record vote. Ranking Minority Member Concurs—the chair must obtain the concurrence of the ranking minority member before postponing further proceeds in the event of a record vote. No Rule—the committee does not specify a rule on this issue. The word "report" has several meanings in Congress. The chair of a committee or subcommittee or the presiding officer in the House or the Committee of the Whole might direct a clerk to report a measure or amendment. Depending on the parliamentary circumstances, the clerk is being directed to read the title or text of a measure or to read or designate an amendment. At the conclusion of a committee markup, a committee member typically makes a motion to report the marked-up measure to the parent chamber. Assuming that a majority is "actually present" to vote on this motion, as required by Rule XI, clause 2(h)(1), and that the motion is agreed to, the chair must promptly report the measure to the House by submitting it to the Clerk of the House for printing and reference to the appropriate calendar. (See the explanation of filing adverse reports and of filing reports on privileged legislation below, " Filing .") "Report" may also be a noun. When a committee approves a motion to report, it normally writes a report explaining the measure and advocating its passage by the House with any amendment(s) recommended by the committee. (What immediately follow are the requirements in House rules for the content of a House committee report.) Report is also used to designate a committee document submitted to the House on a committee investigation, study, or other activity. Rule XIII, clause 3 delineates many, but not all, requirements for the content of committee reports. Clause 3 requires a report to be filed as a single volume, allowing a supplemental report only for the correction of a technical error in the main volume. Highlights of the content requirements include— record votes on amendments and the motion to report; oversight findings (see, above, " Organization, Planning, and Subsequent Reporting "); new budget authority in spending bills; a cost estimate; performance goals and objectives; changes to existing law, the so-called Ramseyer rule; a list of unauthorized appropriations in a report on a general appropriation bill; and in measures reported by the Committee on Ways and Means, a tax complexity analysis of amendments to the Internal Revenue Code of 1986 and an analysis of the budgetary effects of major legislation, as defined in the House rules. A report on a special rule by the Rules Committee "shall to the maximum extent possible specify ... any waiver of a point of order against the measure or against its consideration." (Rule XIII, clause 6(g).) A committee rule paraphrases this provision. Practice, however, has not been to use specific waivers, but rather so-called blanket waivers to protect a measure against possible points of order. Rule XI, clause 2(l) allows any committee member to file supplemental, minority, additional, or dissenting views for inclusion in a committee report accompanying legislation reported to the House, provided that the views are filed "not less than two additional calendar days after the day of such notice (excluding Saturdays, Sundays, and legal holidays except when the House is in session on such a day)." Most committees explicitly or tacitly follow the House rule of two calendar days. Rule XIII, clause 3(a)(1) requires committee reports to be filed as a single volume and to include supplemental, minority, additional, and dissenting views that are timely submitted. The cover must show that these views are included. Rule XIII, clause 2(c) also requires supplemental, minority, additional, and dissenting views that are timely filed to be printed as part of a committee's report. A committee may arrange to file its report with the clerk not more than one hour after time has expired, or earlier if all views have been received. This subparagraph also allows a committee to file a report if a request to file views is not timely made. In practice, committees interpret differently the two days in the House rule. A committee might interpret two days as 48 hours from the time of a vote to order a measure reported or from the conclusion of the markup meeting, or might even interpret the first day as the day on which the vote occurred to order a measure reported. A committee might interpret two days to commence at midnight the day of the vote to order the reporting of a measure and count the second day as ending a midnight of that day or during business hours of that day. Potential later questions can be resolved if committee members discuss their committee's interpretation of the House and any related committee rule at the committee organization meeting. Supplemental, minority, additional, and dissenting views may foreshadow arguments and amendments in the Rules Committee and on the House floor. In addition to requirements and restrictions on reports and reported measures already described, such as the requirement that a majority be actually present to report a measure or that a committee report be published as one volume, other restrictions appear in several places in House rules on what measures committees may report. For example, the Committee on Rules is prohibited from reporting a special rule preventing a motion to recommit, with or without instructions, from being made for a bill or joint resolution. This motion by tradition is a right of the House minority. (Rule XIII, clause 6(c).) The House is also prohibited from considering a special rule waiving the rule requiring the disclosure of earmarks in bills, joint resolutions, committee amendments, and conference reports. The House, however, may dispose of a point of order that a special rule waives the disclosure requirement on a question of consideration. (Rule XXI, clause 9.) (The earmark disclosure rule is discussed below in this section.) Rule XXI contains a number of restrictions on reported measures applicable to tax, appropriations, and budget measures. With regard to tax or tariff measures and amendments, no committee may report a bill or joint resolution containing a tax or tariff unless the committee has jurisdiction to do so. Likewise, an amendment in the House or proposed by the Senate containing a tax or tariff is not in order when the House is considering a bill or joint resolution reported by a committee without jurisdiction over the tax or tariff. A point of order lies against the bill, joint resolution, or amendment while the measure is open for amendment. This rule protects the jurisdiction of the Ways and Means Committee. (Rule XXI, clause 5(a).) The House may also not consider a bill, joint resolution, amendment, or conference report carrying a "retroactive Federal income tax rate increase." (Rule XXI, clause 5(c).) Another clause of Rule XXI protects the jurisdiction of the Appropriations Committee. Clause 4 provides that a committee may not report a bill or joint resolution carrying an appropriation unless the committee has jurisdiction to report appropriations. Likewise, an amendment providing an appropriation to a bill or joint resolution reported by a committee, which is without jurisdiction to report appropriations, is not in order. A point of order lies against the bill, joint resolution, or amendment while the measure is open for amendment. While a general appropriations bill and, after September 15, a continuing appropriations resolution may be called up by a privileged motion, an appropriation bill today is typically considered pursuant to a special rule. A special rule may be used to waive various points of order that would lie against an appropriations bill under Rule XXI, clauses 2 and 3. The restrictions in clause 2 disallow the Appropriations Committee from reporting measures, with limited exceptions, containing unauthorized appropriations or changing existing law. Other restrictions on bills and amendments appear in clause 2. The restriction in clause 3 prohibits the House from considering a general appropriation bill or joint resolution, or conference report on these measures, that provides spending from the Highway Trust Fund or reduces or limits balances accruing in the Highway Trust Fund, except for activities authorized for highways and mass transit. Rule XXI also contains restrictions on various budgetary measures. Clause 7, for example, disallows the House from considering a concurrent resolution on the budget, an amendment to it, or a conference report on it, that contains reconciliation directives that would result in an increase in net direct spending. Direct spending is defined to include mandatory spending and changes in mandatory spending included in appropriations acts. Similarly, clause 10 disallows the House from considering bills, joint resolutions, amendments, or conference reports on bills and joint resolutions that have the net effect of increasing mandatory spending, including changes in mandatory spending included in appropriations acts, over 5-year and 10-year budget windows. Rule XXI also disallows the consideration of legislation where earmarks have not been disclosed and of certain public works. Rule XXI, clause 9 disallows the House from considering a bill or joint resolution, whether or not reported from committee; a committee amendment; or a conference report—unless the report on a reported measure, the joint explanatory statement accompanying a conference report, or a list provided for an unreported measure or a committee amendment lists the earmarks, limited tax benefits, or limited tariff benefits that the proposition contains and the sponsor of each, or carries a statement that the proposition contains no earmarks, limited tax benefits, or limited tariff benefits. An additional requirement applies to the joint explanatory statement accompanying a conference report on a general appropriations bill: it must disclose any earmarks, limited tax benefits, or limited tariff benefits included that had not been submitted to conference by either house. (The restriction on special rules was described above in this section.) Rule XXI, clause 6 disallows the House from considering a bill, joint resolution, amendment, or conference report that designates or redesignates a public work in honor of a sitting Member of Congress. Rule XIII, clause 2(b) requires a committee chair to "promptly" report a measure or matter approved by a committee and to "take steps necessary to bring the measure or matter to a vote." This paragraph also requires a report to be filed within seven calendar days, excepting days when the House is not in session, of the day that a majority of committee members file a written request with the committee clerk for filing of the report. Rule XIII, clause 2(a) provides that committee reports are to be delivered to the clerk and referred to the appropriate calendar as directed by the Speaker. A report made adversely is laid on the table unless the committee requests its referral to the appropriate calendar or unless, within three days, any Member, Delegate, or the Resident Commissioner requests its referral to the appropriate calendar. (See also " Committee Procedure for Oversight Reports ," above.) Privileged reports are listed in Rule XIII, clause 5, which identifies five committees and the specific matters they might report that are eligible under this clause. Unlike nonprivileged reports, privileged reports are filed from the floor and referred to the appropriate calendar. If a resolution of inquiry has not been reported from the committee to which it was referred, a privileged motion to discharge the committee is available 14 days after the referral (see Rule XIII, clause 7.) Rule XIII, clause 4(a) disallows the House from considering in the House a measure or matter reported by a committee until the third calendar day (excluding Saturdays, Sundays, and holidays unless the House was in session) on which a report was available. In addition, this paragraph exempts five kinds of measures from the rule: a resolution providing a rule, joint rule, or order of business reported by the Rules Committee; a committee funding resolution reported by the House Administration Committee; a question of the privileges of the House reported by any committee; a declaration of war or national emergency; and a measure disapproving of a government agency's decision or action that would be effective unless disapproved by one or both houses of Congress. This layover requirement does not apply to a supplemental committee report to correct record votes (Rule XIII, clause 3(a)(2)). A one-day layover rule applies to reports of the Rules Committee (Rule XIII, clause 6), although this layover may be waived by a two-thirds vote of members. The layover also does not apply during the last three days of a session or in two limited instances under Rule XXII pertaining to reaching agreement with the Senate. Other paragraphs of Rule XIII, clause 6 address additional aspects of the consideration of resolutions reported by the Rules Committee. A measure to be called up under the suspension of the rules procedure might have been reported by a committee, might have been ordered reported by a committee, or might have another status in the legislative process. Since the motion is to "suspend the rules and pass" the measure, House rules are waived by the motion. Both parties have guidelines that the party leadership may follow in deciding whether to schedule a measure for House consideration by suspension of the rules. Rule XI, clause 2(e)(1) requires committees to keep records of all committee actions, including "substantially verbatim" accounts of hearings and meetings, including markups, and a record of all roll-call votes. With exceptions, these records must be available for inspection by Members, staff, and the general public in committee offices. A committee's records must be kept by the committee, separately from the office records of the committee's chair. Public availability does not necessarily allow a person reviewing a record to photocopy it or make notes. The House requires its committees to post a markup text not less than 24 hours in advance of a markup meeting (Rule XI, clause 2(g)(4)). Rule XI, clause 2(e)(5) requires committees, to the "maximum extent practicable," to provide audio and video coverage of each hearing or meeting in a way that allows for easy public viewing or hearing and then to maintain those recordings so that they are readily accessible to the public. Committees are required to post electronically votes taken in a markup (within 48 hours) and amendments adopted (with 24 hours) (Rule XI, clause 2(e)(1)(b) and (6), respectively). Witnesses' "truth-in-testimony" filings are to be posted electronically within one day of a witness's appearance (Rule XI, clause 2(g)(5)). Pursuant to Rule VII, each committee chair is responsible for transferring noncurrent records of the committee to the Clerk of the House, who is then responsible for transmitting those records to the National Archives. Committees are directed in Rule XI, clause 2(e)(3) to adopt in their rules "standards for availability" of committee records delivered to the National Archives, addressing specified policies. Rule VII contains additional provisions on the availability of records, including committee records, and assigns regulatory authority on implementation to Rule VII to the Committee on House Administration (Rule VII, clause 5(b)). A number of committees have rules on access to or protection of classified, sensitive, or confidential information. Pursuant to Rule XI, clause 1(c), committees are authorized to print hearings. Clause 2(e)(4) states that committee publications must be made available in electronic form "to the maximum extent feasible." Rule XIII, clause 4(b) directs a committee that reports a measure or matter to make "every reasonable effort" to have its hearings printed and available before the measure or matter is considered by the House. Committees might publish reports that have not been approved by a majority vote of the members of a committee. As a result, a report might be issued without the knowledge of certain members of the committee, perhaps minority members. In response to this possibility, some committees have added provisions to their rules that attempt to alleviate their committee members' concerns. Committees' responses may generally be characterized in two ways: Disclaimer—the committee requires that any report not approved by a majority vote of the committee carry a disclaimer on its cover explaining that the report was not adopted by that committee and may not necessarily reflect the views of its members; or Individual Views—members would be afforded the opportunity to add their views to the report. Six have rules requiring a disclaimer, and six committees allow individual views. A committee might also proscribe by rule the printing of a report not approved by a majority of a committee, as is the case with the Science, Space, and Technology Committee. Rule X, clause 4(f) requires each standing committee to submit to the Budget Committee its views and estimates six weeks after the President transmits the executive budget to Congress. This clause also requires the Ways and Means Committee, after undertaking public hearings, to recommend in its submission an "appropriate level" of public debt to be included in the concurrent resolution on the budget. A rule of the Budget Committee governs information the committee provides to the Speaker in fulfillment of its duties under the Congressional Budget Act to inform floor debate on measures with a budgetary effect. This information is contained in the Parliamentarian's Status Report and the Section 302 Status Report. Another rule provides the committee chair with the opportunity to consult committee members on recommendations to the Rules Committee on waivers of Budget Act points of order. Modifications to the Budget Committee's reports and roles are regularly included as separate orders in the biennial rules packages. Rule X, clause 6 governs aspects of committee expense resolutions reported by the House Administration Committee. Rule XI, clause 1(b)(1) allows committees to conduct "investigations and studies" subject to any expense resolution adopted pursuant to Rule X, clause 6.

Rule XI, clause 2(a)(1) directs each standing committee to adopt "written rules governing its procedure." This paragraph continues: "Such rules … (B) may not be inconsistent with the Rules of the House or with those provisions of law having the force and effect of Rules of the House…." Rule XI, clause 1(a)(1)(A) in addition states: "The Rules of the House are the rules of its committees and subcommittees so far as applicable." Finally, Rule XI, clause 1(a)(1)(B) subordinates subcommittees to the committee of which they are a part: "Each subcommittee is a part of its committee and is subject to the authority and direction of that committee and to its rules, so far as applicable." Many provisions of House rules applicable to committee procedures appear in Rule XI, which also includes procedures specifically applicable to the Committee on Ethics. Rule X contains the legislative and oversight jurisdiction of standing committees, several clauses on committee operations, and a clause specifically addressing the jurisdiction and operation of the Permanent Select Committee on Intelligence. Rule XII concerns the referral of legislation and related matters. In addition to calendars, Rule XIII addresses the filing and content of committee reports. Each House standing committee implements these rules, and select provisions of other House rules, in adopting its rules. Variety as well as consistency in committee rules is analyzed in this report as the rules relate to legislative activities, principally hearings, oversight, and markups. Administrative provisions in House and committee rules are not analyzed. Provisions of committee rules on legislative activities are clustered by topic, rather than by House rule number. In adopting their rules for the 113th Congress, committees in some instances adopted House rules unchanged, and in other instances adapted House rules to their own needs where they had discretion to do so. Committee rules change incrementally from one Congress to the next, with a committee typically making several amendments to its rules from the preceding Congress. Variations in key committee rules are highlighted in five tables: referring measures or matters to subcommittees—whether the chair may or must refer legislation to a subcommittee, the time frame within which a decision must be made, and where authority to discharge a subcommittee resides; scheduling hearings and meetings—committees' regular meeting day and time, authority to schedule additional meetings, and authority to cancel meetings; hearings—quorum requirements, extending witness questioning time, and order of questioning witnesses; subpoenas—committee authority, chair authority, ranking minority member authority, and notification to committee members of issuance of a subpoena; and record votes—obtaining a record vote, and postponing further proceedings when a record vote is requested. See CRS Report RS20794, The Committee System in the U.S. Congress, by [author name scrubbed], for an explanation of the types of committees. See also CRS Report R40233, House Ad Hoc Select Committees with Legislative Authority: An Analysis, by [author name scrubbed]; and CRS Report 96-708, Conference Committee and Related Procedures: An Introduction, by [author name scrubbed].

The Lacey Act was enacted in 1900 to address game poaching and wildlife laundering, among other things. The Lacey Act regulates the trade of wildlife and plants and creates penalties for a broad spectrum of violations. Violations addressed by the Lacey Act involve domestic and international illegal trade of plants and wildlife. Before the enactment of amendments in 2008, the Lacey Act addressed these issues by making it unlawful for any person to: "import, export, transport, sell, receive, acquire, or purchase any fish or wildlife or plant taken, possessed, transported, or sold in violation of any law, treaty, or regulation of the United States or in violation of any Indian tribal law"; or to "import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any state, or in violation of any foreign law;" and any plant taken, possessed, transported, or sold in violation of any state law or regulation. In 2008, the Lacey Act was amended to include nonindigenous plants and violations of foreign laws pertaining to certain conservation actions and other activities involving plants and plant products. Based in part on these amendments, the Lacey Act now makes it unlawful for any person to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant taken, possessed, transported, or sold in violation of any law or regulation of any state, or any foreign law, that protects plants or that regulates taking or exporting plants and plant products in certain situations. This includes plants taken, possessed, transported, or sold without the payment of appropriate royalties, taxes, or stumpage fees; and plants exported in violation of state or foreign law. Further, in reference to plants, it is unlawful to import, export, transport, sell, receive, acquire, or purchase any plant or plant product taken, possessed, transported, or sold in violation of any law, treaty, or regulation of the United States or in violation of any Indian tribal law. In addition, the Lacey Act makes it unlawful to falsify or submit falsified documents related to any plant or plant product covered by the act, and to import certain plants and plant products without an import declaration. The provisions related to fish, wildlife, and plants in reference to laws, treaties, and regulations of the United States and any Indian tribal law were unchanged (although the definition of plants was expanded to include nonindigenous plants). The 2008 amendments to the Lacey Act (2008 amendments) also expand the definition of a plant to include any plants (including foreign plants), whereas before it referred only to plants indigenous to any state or associated commonwealths, territories, or possessions of the United States. A plant is specifically defined as "any wild member of the plant kingdom, including roots, seeds, parts, or products thereof, and including trees from either natural or planted forest stands." There are certain exclusions to this definition of plants, including common cultivars (except trees), common food crops, scientific specimens of plant genetic material to be used for laboratory or field research, and any plant that is to remain planted or be planted or replanted. The 2008 amendments also require importers of all covered plants and plant products to submit an import declaration to U.S. Customs and Border Protection (CBP) at the time of importation. The law requires that the declaration contain certain information, such as identification of the species and genus of plants or plants used in a product, and country of origin of plants, among other things. The declaration appears to apply to all plants and plant products, including those plants harvested or plant products made before the enactment of 2008 amendments. The primary aims of the 2008 amendments were to reduce illegal logging and to increase the value of U.S. wood exports. International illegal logging is a pervasive problem affecting several countries that produce, export, and import wood and wood products. Estimates of the extent of illegal logging vary and may not be completely accurate due to the clandestine nature of the activity. Some have estimated that 15% to 30% of the volume of all forestry is attributable to illegal logging. In tropical countries, some estimate that between 50% and 90% of all logging is illegal. Illegal logging is a concern to many because of its economic implications as well as its environmental, social, and political impacts. The economic value of global illegal logging is estimated to be between $50 billion and $100 billion of the global wood trade. An analysis by the World Bank estimates that illegal logging costs governments approximately $5 billion annually in lost royalties and an additional $10 billion in lost revenue. Some are concerned that high U.S. demand for tropical timber from countries in Latin America and Southeast Asia may exacerbate illegal logging. The United States is the world's largest wood products consumer and one of the top importers of tropical hardwoods. For example, the United States is the largest importer of Peruvian mahogany, which some estimate to be 80% illegally logged. Global illegal logging activities can devalue U.S. exports of timber. Illegally logged wood generally costs less to bring to market than legally logged wood due to nonpayment of fees or taxes, and avoidance of costs related to laws that govern harvesting. This lowers the market price of wood, potentially harming timber operations that operate legally. According to a 2004 report issued by the American Forest and Paper Association, it is estimated that illegal logging of roundwood for wood products depresses world wood prices on average by 7%-16% annually. This affects U.S. producers of wood and their exports. If there were no illegally logged wood in the global market, it has been projected that the value of U.S. exports of roundwood, sawnwood, and panels could increase by an average of approximately $460 million each year. Further, if increases in value for domestic wood production if illegal logging is halted are taken into account, then the increase in value of wood products in the United States each year could be approximately $1.0 billion, according to the study. Other countries and entities have adopted measures similar to the Lacey Act. The European Union (EU), for example, has a regulation that prohibits the placement of illegally harvested timber and timber products on the EU market and requires entities to establish due diligence schemes. Australia passed a similar law that prohibits the import of wood or wood products that were illegally logged or contain illegally logged timber. The requirements established in the Lacey Act are administered by the Departments of the Interior, Commerce, and Agriculture through their respective agencies. These include the U.S. Fish and Wildlife Service (FWS), National Marine Fisheries Service (NMFS), and Animal and Plant Health Inspection Service (APHIS). This report summarizes the implementation of the 2008 amendments to the Lacey Act and discusses policy issues related to the amendments. A raid on Gibson Guitar Corporation (see box below) brought to light several existing policy and legal issues related to the 2008 amendments to the Lacey Act. In broad terms, some question why U.S. importers should be held responsible for violations of foreign law potentially committed by foreign entities (i.e., not U.S. importers). They claim that it is difficult to monitor the harvesting and processing of plants and plant products in foreign countries to make sure that no foreign laws are being violated. Other concerns address specific provisions of the 2008 amendments such as the declaration requirements for plants and plant products imported into the United States. Several businesses have suggested that the declaration requirements for importing plants and plant products are cumbersome and in some cases, not possible to meet. For example, some claim that identifying species for the declaration can be difficult for composite wood materials or some finished products where the wood has been modified from its natural state. Compliance with other requirements in the act is another issue. Some contend that plants and plant products imported before 2008 should be exempt from the law. They note that getting declaration information about these products, sometimes years after importation, can be difficult. To temper these criticisms of the 2008 amendments of the Lacey Act, some are reiterating the intended positive effects of the amendments, such as the potential economic benefits of reducing illegal logging and the potential environmental benefits of reducing deforestation and corruption associated with the illegal timber trade. Congressional interest in this issue stems in part from the wide-reaching applicability of the Lacey Act for U.S. industries and consumers and the environmental and economic benefits of reducing illegal logging. The 2008 amendments to the Lacey Act affect all industries that import plant and plant products, including musical instrument makers, furniture manufacturers, flooring companies, toy manufacturers, the auto industry, and some textile manufacturers that use fabrics that contain plant fibers. The 2008 amendments are expected to reduce illegal logging, which will reduce corrupt practices and increase biodiversity and conservation in timber-supplying countries, and increase revenues for foreign and domestic companies that sell and process wood. The 113 th Congress has addressed the 2008 amendments with proposed legislation. H.R. 3324 would amend the Lacey Act so that importers would need to possess and make available certain information about the plant or plant products being imported. Currently, importers are required to file this information. Further, the bill would amend the rulemaking authority of the Secretary to give more flexibility for specifying the applicability of declaration requirements. H.R. 3280 would amend the Lacey Act to exempt plants and plant products imported before May 22, 2008, from the Lacey Act. This section reviews the implementation of declaration requirements, enforcement, and funding under the 2008 amendments. Policy issues associated with implementation are discussed below in " Issues and Legislative Options ." Under the Lacey Act, all plants or plant products being imported into the country must be declared, with some exceptions that include common cultivars, packaging material, and scientific specimens, among other things. The declaration is to be made by the importer at the time of import. According to APHIS, the declaration requirements in the 2008 amendments are expected to facilitate accountability and improve data collection on plant imports. Similar declaration requirements are used for the import of wildlife to the United States. The declaration for plants and plant products is to provide: the scientific name of any plant (genus and species) contained in the importation; the value of the plant or plant product; the quantity of the plants or plant products (including the unit of measure); and the country of origin of where the plant was taken. In cases where multiple species are found in a product, there are some variations to the declaration. If a product contains material from several different plants, of which the names of the species are uncertain, the law states that the declaration should contain the names of all plant species that could have been used to create the product. Furthermore, if the exact country of origin is not known, the declaration must contain the names of all of the countries from where the plant species could have come. Information from submitted declarations is entered into a database, maintained by APHIS. It is unclear if this information will be openly available to the public. The declaration does not require information on the chain of custody of the product or its parts. For example, if a chair was fabricated in China with wood that was harvested and shipped from Indonesia, via Singapore, a full record of transactions throughout its fabrication process would not be necessary. The declaration will require the species of plant(s) used in the making of the chair (i.e., product imported), and the origin of each plant species used (e.g., Indonesia), and the value and quantity of the plant used. In some cases, the country of harvest for the declared plant material will be different from the country of export. APHIS has also developed a series of special use designations (SUDs) to ease some burdens of declarations. A SUD is an entered code that would substitute for certain required information. SUDs apply to specific products under designation regulations and are organized into three categories: The use of shorthand names for common trade groupings of species. (APHIS has a list of acceptable names.) The use of a special code to identify composite woods or recycled and reclaimed products if species and genus cannot be determined through a process of due care. Items manufactured prior to May 22, 2008, whose sources or species cannot be identified through a process of due care could be given a SUD. The declaration requirements were to be implemented by December 2008; however, APHIS delayed implementation due to concerns about the complexity of the requirements. Consequently, the declaration requirements on certain items were implemented on a delayed schedule between April 2009 and April 2010. The implementation of the declaration requirements is related to the Harmonized Tariff Schedule (HTS) of the United States, which classifies plants and plant products under certain codes in trade for duty, quota, and statistical purposes. Implementation is based on HTS codes and follows a schedule. Some more complex plant products (e.g., those containing specialty wood) were declared by April 2010 (e.g., musical instruments). Only items classified in the current implementation schedule are subject to enforcement for compliance with the declaration schedule, according to APHIS. Several other products containing wood parts, such as some firearms, furniture, and some toys, are being considered for phased-in implementation. APHIS has stated that it is not enforcing the declaration requirement for informal entries such as personal shipments. It is uncertain when or if these types of products will have to be declared. Any additions to the items requiring a declaration are expected to be reported in the Federal Register , according to APHIS. The 2008 amendments required a review of the declaration requirements and the effects of certain exclusions to the declaration requirements not more than two years after the enactment of the amendments (by May 22, 2010). APHIS published a notice in 2011 stating that it is initiating this review and seeking comments on the implementation of the declaration requirements. Further, 180 days after the review is complete, a report reviewing the implementation of declaration requirements is to be submitted to appropriate congressional committees. The report is to contain: an evaluation of the effectiveness of the declaration requirements in assisting enforcement of the requirements and efforts to integrate the requirements with other import regulations; recommendations for legislation that would assist in the identification of plants that are imported into the United States illegally; and an analysis of the effect of prohibitions and declaration requirements on the cost of legal plant imports and the effect on illegal logging practices and trafficking. A report was completed in May 2013 and sent to Congress. The report discusses some statistics of declaration requirements. For example, APHIS is receiving approximately 40,000 declarations per month (5,000 per month on paper, the rest electronically), and, of the declarations sent, approximately 32% are missing some aspect of the declaration. The report also mentions some of the issues associated with declarations. These range from importers not being able to identify species and genus of plants in products to mislabeling the country of harvest of the species. Further, the report discusses difficulties in processing the magnitude of paper declarations and the unsuccessful pilot program to create and implement blanket declarations. The report did not suggest recommendations for creating legislation to ease declaration requirements, but did emphasize the use of SUDs to ease the burden of declaring goods for importers. Regulations to reflect the study's findings may be promulgated 180 days after the review discussed above. The 2008 amendments authorize the regulations to include limits on the applicability of the declaration requirements to specific plant products; modifications to the requirements based on the review; and limits to the scope of the exclusions to the declaration requirement if they are warranted according to the review. No recommendations for changing the regulations of the 2008 amendments have been promulgated, although SUDs are in place to address some issues. The Lacey Act states that the provisions and subsequent regulations under the act are to be enforced by the Secretaries of the Interior and Commerce, and in the case of plants, also the Secretary of Agriculture. Agencies—for example, CBP, the U.S. Coast Guard (e.g., for fisheries violations), the National Marine Fisheries Service, the Federal Bureau of Investigation, the U.S. Forest Service, the Office of the Inspector General, and U.S. Immigration and Customs Enforcement—also can enforce the Lacey Act through inspection or monitoring activities. The Lacey Act can be enforced at the border or through investigations. Agents at ports of entry inspect imports and monitor the declaration process. Inspectors can initiate and conduct investigations into violations of the Lacey Act. The FWS Office of Law Enforcement reported 2,474 investigations related to the Lacey Act in 2012. Enforcement of the Lacey Act sometimes depends on an understanding of what foreign laws might have been violated. There is no federal database of foreign wildlife and plant laws, thus making enforcement of the law challenging. However, to facilitate investigations, officials might use information gained from foreign governments, nongovernmental organizations, private citizens, anonymous tips, declarations, industry, and border agents, among others, during the investigation. Officials are also authorized to provide rewards to informants that lead to the arrest, conviction, or assessment of fines to a violator. A Lacey Act violation requires two actions to be taken. If a person violates a U.S. or tribal law by taking, possessing, transporting, or selling any fish, wildlife, or plant (or plant product), the Lacey Act is violated if that fish, wildlife, or plant is then imported, exported, transported, sold, received, acquired, or purchased. It is slightly different for violations of state or foreign laws, which require that the import, export, transport, sale, receipt, acquisition, or purchase of the fish, wildlife, or plant be in interstate or foreign commerce before there can be a violation. A Lacey Act violation can result in civil penalties that could involve fines and forfeiture of wildlife, plants, and products, and criminal penalties that could involve fines, forfeiture, and incarceration. The Lacey Act does not authorize funding to implement the act or enforce provisions within the act. However, funding for implementing the act could come from discretionary appropriations. The Secretary is directed to identify funds used to enforce the Lacey Act and any regulations as a special appropriations item in the Department of the Interior appropriations budget proposal to Congress. Funds for implementing the act could come from other accounts in federal agencies. For example, funds for FWS investigators to enforce laws that address fish, wildlife, and plant resources are provided under the Office of Law Enforcement line item for FWS. This program received $62.3 million for FY2013. This office also funds law enforcement officials to monitor and investigate the wildlife trade. The office has 219 agents and 143 inspectors on staff for FY2012. In FY2012, investigators conducted 12,996 investigations, of which 2,474 involved the Lacey Act. FWS also has an international wildlife trade program that implements domestic laws and international treaties that address the wildlife trade. APHIS also funds the implementation of the Lacey Act. Money taken from penalties and fines under the Lacey Act can be deposited into the Lacey Act Reward Fund. Money in this fund can be used to provide rewards to people who provide information that leads to an arrest, criminal conviction, and other things. Money can also be used to reimburse costs to those providing temporary care to fish, wildlife, or plants while a case is ongoing. Several policy issues are associated with the 2008 amendments, ranging from questions about the overall purpose and function of the Lacey Act to issues about specific provisions in the act such as the declaration requirements. Several environmental, trade, and industry groups have formed coalitions to identify issues and suggest solutions. Some coalitions who primarily have issues with the declaration requirements have proposed solutions that they contend could be addressed by regulations. Others contend that the regulatory process has not worked and congressional action is needed. This section discusses selected policy issues associated with the 2008 amendments and summarizes proposed and potential legislative and regulatory options. Under the Lacey Act, the importer is responsible for making sure that imported plants and plant products are legally harvested, processed, and imported. This could involve monitoring the production of plant products and verifying that plants and plant products are being harvested, processed, and imported legally under foreign laws. This requirement has been interpreted by some as requiring the United States to enforce foreign laws, which some contend should be the responsibility of the country who established the laws. Others contend that the United States contributes to illegal trade by being one of the largest consumers of plant and plant product imports, and therefore is in a special position to apply demand-side pressure to ensure legally sourced plants and plant products for export. Some might argue that there is limited potential to lower the level of illegal trade of plants and wildlife, since the illegal trade could shift away from responsible importers (i.e., U.S. importers following the Lacey Act) to those in countries with fewer restrictions. In the case of illegal logging, however, this argument is waning since other countries or blocks of countries are adopting regulations similar to the Lacey Act. For example, the European Union (EU) has adopted a regulation that prohibits the entry of illegally harvested timber into the European market. The responsibility for regulating timber falls on those who put plants and plant products in the market (e.g., importers and producers). Illegally harvested is defined under the regulation as "harvested in contravention of the applicable legislation in the country of harvest." The regulation applies to both timber imported into the EU and timber produced within the EU. The regulation requires that those placing timber or timber products into the market practice due diligence. Further, the regulation will require that those who buy and sell timber or timber products on the market be able to identify their suppliers and customers so that the timber and timber products can be traced. Australia has also passed a law similar to the Lacey Act and the EU regulation. This law prohibits the import of timber products that contain illegally logged timber; requires importers to undertake due diligence to mitigate the risk of products containing illegally logged timber; and establishes a monitoring, enforcement, and investigation regime. If a large portion of the world market for timber adopts regulations similar to the 2008 amendments, such as the EU regulations, the market for illegally harvested or processed plants and plant products would be expected to decrease because the consumer base addressing illegal logging would presumably increase. There is no proposed legislation in the 113 th Congress that attempts to remove foreign laws from the coverage of the Lacey Act. Some contend that the 2008 amendments of the Lacey Act overreach the original intent of their proponents by addressing laws that are not related to conservation. For example, the act makes it unlawful to possess any plant that was processed illegally according to a foreign law. As discussed in the Gibson guitar case, exporting unfinished wood conforming to HS 4407 from India is a violation of Indian law governing exports and hence a potential violation of the Lacey Act. Some could contend that illegally processing wood might not have a direct effect on conservation. Indeed, under the 2008 amendments, harvesting and exporting wood where applicable conservation laws and payment of fees and taxes are followed could still violate a country's export law (e.g., due to restrictions on unfinished wood exports) and therefore would be prohibited under the Lacey Act if the plant or plant products are imported into the United States. Counter to the argument that the Lacey Act overreaches its intent, others defend the legitimacy of the Lacey Act as a conservation tool. They contend that all areas covered by the Lacey Act, including export laws, have some connection to conservation. Enforcing payments of stumpage fees and taxes, for example, takes away the financial benefits of illegal logging and could provide revenue for conservation activities (e.g., more law enforcement officers). They also contend that enforcing export laws lowers the influx of illegal plants and plant products onto the market. For example, legally required processing or finishing of wood could provide another layer of oversight on the trade of plants and plant products, and could also increase the transparency of the supply chain of the plants and plant products, making enforcement of foreign laws easier. Removing violations of foreign laws from the Lacey Act would address this issue, yet would narrow the scope of the act significantly. Another alternative, as discussed above, would be to limit the applicability of foreign laws to those laws that directly address the protection, conservation, and management of plants. This would also narrow the scope of the law, but would keep it focused on addressing conservation. However, some might contend that violations not related to conservation might lead to charges that ultimately might address conservation. The enactment and implementation of the 2008 amendments has led some to contend that the law increases costs for certain companies and could result in the loss of jobs. Others, in contrast, contend that the law increases revenue for certain companies and thus could lead to job creation. There has been no comprehensive analysis of the costs and benefits of the 2008 amendments for various types of plant and plant product industries. This section discusses the potential areas of costs and benefits of the 2008 amendments. The primary costs to comply with the 2008 amendments are attributable to exercising due care to ensure that imported plants and plant products are harvested and processed legally, and to comply with the declaration requirements. According to H.Rept. 112-604 , APHIS has stated that it is receiving approximately 40,000 declarations per month, at a cost of $56 million annually for regulated entities. This figure could be higher when the Lacey Act is fully implemented. The costs of compliance for regulated entities depend on the amount of due care conducted by the importer and the cost of declaration requirements. Larger companies might have more resources to exercise due care than smaller companies. Further, those importing large quantities of wood or products from single sources might have lower costs applying due care than those purchasing small quantities of specialized wood or products from several sources. In addition to costs of due care, other costs might come from complying with declaration requirements. Identifying the species and genus of wood products and filling out paperwork for declarations could require additional staff for companies importing wood and wood products. Indirect costs may result from changing trade partners that might not be able to verify the legality of their wood products. This might involve searching for new markets and establishing business with new companies. Last, there are costs associated with violations created by the 2008 amendments. Violations could result in penalties up to $500,000 for criminal violations and forfeitures of goods, which can be costly depending on the quantity and species of plants or plant products confiscated. One of the primary benefits of the 2008 amendments is based on the premise that reducing illegal logging would increase revenues for legal logging operations in the United States and other countries. As discussed before, illegally logged wood is cheaper to bring to market and likely depresses wood prices for both domestic and international markets. Based on this premise, if illegally logged wood were removed from the market, prices for legally harvested wood would probably increase. According to one study, this increase could be 7%-16% annually. Less illegally harvested wood in the market could lead to an increase in the demand for legally harvested wood, causing an upward pressure on prices. To illustrate the benefits of the 2008 amendments, several cite a trade report that estimated that illegal logging contributed approximately $1 billion annually in economic losses to the U.S. forest products industry in the form of lower exports and depressed wood prices. Some contend that the revenue gained from lowering the influx of illegally harvested wood into the market could lead to more domestic jobs. Another economic benefit of reducing illegal logging would be increasing revenues for governments in countries where wood is harvested. Studies have shown that illegal logging leads to corruption and evasion of paying fees and taxes for harvested and processed wood. The World Bank estimated that governments lose approximately $15 billion annually due to illegal logging, due primarily to lost revenue from taxes and fees. It is difficult to assess whether the 2008 amendments to the Lacey Act have been effective in reducing illegal logging around the world. There have been no comprehensive studies assessing the effect of the amendments on the logging industry. Some suggest anecdotally that foreign logging operations in China and Vietnam are paying closer attention to complying with local laws because of consumer-driven pressure. Others, however, might contend that restrictions on selling illegally harvested wood to U.S. companies might drive sales of illegally harvested wood higher to companies from countries that do not have restrictions on purchasing illegally harvested wood (i.e., leakage), potentially reducing the effect of the Lacey Act on illegal logging. The declaration requirements for plants and plant products under the 2008 amendments are controversial. Some contend that the declaration requirements are a burden and difficult to comply with under certain circumstances. For example, a case study of IKEA's procurement strategy noted that it would take 25 person-years annually to complete the declaration forms for IKEA's supply chain. Further, it notes that a single shipment might generate a 1,000-page document for a declaration because of all the products being shipped. Others are concerned with specific parts of the declaration requirements and have suggested modifications. Proponents of the declaration requirements, in general, contend that they are necessary to ensure compliance with the provisions of the Lacey Act and serve as an oversight mechanism for compliance. Some contend that wood in certain plant products is difficult to identify by genus and species. For example, for composite products and materials (i.e., products that contain more than one species of wood such as particleboard), it is difficult to identify the genus and species of all the component fibers because numerous species of wood can be used to make the products. Some have suggested that these types of wood products be excluded from the declaration requirements until it is feasible to identify various fibers by species. The law attempts to address complications with identifying several species of wood in products. For example, if the species of wood used in products is uncertain, one may declare all species of wood that the product could contain. Therefore, if a composite wood product is created from by-products from several species, listing the species that may have been used to create the product would satisfy the declaration requirement. However, APHIS has acknowledged that this might not be enough to facilitate the declaration of composite wood, and has asked for information on this issue to consider regulatory options. In the request for comments for potential changes in regulations, APHIS proposes a definition for composite wood and identifies two possible approaches for declaring composite wood through regulations. APHIS would define composite wood as consisting of plant material that has been chemically or mechanically broken down and reconstituted. The approaches to declaring composite wood would involve applying a type of de minimis standard to the wood. One approach is to identify the genus, species, and country of harvest for no less than a given percentage of the wood contained in the product. The percentage could be measured in terms of weight or volume. The second approach would be to declare the "average percent composite plant content" of the product, without regard for the species and country of harvest for the plant. Non-composite plant material would still need the genus, species, and country of harvest in the declaration. A de minimis standard has also been proposed for certain types of products that contain plant materials which are highly processed and are in small quantities. Some argue that identifying these plant materials is difficult due to the level of processing they have undergone and their small quantity in the product. Under this proposal, plant materials in certain products would be excluded from the declaration requirements. Product examples include cosmetics, personal care products, textiles, and rubber or cork products. Proponents of this proposal contend that federal agencies have rulemaking authority to make these exclusions, but that congressional action might be needed to clarify the agency's authority to establish exclusions to the declaration requirements. APHIS has addressed this issue, in part, with the use of SUDs. SUDs provide a special code to identify composite woods or recycled and reclaimed products if species and genus cannot be determined through a process of due care. Specific guidelines on using SUDs are provided. Some counter the need for modifications to the declaration requirements because they contend that knowing the type and source of wood is important for ensuring legal practices and countering the illegal trade. They specifically oppose suggestions to broaden the exemptions of plant products from declaration requirements, arguing that modifications proposed in H.R. 3210 would have excluded pulp and paper, which constitute a significant portion of the plant imports into the United States, from declaration requirements. Some contend that repeated or regular declarations of the same plant products add administrative burden and extra costs on industries without providing additional benefits for tracing the source of wood. A proposal to address this issue would allow for a blanket declaration. In a blanket declaration, importers would submit one declaration for similar products imported over a period of time, thus potentially saving the importer from submitting duplicate declarations for each product imported. APHIS has responded to this issue by initiating the Lacey Act Blanket Declaration Pilot Program in 2009 to test the feasibility of collecting information through a blanket declaration. Eligible importers can participate in the program. A blanket declaration will apply for one month, and a reconciliation report providing how much was actually imported during the month is due within 15 days after the end of the month. The report to Congress submitted by APHIS stated that this pilot project was not a success. Further, a survey revealed that users felt the program was duplicative of efforts related to declarations. The modification of declaration requirements can be done either through regulations or by law. Regulatory changes to the declaration requirements under the Lacey Act can be implemented from recommendations provided by certain reports and reviews. As discussed above, under the Lacey Act, the Secretary is required to review the declaration requirements and report findings to appropriate congressional committees. The report to Congress contains information on several factors, including an evaluation of the effectiveness of declaration requirements. The Secretary is authorized to promulgate regulations that could modify certain declaration requirements for plant products 180 days after the Secretary completes the review. For example, the Secretary could limit the applicability of declaration requirements to any plant product; make changes to declaration requirements for plant products that are suggested in the review; and limit the scope of exclusions if they are justified by the review. This could be an avenue for excluding products (e.g., composite wood products) that are difficult to declare. It is unclear, however, if these regulations could be used to exempt plant products made before 2008 from the declaration process. In the 113 th Congress, H.R. 3324 would amend the Lacey Act so that importers would need to possess and make available certain information about the plant or plant products being imported. Currently, importers are required to file this information. This would lower the burden of processing declarations for APHIS, but would not lower the burden of creating declarations by the importers. Therefore, many of the issues associated with identifying species and genus, or country of origin, would remain. Further, the bill would amend the rulemaking authority of the Secretary to give more flexibility on the applicability of declaration requirements. Some contend that the 2008 amendments should not apply to plants imported or plant products created or imported before 2008. They note that declaration requirements under the act are difficult to complete for these plant products because the sources and species of plants used might not be known, since they were not required by law to be identified. In the 113 th Congress, H.R. 3280 proposes to exclude plants from the Lacey Act that were imported into the United States before May 22, 2008, or plant products created before May 22, 2008. The intent of this provision appeared to be to exclude plant products created and imported before 2008 from Lacey Act coverage and clarify any doubts or interpretations of the law. Note that this provision would not cover plants harvested before 2008 that were not imported before the act took effect, making them still subject to the Lacey Act. The primary method by which U.S. importers can protect themselves from criminal and certain civil penalties under the Lacey Act is to exercise due care in determining if the imported plants or plant products were legally harvested, processed, and exported. The exercise of due care refers to the amount of attention and effort that a reasonable person would expend in a similar situation to address an issue or conduct an activity. Some contend that the actions needed to demonstrate due care with respect to the Lacey Act are not sufficiently defined or clear. Some definitions of due care are found in S.Rept. 97-123, which accompanied the Lacey Act amendments of 1981, and in guidance provided by federal agencies. S.Rept. 97-123 states that "due care means that degree of care which a reasonably prudent person would exercise under the same or similar circumstances." Further, the Senate report notes that due care requires that a person under certain circumstances take steps that a reasonable person would take under similar circumstances to insure they are not violating the law. The exercise of due care is pivotal for determining penalties under the Lacey Act. Under the Lacey Act, certain civil and criminal violations and forfeitures can be imposed on persons if they engaged in conduct prohibited by the act. If they knowingly engaged in prohibited conduct, the penalties are steeper than if they unknowingly engaged in prohibited conduct. If they unknowingly committed a violation without exercising due care, their penalties are steeper than if they exercised due care and unknowingly committed a violation. (See Figure 1 .) Therefore, persons who exercise sufficient due care to determine if their plants or plant products were taken, possessed, transported, or sold in violation of laws, treaties, or regulations might not be held liable for certain violations under the act if a violation is committed unknowingly. However, exercising due care and unknowingly committing a violation could still result in penalties under the Lacey Act, such as forfeiting goods. The due care standard does not apply to marking or labeling violations, and is excluded from declaration requirements under the Lacey Act. According to S.Rept. 97-123, the intent behind incorporating a due care standard in the Lacey Act was to lower the potential for abusive and indiscriminate enforcement efforts. The Senate report also notes that the degree of due care is "applied differently to different categories of persons with varying degrees of knowledge and responsibility." For example, a horticulturalist in a professional capacity and with experience in the plant trade could be expected to apply greater knowledge toward correctly identifying plants and verifying permits than would be expected of an airline company that transported plants to the United States and has little knowledge of the plant trade and plant species. Some practical measures one could take to demonstrate due care are given by APHIS. For example, importers can ask questions about the chain of custody of the wood, implement compliance plans, abide by industry standards, record efforts at each stage of the supply chain, and change their practices in response to practical experiences. Some red flags that might indicate violations of logging or processing laws offered by APHIS include: goods trading significantly below their common market rate; cash transactions without paperwork; invalid or falsified documents or permits; and unusual sales practices or transactions. Some suggest that the Lacey Act Compliance Program described in the agreement with Gibson Guitar could be viewed as a guideline for how due care might be interpreted or applied to the 2008 amendments. The due care standard in the Compliance Program states that Gibson should follow a number of steps before buying wood or a wood product. They include: communicating with suppliers to determine any challenges they might have in implementing policies within the program; determining the origin of the wood from discussions with the supplier; conducting independent research to determine risky sources of wood or the potential for false documentation; requesting sample documentation to evaluate compliance and validity; making a determination of legality before purchasing wood and maintaining records of these effects; and declining to purchase wood if there is any uncertainty of illegality. Gibson is to supplement these requirements by continuing its own policies. Some policies include procuring wood sourced from forests where legal harvest and chain of custody can be certified by a third party, such as the Forest Stewardship Council. Further, when working with a new supplier, Gibson is to study foreign laws, verify certifications, and use watch lists to determine the risk of procuring illegal wood. This standard and compliance program is binding only to Gibson Guitar and is not intended to be a pronouncement of what DOJ intends due care to mean with respect to the 2008 amendments. Establishing a process for exercising due care under the Lacey Act when dealing with plants and plant products has been proposed for clarifying guidelines. Some suggest that a process for exercising due care should have steps a person or company can take to verify that their imported plants and plant products comply with the Lacey Act, ultimately leading to a type of certification for the plant or plant product. The process could consider certification of individual items as well as certification of manufacturers, importers, and retailers. Others are also considering a process for satisfying due care. A group of stakeholders associated with the trade of plants and plant products and conservation is creating a process that aims to define due care under the Lacey Act. Their standard centers on obtaining a type of forest certification that ensures the forest is protected and conducting risk, compliance, and legal audits related to potential illegal activities. A process for exercising due care has been adopted by the European Union (EU) in regulations that aim to curb illegal logging. The process has three primary elements that are to be provided: Information on the timber and timber products, including a description and scientific name of the timber, country of harvest, quantity of the timber or product, details on the supplier and purchaser, and documents indicating compliance with national legislation. A risk assessment of the timber being illegal throughout its supply chain based on information gathered and risk assessment criteria, which include compliance with applicable legislation, prevalence of illegal logging of specific species in the country of harvest, international sanctions on imports of timber, and complexity of the supply chain. Risk mitigation addressing the risks noted in the previous point, which can include gathering additional information and verification of legality from the supplier of the timber, including obtaining third party verification. The regulation also provides for monitoring organizations to be recognized. These organizations are expected to provide EU operators due care systems, which they can accept or refuse in lieu of creating their own system. The EU system for due diligence is similar to the 2008 amendments, but potentially more involved. Under the EU system, information on the chain of custody and a calculation for mitigating risks is required; this information is not required under the 2008 amendments. Clarity on how to exercise due care and a defense against charges when due care is exercised are two potential benefits of implementing a process for exercising due care. A process that specifies steps to ensure the legality of imported products would reduce confusion as to how due care is exercised, and provide consistent practices among importers, thus making it easier for them to coordinate efforts to verify the legality of their products. This could also lower the costs of compliance. Further, monitoring compliance according to a process could give law enforcement officials a benchmark for bringing charges against an importer who may not have taken sufficient steps to exercise due care. Potential drawbacks of establishing and implementing a process to exercise due care include determining the level of reliability for verifying timber practices in foreign countries and the potential for violations to go unnoticed when due care is applied. One component of a due care process might be employing third parties to verify timber operations in foreign countries (i.e., certification scheme). Third parties can invest resources in particular countries to monitor logging and processing operations for several importers, and provide a certificate to operations that comply with the law. For example, the Forest Stewardship Council (FSC) certifies timber operations to ensure legal, sustainable management of forested land and monitors the chain of custody to trace the life cycle of wood products originating in a certified forest. The effectiveness of third parties to monitor all aspects of plant harvesting and production, however, has been questioned by some. They claim that corruption and fraud can take place, thus undercutting the ability to certify legal wood. This would lower the credibility of the standard and lower its effect in curbing illegal logging. Further, some certification schemes might not cover all aspects of a due care process and the timber and timber products in question. FSC, for example, does not apply rigorous oversight to "FSC Controlled Wood," which is non-FSC-certified wood that is allowed to be mixed with FSC-certified wood. Further, certification schemes may not cover all steps in the succession from harvesting to importation. For example, FSC standards would not cover some laws dealing with the export or processing of wood after harvest that would be subject to the Lacey Act. Exercising due care for importing plants and plant products under the Lacey Act can be challenging for importers because it requires an understanding of foreign laws and practices, and possibly monitoring in the foreign country where plant and plant materials are being harvested. Some contend that exercising due care is complicated by the quantity of foreign laws related to plants and plant products. For example, Indonesia has more than 900 laws, regulations, and decrees that address timber harvesting and processing. There is no federal database that compiles and presents foreign laws that apply to plants and plant products. According to APHIS, importers are responsible for being aware of any foreign laws that apply to the plants and plant products they are importing. Some have suggested other options for reducing illegal logging that would help importers exercise due care. These options would be supply-side driven. One option is to encourage timber-producing countries to construct timber legality standards that could be implemented as voluntary guidelines or mandatory procedures for domestic timber operations. Supply-side guidelines were implemented in a trade agreement between the United States and Peru in 2006 to address illegal logging in Peru. For example, Peru is required to implement several measures to deter illegal logging within the country, such as increasing the number of enforcement personnel, imposing criminal and civil penalties under existing laws to deter illegal logging, monitoring endangered plant species, verifying and auditing exporters and producers of timber products, and developing tools that strengthen regulatory controls and verification systems related to the harvest and trade of timber products. Individual countries have also initiated legality standards to differentiate between legal and illegal sources of wood. Indonesia, for example, has a standard with several indicators that address timber operations and forest management. Independent auditors assess timber concessions and factories against the standard and award certificates for legal operations. Another option is to promote international cooperation and coordination to identify areas of legal and illegal logging practices. With the advent of the EU regulation, opportunities exist for coordination among a large range of importers spanning two of the largest markets for plant and plant product exports—Europe and North America. Efforts could be made to identify "hot spots" where illegal logging is common, as well as areas where legal practices prevail. This could create incentives for suppliers to be placed on the legal lists. Further, identifying areas where illegal logging or trade exists could warn importers of areas in their supply chains they should be wary about. This might also encourage importers to change their supply chains so as to avoid these areas. However, these lists could be subjectively created and generate controversy by countries that are on the list. For example, some might question how many infractions would cause a country to be listed, or how a country could come off the list. Legal operators in the listed country might also argue that they are being unfairly targeted because of the crimes of others in their country. Some have suggested strengthening existing federal programs aimed at reducing illegal logging in foreign countries as a mechanism to make compliance with the Lacey Act easier. Some examples include programs at the U.S. Agency of International Development and Department of State that aim to educate foreign companies about the Lacey Act and provide funds to improve forest governance and law enforcement in foreign countries. An example is the Tropical Forest Conservation Act. Under this program, debt restructured in eligible countries generates funds to support programs to conserve tropical forests within the debtor country. Some of the eligible activities include improving law enforcement capacity in reserves to address illegal logging. This helps importers by reducing illegal logging practices in countries that supply plants and plant products. Some aspects of the 2008 Lacey Act Amendments have been controversial, and several observers and stakeholders have suggested potential changes. Some contend that changes should be done through law; others argue that changes should be done through regulations. Some contend that efforts to change the implementation of the Lacey Act through regulations have stalled and not produced results. This is supported, in part, by the delay by APHIS in producing a review report of implementing declaration requirements under the act. Based on this report, the Secretary is authorized to make certain changes to the declaration requirements. Some take a broader look at the Lacey Act and contend that understanding and applying foreign laws to the processes of harvesting and producing plant and wildlife products is not feasible for the average person or corporation in the United States. Thus, some might consider removing violations of foreign laws from the Lacey Act. Proponents of making changes through regulations contend that amending the act could lead to additional changes in the law that are not contemplated or supported by various stakeholders. They also contend that amending the law is subverting the intended process of making changes through regulations.

The Lacey Act regulates the trade of wildlife and plants and creates penalties for a broad spectrum of violations. In 2008, the Lacey Act was amended to include protections for foreign plants and to require adherence to foreign laws as they pertain to certain conservation and other activities involving plants. Further, the 2008 amendments make it unlawful to submit falsified documents related to any plant or plant product covered by the act, and to import certain plants and plant products without an import declaration. The primary drivers behind the Lacey Act amendments of 2008 (2008 amendments) were to reduce illegal logging globally and increase the value of U.S. wood exports. Illegal logging is a pervasive problem with economic and environmental consequences. Some estimate that illegal logging accounts for 15%-30% of the volume of all forest extraction activities globally, and has an estimated worth of $30 billion-$100 billion of the global wood trade. Further, if there were no illegally logged wood in the global market, it has been projected that the value of U.S. exports of roundwood, sawnwood, and panels could increase by an average of approximately $460 million each year. A halt to illegal logging would also raise the value of domestic wood production. If this is added to exports, some estimate the increase in revenue for companies in the United States at approximately $1.0 billion annually. A highly publicized raid on Gibson Guitar Corporation brought to light several existing policy issues related to the 2008 amendments to the Lacey Act. Some issues are broad and address the intent of the act. For example, some question why U.S. importers should be held responsible for violations of foreign law or if the requirements under the Lacey Act actually reduce illegal logging. Other issues are narrow and address certain requirements in the act. For example, several suggest that the declaration requirements for importing plants and plant products are cumbersome and cannot be met in some cases. Further, some contend that the 2008 amendments should not apply to plants harvested or plant products fabricated before the 2008 amendments were enacted. In contrast, some reiterate the benefits of the 2008 amendments, primarily reducing illegal logging and increasing the value of legally obtained plants and plant products on the market. The 113th Congress is attempting to address some of these issues in proposed legislation. H.R. 3324 would amend the Lacey Act so that importers would need to possess and make available certain information about the plant or plant products being imported. Currently, importers are required to file this information. Further, the bill would amend the rulemaking authority of the Secretary to give more flexibility for specifying the applicability of declaration requirements. H.R. 3280 would amend the Lacey Act to exempt plants and plant products imported before May 22, 2008, from the Lacey Act. Efforts to address implementation issues could also be pursued through regulations. The law requires a review of the implementation of the Lacey Act by the Animal and Plant Health Inspection Service and a report evaluating and analyzing some implementation requirements and providing recommendations to improve plant identification. Further, the Secretary (e.g., Secretary of Interior, Commerce, or Agriculture) may promulgate regulations that aim to improve implementation as discussed in the review.

The First Responder Network Authority (FirstNet) is a federal agency that includes private sector and other non-federal representation on its board of directors. FirstNet was created by Congress with provisions in Title VI (Spectrum Act) of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) to ensure the deployment and operation of a nationwide, broadband network for public safety communications. It is established as an "independent authority" within the National Telecommunications and Information Administration (NTIA), part of the Department of Commerce. In addition to establishing the structure and goals for FirstNet, Congress provided $7 billion for costs related to planning and deploying the broadband network, and a $135 million grant program to assist states with plans to connect to FirstNet's broadband network. These funds are provided from revenue realized through auctioning licenses for radio frequency spectrum, as designated in the act. The anticipated cost of building and operating a nationwide core broadband network—and the interoperable radio networks that connect to it—is significantly in excess of the amount appropriated. The act therefore provides for public-private partnerships with FirstNet or with states, and for fees (charged to states and other users) to ensure that FirstNet becomes self-sustaining. To attract private sector partners, FirstNet can offer access to its assets, including radio frequency spectrum capacity, in return for financial payment or other support. FirstNet holds a license for 20 MHz of broadband spectrum, assigned by the Federal Communications Commission (FCC), as required by the act. The act allows states that meet specified requirements to lease spectrum from FirstNet and thereby negotiate their own partnerships that share spectrum in Radio Area Networks for their state or region. The act requires that FirstNet deploy its network using the fourth-generation wireless technologies of Long Term Evolution (LTE). LTE is a powerful cellular technology with industry standards that are consistently being upgraded to expand its capabilities. LTE is also a platform for commercial carrier-expansion into fifth-generation (5G) wireless communications and the Internet of Things. There are many challenges for public safety leaders and policymakers in establishing the framework for a nationwide network that meets state, local, tribal, and territorial needs for robust, interoperable emergency communications. Currently, for example, state emergency communications needs are typically met by separate networks using different technologies. Furthermore, each state has its own laws and procedures for building, managing, and funding communications infrastructure. Among the challenges facing FirstNet is establishing a governance model that accommodates current investments and future needs of its clients without compromising the coherence of a national network. FirstNet officials face enormous pressure to produce a functional network in a timely manner, reflecting widespread concerns that public safety communications will not be adequate for response and recovery if a catastrophic national emergency occurs. Among the timelines that the winning bidder must meet is geographical coverage for 95% of the country within six months of receiving the contract. This obligation suggests that participation of one of the four nationwide carriers (Verizon, AT&T, Sprint, T-Mobile) to carry FirstNet traffic will be essential, even if the carrier acts as a subcontractor and not a lead partner. Agreements with rural carriers may also be used to meet rural coverage goals. The winning contractor must guarantee priority access to public safety on the 20 MHz of spectrum capacity that FirstNet brings to the table. The requirements for buildout using FirstNet spectrum (referred to as Band 14) are 20% coverage of population within the first year of operation and 60% coverage within two years. Also within six months, the winning contractor is expected to submit simultaneously to 56 states and territories, as required by the act, a plan for how FirstNet would be deployed within that state or territory (tribal areas are covered in state plans). FirstNet will make available $6.5 billion of its federal funding for the buildout. The bidder must indicate the cost of each state's buildout within the context of its cost model. States that successfully meet the criteria to build their own network within FirstNet will be eligible for a proportionate share of the $6.5 billion, provided in the form of a grant. The total cost to build out the network is estimated by most experts to be in excess of $30 billion over 10 years. The successful bidder will sign a contract for 25 years, expiring in FY2042. Annual payments totaling at least $5.625 billion over the period of the contract are required as a guarantee that FirstNet will be financially self-sustaining. On October 17, 2016, two of the bidders—Rivada Mercury and pdvWireless—were informed by the U.S. government that their proposals had been eliminated from consideration. This leaves AT&T as the one publically known bidder still in consideration. On November 21, 2016, Rivada Mercury filed a lawsuit against the U.S. government in the U.S. Court of Appeals of Federal Claims over what Rivada says is the illegal and wrongful exclusion of the consortium from the FirstNet procurement process. The lawsuit is expected to delay the contract award until March 1, 2017, at the earliest, although further delays are possible depending on the resolution of the lawsuit. Achievements since the FirstNet board first met officially in September 2012 include a number of Requests for Information (RFI), notably the September 2014 Request for Information for Comprehensive Network Solution(s). This document proposed a comprehensive broadband network solution for FirstNet that would reach from core network management requirements to include local area networks in many communities, as well as some devices used to access the network. A Second Notice , issued by the Department of Commerce for comment on March 9, 2015, provided FirstNet's perspective on the intent of Congress in enacting language that allows states to build their own networks. The discussion in the Second Notice also supplemented the Public Notice on Statutory Interpretations , issued in September 2014. A number of important issues are raised in these formal statements of proposed interpretation, including possible definitions of "public safety" and "rural." A third public notice concerning the definition of "public safety" was released after a FirstNet board meeting on April 24, 2015. Also on April 24, the proposed acquisition approach and the draft Request for Proposal(s) (RFP) were considered in a closed meeting. The draft RFP builds on proposals from previous notices and RFIs. The planning process for 2015-2016 centered on circulating the draft Request for Proposal(s) and a final RFP. FirstNet concluded that the contract or contracts would be awarded through the Federal Acquisition Regulation (FAR) process. According to FirstNet, "key goals are to meet the needs of public safety and to provide extensive coverage so Federal subscribers and other public safety users can count on the network when they are on the job." Network coverage includes deployable units, such as vehicles equipped to connect with the network, and local area networks operated by FirstNet. "Incident commanders and officials will have local control over the network so, for example, they can assign users and talk groups and determine who can access applications." The underlying premise of the strategy is that the chosen network solutions will allow FirstNet to "control and operate" national and regional core network infrastructure, Radio Access Networks (RANs) in states that opt in, as well as devices, applications, and other functions. To achieve this level of coverage, FirstNet's "acquisition strategy centers on maximizing the network's value to public safety while meeting its financial sustainability obligations under the Act." Although many details have not been made public, the general architecture of FirstNet's broadband network has been presented at numerous public events and is available on the FirstNet website. The network design shows what is referred to as a heterogeneous network, or HetNet. It depicts the Radio Access Network to include both macro and micro networks. In simple terms, high towers with base stations, known as eNodeB in LTE network design, are referred to by the wireless industry as a macro network; a variety of small cell network designs are referred to as micro networks. The macro network is often described as providing coverage over distance and the micro network as providing capacity as well as extra coverage at the local level. The trend in the evolution of network coverage is depicted in Figure 1 . In this configuration, the micro network has become the predominate provider of mobile communications coverage and capacity through contiguous small cell networks. The tower of the macro network (eNodeB) assures nationwide connectivity and provides additional coverage. Small cell networks are by and large autonomous, providing coverage for their area and connecting to other small cell networks or cellular towers when needed. These micro networks are local in nature but fully interoperable across wide geographic areas. For FirstNet, a network strategy that shifts the majority of routine, public safety mobile communications onto shared spectrum in small cell networks will free much of the 20 MHz spectrum license for secondary use by commercial carriers. Only in times of a major emergency would public safety users make heavy demands on the macro network and spectrum licensed to FirstNet. In an LTE network, it is the eNodeB macro coverage infrastructure—not the micro network—that requires a significant spectrum assignment to operate efficiently. During the period 2011-2012, when the Spectrum Act was drafted and enacted, the Radio Area Network would have consisted primarily of high-site towers with base stations (eNodeB). Since the Spectrum Act was passed, communications technologies have evolved in ways not fully anticipated at the time. Congress, therefore, may have assumed that a state with a successful plan to opt out and create its own public-private partnership would be granted a statewide license for 20 MHz to operate a Radio Area Network using eNodeB towers and base stations. Micro networks, however, can operate within the 20 MHz assignment, essentially sharing the spectrum, but may require no more than 1.5 x 1.5 MHz for a basic LTE network. Therefore, if FirstNet decides that only micro network capacity will be made available for a state-operated Radio Area Network, then the state will have a sub-license for a relatively small amount of spectrum that may be difficult—perhaps impossible—to leverage in a public-private partnership. Since September 11, 2001, state and local agencies—aided by federal grant programs—have invested in improving the reliability and interoperability of mission critical voice communications over Land Mobile Radio (LMR) networks. The 2014 National Emergency Communications Plan prepared by the Department of Homeland Security emphasizes the need to continue investment in these networks to provide communication for first responders until such time as FirstNet is deployed and capable of handling mission-critical voice communications over broadband. These networks may also be essential for local and state backup service when access to FirstNet has been preempted by a large-scale emergency, or they may be an alternative to using FirstNet. FirstNet is required to consult with regional, state, tribal, and local authorities regarding decisions such as those concerning the costs of the policies it formulates, as required in the law, including expenditures for the core network, placement of towers, coverage areas, security, and priority access for local users. Consultation will be through a state-selected coordinator as specified in the act. Appointment of an individual or governmental body as the Single Point of Contact (SPOC) is required as a condition of state participation and eligibility to receive grants established by the act. Every state has one or more agencies that plan for public safety, homeland security, and emergency communications. To be eligible for grants from the Department of Homeland Security, a state establishes a Statewide Interoperability Coordinator (SWIC) to administer its Statewide Communication Interoperability Plan (SCIP). SCIPs are written to conform with federal guidelines and requirements, such as the National Emergency Communications Plan. States may decide to use the existing SWIC as the required single point-of-contact or may choose to appoint a separate coordinator. Each state and other participants have appointed a coordinator to work directly with FirstNet. The coordinator (SPOC) is responsible for managing FirstNet activities in his or her state. Often this includes revising the existing SCIP to include broadband communications. The governor of each state is to be notified by FirstNet when it has completed its requests for proposals regarding construction, operation, maintenance, and improvement of a nationwide network. The governor or his designee will receive the details of the proposed plans and notification of the amount of funding available to the state if it participates in the FirstNet program. The act only identifies two options for a state: join FirstNet or build a statewide Radio Access Network subject to the provisions of the act. The act does not include specific provisions for a state that chooses to build its own Radio Access Network without opting out of FirstNet, although providing such an option may be within FirstNet's charter. A state might, for example, choose to build its own data management center or mobile access routers while also sharing FirstNet's infrastructure for regional and national coverage. The act also is silent on whether states may choose to opt out of the broadband network entirely, choosing neither to join FirstNet nor to build a broadband network on the frequencies assigned to FirstNet. Some states may prefer to concentrate their resources on improving mission-critical voice networks and acquire broadband access from a commercial provider or through other means. FirstNet, through its partners, intends to provide service in all states, even if a state chooses not to be a customer or otherwise participate in the network. The Spectrum Act specifies that a state that chooses to build its own Radio Access Network must submit an alternative plan for construction, operation, maintenance, and improvement of the Radio Access Network within the state. The state has 90 days to agree to participate or to notify FirstNet, the NTIA, and the FCC of its intent to deploy its own part of the Radio Access Network, and an additional 180 days to provide its plan to the FCC. The state must demonstrate to the FCC, which the law requires to review the plan, that its planned Radio Access Network would comply with minimum technical requirements and be interoperable with FirstNet. If a state's plan is approved it will be eligible to apply for a grant, administered by the NTIA, that will be funded from the Network Construction Fund created by the act. The amount available may be less than what would have been provided if the state had opted in to the FirstNet program, because the grant will be applied only toward building the Radio Access Network and may be subject to matching grant requirements. Approval of the grant is contingent on meeting additional requirements established by the NTIA, including sustainability, timeliness, cost-effectiveness, security, coverage, and services that are comparable to FirstNet. The state would be required to pay a user fee for access to FirstNet's core network. It would not be permitted to enter commercial markets or lease access to its network except through a public-private partnership. FirstNet has determined that any revenue to the state from a partnership must be used only for costs associated with its participation in FirstNet. If a state's plan meets FCC and NTIA requirements, then the NTIA may approve lease authority for FirstNet to grant a sub-license to a state, to operate on some portion of the FirstNet spectrum. On July 19, 2016, the NTIA published notice of its proposal for evaluating State Alternative Plan Programs for states that wish to opt out of FirstNet. If a state's plan has met the initial approval of the FCC, it must then demonstrate to the NTIA that it meets technical and financial requirements. To the general parameters provided in the Spectrum Act, the NTIA has added several specific criteria for states that parallel requirements for contractors, including: The State Alternative Plan Proposal submission and the related request for a spectrum lease will be treated as a single request for a grant (even though the state may choose not to request a grant as described in the Spectrum Act) in accordance with provisions of the Federal Grants and Cooperative Agreement Act of 1977 ( P.L. 95-224 ). The forthcoming Federal Funding Opportunity announcement will include additional details regarding the technical capabilities required of a state, in addition to those published in the July 19 notice. States must submit their application to the NTIA within 60 days of FCC approval of the alternative plan. State network plans must adhere to the same policies as those applied to FirstNet. States will be required to provide information on how it will manage its Radio Access Network, including, for example, its staffing plan and budget documents. States must disclose partnership agreements and address funding risks; NTIA may require surety bonds to ensure network construction is completed. Deadlines for the state plan must match those presented in FirstNet's plan for the state. A state plan that relies on new buildouts of the network ("greenfield") might not qualify as cost effective. In evaluating the cost-effectiveness of a state's alternative plan, NTIA will include as a factor its assessment of the value of cross-border economies of scale that may be lost. The following discussion focuses on key statements from FirstNet that seem to indicate the agency's current plans for state, tribal, territorial, and local participation in the network. FirstNet may later choose to alter its plans. FirstNet's deployment strategy reportedly will Include state-based eNodeB's in FirstNet's core services, thereby bringing the entire 20 MHz spectrum license under the full control of FirstNet and its federal contractors. This decision, if implemented, represents a change in an earlier statement that proposes including the eNode B as part of the Radio Area Network. Provide local area network capacity and connections as an extension of FirstNet, limiting state authority to providing fill-in capacity for some under-served areas. Assign to FirstNet contractors the responsibility of identifying additional partners or subcontractors to act under the authority of the contractor; this might include, for example, negotiating an agreement with a local power company for access to its infrastructure. Assign negotiations for access to existing state, local, or tribal infrastructure to contractors, to be pursued after the contract has been issued. Extend coverage to rural areas where there is currently little or no commercial service through new, federally funded build-out to the commercial networks of partners chosen through the RFP process. A major goal of this network design is to maximize the value of spectrum by capturing its full value, nationwide, in order to provide sufficient funding for rural coverage. FirstNet therefore believes that allowing states to build their own RANs "potentially takes with it subscriber fees and/or excess network capacity fees that would have helped fund the FirstNet network in all other states." Apparently not included in FirstNet's planning process is an analysis of the costs to be assumed by states as a consequence of its business plan. These costs include the continued operation and possible expansion of state and local LMR voice networks; the cost of integration of LMR and broadband infrastructure; the costs of forfeiting to FirstNet the potential economies of scale in network construction and operation; and the cost of lost opportunities for competition and innovation in wireless services at the state and local level. It remains to be seen what the winning contractor to deploy FirstNet will offer to states to offset costs that states are likely to bear in order to participate in FirstNet. FirstNet appears to be making decisions about the network design that are evolving as new information is gathered and analyzed. It claims that a federalized network is the "only solution" that meets its goals of providing nationwide coverage, interoperability, and assured access. In the Second Notice it concludes that allowing populous states to opt out of FirstNet and build their own public safety broadband networks, monetizing the value of the 20 MHz of spectrum assigned for that purpose, will beggar their more rural neighbors who cannot so readily capture the value of excess capacity. This is a presumption of market failure that is not supported by information made public by FirstNet and is inconsistent with the many positive analyses of the economic value of small cell networks, community broadband, and the Internet of Things. The value of economies of scale in building and operating wireless networks has long been recognized by telecommunications experts and policymakers. The FCC, for example, has modified its policies to make it easier for wireless companies to expand through mergers and acquisitions in order to benefit from scale economies. These and related FCC decisions are based on, among other considerations, improving coverage through macro networks to customers for wireless services. When FirstNet refers to the importance of economies of scale, it is apparently referring to geographic coverage through macro networks. The economics for small cell networks, however, enable profitability by providing economies of scope, with many different types of services to multiple customer segments in a small area. Economies are provided not through macro network coverage but by micro network capacity to accommodate many customers with different technology needs. Many wireless network experts believe that dense deployments of small cells in an area served by a single eNodeB tower will increase efficiency and reduce costs while increasing capacity to handle many different markets. Although urbanized areas are seen by many as the primary market for expanding small cell services, the benefits may also be important in rural or remote areas. Experts suggest that, in addition to serving public safety, a rural small cell configuration could support, for example, transportation improvements, education, job search, agricultural and forestry management, new efficiencies in municipal government and services, and economic growth. Economies of scale at the macro level may also be available in states with a low population density. A cost-effective network solution may be achieved by adjacent states combining their resources to provide coverage with eNodeBs and maximizing the utility of small cell networks at the local level. For state and local public safety agencies, maximizing the value of spectrum may be less important than achieving sufficient levels of scale and scope to meet their requirements. FirstNet refers to the need to monetize the value of its spectrum holdings to expand coverage, based on the existing commercial footprint for LTE, not the footprint of statewide or local public safety networks. It does not estimate the value to states and communities of small cell networks and the wireless component of community broadband that may be transferred to FirstNet's commercial partners. FirstNet's plans appear to capture for its own use most of the value of spectrum used to provide both coverage and capacity. This value is unknown but potentially far greater than what FirstNet can lawfully spend on improving its network or by reducing user fees. The excess value of the spectrum and access to local markets that FirstNet is using to barter for goods and services, therefore, will in most cases go to FirstNet's contractual partners, not to the states and communities intended by the act to be the primary beneficiaries of FirstNet's actions. Economists might describe this as a monopoly surplus. Advantages of a federalized network, cited by FirstNet, include Swift execution. Adding public safety access to existing commercial LTE infrastructure provides a turn-key solution for immediate access to a potentially large number of public safety agencies, federal agencies, and others; Extension of LTE service to rural areas that currently have no commercial broadband service and might not have public safety communications coverage; Streamlined access for federal partners. Instead of negotiating with each state or regional network, federal agencies need only negotiate with FirstNet to gain immediate access to the entire network; National reach in times of emergency and assured access to federal incident commanders and officials; Economies of Scale. FirstNet requires full control of many assets in order to maximize their value throughout the network; and Sustainability. Development of small cell networks under FirstNet's control allows for most traffic to be off-loaded onto local networks that require minimal spectrum, freeing spectrum for customers with a higher dollar-value for FirstNet. A number of advantages offered by FirstNet could be available in many other governance or business models. These include Operation of core network (Evolved Packet Core) services such as enforcement of rules for interoperability and other policies and rules, operations, performance and security management, and subscriber databases; Purchasing power. Negotiated discounts for equipment through buying cooperatives; Research and development, standardization, and negotiations with standards bodies; Widespread adoption of broadband technologies to improve, enhance, and extend the effectiveness of emergency responders; and Development of best practices for cybersecurity and enforcement of network security procedures. Some disadvantages of a federalized network might be Loss of state autonomy. States have a consultative role but many decisions rest with FirstNet. States also lose control of spectrum assets, potentially limiting their ability to develop capabilities and services that are of value to them but not to FirstNet's customers for nationwide service; Devaluation of state and federally funded investments in existing public safety communications networks. Although contractors may, after receiving a contract, negotiate with states and localities for access to their assets, the value and availability of those assets have not been openly stated in the FirstNet planning process; Displacement of local competitors by the FirstNet contractor in local and state broadband development. Smaller communities may not be able to generate sufficient business for two or more broadband service providers. To achieve financially viable programs, they might be restricted to using the incumbent (FirstNet) provider; Displacement of partners for broadband development. Desirable partners (such as a rural utility) may not be available for local projects because of contractual obligations to FirstNet; Loss of market power for state public safety customers. If fees from state and local public safety agencies are a small part of FirstNet's revenue stream, states lose some of their bargaining power in negotiating for improved services or other requests; and Increased risk through lack of diversified assets. Risks include operational risks such as a system-wide failure or cyberattack; financial risks such as monopoly pricing; competitive risks in some markets controlled by FirstNet contractors that may lead to reduced innovation; and the risk of poor management decisions with system-wide impact. State reactions in weighing risks and rewards of network participation may lead to another risk: limited participation, negating much of the intended value of FirstNet. The NTIA, in consultation with FirstNet, has responsibility for carrying out two grant programs: the State and Local Implementation Grant Program (SLIGP); and grants from the Network Construction Fund to states that are permitted to build their own Radio Access Networks. The State and Local Implementation Fund was allocated $135 million from the Public Safety Trust Fund for grants to be made available to all 56 states and territories to develop a plan on how to use a nationwide public safety broadband network to meet their emergency communications needs. The distribution of available funds among the states is established by the NTIA, which administers the State and Local Implementation Grant Program in consultation with FirstNet. The program is conceived as a matching grant program. Federal grants from the fund are not to exceed 80% of the projected cost to the state; however, the NTIA may make the decision to waive the matching funds requirement. The NTIA decided to plan for funding in two phases. Grants for both phases totaled over $116 million. Grants for the initial phase were awarded to 54 of the 56 eligible states and territories in FY2013. The state of Mississippi and the territory of the Northern Mariana Islands did not receive grants. The first phase of funding, totaling about $58 million, has helped states conduct outreach with public safety and state and local officials to determine their needs, gaps, and priorities for public safety wireless broadband and to prepare for formal consultations with FirstNet. Grants in the second phase may be used by states to collect data identifying and prioritizing where public safety broadband coverage is needed; identifying potential users and their capacity needs; detailing current providers and procurement mechanisms; and similar needs. Reportedly, NTIA has recently decided no federal grant monies (SLIGP) can be used to explore any option other than "opt in". FirstNet itself recently asked for review of its interpretations of the Law ("second notice"), and those interpretations also tend to restrict the ability of states to explore options to build their own. It is clear NTIA does not want states doing coverage and financial modeling, even though such work would result in improved FirstNet plans for each state. The second phase of grants, also for $58 million, was announced in 2015. Awards went to states to collect data identifying and prioritizing where coverage is needed and identifying potential users and other information to facilitate network deployment. The Spectrum Act requires that $7 billion, reduced by the amount needed to establish FirstNet, be available for a Network Construction Fund established in the Treasury to be used by FirstNet for costs associated with building the nationwide network and for grants to states that qualify to build their own networks. The amount to be made available for the fund has been set at $6.5 billion by FirstNet and the NTIA. The act effectively creates three types of expenditures from the Network Construction Fund but does not specify how funds would be allocated for (1) expenditures by FirstNet on construction, maintenance, and related expenses to build the nationwide network required in the act; (2) by the NTIA to make payments to states that are participating in FirstNet; and (3) by the NTIA for grants to those states that qualify to build their own Radio Access Networks. The Spectrum Act requires that, before the end of FY2022, the Government Accountability Office (GAO) is to recommend to Congress what actions should be taken in regard to the ending of FirstNet's authority, mandated to occur in 2027. Additionally, at the request of the Senate Committee on Commerce, Science, and Transportation, GAO has prepared an evaluation of FirstNet's organization, including business decisions contained in the request for proposal; use of commercial, federal, state, local, and tribal infrastructure in deploying the network nationwide; and financial sustainability. GAO presented preliminary findings as testimony at a Commerce Committee hearing on March 11, 2015, and issued a final report on some of these issues on April 28, 2015. In testimony, GAO summarized the progress FirstNet has made in meeting its responsibilities but noted that it had not put in place a number of measures that GAO considers important. Notably, GAO found that FirstNet has not fully assessed the risks associated with its planning efforts (such as conflict of interest); has not established Standards of Conduct; and is not fully evaluating the information from five "early builder" projects. The full report expands on the information provided in testimony. The full report includes, for example, a timeline and other information regarding the development of FirstNet; more details about the "early builder" program; and some insight into FirstNet's planning process. Regarding the interaction of planning and the cost of building the network, GAO's comments include these observations: "As part of its planning and market research, FirstNet has developed a cost estimate for its public safety network that met most of the best practices against which we evaluated it." "FirstNet's cost estimate, including the assumptions it is based on, are not public because of the highly sensitive nature of the information it contains." "We did not assess FirstNet's cost estimate against all the characteristics established in our Cost Estimating and Assessment Guide. Specifically, we did not assess whether FirstNet's estimate was 'credible' or 'accurate' because the estimate and its associated documentation were deemed business sensitive." "We did not analyze the quantitative input and output of the cost model because the data included procurement sensitive information, and we would therefore be unable to report our findings in a public report." "Therefore we cannot say if the estimate is in line with the credible and accurate characteristics of our Cost Estimating and Assessment Guide." Criticism by a member of the board of FirstNet, in April 2013—regarding a lack of transparency in information provided to the Board and other issues—led to a review of practices by the Office of Inspector General (OIG.). The primary focus of the review had two main objectives, to determine whether the Department of Commerce (DOC) had adequate processes in place to ensure that FirstNet Board members properly filed financial disclosures and identified potential conflicts of interest; and used appropriate contracting processes and requirements. The overall finding is that some monitoring procedures were inadequate, including, for example, a finding that "FirstNet contracting practices lacked transparent award competition, sufficient oversight of hiring, adequate monitoring, and procedures to prevent erroneous costs.... " In its review, the OIG looked at the roles of the NTIA, the DOC Office of General Counsel, and two agencies within DOC that were assigned direct responsibilities to assist FirstNet; the Bureau of the Census and NIST were asked to award and manage contracts with outside entities to provide assistance to FirstNet. The OIG did not specifically review activities of the NTIA Office of Public Safety Communications, created to assist FirstNet with administrative tasks, including staffing. The OIG review determined that nearly $11 million had been inappropriately spent, much of it going for consulting work that did not meet contractual definitions of deliverables. The OIG referred to this consulting work as "work products" and questioned the expenditures. The DOC responded that it conducted relevant contracting activities in accordance with federal procurement laws and regulations and monitored performance, and that the contracts produced "first-rate feasibility research, technical analysis, strategic planning, and outreach services from highly specialized consultants, whose work product has laid the groundwork for executing FirstNet's mission." The OIG made recommendations to the Secretary, the General Counsel, the Chair of FirstNet, and the DOC's Senior Procurement Official regarding various procedures and responsibilities. A joint response from FirstNet, the NTIA, and the General Counsel concurred with the specific recommendations from the OIG, although not all the findings. In general, they defended their actions in the context of unique requirements and time constraints in setting up FirstNet. The OIG review covered a limited range of issues linked to oversight procedures. Although it did not go into detail, the OIG noted "inconsistent administration" and several instances of significant time lags in the performance of DOC officials. For example, "6 months after the Board began regular meetings, senior NTIA and Office of General Counsel officials were still debating [the monitoring] of potential conflicts of interest." OIG found that most of the lapses occurred in the year after the FirstNet board held its first official meeting in September 2012. The review observed that "neither a business plan nor a network plan were completed or delivered to FirstNet during the 1-year performance period of the contracts.... " The OIG has established a team to audit and evaluate FirstNet activities. Additionally, it operates a fraud, waste, and abuse hotline for the Department of Commerce, which has received complaints regarding FirstNet. The OIG conducts follow-up on these complaints. Testimony at a Senate hearing on June 21, 2016, provided an update of OIG oversight of FirstNet activities. OIG reported ongoing improvements in implementing internal controls and risk assessment at FirstNet. Testimony highlighted several short- and long-term risks for FirstNet, such as the need for successfully managing the choice of contractor; setting competitive prices; and effective consultation with state and other authorities that are FirstNet's target customer base. Following is a discussion of other major provisions in the act that pertain to public safety communications, including provisions to improve the nation's 911 emergency call system. Among federal agencies designated by the act to provide consultation and support are the Federal Communications Commission (FCC), the National Telecommunications and Information Administration (NTIA), the National Institute of Standards and Technology (NIST), and the Office of Emergency Communications (OEC). The FCC manages commercial and non-federal spectrum use, including spectrum allocated to public safety. The NTIA manages federal spectrum resources and, along with NIST, is an agency within the Department of Commerce. OEC is part of the Office of Cybersecurity and Communications, Department of Homeland Security. Radio frequency spectrum is an essential resource for wireless communications. The energy in electronic telecommunications transmissions converts electro-magnetic spectrum (airwaves) into signals to deliver voice, text, and images. These signal frequencies are allocated for specific purposes, such as television broadcasting or WiFi, and assigned to specific users through licenses. Allocating sufficient spectrum for wireless emergency communications has long been a concern for Congress. The Balanced Budget Act of 1997 ( P.L. 105-33 ), for example, directed the FCC to allocate 24 MHz of spectrum in the 700 MHz band for public safety use. With the passage of the Spectrum Act, some existing public safety licenses in the 700 MHz band and an additional license for commercial use (known as the D Block) —together totaling 22 MHz—have been re-designated by Congress for a federal license for paired spectrum at 758-768 MHz and 788-798 MHz, plus guard bands at 768-769 MHz and 798-799 MHz to mitigate interference from adjacent channels. As required by the act, the initial, 10-year license to use these frequencies was assigned by the FCC to FirstNet. It is renewable for an additional 10 years, on condition that FirstNet has met its duties and obligations under the act. A total of 34 MHz of spectrum capacity will therefore be available for public safety networks within the 700 MHz band: the 22 MHz designated for broadband, and 12 MHz allocated for narrowband communications, primarily voice. Additionally, there are public safety networks on adjacent frequencies within the 800 MHz band. Time and technological advances may someday bring these spectrum assets together, but at present there are three distinct public safety network technologies in use or planned within the 700 MHz and 800 MHz bands. These are broadband communications at 700 MHz; interoperable narrowband communications at 700 MHz; and narrowband communications at 800 MHz. Some of the narrowband networks at 700 MHz and 800 MHz can share infrastructure and radios but older narrowband networks at 800 MHz are often not easily integrated with narrowband networks being built on 700 MHz frequencies. The act also gives the FCC the authority to " ... allow the narrowband spectrum to be used in a flexible manner, including usage for public safety broadband communications ... " subject to technical and interference protection measures. States, therefore, might be able to convert some existing narrowband networks to broadband use in addition to service from FirstNet. The act requires that public safety users return frequencies known as the T-Band. These are frequencies between 470 and 512 MHz allocated for television that have been made available for public safety use in 11 urban areas. Since the transition to digital television, radio transmissions on some of these frequency assignments have experienced interference and the public safety agencies that use them are considering moving to new networks at 700 MHz. Other areas have recently invested to upgrade networks built on the T-Band frequencies and are concerned about the loss of this communications capacity. The act requires that the FCC act by February 2021 to establish a relocation plan that would free up the T-Band for reassignment through competitive bidding. Proceeds from the auctions of T-Band frequencies are to be available for grants to cover relocation costs. There are no requirements in the law as to how the NTIA, the designated grants administrator, is to structure the grant program or determine eligible costs. The law also does not address technical complications that may arise because of adjacent commercial assignments not included in the rebanding. Some of the earliest spectrum assignments for public safety are in channels below 512 MHz. Public safety and other license-holders in designated channels below 512 MHz are required to reband their holdings to conform to an FCC mandate to improve spectrum efficiency. This narrowbanding requirement, as it is called, requires that assigned channels be reduced from a width of 25 kHz to 12.5 kHz, thereby freeing up new spectrum capacity for public safety and other uses. The deadline to meet the narrowbanding requirement was January 1, 2013. To accommodate public safety license holders in the T-Band that now fall under requirements established in the act, the FCC has ruled to exempt them from the narrowbanding requirements. The law provides for transfers from a Public Safety Trust Fund, which is established in the Treasury by the act, to receive revenues from designated auctions of spectrum licenses. The designated amounts are to remain available through FY2022, after which any remaining funds are to revert to the Treasury, to be used for deficit reduction. Auction proceeds are to be distributed in the following order of priority: To the NTIA, to reimburse the Treasury for funds advanced to cover the initial costs of establishing FirstNet: not to exceed $2 billion. To the State and Local Implementation Fund for a grant program: $135 million. To the Network Construction Fund for costs associated with building the nationwide network and for grants to states that qualify to build their own networks: $7 billion, reduced by the amount advanced to establish FirstNet. To NIST for public safety research: $100 million. To the Treasury for deficit reduction: $20.4 billion. To the NTIA and the National Highway Traffic Safety Administration for a grant program to improve 911 services: $115 million. To NIST for public safety research, phase two: $200 million. To the Treasury for deficit reduction: any remaining amounts from designated auction revenues. In compliance with the act, the FCC conducted two auctions in 2014-2015 (Auctions 96 and 97) that generated sufficient revenue to meet the funding requirements of the act summarized above. The act caps FirstNet's administrative expenses at $100 million in total over the first 10 years of operation. Costs attributed to oversight and audits are not included in the expense cap. Congress gave FirstNet the authority to obtain grants, and to receive payment for the use of network capacity licensed to FirstNet and of network infrastructure "constructed, owned, or operated" by FirstNet. Specifically, FirstNet is authorized to collect network user fees from public safety and secondary users and to receive payments under leasing agreements in public-private partnerships. These partnerships may be formed between FirstNet and a secondary user for the purpose of constructing, managing, and operating the network. The agreements may allow access to the network on a secondary basis for services other than public safety. The act requires that these fees be sufficient each year to cover annual expenses of FirstNet to carry out required activities, with any remaining revenue going to network construction, operation, maintenance, and improvement. There is a prohibition on providing service directly to consumers; this does not impact the right to collect fees from a secondary user or enter into leasing agreements. The Spectrum Act created FirstNet as an independent entity within the NTIA. FirstNet is required to plan for and establish an interoperable broadband network for public safety. The act requires that state and local agencies and tribal authorities have a consulting role in the development, deployment, and operation of the nationwide network. The act further provides an opportunity for states to plan and build their own Radio Access Networks within the framework of the nationwide broadband network. Unless renewed, this authority expires in 2027. When Congress creates an independent entity within the federal government, it may have the obligation to achieve a specific goal, usually within a specific time frame. As an independent entity, FirstNet—the First Responder Network Authority—has been given both goals and time frames. It has been instructed by Congress to exercise all powers specifically granted by the act and "such incidental powers as shall be necessary" to create a nationwide broadband network for public safety. The law requires FirstNet to become a self-funding entity, independent of government subsidies. FirstNet is to take "all actions necessary to ensure the building, deployment, and operation" of the network in consultation with federal, state, tribal, and local public safety entities, the Director of NIST, the FCC, and the public safety advisory committee. FirstNet appears therefore to be an autonomous organization, with broad powers to carry out its mandate, within the requirements established by the law. It has, for example, sole power to select the program's manager and its agents, consultants, and other experts subject to the requirement that they be chosen "in a fair, transparent, and objective manner." However, FirstNet, except for certain exemptions provided in the act, must follow federal agency requirements, notably in hiring and procurement, slowing down the process for establishing FirstNet as a going concern. FirstNet is headed by a board of 15 members of which 12 are appointed by the Secretary of Commerce according to criteria established by the act, which are intended to provide both representation from key stakeholders and expertise. The other three members of the board are designees of the Secretary of the Department of Homeland Security, the Attorney General of the United States, and the Director of the Office of Management and Budget. The Secretary of Commerce is required to appoint a chairman of the board for an initial term of two years. As part of its management of the network, FirstNet is required, at a minimum To establish network policies, including development of detailed requests for proposals to build the network, and operational matters such as terms of service and billing practices. To consult with states on network-related expenditures, as part of the preparation of policies and requests for proposals. To enter into agreements to use existing communications infrastructure, including commercial and federal infrastructure, "to the maximum extent economically desirable." To ensure the construction, maintenance, operation, and improvement of the broadband network, taking into account new and evolving technologies. To enter into agreements with commercial networks to allow public safety roaming on their networks. To represent the interests of the network's users before standards-setting boards, in consultation with NIST, the FCC, and its own Public Safety Advisory Committee. FirstNet is required to create a public safety advisory committee to assist in carrying out its mandate. There are no requirements in the statute as to the composition of the committee. By-laws adopted at the organizing meeting of the FirstNet Board of Directors on September 25, 2012, created a Public Safety Advisory Committee. It was further agreed that the members of the committee would be chosen from the Advisory Committee to SAFECOM, within the Department of Homeland Security, in consultation with the Secretary of Homeland Security. The organizations chosen to be represented on the committee were announced on February 20, 2013. State and local government interests are represented through a subcommittee of PSAC. Examples of statutory obligations for Congress and the Administration in the direction of FirstNet include the following. Membership on FirstNet b oard . The members of the FirstNet board are to be chosen by the Secretary of Commerce, within the parameters established in the act. The Department of Homeland Security, the Attorney General, and the Office of Management and Budget each have one member on the board in permanence. The Secretary of Commerce is required to appoint a chairman of the board for an initial term of two years. Grant p rograms for planning . The NTIA is to establish and administer the State and Local Implementation Fund. Grant provisions are to be decided in consultation with FirstNet, but not necessarily in accordance with decisions made by the FirstNet board and executive management. Grant programs for state networks . The NTIA is to administer grants from the Network Construction Fund to states that qualify to build their own Radio Access Networks and choose to apply for a grant. Funding for FirstNet and participating states through the Network Construction Fund. The NTIA is to determine the funding level available to each state for the buildout of the nationwide broadband network, if the state chooses to participate in FirstNet. Spectrum leases for state networks. The NTIA sets the terms and is responsible for enforcing the requirement that states qualifying to build their Radio Access Networks must sublease spectrum through FirstNet, the assigned license-holder. License r eview. The FCC is required to review the initial 10-year license assigned to FirstNet and consider its renewal based on performance criteria. Performance r eview . The Government Accountability Office (GAO), within 10 years, is to prepare a report providing recommendations on "what action Congress should take" regarding the mandated termination of authority of FirstNet in 2027. Fee schedule . The NTIA is to review and approve the annual schedule of fees charged to public safety agencies and other users for access to FirstNet's resources. Annual audit . The Secretary of Commerce is to contract for an annual audit of FirstNet's finances and activities. The reports are to be submitted to Congress, the President, and FirstNet. Report to Congress . FirstNet is required to submit annual reports to Congress on its "operations, activities, financial conditions, and accomplishments." The designated appropriate congressional committees are, in the Senate, the Committee on Commerce, Science, and Transportation; in the House, the Committee on Energy and Commerce. The requirements of the Spectrum Act must be substantially met and the viability of the project demonstrated no later than the end of FY2022, if not sooner. The State and Local Implementation Fund and the Network Construction Fund expire in 2022, with any balances reverting to the Treasury. By 2022, GAO must have assessed the performance of FirstNet and provided a report to Congress; and the FCC must decide whether or not to renew the licenses for the public safety broadband network. Within this 10-year time frame, there are few deadlines beyond requirements for the initial establishment of the planning and implementation framework. Many of the important steps for building the network have no required deadline. Some milestones, such as rural coverage, are mandated in the act, but the deadlines are not specified. There are, for example, no deadlines in provisions that require FirstNet to Develop requests for proposals that include a requirement for timetables. Consult with states on establishing state and local planning processes. Complete the request for proposal process that is to be given to each state governor regarding the request for proposal and its details, and the funding level for each state as determined by the NTIA. Mandated deadlines for states include Within 90 days of receipt of notice from FirstNet, the governor shall choose either to participate in deployment of FirstNet or to conduct its own Radio Access Network deployment within the state. Within 180 days of giving notice to opt out of FirstNet, the governor shall complete requests for proposals for a state network. No deadline is established in the statute for the FCC to approve or disapprove state proposals for their own portion of the nationwide broadband network. There are also no specified deadlines for a state to apply to the NTIA for a grant to construct the Radio Access Network and to lease spectrum capacity from FirstNet, if FCC approval is received for a state network. However, one condition of eligibility for a grant to a state to build its own Radio Access Network is that the state's plan must demonstrate "the ability to complete the project within specified comparable deadlines.... " Today's 911 system is built on an infrastructure of analog technology that does not support many of the features that most Americans expect to be part of an emergency response. Efforts to splice newer, digital technologies onto this aging infrastructure have created points of failure where a call can be dropped or misdirected, sometimes with tragic consequences. Callers to 911, however, generally assume that the newer technologies they are using to place a call are matched by the same level of technology at the 911 call centers, known as Public Safety Answering Points (PSAPs). However, this is not always the case. To modernize the system to provide the quality of service that approaches the expectations of its users will require that the PSAPs and state, local, and possibly federal emergency communications authorities invest in new technologies. As envisioned by most stakeholders, these new technologies—collectively referred to as Next Generation 911 or NG9-1-1—should incorporate Internet Protocol standards. An IP-enabled emergency communications network that supports 911 will facilitate interoperability and system resilience; improve connections between 911 call centers; provide more robust capacity; and offer flexibility in receiving and managing calls. The same network can also serve wireless broadband communications for public safety and other emergency personnel, as well as other purposes. Recognizing the importance of providing effective 911 services, Congress has previously passed three major bills supporting improvements in the handling of 911 emergency calls. The Wireless Communications and Public Safety Act of 1999 ( P.L. 106-81 ) established 911 as the number to call for emergencies and gave the Federal Communications Commission (FCC) authority to regulate many aspects of the service. The most recent of these laws, the NET 911 Improvement Act of 2008 ( P.L. 110-283 ), required the preparation of a National Plan for migrating to an IP-enabled emergency network. Responsibility for the plan was assigned to the E-911 Implementation Coordination Office (ICO), created to meet requirements of an earlier law, the ENHANCE 911 Act of 2004 ( P.L. 108-494 ). Authorization for the ICO terminated on September 30, 2009. ICO was jointly administered by the National Telecommunications and Information Administration and the National Highway Traffic Safety Administration. Spectrum Act provisions re-establish the federal 9-1-1 Implementation Coordination Office (ICO) to advance planning for next-generation systems and to administer a grant program. ICO is to provide matching grants to eligible state or local governments or tribal organizations for the implementation, operation, and migration of various types of 911 and IP-enabled emergency services, and for public safety personnel training. States that have diverted fees collected for 911 services are not eligible for grants under the program. Provisions in the act regarding 911 programs include GAO is required to study how states assess fees on 911 services and how those fees are used. The General Services Administration is required to prepare a report on 911 capabilities of multi-line telephone systems in federal facilities and the FCC is to seek comment on the feasibility of improving 911 identification for calls placed through multi-line telephone systems. The FCC is to assess the legal and regulatory environment for development of NG9-1-1 and barriers to that development, including state regulatory roadblocks. The FCC is also to (1) initiate a proceeding to create a specialized Do-Not-Call registry for public safety answering points, and (2) establish penalties and fines for autodialing (robocalls) and related violations. ICO, in consultation with NHTSA and DHS, is to report on costs for requirements and specifications of NG9-1-1 services, including an analysis of costs, and assessments and analyses of technical uses. Immunity and liability protections are provided—to the extent consistent with specified provisions of the Wireless Communications and Public Safety Act of 1999—for various users and providers of Next Generation 911 and related services, including for the release of subscriber information. The act also requires FirstNet to promote integration of the nationwide public safety broadband network with PSAPs. In its National Broadband Plan , the FCC indicated that it wanted to make commercial networks in the 700 MHz band available for public safety use and requested that Congress confirm the FCC's authority to act. The Spectrum Act provides the FCC with statutory authority to establish rules in the public interest to improve the ability of public safety networks to roam on commercial space and to gain priority access. FirstNet is empowered by the act to enter into agreements with commercial providers that would allow public safety network users to roam on partnering networks. The act does not state whether roaming agreements may be negotiated by states that opt out and receive spectrum leases from the NTIA to operate their own Radio Access networks. Agreements might also cover rules for priority access in times of high demand for network capacity. Priority access can take several forms, such as "ruthless pre-emption," in which non-public-safety transmissions are immediately terminated to make way for emergency communications, or negotiated priority agreements that might, for example, place public safety users at the head of the line for network access as capacity becomes available. The act stipulates that the FCC's authority may not require roaming or priority access unless (1) the public safety and commercial networks are technically compatible; (2) the commercial network is reasonably compensated; and (3) access does not preempt or otherwise terminate or degrade existing traffic on the commercial network. Within these limits, the FCC appears to have some leeway to use its regulatory authority to support public safety in negotiations with partners. The FCC cannot, under the act, mandate ruthless pre-emption, although the act does not preclude contractual negotiations that would allow it. The act's provisions for roaming and priority access do not require a commercial vendor to make additional investments to insure technical compatibility, and the act's language might be interpreted as precluding an FCC mandate to that effect. Full-spectrum roaming is considered by many to provide advantages for public safety and also for the public at large. For example, it makes more network capacity available for shared emergency communications of all types, not just for first responders. Many believe that full-spectrum access supports competitiveness among wireless carriers—in particular assisting small wireless carriers serving rural areas to offer new broadband services—by providing access to all customers within the band. Legislation in the 115 th Congress addressing public safety communications issues includes the following. H.R. 588 (Pallone). Securing Access to Networks in Disasters Act. Directs the FCC to conduct a study on network resiliency during times of emergency. Requires the FCC to submit within three years a study on the public safety benefits and technical feasibility and cost of (1) making telecommunications service provider-owned WiFi access points, and other communications technologies operating on unlicensed spectrum, available to the general public for access to 9-1-1 services, without requiring any login credentials during times of emergency when mobile service is unavailable; (2) the provision by non-telecommunications service provider-owned WiFi access points of public access to 9-1-1 services during times of emergency when mobile service is unavailable; and (3) other alternative means of providing the public with access to 9-1-1 services during times of emergency when mobile service is unavailable. Also amends the Stafford Act to include all communications providers as essential service providers during federally declared emergencies. Introduced January 17, 2017; passed by House (voice vote) on January 23, 2017. S. 102 (Cantwell). Securing Access to Networks in Disasters Act of 2017. Directs the FCC to conduct a study on alternative access to 9-1-1 services during times of emergency. Requires the FCC to submit within three years a study on the public safety benefits and technical feasibility and cost of (1) making telecommunications service provider-owned WiFi access points, and other telecommunications service provider-owned communications technologies operating on unlicensed spectrum, available to the general public for access to 9–1–1 services without requiring any login credentials during times of emergency when mobile service is unavailable; (2) the provision by non-telecommunications service provider-owned WiFi access points of public access to 9-1-1 services during times of emergency when mobile service is unavailable; and (3) other alternative means of providing the public with access to 9-1-1 services during times of emergency when mobile service is unavailable. Directs GAO to conduct a study on how executive departments can better ensure essential communications services remain operational during times of emergency; any legislative matters Congress could consider to help promote the resiliency of essential communications services; and whether a nationwide directory of points of contact among providers of essential communications services is needed to facilitate the rapid restoration of such services damaged during times of emergency. Also amends the Stafford Act to expand list of essential service providers during federally declared emergencies to include all communications providers. Introduced January 11, 2017; ordered to be reported with an amendment in the nature of a substitute favorably by the Committee on Commerce, Science, and Transportation on January 24, 2017. H.R. 582 (Gohmert). Kari's Law Act of 2017. Amends the Communications Act of 1934 to require multi-line telephone systems to have a configuration that permits users to directly initiate a call to 9-1-1 without dialing any additional digit, code, prefix, or post-fix. Introduced January 17, 2017; passed by House (408-0) on January 23, 2017. S. 123 (Klobuchar). Kari's Law Act of 2017. Amends the Communications Act of 1934 to require multi-line telephone systems to have a default configuration that permits users to directly initiate a call to 9-1-1 without dialing any additional digit, code, prefix, or post-fix. Ordered to be reported favorably by the Committee on Commerce, Science, and Transportation on January 24, 2017.

Congress included provisions in the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) for planning, building, and managing a new, nationwide, broadband network for public safety communications, by creating the First Responder Network Authority (FirstNet). The act allocated 10 MHz of additional radio frequency spectrum to accommodate the new network and required that the Federal Communications Commission (FCC) assign a license to FirstNet, comprising the newly designated frequencies plus 10 MHz previously assigned to states by the FCC for public safety use. In addition, the act designated federal appropriations of over $7 billion for the network and other public safety needs. These funds are provided through new revenue from the auction of licenses to the commercial sector in other spectrum bands. The establishment of FirstNet is an important step toward reaching what has been a national goal since September 11, 2001: the provision of interoperable communications for first responders. The immediate goal for FirstNet is to provide a broadband network nationwide to carry data, although it will provide an option for voice communications as well. The cost of constructing and maintaining a nationwide network is estimated by many experts to be in the tens of billions of dollars over the long term. The law anticipates that most of these costs will be covered by partnerships between FirstNet and the private sector in return for commercial access to FirstNet's spectrum. In order to maintain control over the quality and nature of communications, many states are likely to continue to invest in and maintain their own Land Mobile Radio (LMR) networks that operate on narrowband frequencies under the jurisdiction of state and local public safety agencies. Information available to the public indicates that FirstNet intends to discourage states from building and operating their own networks within FirstNet, in part by limiting the amount of spectrum available for this purpose. FirstNet has taken the position that state autonomy in network design decisions and management will jeopardize FirstNet's ability to provide a network that meets its coverage and service goals. P.L. 112-96 was signed into law on February 22, 2012, setting in motion the process of setting up FirstNet as an "independent authority within the National Telecommunications and Information Administration," as required by the act; laying out the parameters for partnerships and state, tribal, and federal participation; and meeting requirements either statutory or practical. After extensive consultation with stakeholders and potential partners in preparing proposals for partnering with FirstNet, the initial phases of organization culminated with the deadline for submitting proposals to build and operate the nationwide network, on May 31, 2016. On November 21, 2016, one of the FirstNet bidders eliminated from consideration, Rivada Mercury, filed a lawsuit in the U.S. Court of Appeals of Federal Claims over what Rivada says is the illegal and wrongful exclusion of the consortium from the FirstNet procurement process. The lawsuit is expected to delay the contract award until March 1, 2017, at the earliest, although further delays are possible depending on the resolution of the lawsuit. Once the contract is awarded, the contractor will have up to 180 days to deliver detailed deployment plans to each state and territory. Governors will then have 90 days to decide whether to opt in to FirstNet or to opt out and build their own Radio Access Network which must be interoperable with FirstNet. As FirstNet becomes operational, the potential level of public safety agency participation should be better understood, providing opportunities to evaluate the success of FirstNet in meeting the goals Congress set for it in 2012. The 115th Congress will likely continue monitoring the development and deployment of FirstNet through periodic hearings in both the House and Senate.

Article I, Section 8 of the Constitution charges Congress to "raise and support armies." On an annual basis, Congress authorizes and appropriates funds for the Army to, among other things, modernize its fleet of ground combat systems. As part of this process, congressional defense committees annually hold dedicated hearings on the Army's Budget Request for the upcoming fiscal year and a hearing specifically on Army Modernization. Congressional defense committees also, on occasion, hold hearings on specific Army ground combat systems. Many nations maintain armies whose ultimate responsibility is to defeat other nations' combat formations on the battlefield. In order to accomplish this, nations indigenously develop, maintain, and improve a variety of ground combat systems or purchase them from other nations. Ground combat system development and improvement is informed by existing and emerging technologies and budgets as well as observations from current land conflicts. As this process is also intended to address potential future battlefield threats, beliefs as to what the future combat operational environment will look like, as well as what future technologies might be available for military use, also influence a nation's developmental efforts. This process, broadly referred to as "modernization," varies from nation to nation based on a variety of factors, including available financial resources and a nation's technological and defense industrial aptitude. The U.S. Army's current fleet of main battle tanks (MBTs), tracked infantry fighting vehicles (IFVs), tracked self-propelled (SP) artillery, and multiple launch rocket systems (MLRS), the nucleus of the Army's armored ground forces, was developed in the 1970s and fielded in the 1980s to counter the Soviet Union's and Warsaw Pact's numerically superior ground forces. The combat performance of these systems against Iraqi forces Operation Desert Storm in 1991 reaffirmed for many the role these systems would play in future Army ground operations. Efforts to modernize these systems, however, did not enjoy the same level of success as did their 1991 combat performance. In 2002 the Secretary of Defense cancelled the $11 billion Crusader SP artillery system largely due to its excessive weight and cost. In 2009 the Secretary of Defense cancelled the $160 billion Future Combat System (FCS) program, intended to develop replacements for the M-1 Abrams tank, the M-2 Bradley IFV, and the M-109A6 Paladin SP artillery system, due to unrealistic technology expectations and cost. A spin off modernization effort to replace the M-2 Bradley, the Ground Combat Vehicle (GCV), was cancelled in 2014 due to affordability concerns. In light of these and other program cancellations, the 2011 Decker–Wagner Army Acquisition Review found that since 1996, the Army had spent over $1 billion a year on programs that were ultimately canceled and since 2004, that amount had increased to between $3.3 billion and $3.8 billion dollars a year. This amount represented 35 to 42 percent of the Army's research, development, testing and evaluation (RDT&E) budget. This report, commissioned by Army leadership, further served to erode confidence among some policymakers that the Army could successfully modernize its major combat systems. This perception, along with significant budgetary restrictions, has created a dilemma for the Army. Army leadership notes for the first time since World War I, that the Army does not have a new ground combat vehicle under development and "at current funding levels, the Bradley and Abrams will remain in the inventory for 50 to 70 more years." Regarding armored vehicle development, the Army suggests "our enemies, and even our friends and allies, have not remained static and, in fact, even our allies are modernizing to such an extent that they have outpaced us in some areas," raising the possibility that in the not- too-distant future, foreign armored vehicle design and capabilities could surpass existing U.S. systems. The Army's effort to replace the Abrams and Bradley, referred to as the Next Generation Combat Vehicle (NGCV), is reportedly anticipated to be: A multi-decade effort that will require completing the majority of the work prior to 2025 because it's going to take 10 years for industry to actually build and field what we want for the first unit equipped in 2035. Tied in with the initiative will be four years of analysis and a focused science and technology effort. This approach suggests that for almost the next two decades, the Army will continue to rely on legacy upgraded Cold War ground combat systems. In the meantime, other nations could potentially develop and field multiple iterations of new advanced ground combat systems while a number of factors, including limited funding and the constraints of the U.S. defense acquisition process precludes similar U.S. developmental efforts. One defense expert characterizes the U.S. defense acquisition process as consisting of a ponderous requirements definition process, ill-informed by knowledge resident in the defense industrial community, engage in an excessively drawn out series of competitions and then pursue a painfully laborious major program that might produce half of what is needed in twice the time and at higher costs. This situation is further exacerbated by what some consider a less than well-defined vision for the NGVC: That's not to say that the next-generation combat vehicle might be an infantry fighting vehicle. But it could also be a single combat vehicle that replaces the Abrams [and] the Bradley.... We don't know yet, with another option creating a family of vehicles very similar to the original Future Combat System program. While it may not be realistic to have definitive design criteria for a vehicle to be fielded in 2035 established now, a clearer sense of direction is viewed by some as necessary—sooner as opposed to later—to facilitate not only program success but also to instill a sense of confidence in policymakers that the Army can successfully execute ground combat vehicle replacement programs. In recognition that both potential enemies and allies are modernizing their ground combat systems, the following figures compare selected tanks, IFVs, tracked SP artillery systems, and MLRS using a number of standard capabilities applied across the systems. Comparison of these representative ground combat systems is illustrative only. Detailed technical military analysis of these systems and assessments of their relative effectiveness in combat is classified and beyond the scope of this report. (See the Appendix for terms and abbreviations used in the figures.) The following sections provide general observations based on a comparison of the aforementioned systems. It is not intended to be a definitive technical evaluation of these systems but instead provide context for current and future policy-related discussions. Many tank-producing countries have given protection priority over lethality or mobility, particularly the United States and Israel. This emphasis is largely in response to the proliferation of precision anti-armor weapons, including both direct and indirect fire weapons, as well as improvised explosive devices (IEDs). Many foreign tanks have incorporated an automatic loader for their main gun, replacing one of the crew members, thereby permitting a smaller design and resulting in a potentially lighter vehicle. The autoloader also facilitates a greater rate of fire but puts the main gun at a greater risk of jamming than would a manual loader. While there are advantages to a smaller crew, they come with decreased situational awareness as well as a decreased physical ability to maintain the tank. Active protection systems (APS) are featured on a number of potential protagonists as well as allies' tanks but the U.S., despite a long-standing interest in APS, has yet to field an existing system or a developmental one. APS is seen as a means, in conjunction with vehicle armor, to enhance crew survivability from an ever-growing range of threats. Some tanks, including the Israeli Merkava Mk 4 and, reportedly, the Russian T-14 Aramata are designed around an integral APS as opposed to having a system retrofitted to the tank which is generally considered a sub-optimal solution. Some Russian and Chinese tanks are also employing larger caliber main guns than their Western counterparts, theoretically offering greater range and armor penetration. It should be noted, however, that the quality and performance of main gun ammunition also plays a highly significant role in a tank's lethality. Some of the larger caliber main guns reportedly can also fire anti-tank guided missiles in addition to their traditional tank main gun rounds, further enhancing lethality. In terms of fire control systems, while once a U.S. comparative advantage, most tanks now employ some form of Forward Looking Infrared Radar (FLIR) as well as Global Positioning Systems (GPS) and thermal and night vision technology, thereby, to a certain extent, "leveling the playing field" with the U.S. M-1A2 Abrams tank. In a manner similar to main battle tanks, the trend in IFV development is towards heavier vehicles, ranging from 20 to more than 60 tons, to address both the proliferation of AT systems and IEDs and a growing tendency for combat operations to occur in urban areas. In the case of the M-2A3 Bradley, its weight growth over time has resulted in the loss of its original swim capability. Compared with many of its foreign counterparts, which mount 30 and 40 mm cannons, the M-2A3 Bradley's 25 mm cannon is generally considered to be at a relative disadvantage against some armored vehicles and well-constructed buildings. While the 25 mm is considered to have excellent armor penetration for the caliber, some of the larger IFV cannons have both superior anti-armor capability and larger high explosive rounds. In addition to cannons, many tracked IFVs (including the Bradley) are capable of firing ATGMS either from their cannons or from separate external mounts. Most countries build their tracked IFVs to carry an entire infantry squad—although squads for the countries compared range from 6 to 8 soldiers while a U.S. infantry squad presently consists of 9 soldiers. It should be noted the M-2A3 Bradley does not accommodate an entire infantry squad, and past requirements for the Bradley's replacement have stipulated a capacity to accommodate a 9 soldier squad. While having the entire squad in a single IFV is viewed by some as enhancing command and control and simplifying logistics, others note the advantages of splitting a squad between two vehicles to insure some residual combat capacity should one of the squad's two IFVs suffer a catastrophic kill. A number of foreign tracked IFVs mount either hard kill or soft kill APS and the Army is presently examining both non-developmental and developmental APS options for the Bradley. The Bradley's limitations in terms of its capacity to support the added weight and power requirements of an APS, as well as internal and external space constraints, are generally considered limiting factors should the Army opt to adapt APS for use on the Bradley. A 2014 RAND research report notes In terms of cannons, the U.S. Army's Paladin self-propelled howitzer has a digitized fire control system, but lacks the high level of automation that exists in top-quality foreign self-propelled weapons such as the German PzH2000. In terms of lethality, the report suggests Medium self-propelled howitzers that outrange Paladin while firing standard ammunition are increasingly common. While Paladin can make up some of the range gap using Excalibur, this requires the use of an expensive round that is fielded only with a unitary warhead [See below Department of Defense (DOD) Policy on Cluster Munition s for further explanation] ; the disadvantage of Paladin's shorter range while employing special ammunition types, such as smoke or illumination rounds, remains. A quick comparison of the ability of a platoon of four Paladins and four PzH 2000s to deliver fires over a three-minute period shows the limitation of the U.S. system compared with the leader among the world's self-propelled howitzers. While a Paladin platoon could deliver 48 shells in an intense three-minute fire mission, the German platoon could deliver 120 shells—and could do so at distances up to 50 percent greater than Paladin's maximum range. Regarding U.S. MLRS systems, RAND suggests that current U.S. MLRS are being outranged and have limited munition options: The U.S. Army's Multiple Launch Rocket System (MLRS) and the similar High Mobility Artillery Rocket System (HIMARS) lack the range of some of the heavy, foreign, large-caliber artillery rocket systems, particularly some that have been developed by China. Therefore, the rocket systems are falling behind the increasing range of similar Russian and Chinese rocket systems. The trend of foreign, heavy MLRS being able to fire well over 100 km has implications for the U.S. Army's fires system, including counter fire and target acquisition. Although the Guided MLRS (GMLRS) rocket has exceptional accuracy compared with any fielded foreign system, the suite of munitions available to MLRS and HIMARS is very limited compared with foreign rocket launchers. A large portion of the Army's current stock of rocket munitions will also have to be replaced when the 2019 limitations on submunitions take effect. [See text box below for further explanation.] As previously discussed, observations from current conflicts as well as beliefs as to what future conflicts might look like inform the military modernization process. These observations and beliefs are used to help determine what types of improvements should be made to existing ground combat systems in terms of lethality, survivability, mobility, and maintainability. They may also prompt a conclusion that an entirely new combat system will be required to address current and potential future threats. A number of military analysts and policymakers view the 2006 Israeli conflict in Lebanon and Gaza and the ongoing conflicts in Ukraine, Syria, and Iraq as representative of the current operating environment. These conflicts are seen as illustrative in terms of both middle and high end threats which the U.S. military might face in the near term or immediate future. The 2006 conflict between Hezbollah and Israel demonstrated how a non-state irregular force could transform into a "hybrid" force if provided with advanced weaponry from other states. After previous conflicts with Israel and having studied how they responded to past attacks, Hezbollah evolved by acquiring more advanced RPGs, ATGMs, MANPADS, mortars, and rockets from countries such as Russia and Iran. They also changed their tactics. Hezbollah employed their advanced weapons from hidden positions in complex terrain over about a 27 by 27 square mile area in southern Lebanon, creating a standoff threat for Israeli forces. Israeli forces, used to fighting unorganized, minimally trained and commanded irregular forces experienced a number of difficulties. Many Israeli tank crews did not know how to execute battle drills or screen their tanks from observation with smoke. Many Israeli commanders also did not know how to integrate heavy mortars and machine guns to support their maneuver. The combination of advanced long-ranged anti- tank and anti-aircraft weapons, new Hezbollah tactics, effective communications and command and control, and Israeli training deficiencies resulted in significant damage and destruction of Israeli armored vehicles and served as a "wake up call" for the Israeli armed forces. As a result of the 2006 conflict, Israel developed and fielded the Namer IFV, acquired more Merkava MkIV tanks, and fielded the Trophy APS. Israel also changed its doctrine and training emphasis from fighting irregular forces to fighting hybrid forces and focused its training on combined arms fire and maneuver as well as air-ground operations. These and other changes were credited with improved performance and fewer Israeli casualties during combat operations in Gaza in 2014. Some experts believe the 2014 Ukrainian conflict reflects "a closer interaction between a state (Russia) and its proxy (Ukrainian separatists) and the use of weaponry that the United States has not confronted since the Cold War in theory and since the Vietnam War in practice." The Army's 2015 Combat Vehicle Modernization Strategy notes In the aftermath of its annexation of Crimea in March 2014, Russian forces began supporting separatists in Eastern Ukraine with advanced weaponry, fire support, and special and conventional forces. This ongoing conflict offers important insights for the U.S. Army about the lethality of the modern battlefield; lethality the U.S. Army has not faced since World War II. Russian and separatist forces are employing combined arms warfare with advanced weapons to devastating effect. Russian artillery, particularly rocket launchers with conventional, thermobaric, and cluster munitions—using unmanned aerial systems (UAS), both for target location and battle damage assessment—is particularly effective against Ukrainian light armor and infantry formations. Additionally, the Russians are using their most advanced tanks in the Ukraine, including the T-72B3, T-80, and T-90. All of these tanks have 125mm guns capable of firing a wide range of ammunition, including antitank/anti-helicopter missiles with a six kilometer range, and advanced armor protection, including active protection on some models. Finally, the Russian air defense systems (man-portable and vehicle mounted) have made it all but suicidal for the Ukrainian Air Force to provide air support to ground forces. Thus, the battlefields of Eastern Ukraine are similar to those envisioned by the U.S. Army during the Cold War, but with more mature technologies. It is a battlefield that requires armor for maneuver. Light skinned vehicles, including BMP infantry fighting vehicles, have proven vulnerable to both artillery and tank fire. Dismounted infantry in defensive positions risks becoming fixed by fire and either isolated or overrun by maneuvering units supported by tanks. In short, the Ukrainian battlefield is a harbinger of the complex environment the U.S. Army will face in the future; a battlefield that requires mobile protected firepower, the integration of all arms, and counters to long-range artillery, UAS, air defenses, and tank protection systems. Other observations from the Ukrainian conflict emphasized Russia's "heavy and integrated" use of electronic warfare (EW). Russia reportedly used EW to identify sources of fire [artillery, mortar, and rocket positions] and command posts as well as to shut down Ukrainian voice and data communications. In one instance, in northern Ukraine, "every single tactical radio [the Ukrainian forces possessed] was reportedly taken out by heavy Russian sector-wide EW." Other reported examples of successful Russian EW use included possibly causing Ukrainian UAVs to crash and interfering with the electrical fuses of Ukrainian artillery shells so when they impacted, they did not detonate. It was also alleged Russia might have conducted Global Position System (GPS) jamming against Organization for Security and Cooperation in Europe (OSCE) UAVs used for monitoring the conflict. The ability to jam GPS is of particular concern as the U.S. military could "lose the ability to navigate and tell time and drop precision munitions." Because GPS is also a central feature of the fire control systems (FCS) of many tanks, IFVs, SP artillery, and MLRS, jamming GPS signals could render these combat vehicles both combat ineffective and vulnerable to attack. Islamic State forces presently conducting combat operations in Iraq and Syria can also be characterized as a hybrid force. In terms of equipment, the Islamic State has what is described as significant ground military capabilities, primarily captured from the Syrians and Iraqis. Some of these systems include Russian T-55, T-72, and U.S. M-1 tanks (captured from Iraq), a variety of MANPADs and ATGMs, artillery, and Russian ZU-23-2 antiaircraft guns and Grad BM-21 multiple rocket launchers. The Islamic State has also captured large amounts of small arms and ammunition and, given their financial resources, was also able to purchase weapons and ammunition. The Islamic State experience suggests non-state groups can acquire a wide variety of capable, modern weapons either by capturing them in battle or, if financial resources permit, purchasing them. Russian military support of the Asad regime's fight against U.S.-backed Syrian rebels and other anti-government factions has been characterized as taking advantage of Syria as a "proving ground"—much like past Arab-Israeli wars—for battle-testing a variety of weapon systems and operational and tactical techniques. In terms of weaponry, Russia has reportedly provided Syria with T-90 tanks. Russian SA-17 advanced air defense systems deployed in Syria reportedly prevented the U.S. from flying manned air support missions for rebels in key areas in northern Syria in late 2015 because of the air defense system targeting U.S. planes with their radars. Alleged Syrian government and Islamic State use of chemical weapons in both Syria and Iraq has added another dimension to the conflict, suggesting nuclear, biological, and chemical (NBC) protection for ground combat systems remains a survivability requirement. Russia's military campaign in Syria reportedly has also helped Moscow "market" its weapon systems. The Syrian civil war is seen by some as a showcase for Russian-made arms with the Russian government claiming the conflict has "proved the efficiency and reliability in diverse conditions" of Russian weapons. Traditionally, the largest buyers of Russian weapons have been India, China, Vietnam, Iran, Venezuela, Algeria, and the United Arab Emirates but the Syrian campaign is seen as a factor in increasing the demand for Russian weapons, with Egypt, Iraq, and Libya recently concluding arms deals with Russia. The 2015 National Military Strategy identifies Russia, Iran, China, and North Korea as "states that are attempting to revise key aspects of the international order and are acting in a manner that threatens our national security interests." The National Military Strategy further notes "none of these nations are believed to be seeking direct military conflict with the United States or our allies" but also warns as of June 2015 "the probability of U.S. involvement in interstate war with a major power is assessed to be low but growing." In deference to this assessment, some U.S. military officials and defense experts assert that "while we might not fight the Russians or Chinese, we will surely fight their systems." Further elaborating on this, military leaders suggest these foreign combat systems expose some important capability gaps in U.S. ground forces, putting these units and our future strategies at high risk. Furthermore, countering these weapon systems also involves countering military formations and sophisticated air defenses, ballistic missiles, and special operations forces on a new battlefield in which "nothing survives that flies under 25,000 feet." Two examples of systems that have the potential to see further export are the Russian T-90 and the Chinese MBT-3000 tanks. The T-90 has reportedly seen combat action in Ukraine and Syria but has supposedly been proven particularly effective in Ukraine. The upgraded T-90s incorporate a new French Fire Control System (FCS) designed to take advantage of low light, foggy, winter conditions and is outfitted with both explosive reactive armor (ERA) as well as an active protection system (APS). Allegedly, Ukrainian forces "have not been able to record one single kill on a T-90." Russia has exported T-90s to Algeria, Azerbaijan, India, Libya, Turkmenistan, and Uganda. The MBT-3000 was developed specifically for export and China claims it is fully, digitized, fitted with an air conditioning and NBC protective system and features an inertial navigation/global positioning system. An enhanced version of the MBT-3000 is said to be capable of mounting both ERA and an APS, and will feature a second generation thermal imager, a laser range finder, and an autoloader for the tank's 125 mm smoothbore gun. China reportedly signed its first export deal for the MBT-3000 in May 2016 with the Royal Thai Army. At an Association of the United States Army (AUSA) conference in October 2016, Chief of Staff of the Army General Mark Milley reportedly provided some thoughts on the future operating environment: General Milley believes future wars by 2030-2050 will be radically more lethal and savage. Because war is ultimately about political will, wars will likely be fought in mega-cities which encompass about 70% of the world's population. Cyber, electronic warfare (EW), and robotics will appear in a big way. Intelligence, surveillance, and reconnaissance (ISR) sensors will be everywhere because of cell phones and internet and noted "If you can be seen, you will be hit." Formations will have to be small, dispersed, concealed, and constantly-moving with General Milley suggesting "If you stay in one place more than 2 or 3 hours, you will be dead." Mega-city fights will be non-linear and the battlefield will be non-contiguous (versus historic plains or desert fights). Small units must be linked in real-time to long-range-fires. Air superiority will not be guaranteed all of the time. The Army will have to bring in integrated air and missile defense (IAMD) to establish initial air superiority for the Air Force and Navy, while destroying enemy surface to air missile (SAM) sites. The Army will need to learn to sink ships to be relevant in Pacific. Small units will be surrounded most of the time. Sustainment will be limited to combat essentials. Friendly ports will be attacked. Army will have to fight its way in, just to get to the real fight. Mission command will be degraded most of time from EW and Cyber. General Milley's vision of the future operating environment, along with the possibility of confronting a variety of increasingly capable foreign ground combat systems, presents a number of considerations for the Army's ground combat vehicle modernization efforts. The state of international ground combat vehicle modernization, lessons from recent and ongoing conflicts, and predictions of what the future operating environment holds in store for combatants suggests a number of possible implications for Army modernization efforts. These possible implications are discussed first at the general and then at the system level. While most nations of concern continue to upgrade their Cold War era equipment, many countries—all with appreciably smaller defense budgets than the U.S—are also developing new ground combat systems. In pointing out this disparity, one defense analyst suggests, "Western tank development has ebbed and flowed, whereas Russian armored vehicle research has remained almost constant." Countries such as Russia and China are not only upgrading existing ground combat systems with new and effective survivability and lethality features but are also developing entirely new ground combat systems for domestic use and possible export. Given the U.S. has "no new ground combat vehicles under development" and new systems are a "multi-decade effort" due largely to resource constraints and DOD's Acquisition process, there is a possibility one or more upgraded or newly developed foreign ground combat systems could emerge and surpass its U.S. counterpart. With the Army suggesting "our enemies, and even our friends and allies, have not remained static and our allies are modernizing to such an extent that they have outpaced us in some areas," there appears to be a degree of resignation that this possibility may not be far off. Should this occur—even for a single weapon system—it could have significant implications for both the conduct of U.S. ground combat operations and Army modernization priorities. On occasion, the Army has acquired foreign-developed ground combat systems for use. Lacking a dedicated NBC reconnaissance vehicle, the Army acquired 60 Fuchs NBC reconnaissance vehicles from Germany, modified and re-designated them as the XM-93 Fox, and used the vehicle during Operation Desert Storm in 1991. When the Army decided to develop a middle-weight combat force based on a wheeled infantry fighting vehicle, instead of opting for a developmental solution, the Army selected the General Dynamics Land Systems–Canada LAV-3 8x8 to equip these new brigade combat teams that eventually became Stryker Brigade Combat Teams (SBCTs). More routinely however, the Army adopts foreign components for use. A current example of this practice is the ongoing non-developmental APS effort evaluating a number of domestic and foreign APS for possible installation on U.S. ground combat vehicles. As part of the cancelled GCV program, the Army conducted an Analysis of Alternatives (AoA). The GCV AoA evaluated the Israeli Namer IFV, the German Puma IFV, and the Swedish CV-90 IFV. In April 2013, at the request of the former Chairman and former Ranking Member of the Tactical Air and Land Forces Subcommittee of the House Armed Services Committee, the Congressional Budget Office (CBO) released a report titled "The Army's Ground Combat Vehicle Program and Alternatives." As part of their analysis, CBO examined four options: 1. purchase the Israeli Namer IFV; 2. upgrade the U.S. Bradley IFV; 3. purchase the German Puma IFV; and 4. cancel the GCV and recondition Bradley IFVs. Based on two sets of metrics—first improvements in protection of soldiers and survivability of the vehicle in combat, lethality, mobility, and capacity and second, vehicles that could carry an entire nine soldier squad—CBO recommended that Alternative 3: the Puma would be the most capable vehicle and further noted both the Puma and the upgraded Bradley (Alternative 2) would be significantly more capable than the GCV. CBO's study noted, however, if the Army opted to acquire the Puma, it would need to buy five Pumas for every four of its currently Bradley IFVs due to the Puma's six-man seating capability. CBO also suggested the Army's stated urgency to acquire the GCV was "undercut by the reality that the Army would be unable to widely field it [GCV] until 2032." In the study, CBO estimated the total cost from 2014-2030 in 2013 dollars to continue the GCV program would be $28.8 billion while purchasing the German Puma would be $14.5 billion. The example of the GCV AoA and the subsequent CBO analysis can be viewed as more than academic. The rise of increasingly capable foreign ground combat systems, the length of time it takes to develop and field a major combat system under current DOD acquisition regulations, and ongoing and anticipated defense budgetary constraints might present policymakers with an opportunity to re-visit the viability of acquiring existing state-of-the art foreign ground combat systems and modifying them to meet Army requirements as has been done in the past. The demise of the Soviet Union led the United States to pursue a "peace dividend," whereby defense budgets and manpower were drastically reduced in order to decrease taxes and divert budgetary resources to other uses. In the end, a 535,000 soldier Active Duty force—a more than 30% cut—was agreed, at that time constituting the smallest Army since 1939. As part of this reduction, based on an assessment of the perceived threat, the Army decreased the number of certain types of units and placed less emphasis on particular capabilities. Some examples and potential considerations are discussed in the following sections. In its 2016 report to the President and Congress, the congressionally mandated 2015 National Commission on the Future of the Army (NCFA) noted Short-range air defense represents another example of an important shortfall. In the post-Cold War era, the Army envisioned little threat from the air forces of potential adversaries. Recent activities in Ukraine and Syria have demonstrated the threat environment has changed. Yet, no short-range air defense battalions reside in the Regular Army. Moreover, a sizeable percentage of the Army National Guard's short-range air defense capability is providing essential protection in the National Capital Region, leaving precious little capability for other global contingencies, including in high-threat areas in northeast Asia, southwest Asia, Eastern Europe, or the Baltics. The lack of short-range air defense seemingly represents a significant vulnerability to U.S. ground forces and ground combat systems to both enemy manned and unmanned aerial systems. While the Army might choose to create additional short-range air defense units to protect ground combat units, enhanced protection from threat manned and unmanned aerial systems might also need to be incorporated into ground combat systems modernization programs. During the Cold War, a robust U.S. Army artillery capability was seen as a means of countering numerically superior armored and mechanized forces of the Soviet Union and Warsaw Pact. Today it is viewed as an important deterrent against North Korean aggression on the Korean Peninsula. In a similar manner to short-range air defense, field artillery units were cut after the Cold War, in part due to the emergence of precision artillery munitions and artillery rounds that dispensed a variety of anti-personnel and anti-vehicle submunitions as well as a belief that U.S. airpower could, in many cases, be substituted for artillery. In its report, the National Commission on the Future of the Army recommends, among other things, an Army and Department of Defense assessment of field artillery capabilities by examining Field artillery capabilities and the changes in doctrine and war plans resulting from U.S. participation in the Cluster Munitions ban as well as required modernization or munition inventory shortfalls. The NCFA, in its examination of the Army, believed U.S. participation in the Cluster Munitions Ban has had a detrimental impact on Army field artillery capabilities. Results from the examination could include increasing field artillery force structure, the development or acquisition of more capable field artillery systems, improved artillery munitions, or a combination of these courses of action. From a threat perspective, the proliferation of special munitions—such as precision, thermobaric, and top attack munitions, increasing artillery system capabilities, and new tactical techniques have renewed concerns about the potential impact of enemy cannon and rocket artillery on U.S. combat operations and U.S. ground combat systems. One senior U.S. Army official contends, for example, "Russia possesses a variety of rocket, missile, and cannon artillery systems that outrange and are more lethal than U.S. Army artillery systems and munitions." Operationally, one study noted Russian artillery, particularly rocket launchers with conventional, thermobaric, and cluster munitions—using unmanned aerial systems (UAS), both for target location and battle damage assessment—is particularly effective against Ukrainian light armor and infantry formations. In a similar manner, China is reportedly upgrading both its cannon and rocket artillery. One study noted The entrance of the Chinese and their greater emphasis om much heavier, longer-range rockets that begin to bridge the gap between rocket artillery and short-range ballistic missiles could have a significant effect over time in extending the trend toward longer-range strike systems. The dichotomy of diminished U.S. artillery capability—based on fewer units, pending limitations on cluster munitions, and shorter effective ranges—versus potential protagonists who possess longer range systems, a wider variety of munitions, and who are employing innovative target acquisition techniques presents potentially significant battlefield challenges for the U.S. Army and carries with it implications for modernization as well. In terms of modernization, enhanced fire control systems permitting a greater rate of fire, systems capable of greater ranges, and new munitions such as the Guided Multiple Launch Rocket System Alternative Warhead, which is designed to be Cluster Munitions Ban-compliant, could help to address current shortfalls. During the Cold War, the Soviet Union placed a great deal of emphasis on Electronic Warfare (EW) and invested heavily in electronic counter-countermeasures and lethal and non-lethal countermeasures. The Soviets integrated EW into their routine operations such as security, command and control, reconnaissance, air defense, camouflage, and deception programs to such an extent that EW became a common feature of Soviet operations, in contrast, the U.S. viewed EW, more often as an operational afterthought. Both the Russian and Chinese armies have dedicated EW brigades and battalions. The Vice Chairman of the Joint Chiefs of Staff, GEN Paul Selva, has suggested "at the tactical level, the small-unit level, the Russians and the Chinese have a distinct advantage because they have deployed very capable electronic warfare tools." The Association of the United States Army (AUSA) notes Russian electronic warfare coupled with U.S. dependence on technology and digital systems create a huge vulnerability for U.S. forces on the modern battlefield. Russia uses electronic warfare for four primary roles: 1). Denying communications: There are regions in Donbass where no electromagnetic communications—including radio, cellphone and television—work. 2). Defeating unmanned aerial systems: Electronic warfare is the single largest killer of Ukrainian systems by jamming either the controller or GPS signals. 3). Defeating artillery and mortars: Russian electronic warfare predetonates or duds incoming artillery and mortar rounds that have electronic fusing. 4). Targeting command and control nodes: Russian electronic warfare can detect all electromagnetic emissions, including those from radios, Blue Force Tracker, Wi-Fi and cellphones, which can then be pinpointed with unmanned aerial systems and targeted with massed artillery. EW has been viewed as an attractive option for Russia in its conflict in Ukraine. It is considered by some analysts as highly effective, and, as a "non-kinetic form of attack, it is harder to trace and less likely to be viewed as overt aggression." The re-emergence of EW, in addition to operational and tactical considerations, carries with it implications for ground combat systems modernization. Across all systems, concerted efforts to reduce vehicle electromagnetic emissions could go a long way to reducing vehicle vulnerability to mortar, artillery, and rocket attack, thereby addressing GEN Milley's concern "if you can be seen [detected] you can be killed." Another modernization consideration could be to insure redundant systems are included in vehicle design requirements to compensate, where possible, for loss of communications, GPS access, and various FCS functions resulting from a successful EW attack. In addition, munitions employed by ground combat systems having electronic fuzzes could be "hardened" against EW attacks to preclude pre-detonation or "duds." RAND research regarding FLIR on both MBTs and IFVs concluded This research identified the proliferation of modern, second-generation FLIR systems throughout the current generation of foreign MBTs and IFVs, including those available on the market to potential adversaries. Improvements to vehicle sensors will be necessary to regain the battlefield advantage that the Army enjoyed in 1991 and 2003 due to its early adoption of first and second-generation FLIR systems. The Army should invest research and development funds and expand on existing technology to preserve and extend the current tactical advantage these vehicles have in direct fire capability in all weather and visibility. Improvements in sensors and direct fire targeting have the potential to substantially affect multiple classes of combat vehicles, including the Army's MBTs, the Bradley and its eventual replacement, and other systems employing stabilized direct fire weapons, such as the Stryker mobile gun system (MGS). Research and development options that the Army could consider include (1) how to degrade the increasingly capable FLIRs that are appearing on foreign systems, and (2) if there other direct fire sensor technologies that could supplement or replace FLIRs in order to maintain the Army's direct fire advantage. Reportedly, the Army's M-1A2 SEP v4 Abrams, which is slated to begin testing in 2021, will feature a third generation FLIR which is designed to "allow for better target identification at long ranges and better resolution at short ranges." This improved FLIR is intended to also help crews "better recognize light and heat signatures emerging from targets such as enemy sensors, electronic signals or enemy vehicles." While the U.S. has plans to upgrade its FLIR and FCS, other nations are doing so as well. One report notes Russian ground forces are slated to upgrade "a number of T-72 and T-90 MBTs with a new automatic target tracker and fire control computer also found on the third-generation T-14 MBT." The T-14's Kalina target tracker and fire control computer are supposedly "capable of automatically tracking and continuously locking the MBT's main gun on target based on input from various sensors until the gunner decides to engage the target." As other nations seemingly "close the gap" in terms of FLIR and FCS capabilities, Army ground combat system modernization efforts might not only examine other emerging sensor technologies for incorporation into future FCS design but also the means to degrade the FLIRs and FCSs of potential opponent's ground combat systems. In addition to the countries previously discussed, many nations are pursuing and adopting APS for their MBTs and IFVs. For example, Turkey is reportedly developing the AKKOR APS system for its Altay MBT; Iran reports it has successfully developed and tested an APS for its Zulfiqar MBT and plans to adopt its APS for use on other armored fighting vehicles; and the Dutch plan to mount the Israeli Iron Fist APS on their CV90 IFVs. As previously noted, the Army is currently involved in two separate parallel and distinct APS efforts—the Expedited, Non-Developmental Item (NDI) APS effort and the Modular Active Protection System (MAPS) effort. The Army's Expedited NDI APS Program is focused on fielding an existing "hard kill" APS capability in the near term for the Army's M-1 Abrams tanks, M-2/3 Bradley fighting vehicles, and the M-1126 Stryker combat vehicle. In parallel with the Expedited NDI APS effort, the Army is involved with the Modular Active Protection System (MAPS) effort. MAPS is—in and of itself—not an APS, but instead a modular framework and controller intended to enable the integration of commercial or government-provided APS subsystems (sensors and hard and soft kill countermeasures) for current and future combat vehicles. While APS is part of the Army's ground combat system modernization plan, it remains to be seen if the Army will aggressively pursue an APS capability for its ground combat vehicles in the near or mid-term or defer until a less risky (to dismounted ground troops and civilians) and more effective version can possibly be developed in the future. As the Illustrative Comparison of Selected U.S. and Foreign Ground Combat Systems tables (pages 4-7) depicts and RAND's "Comparing U.S. Army Systems with Foreign Counterparts: Identifying Possible Capability Gaps and Insights from Other Armies" study suggests, there is a trend for larger main armament in MBTs and, in particular, for tracked IFVs. For MBTs, in addition to larger caliber main guns, some countries are also incorporating autoloaders which can increase the rate of fire for MBTs and offer the possibility of a smaller crew and an unmanned turret. One report suggests the Army plans to test the feasibility of having the M-1 Abrams loader crewman controlling supporting unmanned aerial and ground vehicles instead of loading the Abrams main gun, thereby requiring the installation of an autoloader on the Abrams. For tracked IFVs, the trend is towards 30 and 40 mm main armament which provides an enhanced capability to engage both armored vehicles and buildings—the latter being an important consideration given the ever-increasing global trend towards urbanization. The Army's last effort to develop a tracked IFV replacement—the GCV—planned to incorporate a 30 mm cannon into the vehicle's design so it is possible the Army might continue to pursue a 30 mm cannon in future tracked IFV modernization efforts. As previously noted, while there are advantages to larger main armament, it is also generally considered important that any ground combat vehicles modernization efforts also include concerted efforts to improve existing munitions and develop new munitions based on lessons learned from current conflicts as well as potential future threats. An example of such a new munition is the XM1147 Advanced Multi-Purpose (AMP) 120 mm round which is slated to be fielded with the M-1A2 SEPv4 Abrams. Reportedly the AMP round will replace four tank rounds presently in use: the M-830 HEAT round; the M-830A1 Multi-Purpose Anti-Tank round; the M-1028 Canister anti-personnel round; and the M-908 Obstacle Reduction round. The AMP round will be used to defeat targets including ATGM teams, dismounted infantry, double reinforces concrete walls, bunkers, obstacles, and light armored vehicles. The AMP will join the M-829A4 Armor-Piercing, Fin-Stabilized, Discarding Sabot round which has been in service since 2014, and is designed to defeat threat armored vehicles with third-generation explosive reactive armor. Regarding tracked self-propelled (SP) artillery, RAND research notes a number of shortcomings of the M-109A6 Paladin: The M109A6 Paladin is the U.S. Army's sole self-propelled howitzer, and it equips all of the Army's armored brigade combat teams. Compared with the field as a whole, the M109A6 Paladin is a solid performer in a few key respects but lacks the more powerful gun and automation of the current generation of modern howitzer systems, which results in it lacking in range and burst rate of fire relative to many foreign systems. The M109A6 Paladin ([Paladin Integrated Management [PIM] version entered service in 1992 and is based on the M109 chassis, which was originally fielded in 1963. The Army has unsuccessfully attempted to replace Paladin twice in the past decade, most recently with the Crusader advanced self-propelled howitzer and the Non-Line-of-Sight Cannon (NLOS-C) Future Combat Systems vehicle. The age and relatively low mobility of Paladin are seen as its most significant weaknesses, and as such current Army plans call for a major upgrade, entitled PIM. PIM mainly consists of a new chassis for Paladin, built by BAE Systems and featuring substantial commonality with the Bradley family of vehicles. This should help mitigate sustainment and mobility issues but will not address limitations in Paladin's range and rate of fire. In both Operation Desert Storm (in 1991) and Operation Iraqi Freedom (in 2003), Paladin-equipped artillery units had some difficulty keeping pace with armored units armed with Abrams and Bradley tanks and IFVs. Another feature of modern artillery systems is a high degree of automation. Paladin has a digitized fire control system and a hydraulic rammer, but some systems, such as PzH 2000, have much higher levels of automation. This permits a high burst rate of fire—up to ten rounds a minute with some systems. Due to heating of the barrel, the sustained rate of fire on all modern howitzers falls to approximately two rounds per minute over time, but for brief periods, automated systems provide a significant advantage. This extends to the ability to conduct Multiple Round Simultaneous Impact (MRSI) missions, where an individual howitzer with automated loading and laying mechanisms is capable of firing multiple rounds with trajectories and timing that enable the rounds to reach the same target at the same time. PzH 2000 has demonstrated the ability to fire a five-round MRSI against a target 17 km away. While it is acknowledged the Army's M-982 Excalibur 155 mm round provides enhanced accuracy and range for the M-109A6 Paladin, artillery ammunition restrictions imposed by the U.S. policy decision to abide by the 2008 Cluster Munitions Ban effectively limits the types of artillery ammunition available for U.S. military use. Modernization solutions addressing this policy could include developing new, more capable artillery systems and different types of Cluster Munitions Ban-compliant munitions. Examples of new rounds under development include the 5 Inch Multi Service-Standard Guided Projectile (SGP) which reportedly can deliver accurate fires out to 52 nautical miles as well as a SGP variant which incorporates a sabot with in-flight retargeting capabilities that can hit moving targets out to 70 kms. Another round under development that could facilitate effective counterbattery fires against longer-ranged enemy systems is a 155mm ramjet powered projectile with a range of almost 200 kms. Developing new munitions could be a financially significant and lengthy undertaking as sufficient stockpiles will need to be built to meet Combatant Commanders' warfighting requirements as well as for training use. Another modernization consideration could be DOD's and the Army's NCFA-recommended examination of artillery force structure. If it is determined additional artillery units are warranted, it also could be a costly and lengthy process to equip new artillery units with either the M-109A6 Paladin or a new SP artillery system, as well as needed support vehicles and equipment. RAND's research report suggests two system-related trends: 1. U.S. artillery rocket ranges have improved significantly over time, but without a continued emphasis on further increases in range, GMLRS will begin to be eclipsed by the latest Russian and, especially, Chinese rocket systems. 2. The entrance of the Chinese and their greater emphasis on much heavier, longer-range rockets that begin to bridge the gap between rocket artillery and short-range ballistic missiles could have a significant effect over time in extending the trend toward longer range strike systems. Regarding ammunition, it is also noted Finally, the variety of warhead types available for foreign rockets is substantial compared with that of the MLRS family of rockets in its present form. In foreign use, these heavy rockets are typically under the control of corps or higher-level headquarters; the emphasis has remained on conventional missions, and the ability to contribute usefully in an environment with limited rules of engagement is a lower priority for the Russian and Chinese militaries... When compared with their foreign counterparts, the Army's rocket launchers have a limited suite of warhead options. Currently, DPICM and HE warheads are the only munitions that MLRS and HIMARS can fire. The 2019 submunitions limitations mean that the Army will have to replace most of its DPICM warheads. Given that reality, there may be an opportunity to examine other warhead options of the type that are used in other armies' MRLs (guided submunitions, fuel-air explosive, etc.). These findings seemingly suggest a dual approach to Army MLRS modernization—modify existing systems or develop new systems that can facilitate the achievement of greater ranges and expand the types of warheads available for MLRS rockets. In addition to the longer-ranged GMLRS, the Army's Long-Range Precision Fires (LRPF) replacement for current tactical rockets employs a new design which fits two rockets in a single launcher and employs new propulsion which enables the LRPF rocket to fly faster over greater distances—approximately 500 kms—to strike fixed targets. As with cannon artillery, developing or acquiring a new MLRS and developing new warheads and rockets could prove to be an expensive and lengthy undertaking. During a January 12, 2017, talk at the Association of the U.S. Army, Army Chief of Staff General Mark Milley reportedly noted while readiness will continue to be the service's top priority in 2017, the Army will mount a "major effort" this year to modernize the force. In this regard, without speculating on the Army's future budget, he stated the Army had developed a "priorities list" which he intends to share in the near future with Congress and the public. While air defense, ground mobility for light infantry units, and aviation survivability are known modernization priorities, it remains to be seen how the Army will approach the modernization and possible eventual replacement of major ground combat systems. As allies and potential protagonists upgrade and replace their ground combat systems to meet current and projected battlefield threats and tactics, Army modernization of ground combat systems, which have served the nation well for decades, may take on an added degree of importance. Active Protection System (APS): Subsystems integrated into or installed on a combat vehicle to automatically acquire, track, and respond with hard or soft kill capabilities to a variety of threats including rocket-propelled grenades (RPGs) and anti-tank guided missiles (ATGMs). Anti-Tank (AT): A projectile designed to penetrate armor on a vehicle. Anti-Tank Guided Missile (ATGM): A missile guided by wire, optics, or laser which is fired from a vehicle, aerial platform, or by ground troops designed to penetrate armor on a vehicle. Dual-Purpose Improved Conventional Munitions ( DPICM): Dual-purpose improved conventional munitions are base-ejection, payload-carrying artillery rounds or surface to surface missiles. These projectiles are filled with submunitions. During flight, the base of the projectile is blown off and centrifugal force disperses submunitions at an optimum altitude and distance from the desired target for area coverage. There are both anti-armor and antipersonnel submunitions with some types designed for delayed action or to impede mobility (mines). The air-to-surface variety of this kind of munition is better known as a cluster bomb. DPICMs are generally considered Cluster Munitions. Explosive Reactive Armor (ERA): ERA typically consists of a layer of high explosive between two metallic armor plates. When a penetrating weapon strikes the armor, the explosive detonates in order to damage the penetrator. Fire Control System (FCS): A Fire Control System is essentially the "brain" of the weapon system, orchestrating the sighting by means of a variety of sensors, in order to facilitate accurate aiming of weapons. Forward Looking Infrared Radar (FLIR): Forward Looking Infrared Radar consists of forward-looking infrared cameras and other thermal imaging devices that detect infrared radiation, typically emitted from a heat source (thermal radiation). These sensors create a "picture" or video depiction of an object. FLIR can be can be used to help drivers navigate vehicles at night, in fog, snow, or in other low visibility conditions as well as to aim the vehicle's weapon systems. High Explosive (HE): Explosives that typically detonate at the speed of sound and are primarily used for military applications. Heavy Machine Gun (HMG): Large caliber machine guns generally .50 caliber or greater. GMLRS: Guided MLRS Unitary Rocket (Note: unitary munitions do not contain submuntions). NBC: Nuclear, Biological, and Chemical (refers to chemical, biological, and nuclear weapons). RPGs: Rocket propelled grenades (anti-personal and anti-vehicle grenades fired from the shoulder by a single soldier). TACMS: Tactical Missile Systems (a ground to ground missile employed by U.S. MLRS systems; also referred to as ATACMS or Army Tactical Missile Systems). TOW: Tube-launched, optically tracked, wire-guided anti-tank missile developed and used by the U.S. military. UAS: Unmanned aerial system (also referred to as drones or unmanned aerial vehicles (UAVs) ).

Many nations maintain armies whose ultimate responsibility is to defeat other nations' combat formations on the battlefield. In order to accomplish this, nations indigenously develop, maintain, and improve a variety of ground combat systems or purchase them from other nations. Ground combat system development and improvement is informed by existing and emerging technologies and budgetary factors as well as observations from current land conflicts. As this process is also intended to address potential future battlefield threats, beliefs as to what the future combat operational environment will look like, as well as what future technologies might be available for military use, also influence a nation's developmental efforts. The U.S. Army's current fleet of main battle tanks (MBTs), tracked infantry fighting vehicles (IFVs), tracked self-propelled (SP) artillery, and multiple launch rocket systems (MLRS), which constitutes the nucleus of the Army's armored ground forces, were developed in the 1970s and fielded in the 1980s to counter the Soviet Union's and Warsaw Pact's numerically superior ground forces. The combat performance of these vehicles against Iraqi forces during Operation Desert Storm in 1991 reaffirmed for many the role these systems would play in future Army ground operations. U.S. Army leadership notes for the first time since World War I, that the Army does not have a new ground combat vehicle under development and "at current funding levels, the Bradley and Abrams will remain in the inventory for 50 to 70 more years." Regarding armored vehicle development, the Army suggests "our enemies, and even our friends and allies, have not remained static and, in fact, even our allies are modernizing to such an extent that they have outpaced us in some areas." This comment raises the possibility that in the not-too-distant future, foreign armored vehicle design and capabilities could surpass existing U.S. systems. Observations from current conflicts as well beliefs as to what future conflicts might look like help determine what types of improvements should be made to existing combat vehicles in terms of lethality, survivability, mobility, and maintainability. They may also lead to a conclusion that an entirely new combat vehicle will be required to address current and potential future threats. Comparison of selected U.S. and foreign ground combat systems and observations from current conflicts as well beliefs as to what future conflicts might look like raise implications for U.S. ground combat system modernization. Some of these implications include the following: the possibility U.S. ground combat systems could be outpaced by foreign systems; that increasingly capable foreign ground combat systems could be an option for acquisition; the reemergence of air attack, artillery, and electronic warfare (EW) as ground combat system modernization concerns: and the consideration of system level issues such as Forward Looking Infrared Radar (FLIR) and Fire Control Systems (FCS); Active Protection Systems (APS); new and Cluster Munitions Ban-compliant artillery rounds and rocket warheads; and digitally enhanced and longer-ranged artillery and rocket systems.

For FY2006, the Bush Administration requested $8.73 billion for the Missile DefenseAgency (MDA) budget. This includes $3.3 billion for the Ground-Based Interceptor (GBI) program,currently being deployed in Alaska and California. The House-passed defense authorization bill( H.R. 1815 ) provides $8.83 billion, an increase of $100 million for the ground-basedmissile interceptor program. The Senate-passed authorization bill approved $8.73 billion for MDA( S. 1042 ) and similarly specified that $100 million of the funds provided for theMidcourse Defense Segment be used to enhance the ground-based missile interceptor test program.The House-passed defense appropriations bill ( H.R. 2863 ) includes $8.58 billion forMDA. It too specifies an additional $100 million for ground-based missile defense interceptortesting. The Senate-passed appropriations bill provides $200 million more for the ground-basedmissile defense interceptor program and $65 million for the Israeli Arrow system. Although missile defense remains strongly supported, Congress and others have raisedquestions and concerns over several programs, including the Airborne Laser, the SSTS (SpaceSurveillance and Tracking System), and the BMD System Interceptor program. Some concerns alsoremain over significant flight test delays in the ground-based system being deployed in Alaska andCalifornia. Recent milestones reported by MDA include a successful intercept by the Navy's sea-basedmissile defense program, a successful flight test of the revamped Theater High Altitude AreaDefense (THAAD) system, a successful flight test of the ground-based mid-course defense (GMD)interceptor, and deployment of the 10th operational interceptor of the GMD system. [author name scrubbed] & Amy A. Woolf, Specialists in NationalDefense In July 2001, the Bush Administration presented to Congress the outlines of its proposedapproach to missile defense. The Bush Administration's plan differed significantly from theapproach pursued by the Clinton Administration. The issue for Congress remains whether toapprove or modify the Bush Administration's proposed approach for missile defenses. In general,Congress has supported the President's approach, making some adjustments in programsexperiencing technical problems and reducing funding for programs that Congress was not yetwilling to commit to for early deployment purposes. In December 2002, the Administration announced its decision to begin fielding initial missiledefense capabilities in 2004-2005. An initial national missile defense capability was declared withthe deployment of eight interceptors in Alaska and California at the end of 2004. This report provides background information on the Bush Administration's proposedapproach, and discusses key issues relating to it. Key issues raised in the next section include: Ballistic Missile Proliferation : Which countries of concern possess or aredeveloping missiles that might threaten the United States, its military forces, or its friends and allies?What range of missile threats might U.S. missile defenses be required to counter in the near andmid-term? Technology issues: Will the United States be able to develop and deploymissile defenses that can intercept missiles of all ranges and at all phases of their flights? If not, cana partial system be overcome even by rogue states? What are the key technological challenges? When might the research and development program give way to a deployment program? WillDOD's acquisition policy affect the planned incremental deployment strategy? The latter sections of the report provide background information on the various parts of theAdministration's proposed missile defense program. It includes program and budget data, and keytechnical challenges faced by the programs. The report concludes with a summary of congressionalaction on the missile defense budget. The United States has pursued the development of missile defenses for more than 50 years. Since the Reagan Strategic Defense Initiative (SDI) was launched in FY1985, the United States hasspent more than $85 billion on missile defense programs and studies. Missile defense has provento be a challenging and elusive endeavor. Moreover, the question of whether the United Statesshould deploy extensive defenses to protect against ballistic missile attack has been one of the mostdivisive political and national security issues of this generation. The demise of the Soviet Union and the debate over the emergence of ballistic missile threatsfrom other nations changed the nature of the debate. For many, concerns about nuclear stabilitybetween the United States and Russia have receded as the two nations expanded their areas ofcooperation and improved their relationship, especially in the U.S. lead war on terrorism. Instead,many now focus on concerns about a possible attack from an adversary who possesses only a fewmissiles and may not be deterred by fear of U.S. retaliation. Without a missile defense capability,some argue, the United States itself may be deterred from using its conventional forces to protectU.S. allies and friends. Similarly, the United States might be unable to combat aggressive orprovocative actions on the part of "rogue states" armed with chemical, biological, or nuclear capableballistic missiles. (1) Eventerrorist acquisition of ballistic missiles armed with weapons of mass destruction is today part of thepolicy debate. The Clinton Administration responded to this changing international security environmentby pursuing the development and deployment of defenses that would protect U.S. allies and forcesin the field from attack by shorter and medium-range ballistic missiles (theater missile defense:TMD). It also sought to develop for deployment a limited system to protect U.S. territory fromattack by longer-range ballistic missiles (national missile defense: NMD). Its plans for NMD wouldeventually have conflicted with the terms of the 1972 Anti-ballistic Missile (ABM) Treaty with theSoviet Union, which limited the United States and Soviet Union (now Russia) to a single, land-basedsystem for defense against long-range ballistic missiles. The Administration sought to preserve thebasic framework of the ABM Treaty by negotiating modifications that would have permitted thedeployment of a limited, land-based NMD site in Alaska. The Clinton Administration decided,however, that it would not proceed to deploy the site after failures in the flight test program and othertechnical concerns raised questions about the readiness of the technology. The Bush Administration sharply altered the debate over missile defense. In severalpre-election speeches, President Bush indicated that he would pursue the development oftechnologies that could be deployed on land, at sea, and in space to protect the United States, itsallies, and its forces overseas from ballistic missile attacks from rogue nations. President Bush alsostated that the United States would have to "move beyond the constraints" of the ABM Treaty. Heemphasized that "Russia is not our enemy," and, therefore, Russia should not be concerned aboutU.S. deployment of missile defenses. Instead of seeking to modify the ABM Treaty so that theUnited States could deploy limited missile defenses, the President said "we need a new frameworkthat allows us to build missile defenses to counter the different threats of today's world." (2) The Administration began to outline the details of its plans for missile defenses in July 2001,after submitting its amended defense budget for FY2002 to Congress. In that budget, theAdministration requested $8.3 billion for missile defense, an increase of $3.1 billion or 61 percentover the amount Congress funded for FY2001. The Administration stated that it would explore abroader range of technologies and basing modes, "including land, air, sea, and space-basedcapabilities that had been previously disregarded or inadequately explored." However, as isdescribed in more detail later in this report (see Table 1 ), the Administration appears to haveessentially increased funding evenly for each of the missile defense and sensor technologies alreadyin the defense budget. From a funding and programmatic perspective, the Administration did notappear to give increased priority to any particular program or introduce any major new researchdirections for FY2002 beyond what the Clinton Administration was already pursuing, except toaccelerate the process and integrate key components. A similar argument was made with respect tothe FY2003 missile defense budget of $7.8 billion. In its missile defense program, the Bush Administration eliminated distinctions betweentheater and national missile defenses (TMD and NMD). Instead, according to General Kadish, thedirector of MDA (formerly the Ballistic Missile Defense Organization (BMDO)), the Administrationhas "developed a research, development, and test program that focuses on missile defense as a singleintegrated BMD system." Furthermore, the objective of this program is to "aggressively evaluateand develop technologies for the integration of land, sea, air, or space-based platforms" and todevelop and deploy a global system of "layered defenses, capable of intercepting missiles of anyrange at every stage of flight -- boost, mid-course, and terminal." (3) Administration officials have highlighted two primary benefits of layered defenses. First,layered defenses would seek to provide the United States with more than one opportunity to targetan attacking missile, thus arguably increasing the chance of shooting it down. (A critique of thelayered defense concept is outlined in the section on Technology and Other Challenges.) Second, the layers could complicate an attacker's ability to defeat the overall system. Thisis because countermeasures, which are intended to confuse or overcome defenses, that might beeffective in one phase of a missile's flight might not work in other phases. The Bush Administration has emphasized that its missile defense program will concentrateon "robust research and development" into a wide range of missile defense technologies. Unlike theClinton Administration, the Bush Administration has not yet identified an architecture (a detailedmissile defense system with specific objectives and capabilities) that it will seek to deploy norestablished a schedule for the development and deployment of any particular system or element; but,a clear underlying objective is the early deployment of a defense designed against missiles aimed atU.S. territory. Because it has not identified the types of technologies or the numbers of interceptorsand radars that it intends to deploy, the Administration will not provide any costs for the missiledefense program or system. It emphasizes that cost estimates are premature under the new approach. Administration officials have stated that this research and development effort is "designedto develop effective systems over time ... and to deploy that capability incrementally." The programenvisions the deployment of "different combinations of sensors and weapons" when thesetechnologies "are proven through robust testing." These technologies could then be replaced by moreeffective or advanced systems when they become available. This approach is called an evolutionaryacquisition strategy. This strategy differs from the way in which most military acquisition programsoccur. It will likely be the subject of increased scrutiny. An analysis of this strategy and some of itsimplications follows in a subsequent section of this report. During congressional testimony in July 2001, Deputy Secretary of Defense Wolfowitz statedrepeatedly that the United States would not violate the ABM Treaty, but that the Treaty stood in theway of the Administration's missile defense efforts. He noted that some of the tests or activitiescould "bump up" against the limits in the Treaty in "months not years." (4) However, the BushAdministration also stated that the United States would have liked to reach an agreement with Russiathat would allow these tests, and the eventual deployment of extensive missile defenses, to proceedwithout concern for the Treaty limits. At a meeting in Italy in July 2001, President Bush and Russia's President Putin agreed thatthe two nations would hold discussions that focused on both offensive weapons and defensivesystems. Some interpreted this agreement to mean that the two nations would begin negotiations onnew treaties that would limit offensive nuclear weapons and missile defenses. Administrationofficials stated clearly, however, that these were not negotiations, but consultations. They also statedat that time the Administration did not plan simply to seek modifications in the ABM Treaty, but itwould not allow the Treaty to prevent research and development toward deployment even if thatultimately meant U.S. withdrawal from the Treaty. (5) Rather, the Bush Administration sought to convince Russia thatthe ABM Treaty was no longer relevant and that the two nations should agree to set it aside andreplace it with a new framework for their relationship. According to some reports, the United Stateswould share information about missile defense developments with Russia, but it would not acceptany limits on research, development, testing, or deployment of its systems. Russia, however, did notaccept the U.S. approach, and, on December 13, 2001, President Bush announced that the UnitedStates would withdraw from the Treaty. Actual withdrawal from the 1972 ABM Treaty occurredJune 13, 2002. The Administration announced it had a specific plan for deploying an initial missiledefense capability on December 17, 2002. [author name scrubbed], Analyst in National Defense Overview. Currently, Russia and China are theonly two countries that could attack the United States with intercontinental ballistic missiles(ICBMs). Although other countries with short and medium range missile programs may aspire tojoin this club, there are factors other than scientific and infrastructure to consider. Variables suchas the availability of financial resources, political will, availability of foreign material and technicalassistance, and the affects of non proliferation and export control regimes all play a role in missiledevelopment. In this regard, countries discussed here other than Russia and China should beconsidered as potential future threats outside of their respective regions. Within their respectiveregions however, these countries, along with Russia and China, will present an ever increasingproliferation challenge to U.S. forces, friends, and allies. Ballistic missile proliferation has continued steadily over the past two decades presenting avariety of security challenges to the United States. The number of countries with operationallydeployed ICBMs that could strike targets in the United States remains relatively small. There is,however, a fairly widespread and growing capability to launch shorter range missiles and a slowlyevolving capacity to launch medium range missiles. (6) These short to medium range missiles could not only threaten U.S.forces on a regional basis but could also serve as a precursor for the development of longer rangemissiles over the course of the coming decades. The transition from short to medium range missilesto ICBMs is more a matter of technical expertise than of technology. The principal hurdles todeveloping longer range missiles are manufacturing larger propulsion systems and designing amissile with more than one stage. With an existing short or medium range ballistic missileinfrastructure, overcoming these hurdles becomes an issue of having an experienced and qualifiedscientific and engineering staff. If a country does not have this expertise domestically, it can beimported. The United States routinely monitors ballistic missile development and deployment trendsin a number of critical countries. The countries listed below are those critical countries addressedin the 2002 National Intelligence Estimate (NIE) on Foreign Ballistic Developments and the BallisticMissile Threat Through 2015. Russia. Russia has the most significant ballisticmissile inventory of all countries of concern. Russia currently has approximately 700 ICBMs (7) capable of delivering over3,000 nuclear warheads of various yields. (8) Russia also maintains a number of ballistic missile-capablesubmarines equipped with approximately 200 launchers that could deliver up to 900 nuclearwarheads. (9) Despite theseseemingly significant numbers, the Russian Strategic Nuclear Forces have been in critical declineover the past decade due to a variety of internal and external factors. Because of slower than anticipated development and also in response to the United Stateswithdrawal from the ABM Treaty, the Russian government has slowed the production of its newSS-27 ICBM (START II compliant with one nuclear warhead) and will instead retain a significantnumber of its older SS-18 and SS-24 ICBMs (each capable of carrying 10 multiple independentreentry vehicles (MIRVs)) that were destined to be destroyed under START II ceilings. Russia willretain 154 liquid-fueled SS-18 Satan heavy ICBMs and 36 SS-24 Scalpel ICBMs that were supposedto be eliminated by 2007 under the provisions of START II. (10) Russia's SS-27 Topol-M ICBM was first deployed in 1997 and Russia had deployed 23 SS-27s in silos as of the end of2000. (11) Althoughdesigned to carry one warhead, experts believe that with modifications the SS-27 could carryanywhere from 3 to 6 nuclear warheads. Russia claims to have developed missile defensecountermeasures for the SS-27 allowing the SS-27 to penetrate any known missile defense. Suchcountermeasures could include global positioning technology and independent warhead maneuveringcapability. It is important to note that independent sources have not substantiated Russian claimson the SS-27's penetration capabilities. Over the next five years, the Defense Intelligence Agencybelieves that Russia will focus its limited resources on the SS-27 program, the SS-26 short rangeballistic missile (SRBM), and the submarine-launched SSN-23 and Bulava-30 ballistic missiles. (12) China. China's current ICBM force consistslargely of liquid propellant, single warhead, silo-based missiles. Approximately 20 of these missilesare CSS-4 missiles that can reach targets within the United States. About 12 CSS-3 ICBMs aredeployed and are most likely intended as a deterrent force to Russia, Pakistan, and China. (13) China also has a numbermedium-range JL-1 submarine launched ballistic missiles (SLBMs). Concerned about thesurvivability of their ballistic missiles, China is focusing on the development of mobile, solidpropellant ICBMs. The Intelligence Community projects that by 2015, most of China's land-basedICBMs will be mobile. (14) China continues to develop solid-fueled DF-31 ICBMs for both silo and mobile basing, aswell as for submarine deployment. China has tested CSS-5 medium-range ballistic missiles(MRBMs) with dummy warheads or what the Pentagon calls "penetration aids" designed to defeatmissile defense systems. China is assessed to be capable of developing multiple reentry vehicles(MRVs) for its CSS-4 missiles in the next few years but MRV development for its new mobileICBMs and SLBMs would face significant technical hurdles and would be extremely costly. (15) China continues to deployshort-range CSS-6 and CSS-7 missiles across the Taiwan Strait. U.S. intelligence estimates thatthere are about 350 Chinese missiles deployed within about a 7½ minute flight time of Taiwan. Recently, China has offered to reduce the numbers of deployed missiles if Taiwan scales back itsarms purchases from the United States. China has also exported missile technologies to Iran,Pakistan, North Korea, and Saudi Arabia. Iraq. Western Intelligence believes that Iraq hasupwards of 20 Al Hussein SRBMs and about a dozen transporter, erector, launchers (TELs) inbreach of 1991's UN Security Council Resolution (UNSCR) 687. (16) Other organizations, suchas the London-based Institute for Strategic Studies, suggest that this number could be closer to adozen or fewer missiles. (17) Iraq has continued its short-range missile program, which ispermitted under UNSCR 687, but U.S. and British Intelligence believe that they are working onextending the range of these missiles in excess of the 150 km range permitted. Iraq has also rebuiltpreviously-destroyed facilities and constructed new facilities designed to produce solid propellantsand to test missile engines with ranges in excess of 1,000 kms. Iran. Iran has one of the largest missileinventories in the Middle East. Iran has a few hundred SRBMs consisting mostly of SCUD-Bs,SCUD-Cs, and Chinese CSS-8 missiles. Iran has also successfully tested and deployed a smallnumber of Shahab-3 MRBMs that could strike targets in Israel, Turkey, and most of Saudi Arabia.The Shahab-3 is based on the North Korean No Dong missile and is believed to have a range of1,300 kms. (18) Iran hasalso publically acknowledged the development of the Shahab-IV as a ballistic missile (laterreclassified as a space launch vehicle (SLV)) with an estimated range of 2,200 kms. (19) Iran is also believed to bedeveloping a Shahab-V with an unspecified range. In all cases, Iran's continuing development of itsmissile program will rely heavily on Russian, Chinese, and North Korean assistance. Despite Iran'scurrent efforts, most U.S. intelligence agencies believe that Iran will not be able to launch anICBM/SLV until the later half of this decade while one agency says that a successful test launch isunlikely prior to 2015. (20) North Korea. North Korea's recent actions inrelation to the Agreed Framework and possible "reconsideration of the missile testing moratorium"could foreshadow their resumption of missile testing. The two-stage Taepo Dong 2, which somebelieve could deliver a several hundred kilogram nuclear payload to Alaska, Hawaii, and parts of thecontinental United States may be ready for flight testing in the near future. (21) If North Korea cansuccessfully integrate a third stage, this could boost the Taepo Dong's range to 15,000 km --sufficient range to strike all of North America. (22) North Korea also has hundreds of SCUD and No Dong missilesthat pose a significant WMD threat to U.S. and allied military forces in the region. North Koreahas continued to export ballistic missiles and associated technology, most notably to Pakistan andYemen. On December 11, 2002 the Spanish military intercepted 15 SCUD missiles at sea boundfor Yemen. This was later determined to be a legal shipment and was allowed to proceed. NorthKorea is also believed to be training missile engineers and technicians, most notably Syrian, in thedomestic production of SCUD missiles. India. India continues their aggressive domesticdevelopment of ballistic missiles, primarily to establish a nuclear deterrent to Pakistani first use ofnuclear weapons and as a hedge against a confrontation with China. (23) The Prithvi I, asingle-stage, liquid fueled, road-mobile missile, is currently India's only deployed ballisticmissile. (24) India alsocontinues to develop the Prithvi II, a 250 km SRBM. India has tested the Agni-series of MRBMwith a reported range of 2,000 km. These Agni-series of missiles will likely become operational inthe next few years and will become the mainstay of India's MRBM forces. (25) India has a domestic spacelaunch vehicle program referred to as the Surya program. Intelligence sources believe that Indiacould convert this SLV into an ICBM within one to two years after the decision had been made todo so. (26) India is actively developing the Sagarika SLBM and is attempting to buy or lease nuclear submarines withthe intent of modifying the submarines to accommodate SLBMs. Pakistan. Pakistan's pursuit of missile-deliverednuclear weapons is a considered by many experts as a deterrent to India's nuclear program as wellas their numerically-superior conventional forces. (27) Like India, Pakistan is developing an indigenous ballistic missileproduction capacity and has a variety of missiles. The short range (80 km) Hatf I is a simple solidpropellant missile designed not only for domestic use but also for export. The Hatf III (modifiedChinese M-11 missile) is a single-stage, solid propellant missile with a range of at least 300 kms. Pakistan also has a number of No Dong missiles (renamed Ghauri) from North Korea with a rangeof 1,500 km. Pakistan is developing and testing Ghauri 2 and Ghauri 3 missiles with reported rangesof 2,000 and 3,000 kms, respectively. (28) Pakistan is also developing the road-mobile, two-stage solidpropellant Shaheen II with a reported range of 2,500 kms. (29) Libya. U.N. sanctions from 1992 to 1999 arebelieved to have severely limited Libya's ability to obtain the requisite expertise, materials, andequipment to continue its development of MRBMs and ICBMs. (30) Since the removal ofsanctions in April 1999, Libya has actively attempted to refurbish its aging SCUD force as well asobtain complete, long-range missile systems through a variety of foreign suppliers. Reports suggestthat Libya may have received No Dong MRBMs from North Korea, but this has not been confirmedby Western intelligence sources. (31) Libya may be working on its Al Fatah missile that it claims hasa 1,000 km range (U.S. intelligence believes the range is closer to 200 kms.) but this missile has notyet been tested. (32) Syria. Syria possesses an extensive mobileSCUD-B, SCUD-C, and SS-21 SRBM arsenal. (33) These systems could allow Syria to strike deeply into theterritories of potential regional adversaries Israel, Iraq, Turkey, and Jordan. (34) Although Syria has notshown any overt interest in acquiring longer-range missiles, it is possible that as regional securityprospects continue to deteriorate, Syria may attempt to acquire longer-range systems such as the NoDong MRBM. Hit-to-Kill. ( [author name scrubbed], Specialist inNational Defense ) The concept of kinetic kill or hit-to-kill has been a primary focus of the missiledefense program since the conception of the SDI in the early 1980s. Previously, the United Statespursued missile defense concepts that employed nuclear weapons as interceptors. More conventionalexplosive warheads were used to develop the PAC-2 system used in the Persian Gulf war againstIraqi Scud missiles. Advanced and exotic concepts, such as various lasers, were largely deemedimpractical during the late 1980s and early 1990s. A kinetic kill interceptor would seek to destroy its intended target through a direct collisionat relatively high speeds. The force of the impact would then destroy the attacking missile orwarhead, render it inoperable, or divert it from its intended target. With such an approach, anear-miss has the same practical affect as a large distance miss: the target is not destroyed. Kinetic kill as a concept for destroying short- and medium-range ballistic missiles appearsto be in the process of proving itself. After a string of failed intercept tests, the THAAD programbegan a series of successful tests. Barring major, unforseen technical or engineering problems, itappears that a kinetic kill warhead for THAAD can be developed. The same is true of the PAC-3system. The next generation Patriot interceptor seems to be proving the concept of kinetic kill forshort-range missile defenses, despite the most recent test failures in February 2002. The key question remaining, however, centers around levels of effectiveness, particularly inwartime. Under test-range conditions, most military systems perform better than they do in anoperational environment. The Patriot system used in Desert Storm is a notable example. Prior tothe war, Patriot successfully intercepted 17 of 17 very different targets under a variety of test rangeconditions. Patriot encountered a vastly different operational environment when deployed, and itssuccess or failure during the war is still debatable, and, according to experts, probably unknowable. Kinetic kill as a concept for destroying long-range ballistic missiles is even more problematicat this stage. There is no unambiguous, empirical evidence to support the contention that kinetic killfor ICBM defense will work. Missile defense advocates argue that since the mid-1980s, a string ofsuch tests have occurred with varying degrees of success; some have failed to achieve interception,while others were deemed successful. But in almost every case, post-test doubts have been raised. Critics have charged that testresults over the past two decades have been exaggerated by false claims of success and promises ofperformance that later proved false. Many tests were proven to have had their targets significantlyenhanced to ensure the likelihood of success. Some missile defense advocates say this may be true. But kinetic kill for ICBM defense iscomparable to where kinetic kill was for systems such as PAC-3 several years ago. They maintain,therefore, that continued development, and especially more realistic testing, is needed to ensure thatthe kinetic kill concept for long-range missiles can eventually be deployed. Layered Defenses. ( [author name scrubbed], Specialistin National Defense ) The concept of layered defense, which dates back to at least the 1960s, andwas developed more systematically in the 1980s, envisions deploying several missile defensesystems, each designed to intercept an attacking missile or warhead at a different stage of its flighttrajectory. The concept arguably would allow for multiple intercept opportunities. Although thispresents the possibility that one element of the system may not work as intended, proponents arguethat multiple intercept opportunities significantly increase the chance that an attacking missile orwarhead will be destroyed. Proponents of layered defenses argue that each layer is able to attack a different vulnerabilityof the attacking ballistic missile and that, because each layer is statistically independent of everyother layer, the probability of a warhead getting through all of the layers (1 to N) can be given by asimple multiplication of the probabilities of surviving each independent attack. (35) This analysis wouldreadily lead to a conclusion that a defense with three layers, for example, might let extremely fewmissiles or warheads get through. Other analysts, however, would argue that this is a wrong conclusion. In the first place, thereis no empirical evidence of an air defense system with a probability of intercept (P i ) much greaterthan about 30 percent (or 0.3). So one might conclude more realistically that the probability that anattacking missile or warhead will survive is closer to 34 percent. (36) Moreover, it isargued, (37) even if oneassumes that each layer is 90 percent effective, the layered defense model fails because the layersare not statistically independent for at least two reasons: Each attacking warhead or missile must encounter each of the layers in order,so the performance of one layer will affect the performance of the next layer and so on. For example,if the first layer underperforms because some countermeasure is unexpectedly successful, then thesecond layer will be required to deal with more simultaneous targets than expected; if one missileor warhead avoids interception, that may mean that circumstances are favorable for the next missileto get through also. Even if each layer is over designed by a factor of about 2, failure of one layercan still lead to saturation of the next. For example, if we expect the terminal layer to have to handle10 warheads, we might design it to handle 20, but if earlier layers then fail so that the terminal layeris presented with 30 targets, at least 10 warheads will get through to their intended destination evenif the terminal layer works perfectly. The failure of an early layer would thus result in the collapseof the missile defense system: the layered 'pyramid' defense is balanced on its vertex, rather than setfirmly on its base. Until a layered defense has been tested under realistic conditions, when it mustengage warheads nearly simultaneously in each layer, it is unrealistic for defense planners to assumethat there are no problems of command and control among the layers, and that unknown variablesdo not operate to degrade the system in unpredicted ways. Such a test would be expensive anddifficult to achieve, requiring the multiple simultaneous launch of severalICBMs. The probability of an attacking warhead surviving intercepts by three "correlated" layerscannot be known without making assumptions about the mechanism of the correlation andnon-independence of the layers. In general, critics conclude the performance of the system may beno better than the performance of the best layer, and then only if that layer is not saturated by thesheer numbers of missiles, warheads, or countermeasures. Layered defense proponents are likely to understand, and perhaps agree, with many of thesepoints. But supporters will respond by suggesting these issues can be adequately addressed in thedesign of a missile defense architecture and adjustments made during its development (see below). Acquisition Strategy & Congressional Oversight. ( Gary Pagliano, Specialist in National Defense ) Some observers, particularly critics of the missiledefense program, have expressed concern that the Administration's overall approach for managingthe program could hinder Congress's ability to conduct effective oversight of it. Three areas of theAdministration's management approach are at issue: The first concerns the Administration's planto use evolutionary acquisition with spiral development to develop and acquire missile-defensesystems. The second concerns a DOD directive that exempts the missile defense program fromcertain reporting requirements that are normally applied to major defense acquisition programs. Thethird concerns a decision to classify certain missile defense testing and program information. The Administration and its supporters argue that these three developments are needed to helpthe program proceed expeditiously and to help prevent potential adversaries from learning how toevade or overcome U.S. missile-defense systems when they are deployed. Critics argue that thesethree factors could reduce Congress's ability to understand, track, and thereby conduct effectiveoversight of the Administration's missile defense program. Each of these three developments isdiscussed below. Evolutionary Acquisition with Spiral Development. ( Gary Pagliano, Specialist in National Defense ) In presenting its new missile defense program toCongress in 2001, the Administration announced that missile defense systems would be developedand acquired under a relatively new approach called evolutionary acquisition with spiraldevelopment, or spiral development for short. As discussed in another CRS report, (38) spiral development is anoutgrowth of the defense acquisition reform movement of the 1990s, and represents a departure fromthe traditional DOD approach for developing and acquiring major weapon systems. Spiraldevelopment is aimed at achieving certain widely accepted defense-acquisition goals, including thefollowing: (1) getting usable increments of a weapon capability into service sooner; (2) mitigatingtechnical risk in acquisition programs involving new or emerging technologies; (3) taking advantageof user feedback in terms of determining how to modify and improve the system; and (4) facilitatingthe incorporation of new technologies into the system design during the system's life cycle. Missile defense was the first major weapon acquisition program to be publicly linked withspiral development. DOD officials, however, have stated that they want spiral development to bethe new "default" (i.e., standard) acquisition strategy for major weapons acquisition programs, andhave since announced their intention to apply spiral development to other major weapon acquisitionprograms, such as the Navy's DD(X) next-generation surface combatant program. Under an evolutionary acquisition strategy, a basic version of a weapon system is developedand fielded with the intent of subsequently developing and deploying more capable versions of thesystem as technology and requirements are further refined. A critical aspect of evolutionaryacquisition is spiral development, under which the various elements of a weapon system evolveincrementally over time in an iterative manner. Instead of attempting to develop a system that will,upon first deployment, fully satisfy a detailed military requirement, systems under an evolutionaryacquisition strategy would be developed, tested, deployed, and modified in a cyclic process that, inprinciple, would permit weapons developers to incrementally work toward a final systemconfiguration that is eventually capable of meeting its required objectives. A distinct characteristic of evolutionary development is a reduced ability, particularly at theoutset of a program, to define what the deployed system might look like at various points in thefuture. Rather than attempting to define final configuration at the outset, evolutionary developmentconsciously treats this issue as an open question to be addressed over time as elements of the systemare developed, deployed, evaluated, and modified. In this sense, the Administration's proposedmissile defense effort is more of an evolving concept than a typical military system in development. The Administration's missile defense plan would apply evolutionary acquisition and spiraldevelopment to an entire family of system development efforts related to the common mission ofmissile defense. Under the Administration's plan, missile defense systems would be built, tested,deployed, and evaluated incrementally. The final missile defense system or architecture -- that is,the numbers and characteristics of the land-, sea-, air-, and space-based system involved -- wouldbe determined gradually over the course of several years. During this period, systems capable ofperforming similar portions of the missile defense mission (i.e., the boost phase, the midcoursephase, or the terminal phase) would be in implicit competition with one another for places in thefinal system configuration. The Administration's plan to employ this acquisition strategy for missile defense is consistentwith its view that missile defenses are urgently needed. The Administration argues that deployingmissile defenses sooner with less capability than later versions is desirable because any improvementin U.S. missile defense capabilities would complicate enemy planning and thereby strengthendeterrence against ballistic missile attacks. The Administration also argues that the strategy isappropriate for weapon acquisition programs, such as missile defense, where the fundamentaltechnologies involved are less technically mature than they are for well-established types ofweapons, such as aircraft and ships. A major consequence of the Administration's proposed evolutionary acquisition strategy isthat the missile-defense program would not feature the familiar phases and milestones of thetraditional DOD acquisition system. Another consequence, already reflected in DOD testimony, isthat BMDO cannot provide Congress with a description of its final missile defense architecture, thecapabilities of any near- or longer-term system, the specific dates by which most elements of theemerging architecture are to be tested and deployed, an estimate of the eventual total cost of themissile-defense program, or estimates of the amounts of funding that the program will require inindividual years beyond FY2002. Lt. Gen. Ronald Kadish, Director of BMDO (now MDA), statedthe following to the Senate in July 2001 in introducing the Administration's missile-defense plan But before I proceed to describe the newprogram in detail, I would like to make clear what this program does not do. It does not define aspecific architecture. It does not commit to a procurement program for a full, layered defense. Thereis no commitment to specific dates for production and deployment other than for lower-tier terminaldefense systems.... First, we are recommending a broad, flexibleapproach to RDT&E that allows us to explore multiple development paths and to reinforce successbased on the best technological approaches and the most advantageous basing modes in order tohedge against the inherent uncertainty of the ballistic missile defense challenge. Second, we arerecommending an acquisition approach that is evolutionary, one that will allow us to field systemsincrementally once they are proven through realistic testing. And third, rather than committing toa single architecture as we have done in the past, we will deploy over time different combinationsof sensors and weapons consistent with our national strategicobjectives.... This robust RDT&E program aims todemonstrate what does and does not work. Those activities showing the greatest promise willreceive greater resource emphasis. Our progress will inform an annual high-level decision-makingprocess that will steer the BMD program in the most promising direction, taking into accountoptimal approaches and the most reliable information on costs, allowing informed research,production, and deployment decisions.... The business of missile defense requires copingwith a number of technological, developmental, acquisition, and threat uncertainties. For this reason,I cannot tell you today what exactly the system will look like 15, 10, or even five years from now. This system will take shape over time. We do not intend to lock ourselves into a highly stylizedarchitecture based on either known technologies or hoped for advances in technology that will takea decade or more to complete. We intend to go beyond the conventional build-to-requirementsacquisition process.... Specific system choices and time lines will takeshape over the next few years through our capability-based, block approach. We will increase ourcapability over time through an evolutionary process as our technologies mature and are proventhrough testing. The block approach allows us to put our best, most capable technologies "in play"sooner than would otherwise be possible. We have organized the program with the aim ofdeveloping militarily useful capabilities in biannual blocks, starting as early as the 2004-2006 timeframe.... We must deviate from the standard acquisitionprocess and recognize the unprecedented technical challenges we are facing. We do not have major[missile] defense acquisition programs in the FY2002 budget. We do not have program activitieswith traditional fixed milestones and clearly marked phases showing the road toproduction. The new approach to BMD developmentfeatures more streamlined, flexible management through comprehensive and iterative reviews. Wewill establish yearly decision points to determine the status of the available technologies and conceptevaluations in order to be in a position to accelerate, modify, truncate, or terminate efforts in aparticular area. This comprehensive annual review process will also help us make decisions to shapethe evolving systems and allocate resources to optimally support them. (39) The Administration and its supporters argue that the use of spiral development for the missiledefense program (or other weapon acquisition programs) will not prevent Congress from conductingeffective oversight, and could even improve Congress's oversight ability in some respects, becauseCongress will retain its role in approving each block, or segment, in a spiral development program,and because the information that DOD provides for the block to be approved will be more reliablethan the potentially speculative information it might present under the traditional acquisitionapproach about what the entire program might look like from beginning to end. Critics of the Administration's plan to use spiral development argue that it could reduceCongress's ability to provide effective oversight by putting Congress in the position of approving thestart of a program whose outlines are only vaguely defined, because the lack of an original estimateof the program's overall quantities, cost, schedule, and cost would deprive Congress, years later, ofa benchmark against which to measure performance of the program, and because the built-inpotential for changes in a spiral development program could make funding projections for spiraldevelopment programs more volatile than funding projections for traditional developmentprograms. (40) Exemption from Reporting Requirements. ( GaryPagliano, Specialist in National Defense ) In January 2002, the Secretary of Defense issued amemorandum exempting the missile defense program from certain reporting requirements normallyapplied to major defense acquisition programs (even those that employ spiral development). TheAdministration's stated intent in issuing this directive was to help streamline the management andoversight of the missile defense program and thereby enable it to proceed more expeditiously. Thisobjective is consistent with the Administration's interest in fielding missile defense systems withoutdelay. Critics of the Administration's missile defense program, however, argue that the directive willdeprive Congress of key program information and thereby reduce the ability of Congress to conducteffective oversight of the program. (41) Information to Be Classified. ( Gary Pagliano,Specialist in National Defense ) In May 2002, the Administration announced that certain informationabout the missile defense program, including details about developmental tests, will henceforth beclassified, and, therefore would not be released to the public. Administration officials argue thatclassifying the information will help prevent potential adversaries from learning about the technicalcharacteristics of U.S. missile defense systems and using that information to design ballistic missileswith features designed to evade or overcome U.S. defenses. Critics of the decision argue that someof the information the Administration has decided to classify, such as basic details about earlydevelopmental tests, would be of no practical use to a potential adversary, and that theAdministration's actual motive in limiting access to the information is to shield the missile defenseprogram from public scrutiny and criticism. (42) Air-Based Boost. ( [author name scrubbed], Analyst inScience & Technology, and [author name scrubbed], Specialist in National Defense ) The Air-BasedBoost program, more commonly known as the Airborne Laser (ABL), would use a high-powerchemical laser mounted in a modified Boeing 747 aircraft to shoot down theater missiles in theirpowered boost phase of flight. The laser would seek to rupture or damage the missile's booster skinto cause the missile to lose thrust or flight control and fall short of the intended target before decoys,warheads, or submunitions are deployed. The ABL's intended range is several hundred kilometers.Major subsystems include the lethal laser, a high-precision tracking system for keeping the laserbeam on target, and an adaptive optics system that compensates for atmospheric effects to keep thebeam tightly focused. The ABL program was transferred to BMDO, now the MDA, from the Air Force. The MDAstates there is no current system or architecture envisioned for missile defense, including specificsfor the ABL. But the Director of BMDO, in congressional testimony, has stated that "BMDO willevaluate the most promising projects" for boost-phase defense "to provide a basis for an architecturedecision between 2003 and 2005." The most recent Air Force concept envisioned a fleet of seven aircraft. Five of these aircraftwould deploy to a theater to support two 24-hour combat air patrols. These aircraft would bepositioned behind the friendly line of troops and moved closer toward enemy airspace as local airsuperiority is achieved. The most recent cost estimate was $10.7 billion (life cycle costs), whichincludes an estimated $1.6 billion for the current program development and risk reduction phase. The contractor team consists of Boeing, Lockheed Martin, and TRW. Boeing is responsiblefor the aircraft and for overall management, including systems integration. Lockheed Martin isresponsible for the beam control systems, including target tracking and atmospheric compensation.TRW is responsible for the lethal laser and for ground support systems. There are numeroussubcontractors. The system currently under development will attempt its first missile shoot-down test in2005. BMDO states this half-power ABL could be available for deployment as an emergencycapability immediately following lethality demonstrations scheduled for late 2005. If all goesaccording to schedule, this system and the next two could provide an initial operating capability: one aircraft on station, one preparing to arrive on station, and one on ground alert between FY2009and FY2011, depending on the results of additional operational testing. Congressional concerns about the ABL have centered on two main issues: the maturity of keytechnologies and the concept of operations. First, although proponents contend that the ABL employsmature technology, others characterize key aspects (particularly the atmospheric compensationsystem) as experimental. Critics also claim that the tests needed to resolve this question, which arebeing conducted concurrently with the development of the technology, will not take place until 2005.This date is after a second aircraft is scheduled to be ordered, and just months before the firstshoot-down test. The compressed and concurrent nature of this schedule also is an issue of concern. The Defense Department's Office of Test and Evaluation informed Congress in its FY2000annual report (January 2001) that the 24-month EMD (Engineering, Manufacturing, andDevelopment) program is "alarmingly short....[the schedule] allows for no technical problems or testfailures, and the many integration and test activities cannot all physically be accomplished in the timeallotted for EMD." However, this schedule is likely to change due to the two year delay for the lethalshoot-down. Second, there is disagreement about whether the ABL would be operationally effective, evenif its technology performs as planned. The ability of the ABL to destroy enemy missiles at itsintended range depends on a number of factors, including atmospheric conditions between the laserand the target, possible enemy countermeasures, and the worldwide trend towards deployment oflonger-range missiles for theater operations. Possible technical countermeasures include hardeningthe missile casing, spinning the missile, or applying a polished finish to the missile. In addition, the ability to deploy ABL aircraft during crisis or war will depend on the abilityto provide a relatively safe area of operations through air superiority. It is not clear whether enemyforces would wait for this to happen and render their ballistic missile forces more vulnerable, or seeincentives to launch their missiles before ABL systems were deployed, or whether an opponentmight choose to wait out a crisis because a force of ABL aircraft probably would not be deployedon 24-hour combat patrols indefinitely. Space-Based Boost. ( [author name scrubbed], Specialistin Science & Technology Policy ) The mission of the Space-based Boost intercept portion of theprogram is to develop the capability of shooting down ballistic missiles of any range in their boostphase (i.e., before the missiles have released their payload) from platforms located in orbit. Twoconcepts are under development: a space-based laser (SBL) and space-based kinetic weapons. Bothconcepts have been under development to varying degrees since before SDI in the early 1980s. Congressional funding support for this portion of the program is waning. In FY2002, the Bush Administration had requested $170 million for space-based laserdevelopment, with much of that directed toward the development of an Integrated Flight Experiment,to be conducted in space and initially scheduled for 2012, and the construction of a test facility tobe located at Stennis Space Flight Center. However, Congress, concerned that the technology wasnot mature enough to warrant the development of the flight experiment at this time, appropriatedonly $30 million for the program. As a result, the Integrated Flight Experiment (which was projectedto cost between $1 billion and $3 billion) and the test center were cancelled. The BushAdministration's FY2003 request for the space-based laser was $34 million, and directed primarilyat reducing technical risks associated with key components (the megawatt hydrogen-fluoride laser,mirrors, beam controls, pointing/tracking/fire controls, etc.). Congress reduced the request by $10million in its FY2003 appropriations. The space-based kinetic energy component of the space-based boost phase intercept portionof the program is designed to further develop the key component technologies including the kinetickill vehicle, boosters, sensors, battle management and control, and platform integration. Development work and experiments are to help reduce the technical risks and lead to a designdecision in FY2006 or later. This element was a new start in FY2002 and received $23 million. TheBush Administration requested $53million for FY2003 and had proposed major increases in theprogram in the out-years. Congress cut the request by $50 million. In its appropriations report, theHouse Appropriations Committee stated that greater emphasis should be placed on accelerating themanufacture of existing systems, such as the PAC-3, and on accelerating the development of othermore mature technologies. There are a number of issues associated with space-based boost phase intercept. Any suchsystem could also function as a anti-satellite weapon, an issue that remains highly controversial. Thedesirability of stationing weapons in space generates differing opinions. Also, the technical hurdlesassociated with space-based interceptors -- especially lasers, with their weight, size, and reliabilityconstraints -- are difficult. Feasibility is not yet certain, hence the need for the demonstrationprograms. At the very least, how long it will take to overcome those hurdles and at what costremains uncertain. Although no longer a constraint, when the ABM Treaty was in force, testing anddeploying these systems in an ABM mode had been prohibited. Sea-Based Boost. ( [author name scrubbed], Specialistin National Defense ) The Sea-Based Boost program was created by the Bush Administration in2001 as part of its new missile defense program. The general idea of using sea-based missiles tointercept enemy ballistic missiles in their boost-phase, however, goes back several years. Thesea-based boost-defense concept is of potential interest because forward-deployed Navy shipsoperating off the coasts of other countries might be close enough to certain ballistic missile launchsites of concern for high-speed, high-acceleration, ship-launched interceptors to fly inland from theship and intercept enemy ballistic missiles during the boost phase. The sea-based boost-defense concept appears most feasible for use against missiles launchedfrom sites that are close or somewhat close to international waters, since this would reduce thedistance that the interceptor would need to fly to reach the enemy missile and thereby increase thechance that the interceptor would reach it during its boost phase. The concept might thus have themost potential for intercepting missiles launched from countries such as North Korea, Libya, orperhaps Iran. The concept would appear to offer little potential for intercepting long-range Russianor Chinese missiles, whose launch sites are located deep inland, because these missiles are morelikely to complete their boost phase before a ship-launched interceptor (even one with a high-speed,high-acceleration booster) could reach them. Although the Sea-Based Boost program is not yet well defined, a robust sea-based boostsystem would likely require an interceptor missile with: a much higher maximum speed, or burn-out velocity (perhaps 6 to 8 kilometersper second [kps]) than that of the SM-3 interceptor missile now being developed for the Sea-BasedMidcourse system (which has a maximum speed of a bit more than 3 kps); a high rate of acceleration to maximum speed, to help meet the shortengagement times associated with boost-phase intercepts; and a kill vehicle different from the Sea-Based Midcourse kill vehicle, because thelatter is designed to operate against a small and relatively cold target, while a boost-defense killvehicle would need to be capable of operating against a large and hot-burningtarget. The first two characteristics will likely require either a major modification to the existingSM-3 missile design or the development of an entirely new missile with a diameter of up to 27inches. Whether a modified SM-3 or an entirely new design, a higher-speed missile developed forthe Sea-Based Boost program might prove suitable, with a different kill vehicle, for use as animproved interceptor for the Sea-Based Midcourse system. Conversely, a higher-speed missiledeveloped for an improved Sea-Based Midcourse system might prove suitable, with a different killvehicle, for use as the interceptor for the Sea-Based Boost system. (See section on the Sea-BasedMidcourse program.) Using the same basic interceptor missile for both programs could reduce totalsea-based missile defense costs. It may also be possible, as a near-term stopgap measure, to develop a more limitedboost-phase capability based on the SM-3 missile. Although the SM-3 was designed to interceptslower-moving theater-range ballistic missiles rather than faster-moving intercontinental ballisticmissiles (ICBMs), the SM-3 may have some potential to intercept certain ICBMs -- specifically,those that are fired from coastal launch pads -- during the later (i.e., exoatmospheric) part of theirboost phase, before they have attained their maximum speeds. A mid-2002 discussion of the sea-based boost concept stated: Although the radar currently in place on Aegiscombatants has enough power and resolution to detect and track ICBMs during the boost phase, thenavy has optimized the system's performance and displays to defend against targets such as cruisemissiles and missiles launched from airplanes. The required modifications for ICBM defense are nottrivial, but they are achievable. What is totally missing at present is a suitable boost-phase missileinterceptor. Some U.S. Navy officials proposed using SM-2Block IV (43) missiles toengage boosting ICBMs in the upper atmosphere; that proposal, however, was fraught with a greatdeal of technical risk and required the ship to be within 50 kilometers of the launch site, making theship itself vulnerable. A more practical approach may be developing a missile interceptor intendedto engage the boosting ICBM later in its boost phase above the atmosphere, allowing ships to be asmuch as 1,000 kilometers from the launch site. Developers could use the SM-3 test missiles beingproduced for the navy's midcourse risk-reduction effort as a starting point for suitable interceptormissiles. Successful boost-phase intercept missiles, however, would have to be faster than the testmissiles.... Using the modified SM-3 or wide-diameter missiles(fast-accelerating interceptors with high terminal speeds), the ship could be as far as 1,000 kilometersfrom the launch point. U.S. Navy ships thus equipped in international waters could engage missileslaunched from all of North Korea or Iraq. The effectiveness of sea-based boost-phase missile interceptors against ICBMs launched from Iran would depend on the part of the country from whichthe ICBMs were launched. In some cases, U.S. forces would need ground-based or airbornesupplements. A sea-based boost-phase capability has clear politicaladvantages and some disadvantages. Its main advantage is the ability to provide a potential defenseagainst ICBMs launched from North Korea and most parts of the Middle East. At the same time, seabasing would present no threat to Russia's and China's land-based ICBM deterrents because thoselaunch points are far inland. As for disadvantages, a sea-based boost-phasesystem would potentially threaten Russia's submarine-launched deterrent, assuming a capabilityexisted to estimate the general location of the submarine. Second, any boost-phase defenses wouldrequire the establishment of a "no-launch zone" or other special procedures over the rogue state anda willingness in extremis to delegate the engagement decision to the local U.S. commander. Bothrequirements may be difficult to sustain politically. Finally, any boost-phase concept would requirelaunching the interceptors in the direction of the country launching the ICBMs as well as towardthird parties that may not be involved. For example, launches against North Korean missiles withboost-phase missile interceptors would entail launches on azimuths toward both North Korea andChina. When defending against Iraqi and Iranian missile launches, the boost-phase missileinterceptors would fly over several countries on an azimuth toward Russia. Additionally, debris fromthe engagement (damaged warheads, spent interceptor boosters, and so forth) could have an impacton uninvolved countries. If the United States accepts these politicaldisadvantages, the operational advantages of a sea-based boost-phase interceptor are significant.With the potential exception of Iran, these interceptors are most effective against the countries inneed of dissuasion and deterrence, and they are less effective against former adversaries that needreassurance. (44) MDA Director Kadish stated in July 2001 that the Sea-Based Boost program "is consideringa high-speed, high-acceleration booster coupled with a boost kill vehicle. This same booster willbe evaluated (with a different kill vehicle) for sea-based midcourse roles." (45) The program could bepursued as either a complement to air- and space-based boost-defense systems or a hedge against thepossibility of technical problems in these other programs. General Kadish also stated in July 2001that MDA is "going to institute concept studies and [is] looking at concepts on how to do the boostphase with kinetic energy, as a hedge against the directed energy, should we run into problems there. So we have some experiments in space with the space-based laser, and we're looking at whether weshould be doing some experiments in space with kinetic energy that build on the terrestrial side forairborne laser and a sea-based kinetic energy killer." (46) In May 2002 it was reported that A modified Standard Missile-3 using a newkinetic kill vehicle now being developed by the Missile Defense Agency may be included in a seriesof experiments planned for fiscal year 2004 that will look at promising new approaches to defeatballistic missiles during their boost phase, an MDA spokesman told Inside the Navy last week. MDAplans to spend over $2 billion through FY-07 to develop a boost-phase interceptor that could belaunched from a Navy ship, according to agency budgetdocuments.... MDA spokesman Christopher Taylor told ITNthat during FY-02 the agency and the Navy will develop mission requirements for early criticalexperiments (ECE) scheduled for FY-04. "Current options for the ECE missile include a modifiedStandard Missile-3 that incorporates the new Generation 1 boost kill vehicle under development aswell as other more powerful boosters resulting from MDA's Broad Agency Announcement," hesaid. The Navy and MDA will also finish a conceptdefinition and assessment study in FY-02 that looks at candidate kinetic energy boost elements ofthe Ballistic Missile Defense System, the layers, multiprogram architecture that will handle a wholerange of ballistic missile threats from ICBMs to the very shortest rangemissiles. "This study, done in collaboration with theMissile Defense National Team, is assessing a broad range of boost concepts spanning the completeset of basing modes including sea, space, air and ground," Taylor said. "Our intent is to executecritical experiments in FY-03-05 to mitigate the risk in accomplishing the boost mission. Thesecritical experiments may culminate in a focused demonstration of a particular basing modedepending on the results of the CD&A study and the early critical experiments." (47) In early September 2002, it was reported that the Defense Science Board (a federal advisorycommittee that provides independent advice to the Secretary of Defense) had recommended inAugust 2002 that DOD focus its missile defense efforts on two main approaches: a ground-basedmidcourse system and a sea-based boost and ascent-phase system. (48) In June 2002, it was reported that one boost-phase activity that's materializing involvesmodifying the lightweight exoatmospheric projectile (Leap) used as the kill vehicle in the sea-basedmidcourse defense system. It will gather data on a boosting target, according to Dean T. Gehr,missile defense business development manager for Raytheon. The goal is to conduct a flybyexperiment and determine whether an infrared sensor can detect the missile. Leap's solid-fuel divertand attitude control system (DACS) would likely be replaced with a larger, liquid fuel system thatwould give the kill vehicle more maneuverability. While the boosting missile is easy to spot because ofits large infrared signature, the weapon becomes encased in a plume of hot gases as it reaches higheraltitude and thinner atmosphere. The seeker then has difficulty finding the missile. Modificationswill likely be made to the IR sensor to look at the bright target, Gehr said. If the IR sensor alone can'tdo the job, it might have to be supplemented with an ultraviolet sensor or laserradar. For test purposes, the data-collection effort probablywill use the Standard Missile SM-3, which is the interceptor for the sea-based midcourse system.Raytheon hopes a modified SM-3, with a 21-in. second stage, can serve as the interceptor in anoperational configuration, but MDA officials have indicated they may need a dedicated missile.Notional performance for such a system would be 30g acceleration and speeds of 8 km./sec. velocityat burnout. (49) In October 2002 it was reported that DOD and industry officials say [MDA] isleaning toward developing a 'multi-use' boost-phase interceptor with a speed of around 6km/s [6 kps]that could be launched from navy ships, but could also be operated from land, even airborne andpotentially have space applications. "We have initiated experiments this year todemonstrate the capabilities of a kinetic-energy boost system," said Pat Sanders, program executiveofficer for the MDA's overarching BMDS [Ballistic Missile Defense System]. "We expect toconduct tests to intercept a boosting missile no later than 2005." Later, the same interceptor boostermay be evaluated with a different kill vehicle for mid-course use, DOD officials said. (50) [author name scrubbed], Specialist in National Defense Ground-Based Midcourse. The Ground-BasedMidcourse Program, also known previously as the National Missile Defense (NMD) program, woulduse some number of ground-based interceptors to seek to defend all 50 states of the United Statesfrom a limited intercontinental-range ballistic missile attack. The kinetic kill warhead on the missilewould seek to destroy its intended target through direct collision during the midcourse phase of theattacking missile or warhead. Major subsystems might include some number of existing and newradars and surveillance platforms, including the Aegis Spy-1 radar, existing early warning radarsand a new X-Band radar, the space-based Defense Support Program, SBIRS (High and Low), andvarious Battle Management, Command, Control, and Communications (BMC 3) components. Pacific Missile Defense Testbed. The Administrationhas moved forward with the Pacific Missile Defense Testbed (also known as the Midcourse TestBed). The Administration asserts this Test Bed could provide a rudimentary ground-based ICBMdefense contingency capability. In December 2002, the Administration announced a specific program and timeline. TheAdministration said the United States would begin fielding initial missile defense capabilities in2004-2005 to meet the near-term ballistic missile threats to the U.S. homeland, to U.S. deployedforces, and to counter ballistic missile threats to U.S. friends and allies. This initial capability wouldbuild on the planned Pacific Missile Defense Testbed and would serve as a starting point fordeploying increasingly effective missile defenses over time, according to the Administration. The initial set of capabilities in mind for 2004-2005 include up to 20 ground-based interceptors designed to intercept and destroy ICBMsduring the midcourse phase of their flight. These interceptors would be based at Ft. Greeley, Alaska(16 interceptors) and Vandenberg Air Force Base, California (fourinterceptors); up to 20 sea-based interceptors deployed on existing Aegis ships to try andintercept ballistic missiles in the first few minutes after they are launched (i.e., during their boost andascent phases of flight); deployment of air-transportable PAC-3 systems designed to intercept short andmedium-range ballistic missiles; and land, sea, and space-based sensors, including existing early warning satellites,an upgraded radar now located at Shemya, Alaska, a new sea-based X-band radar, upgraded existingearly warning radars in the UK and Greenland, and use of other sensors now on Aegis cruisers anddestroyers. These capabilities could be improved upon through additional measures such as additionalinterceptors of varying capabilities and basing platforms. Ground was broken for the Ft. Greely siteon June 5, 2002, for missile silos and support buildings. The initial ground-based midcourse partsof the testbed are to be constructed by the end of September 2004. The purpose of the test bed is tovalidate the ground-based midcourse concept and to improve the realism of interceptor tests,according to DOD. Other key parts of the testbed are planned or are under construction in Alaska,California, Colorado, the Republic of the Marshall Islands. Costs. System costs have not been provided. Thesecosts may also not become available because of the evolutionary acquisition strategy adopted formissile defense. Nonetheless, there is a useful point of reference in terms of costing a midcoursesystem. The Clinton Administration considered deploying a system of 100 ground-based interceptorsin Alaska at a cost of about $36 billion (the life-cycle cost was estimated to be about $44.5 billionthrough FY2026). The Initial Operational Capability (IOC) for this system was 2005. Recent Tests and Technical Challenges. The NMDor ground-based midcourse program has witnessed a number of technical challenges. These includeongoing delays in testing the rocket booster, which in turn has adversely affected decisions onacquiring long-lead interceptor technologies. In addition, modeling and simulation tools that weresupposed to aid the Clinton Administration in its decision whether to deploy a limited NMD inAlaska, were delivered too late to help in that decision. The Integrated Flight Test (IFT) programalso has experienced uncertain results. Although many tests were called successful by the DOD,several post-intercept test analyses have been considered more ambiguous. Much of this debatecenters over the degree to which target missiles or warheads were artificially enhanced to make theintercept more likely. Program delays have occurred regularly. But, a great number of IFT objectiveswere designed to test other aspects of the missile launch, missile flight, and interceptor performance. These other, non-intercept objectives have largely been considered successful. On December 11, 2002, the Missile Defense Agency announced it could not complete aplanned intercept test because the kill vehicle and the booster rocket failed to separate. This was the8th intercept of the ground-based midcourse research and development program. The first test onOctober 3, 1999, successfully intercepted its intended target. The 2nd test occurred on January 19,2000; an intercept was not achieved because of a problem with the on-board cooling system. The 3rdtest on July 8, 2000, also failed to intercept its target because the kill vehicle failed to separate fromthe booster rocket. The 4th test, on July 14, 2001, successfully intercepted its target, as did the 5th and6th tests on December 3, 2001 and March 15, 2002, respectively. BMDO stated this test is a majorstep in an "aggressive test program," and that it was the "third successful intercept test in fiveattempts." The 7th test on October 14, 2002 was also deemed a success and for the first time aship-based SPY-1 radar was used to track a long-range target. More recent planned intercept flight tests have been delayed for some time. Currently, theBMD interceptors deployed in Alaska have not been tested in their current configuration (i.e., currentbooster and interceptor). Hence, questions are raised over its performance and effectiveness. Sea-Based Midcourse. ( [author name scrubbed],Specialist in National Defense ) Ships and SM-3 Interceptor. The Sea-BasedMidcourse program is the successor to the Navy Theater-Wide (NTW) program (which was alsocalled the Navy Upper Tier program). MDA Director Kadish stated in his July 2001 testimony toCongress on the Administration's new missile defense program that "The Sea-Based MidcourseSystem is intended to intercept hostile missiles in the ascent phase of midcourse flight, which whenaccompanied by [the] ground-based system, provides a complete midcourse layer [of defense]. Byengaging missiles in early ascent, sea-based systems also offer the opportunity to reduce the overallBMD System's susceptibility to countermeasures." (51) MDA plans to spend about $3.3 billion on the Sea-Based Midcourse program betweenFY2003 and FY2007. Major contractors for the program include Raytheon Missile Systems ofTucson, Arizona (the prime contractor for the development of the interceptor missile), and LockheedMartin Naval Electronic and Surveillance Systems of Moorestown, New Jersey (which manages thedevelopment of the shipboard Aegis Weapon System). The Sea-Based Midcourse system, like the earlier NTW program, would be based on theNavy's Aegis ships, which are equipped with the powerful SPY-1 radar. (52) The Navy's NTW programwas designed to intercept theater-range ballistic missiles during the midcourse phase of flight, so asto provide theater-wide (i.e., regional) defense of U.S. and friendly forces, vital military and politicalassets ashore, and large geographic areas. Achieving a capability against theater-range ballisticmissiles involves modifying the SPY-1 radar to improve its ability to detect and track ballisticmissiles and developing a new version of the Standard Missile interceptor known as the SM-3. Compared to the earlier SM-2 missile, the SM-3 would incorporate a third-stage rocket motor to givethe missile a higher maximum speed (i.e., a higher "burn-out velocity"), and a kinetic kill vehicle(KKV) called the Lightweight Exo-Atmospheric Projectile (LEAP) that destroys the enemy missileby colliding with it. MDA Director Kadish's July 2001 testimony and subsequent statements suggest that theAdministration's plan for Sea-Based Midcourse is to proceed with development and deployment ofthe capability envisaged under the NTW program, and then work toward improving the system sothat it can eventually be used against faster-flying intercontinental ballistic missiles (ICBMs). MDAofficials have indicated that if developmental testing goes well, the basic version of the Sea-BasedMidcourse system (the NTW-like version capable of intercepting theater-range ballistic missiles)might be ready for deployment in 2005 or 2006. A more advanced version of the Sea-BasedMidcourse system (a version capable of intercepting ICBMs) might be ready for deployment severalyears after that. The basic version of the Sea-Based Midcourse system was successfully tested threeconsecutive times in 2002, achieving intercepts on Aries target ballistic missiles on January 25, June13, and November 21. The June intercept occurred on the day that the ABM treaty expired and wasthe first to employ a sea-based Aegis radar to guide the interceptor to the target missile. Both theJanuary and June tests involved descent-phase intercepts. Following the successful result of the Junetest, the flight test program was accelerated with the intention of deploying the system as a near-termdefense against theater-range ballistic missiles in 2005 or 2006. The November test was the first ina series of six flight tests aimed at this goal, and was the first in which the Sea-Based Midcoursesystem intercepted a missile in its ascent phase. The remaining five tests in the series will involvemore complex and stressing engagement scenarios. Three of these five tests are planned for 2003. The first may occur in April or May and the second in August; both are to involve ascent-phaseintercepts. The tests will also explore the potential for the SM-3 to intercept ballistic missiles atlower altitudes in space, so that it can perform part of the mission that was to be performed by thenow-cancelled Navy Area Defense (i.e., Lower Tier) program (see discussion in the Sea-Based Boostsection). (53) Improving the Sea-Based Midcourse system so that it can be used against ICBMs wouldlikely involve making additional modifications to the Aegis ships' radars, including furtherimprovements to the SPY-1 radar, which operates in the S band, and the potential addition of a newX-band shipboard radar called the high-power discriminator. Improving the Sea-Based Midcourse system so that it can be used against ICBMs would alsoinvolve developing a larger and higher-speed missile than the SM-3, which has a maximum speed(i.e., burn-out velocity) of a bit more than 3 kilometers per second (kps). The Navy reportedly hasbeen considering 3 different options for a higher-speed missile: (54) Faster SM-3 . This missile, also referred to as the SM-3 Block 1 or theEnhanced NTW missile, would extend the 21-inch diameter of the SM-3's first-stage booster upthrough the second stage, but retain the Standard Missile's original 13.5-inch diameter above thatpoint. It would have a range of 1,000 kilometers and a maximum speed of 4.5 kps, and it wouldcarry an improved version of the NTW missile's LEAP KKV weighing about 30kilograms. Enhanced SM-3. This missile, also referred to as the SM-3 Block 2 or theImproved 8-Pack missile, would increase the diameter of the Standard missile along its entire lengthto 21 inches -- the maximum diameter that can be fired from the Mk 41 vertical launch system (VLS)installed on Aegis ships. (The Mk 41 VLS is installed on Navy ships in modules that each contain8 missile-launch tubes, leading to the use of the term 8-pack.) This missile would have a range of1,500 kilometers and a maximum speed of 5.5 kps, and it would carry a more capable KKVweighing about 40 kilograms. New Missile. This missile, also referred to as the Standard Missile 27 or the6-Pack missile, would have a diameter of 27 inches and a longer length than the Standard Missile,and would be fired from a new VLS designed to accommodate missiles of that diameter and length. This new VLS could have 6 missile-launch-tube modules occupying the same deck area as the 8-tubemodules of the current Mk 41 VLS, leading to the use of the term 6-pack. This missile would havea range of more than 1,500 kilometers and a maximum speed of 6.5 kps, and it would carry an evenmore capable KKV, either the same KKV being developed for the land-based NMD system or anadvanced-technology KKV, weighing about 50 kilograms. In addition to the above missile options, Japan is participating in a cooperative developmentprogram with MDA to develop certain technologies that could be used to improve the SM-3. (55) A higher-speed missile developed for an improved Sea-Based Midcourse system might provesuitable, with a different kill vehicle, for use as an interceptor for a Sea-Based Boost system. Conversely, a higher-speed missile developed for the Sea-Based Boost program might provesuitable, with a different kill vehicle, for use as the interceptor for an improved Sea-Based Midcoursesystem. (See section on the Sea-Based Boost program.) Using the same basic interceptor missilefor both programs could reduce total sea-based missile defense costs. Sea-Based X-Band Radar. Independent of theAegis-ship program described above, MDA announced on August 1, 2002 that it wants to build alarge, sea-based, X-band missile tracking and engagement radar to support the Ground-BasedMidcourse system. This sea-based radar would be built in lieu of a ground-based X-band missiledefense radar. MDA wants the sea-based radar to be deployed by September 2005 as part of thePacific missile defense development test bed. The sea-based radar option was selected over thealternative of building an additional ground-based X-band radar in large part because the ability toreposition a sea-based radar permits the creation of a numerous radar configurations that can supporta variety of missile-defense development tests and emerging missile defense requirements. Boeingand Raytheon are main contractors for the radar, whose total acquisition has been estimated at about$900 million. (56) Nofunds specifically for the sea-based X-band radar were included in the FY2003 defense budgerequest. Under MDA's plans, the X-band radar is to be carried aboard "a modified, fifth generationsemi-submersible platform similar to those currently used in the oil exploration industry." Theplatform would have a length of 390 feet, a beam (width) of 238 feet, and a draft of 77 feet. It woulddisplace 50,000 tons, which is about half the full load displacement of a U.S. Navy Nimitz-classaircraft carrier. It would have a deck area measuring 270 feet by 230 feet and would be able torelocate itself using electric thrusters. The X-band radar would sit on the deck, encased in aspherical shell. (57) Thegeneral concept of deploying large radars on sea-based platforms is not new: The United States overthe years has outfitted and operated several merchant-type ships with large radars similar to MDA'sproposed X-band radar to support flight tests of U.S. ballistic missiles and reportedly to learn aboutthe characteristics of foreign ballistic missiles. Ground-Based Terminal. ( [author name scrubbed],Specialist in National Defense) Patriot PAC-3. The Patriot PAC-3 (PatriotAdvanced Capability-3, MIM-104 Patriot/ERINT) is the U.S. Army's primary medium-range airdefense missile system and is considered a major system improvement over the Patriot used in theGulf War, and of the subsequent PAC-2. It will target enemy short- and medium-range missiles intheir mid-course or descent phase in the lower atmosphere, and will be used in conjunction with thelonger-range THAAD. When all changes have been made, the PAC-3 will have a new hit-to-killinterceptor missile (the ERINT), improved communications, radar, and ground support systems. Thefirst unit to be equipped with the final version is receive PAC-3 missiles in late 2001 at Fort Bliss,Texas. Full-rate production was scheduled to begin in late 2001, but slipped to late 2002. In April 2000, the Pentagon projected costs of PAC-3 had increased by $102 million to $2.9billion because of increased reliability and spares costs. A GAO report issued in July 2000 showedPAC-3 total program costs increased from $3.9 billion for 1,200 missiles planned in 1994 to $6.9billion for about 1,012 missiles in the current plan. In April 2001, BMDO estimated the PAC-3acquisition costs to be $10.1 billion. BMDO and the Army are attempting to cut the current cost ofthe missile to allow the purchase of additional missiles. In December 2000, the Army announcedit had restructured the program to finish testing and begin full-rate production earlier. It also plansto increase the numbers purchased in the years 2003-2007. For FY2002, the Bush Administrationrequested $784 million for PAC-3, a 76% increase over the amounts requested and approved forFY2001. The Administration also transferred funding for the PAC-3 from BMDO to the Army. TheHouse Armed Services Committee, in its version of the FY2002 Defense Authorization Bill did notapprove this transfer; this too was later sustained in Congress. Beginning in 1999, PAC-3 had a successful string of intercept flight tests destroying 10 of11 targets, prior to a partial test failure in February 2002 (one PAC-2 missile intercepted a droneaircraft, while a second PAC-2 and a PAC-3 missile missed their intended targets). Subsequentsuccessful intercepts occurred on March 21, April 25, and May 30, 2002. A concern raised was the rising costs of PAC-3. It has been argued that unit costs could bereduced by increasing the number of units purchased and increasing the pace of production. If morecountries buy PAC-3, and if the MEADS program is fielded with PAC-3 missiles, unit costs wouldbe further reduced. (Germany, the Netherlands, Japan, Israel, and Taiwan have Patriot systems andare in various stages of upgrading them. South Korea is considering buying Patriots and Germanyand Italy are participating in MEADS, which would use Patriot missiles.) In May 2000, DOD decided to stop development of PACM (designed to defeat cruisemissiles) because PAC-3 and improvements being made to PAC-2 systems provide a more costeffective defense against ballistic and cruise missile threats. The decision has been controversial,particularly among companies that would have produced PACM. But the conference report on theFY2001 authorization bill noted no funds had been requested for PACM and instructed the Secretaryof Defense to determine if PACM production is warranted. The effectiveness of PAC-3, and other missile defenses, against countermeasures is also anissue. Russia has developed a guided warhead for the Scud missile that it claims has an accuracyof 10-20 meters, can defeat Patriot missile defenses, and is immune to jamming and electroniccountermeasures. It was reported in March 2001 that Russia is offering this warhead for sale to anumber of countries in the Middle East that have Scud missiles. Theater High Altitude Area Defense (THAAD). TheTHAAD program is the U.S. Army's weapon system designed to destroy non-strategic ballisticmissiles just before they reenter the atmosphere or in the upper atmosphere. The THAAD missilewould use a single-stage, solid propellant rocket and a hit-to-kill interceptor designed to destroy theattacking missile with the kinetic energy of impact. Unlike lower-tier, shorter range systems, suchas the Patriot PAC-3 and MEADS, THAAD is intended to help protect wider areas against missilesand falling debris of missiles, as well as possible nuclear, biological, or chemical materials. In April 2000, the Pentagon released a Selected Acquisition Report stating the projected costsof THAAD had increased by $898 million to a total of $9.5 billion because of a revised estimatingmethodology. In April 2001, BMDO estimated THAAD acquisition costs to be $16.8 billion, andthe life cycle costs to be $23 billion. THAAD entered the Engineering and Manufacturing Development (EMD) phase in late June2000. A more advanced version designed to defeat attacking missiles employing countermeasureswas scheduled for 2011. In an accelerated development proposal the Army considered in 2000, thefirst THAAD unit equipped could be moved from FY2007 to FY2006. The Department of Defenseis still studying this accelerated option. Simultaneously, DOD is relaxing the requirement thatTHAAD be able to intercept targets within and outside the atmosphere, raising the altitude at whichit must be able to conduct an intercept. The minimum intercept altitude had been 40 kilometers. Earlier technological problems in THAAD's development jeopardized support for the system. But on June 10, 1999, after THAAD had failed in six previous interceptor flight tests, the firstsuccess was achieved. In each of those six previous unsuccessful intercept flight tests, a differentsubsystem had failed. On August 2, 1999, a second THAAD missile successfully intercepted a targetmissile. After the second successful intercept, Lockheed Martin submitted a proposal for movingTHAAD in EMD, but the Army Space and Missile Defense Command rejected the proposal in April2000 because of management and testing plan deficiencies. Lockheed Martin addressed theseproblems, and the Army later recommended the Defense Acquisition Board (DAB) begin its reviewof THAAD advancing to EMD. Because of concerns that the THAAD and NTW programs were not being tested againsttarget missiles with the speed and other characteristics of likely enemy missiles (such as the NorthKorean Taep'o-dong 1), Representative Vitter introduced legislation in 1999 (H.R. 2596)that would have required BMDO to make appropriate program management and technologyadjustments in the NTW and THAAD programs. Similar legislation in the 107th Congress, such as H.R. 1282 , was designed to help NTW and THAAD improve their likelihood ofsuccessful intercepts against more realistic test targets. For FY2002, the Bush Administration requested $922 million for THAAD, which was a 68%increase over the amount requested and appropriated for FY2001 ($549.9 million), and a 32%increase over the amount requested for FY2002 by the outgoing Clinton Administration. Congresscut THAAD funding by $50 million for FY2002. This cut was directed at denying theAdministration's request to acquire a limited number of THAAD contingency missiles. The FY2003request for THAAD is $935 million. Medium Extended Air Defense System (MEADS). The Medium Extended Air Defense System (MEADS), is a multinational, ground-based, mobile,air and missile defense system. It is essentially a composite of existing technologies with eithersimilar or enhanced capabilities. It will cover the lower-tier of the layered air and theater missiledefense and will operate in the division area of the battlefield to protect against various airbornethreats. Distinguishing characteristics of MEADS are its stated ability to maneuver and deployquickly and to provide 360-degree coverage. It will be able to accompany troops within the theaterand will require less manpower and logistical support to operate than other missile defense systems. MEADS will use the Patriot PAC-3 missile with its hit-to-kill warhead, designed to interceptmultiple and simultaneous short range ballistic missiles (SRBMs), low cross-section cruise missilesand aircraft, and unmanned aerial vehicles. MEADS will eventually replace the aging HAWK airdefense system. In addition to fulfilling operational requirements for limited air defense, theprogram is also expected to reinforce interoperability of NATO forces and to reduce the U.S. burdenof cost for helping to maintain European defense. BMDO has been responsible for program direction and system architecture and integration. The Pentagon sought to shift the management of MEADS and PAC-3 to the Army from BMDO. Some question whether the Army will give the program sufficient budget priority to sustaindevelopment. The House Armed Services Committee did not approve this transfer in its version ofthe FY2002 Defense Authorization Bill, and this was upheld by Congress. Under the initial May 1996 Memorandum of Understanding, Germany and Italy committedto fund 25 percent and 15 percent of the program, respectively, for the next 10 years. The Germanmilitary has questioned the number of MEADS units it would need and whether it could afford them,the German Parliament balked at approving its share of development costs, and the Germangovernment then asked to have the program restructured to reduce its $22 billion cost, even if thatrequired reduced capability. In July 2001, the NATO MEADS Management Agency granted athree-year, $216 million risk reduction contract to MEADS International (a team consisting ofLockheed Martin, Alenia Marconi, and the European Aeronautic Defence and Space Company). The United States will pay 55 percent of the risk reduction program, Germany 28 percent, and Italy17 percent. The agreement was modified to divide German funding and commitment into threephases to ease the Defense Ministry's negotiations with Parliament. Germany has also decided tostop upgrading its Patriot batteries until it can determine whether MEADS will duplicate Patriot'scapabilities. The definition phase of development has been extended three years thus puttingdeployment off till 2009. Responding to congressional criticism of the program's costs for FY2001, Pentagon officialssuggested that Germany and Italy coproduce the Patriot PAC-3 interceptor for incorporation intoMEADS. In April 2000 it was reported that Germany and Italy had tentatively agreed touse the Patriot rather than a new interceptor, but still plan to develop a new seeker radar. For FY2002, the Administration requested $74 million for development of MEADS, $20million more than was appropriated for FY2001 (the defense authorization act for FY2001decreasedthe requested amount by $9.7 million.) In the final appropriations bill, funding for MEADS was cutslightly. The Lockheed-Martin Corp. and the Hughes Aircraft and Raytheon Company consortiumrepresented the U.S. partners of two competing international teams. Alenia of Italy, and EuropeanAeronautic Defence and Space Company (formerly Daimler-Chrysler Aerospace) of Germany,represent the European group. In May 1999, the three governments selected the team headed byLockheed Martin to develop MEADS. Target production and fielding dates were set for 2006 but have slipped to 2009. In May 1996, France rescinded its initial commitment to fund 20 percent of the MEADSprogram. Despite budgetary constraints, however, France is still interested in developing missiledefenses, perhaps an indigenous system. The United Kingdom is not a participant in the programand to date has taken no official position on it. The Netherlands and Turkey have also consideredparticipating in the joint endeavor. Sea-Based Terminal. ( [author name scrubbed],Specialist in National Defense )The sea-based terminal effort has undergone a number of recentchanges. These are described below. Cancellation of NAD Program. On December 14,2001, DOD announced that it had canceled the Navy Area Defense (NAD) program, the programthat was being pursued as the Sea-Based Terminal portion of the Administration's overallmissile-defense effort. In announcing its decision, DOD cited poor performance, significant costoverruns, and substantial development delays. (58) DOD stated that the program's unit acquisition and unitprocurement costs had risen 57 percent and 65 percent, respectively. (59) In announcing the cancellation, DOD cited the Nunn-McCurdy provision, a defenseacquisition law passed in the 1980s. Under the law, a major defense acquisition programexperiences what is called a Nunn-McCurdy unit cost breach when its projected unit cost increasesby at least 15 percent. If the increase reaches 25 percent, the Secretary of Defense, to permit theprogram to continue, must certify that the program is essential to national security, that there are noalternatives to the program that would provide equal or greater military capability at less cost, thatnew estimates of the program's unit acquisition cost or unit procurement cost appear reasonable, andthat the management structure for the program is adequate to control the program's unit acquisitionor unit procurement cost. Edward C. "Pete" Aldridge, the Under Secretary of Defense for Acquisition, Technology andLogistics -- the Pentagon's chief acquisition executive -- concluded, after examining the NADprogram, that he could not recommend to Secretary of Defense Donald Rumsfeld that he make sucha certification. Rumsfeld accepted Aldridge's recommendation and declined to issue thecertification, triggering the program's cancellation. This was the first defense acquisition programthat DOD officials could recall having been canceled as a result of a decision to not certify under aNunn-McCurdy unit cost breach. (60) DOD stated that the cancellation of the program would "result in a work stoppage at somegovernment and contractor facilities." Major contractors for the NAD program were Raytheon ofTucson, AZ, Lockheed Martin of Moorestown, N.J. and Middle River, MD, United Defense ofBaltimore, MD, and Minneapolis, MN, Orbital Sciences of Dulles, VA and Chandler, AZ, and L-3Communications of New York, NY. Major government field activities involved in the program werethe Naval Surface Warfare Center (NSWC) at Dahlgren, VA, NSWC at Port Hueneme, CA, theApplied Physics Laboratory of Johns Hopkins University of Laurel, MD, and Lincoln Laboratoriesof the Massachusetts Institute of Technology of Lexington, MA. Regarding termination costs for the NAD program, it was reported in early November 2002that The Defense Department has granted Raytheona three-month extension for submitting a formal proposal for termination costs tied to one of twocontracts the company held under the canceled Navy Area missile defense program, according to acompany spokeswoman and a DOD official.... At the time of the cancellation, Raytheon heldtwo contracts -- one for low-rate initial production [LRIP] and one for the engineering andmanufacturing development [EMD] phase of the program. Under federal acquisition regulations, acontractor has one year from contract termination to submit a final termination proposal, the DODofficial said. Raytheon was formally notified of the Area program's contract termination in January2002 and the final settlement proposal would normally be received by January 2003, hesaid. But Raytheon asked for the extension on theEMD contract "due to the large number of complex subcontracts associated with vendor parts onStandard Missile-2 Blk IVA," Raytheon spokeswoman Sara Hammond told Inside the Navy lastweek. The SM-2 Blk IVA missile carried the interceptor warhead the Navy was going to use for theArea program. "As such, Raytheon expects to submit the LRIPproposal in January and the EMD contract in April 2003," Hammond said. The DOD official saidthat after the department receives Raytheon's final proposal, there would "be a period of negotiation,normally several months, until final settlement is reached." At the time of the cancellation, sister publicationInside Missile Defense reported the Navy had estimated termination costs for Raytheon to be slightlymore than $200 million. That breaks down to $106.9 million for the EMD contract and $95.3 millionfor the LRIP contract, according to the Navy figures. Both of those contracts were tied to the SM-2Blk IVA development. (61) Post-Cancellation Strategy. Following cancellationof the program, DOD officials stated that the requirement for a sea-based terminal system remainedintact. This led some observers to believe that a replacement sea-based terminal defense programmight be initiated. In May 2002, DOD announced that instead of starting a replacement program,MDA had instead decided on a two-part strategy to (1) modify the SM-3 missile to be used in thesea-based midcourse program to intercept ballistic missiles at lower altitude, and (2) modify theSM-2 Block 4 air defense missile (i.e., a missile designed to shoot down aircraft and cruise missiles)to cover some of the remaining portion of the sea-based terminal defense requirement. DODofficials said the two modified missiles could together provide much of the capability that was tohave been provided by the NAD program. One aim of the modification strategy, DOD officialssuggested, was to avoid the added costs to the missile defense program of starting a replacementsea-based terminal defense program. (62) In June 2002, it was reported that engineers are "grappling with" the issue of how to adapt the SM-3 to attack shorter range(100-300-km.) targets. Since the demise of the Navy Area Wide project that was designed forScud-like targets, the Pentagon has looked for solutions to bridge the gap. One option is to haveSM-3 take on part of the mission. To engage targets at shorter ranges, SM-3 would be modified sothe missile has the flexibility not to fire its two-pulse third stage, or fire just the first of two pulses.The goal is to be able to intercept the target near its apogee, outside the atmosphere where Leap (63) operates. The Navy's Standard defense missile, the SM-2Block 4, is viewed as another stopgap system, particularly for intercepting targets within theatmosphere. Testing will concentrate on three configurations -- unmodified, software modificationsto both the Aegis radar system and missile, and hardware and software changes. Software adjustments being considered includeadapting some of the [NAD] missile's autopilot and fuze modes to the SM-2 Block 4. The [NAD]interceptor, SM-2 Block 4A, had a high degree of commonality with the Block 4 air defenseweapon. (64) In October 2002, it was reported that Upon cancellation of the Navy Area program,the MDA commissioned industry and government teams to study successor options to the SM-2 BlkIVA. The teams found the most promising to be a modified Patriot Advanced Capability-3 missilewith a booster and a program to modify the SM-2 Blk IV - which lacks the infra-red sensor of the[NAD program's] IVA model - to give it terminal BMD capabilities. Both options were envisagedas hit-to-kill systems, unlike the SM-2 family, which has blast-fragmentation warheads. Earlier thisyear the MDA said it intended to pursue the SM-2 Blk IV route and conduct tests to assess its abilityto defeat short-range ballistic missiles "as high in the endo-atmosphere as possible through acombination of software and hardware modifications".... Senior navy officials... continue to speak of theneed for a sea-based terminal BMD capability "sooner rather than later" and have proposed a pathto get there. "The cancellation of the Navy Area missile defence program left a huge hole in ourdeveloping basket of missile-defence capabilities," said Adm. [Michael] Mullen. "Cancelling theprogram didn't eliminate the warfighting requirement. "The nation, not just the navy, needs asea-based area missile defence capability, not to protect our ships as much as to protect our forcesashore, airports and seaports of debarkation" and critical overseas infrastructure including protectionof friends and allies. The service intends to begin funding anext-generation anti-air warfare (AAW) interceptor in FY04, which it calls the 'Extended-RangeActive Missile', to fill the air-defence gap left by the termination of the [NAD program's] SM-2 BlkIVA. It will have a range approaching 200nm.... Unlike the dual-mission SM-2 Blk IVA, the newmissile will be configured solely for AAW. The navy, however, wants the design to allow for theeasy evolution to a separate terminal-phase BMD variant. "Our hope is that we will create a productthere, that while fulfilling our air-defence needs, makes it an option for them [the MDA] to leverageif they choose to do it," said Adm [Philip] Balisle. "They will have to make that decision in thecontext of the contribution to the [BMD] family of systems." (65) [author name scrubbed], Specialist in Aerospace & Telecommunications Policy The sensors program element includes funding for the Space-Based Infrared System-Low(SBIRS-Low); the Russian-American Observation Satellite, or RAMOS (an international cooperativeproject to develop new missile early warning sensor technology); and program operations. ForFY2003, the request was $294 million for SBIRS-Low, $69 million for RAMOS, and $10 millionfor program operations, a total of $373 million. In the FY2003 DOD appropriations andauthorization acts, Congress approved the full $294 million for SBIRS-Low and the $10 million foroperations. Regarding RAMOS, the authorization act cut the request by $10 million, and theappropriations act cut it by $26 million, although it also added $7 million for RAMOS solar arrays. Of these projects, SBIRS-Low is the most visible and controversial. It is one component ofthe Space Based InfraRed System (SBIRS), which is designed to replace and enhance the capabilitiesof existing satellites that provide early warning of missile launches. Historically, U.S. early warningsatellites have been placed in geostationary orbit, high above the equator (22,300 miles). SBIRS alsowill use satellites in that orbit, as well in highly elliptical orbits, and in low orbits. Hence, the SBIRSprogram is divided into two components: SBIRS-High and SBIRS-Low. For more on bothSBIRS-High and SBIRS-Low, see CRS Report RS21148 , Military Space Programs: IssuesConcerning DOD's SBIRS and STSS Programs , by [author name scrubbed]. SBIRS-High is managed bythe Air Force and will not be discussed further here. Management of SBIRS-Low was moved fromthe Air Force to the Ballistic Missile Defense Office (now the Missile Defense Agency) effectiveOctober 1, 2001, to emphasize that its primary objective is to support missile defense. The mission of SBIRS-Low (66) is to track missiles from launch to intercept or reentry; discriminate between targets and decoys; transmit data to boost, midcourse and terminal defensesystems that will cue radars and provide intercept handovers; and provide data for intercept hit/killassessments. Because of deep concerns about the technological readiness of SBIRS-Low, and escalatingcost projections, Congress appropriated no funding for SBIRS-Low in FY2002 ($385 million hadbeen requested). However, it appropriated $250 million for "Satellite Sensor Technology" and gavethe Secretary of Defense discretion as to whether the funding should be spent on SBIRS-Low orother technologies. The decision was to continue with a restructured SBIRS-Low program. On April 15, MDA Director General Ronald Kadish submitted the restructuring plan toCongress. The SBIRS-Low design last year envisioned a system consisting of between 20 and 30satellites in low Earth orbit (the exact number had not been finalized). The first launch wasprojected for 2006. FY2003 DOD budget materials indicated that the launch would slip to 2008,but under the April 15 restructuring plan, two demonstration satellites will be launched beginningin FY2006 or FY2007. MDA is using its "spiral development" strategy for SBIRS-Low and thesetwo research and development (R&D) satellites will have less capability than what was ultimatelyenvisioned. In the late 1990s, DOD planned to launch three demonstration satellites, called theFlight Demonstration System (FDS), but terminated that effort in 1999 due to rising costs. Now,DOD is returning to the demonstration satellite approach. Sensors and flight structures built for theFDS satellites will be used for the R&D satellites identified in the restructuring plan. According tothat plan, new technologies will be introduced as they mature, with incremental improvements insatellite lifetimes, focal plane arrays, and cryocoolers, for example. Because the program recently was restructured, and there is no final system architecture, costestimates are problematic. The General Accounting Office (GAO) reported (67) in February 2001 thatDOD, using the system description at the time, estimated that the life-cycle cost for SBIRS-Lowthrough FY2022 was $11.8 billion. A January 2002 Congressional Budget Office (CBO) report (68) estimated the cost through2015 at $14-17 billion (of which $1 billion was appropriated prior to FY2002). In its report on theFY2002 DOD appropriations bill, the House Appropriations Committee reported ( H.Rept. 107-298 ,p. 250) that the program's life cycle cost had grown from $10 billion to over $23 billion. The April15 restructuring plan did not include a new DOD cost estimate, but said that out-year fundingestimates would be developed as part of the FY2004-2009 FYDP. Two industry teams were chosen in 1999 for program definition and risk reduction (PDRR).The Spectrum Astro/Northrop Grumman team included Boeing, Lockheed Martin, and others. TheTRW/Raytheon team included Aerojet, Motorola, and others. DOD had been expected to select oneof the teams for the next phase (EMD) in mid-2002. However, as part of the April 15 restructuringplan, DOD decided to merge the two teams. TRW was named the prime contractor, and SpectrumAstro a major subcontractor, for the satellites. Competition at the sensor subcontractor level willcontinue, though. with Raytheon and Northrop Grumman pursuing independent parallel sensordevelopment to demonstrate on-orbit performance with the series of R&D satellites. The February 2001 GAO report raised questions over whether SBIRS-Low could meet itstechnical milestones. GAO concluded that five of six critical satellite technologies were tooimmature to ensure they would be ready when needed: the scanning infrared sensor, tracking infraredsensor, fore optics cryocooler, tracking infrared sensor cryocooler, and satellite communicationscrosslinks. GAO also cited concurrency as a concern in that satellite development and productionwere scheduled to occur at the same time; the results of an on-orbit test would not be available untilfive years after the satellites entered production; and software would be developed concurrent withthe deployment of the satellites and not be completed until more than three years after the firstSBIRS-Low satellites were launched. Other critics cite the ability to discriminate between targetsand decoys, and the ability to share information between satellites, as significant technicalhurdles. (69) [author name scrubbed], Specialist in National Defense For FY2006, the Bush Administration requested $8.73 billion for the Missile DefenseAgency. On May 25, 2005, the House approved its version of the defense authorization bill( H.R. 1815 ). The House bill includes $8.83 billion for MDA (an increase of $100million for additional testing of the ground-based missile defense system being deployed). TheSenate Armed Services Committee marked up its version of the authorization bill ( S. 1042 ) on May 12, 2005, to include $8.73 billion for MDA. The Committee also specified that $100million of the funds added to the Mid-Course Segment should be used to enhance the missile defensetest program. The Senate approved its version of the defense authorization bill (S. 1042)on November 14, 2005. The bill specifies an additional $100 million to enhance the GMD testprogram. On June 20, 2005, the House approved its version of the defense appropriations bill( H.R. 2863 ). The bill includes $8.58 billion for MDA, adding $100 million foradditional GMD testing and $82 million to develop a multiple kill vehicle. The Senate passed thedefense appropriations bill on October 6, 2005. It included $200 million for additional GMD testingand $65 million for the Israeli Arrow system. For FY2005, the Bush Administration requested $10.2 billion for all missile programs. Thisincluded about $9.17 billion for MDA and about $1.02 billion for other DOD missile defenseprograms, primarily in the Army (e.g., PAC-3 and MEADS). On July 22, 2004, the House and Senate approved a conference agreement that provides $10billion ($9.995) for all missile defense programs. This was signed into law ( P.L. 108-287 ) onAugust 5, 2004. More recently, the FY2005 defense authorization bill provided $9.95 billion forBMD programs. This was signed into law on October 28, 2004. On February 3, 2003, the Department of Defense announced that the Administration wouldask Congress for $9.1 billion for missile defense spending for FY2004, and $9.7 billion for FY2005. House and Senate conferees approved the defense appropriations bill on September 24, 2003.The bill was then passed in the House on that date, and in the Senate the following day. The FY2004defense appropriations act ( P.L. 108-87 / H.Rept. 108-283 ) was signed into law on September 30,2003. The bill provided $9.1 billion for missile defense programs. In early February 2002, Defense Secretary Rumsfeld announced that the Administrationwould ask for $7.8 billion for missile defense spending for FY2003. However, when the MDAprovided Congress details of its budget, the amount requested was considerably less ($6.7 billion). The Pentagon then attempted, as it had the previous year, to remove the PAC-3 program and fundingfor it from the MDA to the Army. The total amount for Patriot (PAC-3 EMD, modifications,procurement and spares) is $859 million. MEADS was an additional $118 million, bringing thecombined total request for missile defense spending for FY2003 to about $7.68 billion. House andSenate conferees reached agreement on October 9, 2002, and approved $7.6 billion for missiledefense programs ( H.R. 5010 ).

The United States has pursued missile defenses since the dawn of the missile age shortly afterWorld War II. The development and deployment of missile defenses has not only been elusive, buthas been one of the most divisive issues of the past generation until recent years. The Bush Administration substantially altered the debate over missile defenses. TheAdministration requested significant funding increases for missile defense programs, eliminated thedistinction between national and theater missile defense, restructured the missile defense programto focus more directly on developing deployment options for a "layered" capability to interceptmissiles aimed at U.S. territory across the whole spectrum of their flight path, adopted a new, untrieddevelopment and acquisition strategy, announced U.S. withdrawal from the 1972 Anti-ballisticMissile Treaty, and has deployed an initial national missile defense capability. The Administration argued these steps were necessary in response to growing concerns overthe spread of weapons of mass destruction and their means of delivery, especially on the part of ahandful of potentially hostile states and terrorists. In addition, they asserted that U.S. deterrencetheory has outlived its usefulness and that conventional or nuclear deterrence could not be reliedupon to dissuade unstable leaders in rogue states. Critics, however, take issue with assertions that the threat is increasing, citing evidence thatthe number of nations seeking or possessing nuclear weapons has actually declined over the past 20years. Moreover, they argue that the technology for effective missile defense remains immature, thatdeployment can be provocative to allies, friends, and adversaries, and it is a budget-buster thatreduces the availability of funds to modernize and operate U.S. conventional military forces. Theyargue especially that some major powers view U.S. missile defense as an attempt at strategicdomination and that other, such as China, will expand their missile capabilities in response. This report will be updated as needed.

Each house of the United States Congress is expressly authorized within the Constitution to "punish" its own Members for misconduct, and the Senate has exercised this authority in the past by imposing formal "censures," imposing restitution costs, and by expelling Senators from the Senate. In imposing legislative discipline against their Members, the Senate and the House operate through their rulemaking powers, and the express provision for legislative discipline is specifically set out within the clause of the Constitution establishing the rulemaking authority of each house of Congress, at Article I, Section 5, clause 2: Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member. The underlying justification for legislative discipline has traditionally been to protect the integrity and dignity of the legislative institution and its proceedings, rather than merely to punish an individual; and such internal legislative process is additional to any potential criminal or civil liability that a Member might incur for any particular misconduct. Senators are subject to internal, congressional discipline for any conduct which the institution of the Senate believes warrants such discipline. The express constitutional authority drafted by the Framers of the Constitution was influenced by British parliamentary practice, as well as our own colonial legislative experiences, and reflects the principle and understanding that although the qualifications of Members of Congress were intentionally kept to a minimum to allow the voters the broadest discretion in sending whomever they please to represent them in Congress, the Senate and the House have the right to discipline those who breach their privileges or decorum, or who damage their integrity or reputation, even to the extent of expelling from Congress a duly-elected Member. On several occasions, Senate committees to whom censure or expulsion resolutions were referred have recommended certain discipline to the full body, but either the Senate took no action, adjourned prior to consideration (and the Member was defeated in a subsequent election), the Member resigned before Senate action, or the Senate simply did not act upon the particular recommendation or resolution. Additionally, it should be noted that the Senate has delegated to the Select Committee on Ethics the authority to investigate any "improper conduct" of a Senator or employee "which may reflect upon the Senate," and to recommend to the Senate appropriate disciplinary action. As part of the authority delegated to it, the Senate Select Committee on Ethics may issue, and has in the past issued, "a private or public letter of admonition" on the committee's own accord, without further Senate action. The focus of this report, however, is upon those disciplinary actions which were taken by the full Senate against Members. Expulsion is the form of action whereby the Senate (or the House), after a Member has taken the oath of office, removes that Senator (or Representative, in the case of the House) from membership in the respective body by a vote of at least two-thirds of the Members present and voting. The authority to expel a Member is expressly provided for in the Constitution at Article I, Section 5, clause 2. This grant of authority within the Constitution for each house of Congress to expel a Member appears to have been influenced by the parliamentary practice in England whereby Members of the House of Commons were expelled, regardless of the nature or timing of the offense, as a disciplinary action, as well as a remedial measure to deal with those deemed "unworthy" or "unfit" for membership. It should be noted that the disciplinary action of expulsion is different than, and is distinguished from, the action of exclusion. An exclusion is where the Senate (or the House) refuses to seat a Member-elect, generally upon the objection of another Member or Member-elect, by a simple majority vote on the grounds that such challenged Member-elect has either not met the three standing constitutional qualifications of office (age, citizenship, and inhabitancy in the state from which elected), or was not "duly elected." The authority of the Senate to exclude a Member-elect by a simple majority vote of the body—although there had been some legitimate minority argument to the contrary in the past—is now clearly understood to be limited to questions of whether a Member-elect meets the constitutional qualifications for office, or the question of whether the Member-elect had been "duly elected" (a question which is generally resolved in a so-called "contested election" case). The Supreme Court in Powell v. McCormack stated clearly that "the Constitution leaves the House [and the Senate] without authority to exclude any person, duly elected by his constituents, who meets all the requirements for membership expressly prescribed in the Constitution." The precedents in the Senate which pre-date the 1969 Powell v. McCormack decision, and which consider moral character and/or past misconduct in assessing the "suitability," "fitness," or "qualifications" of an individual who was duly elected by the voters of a state in an "exclusion" proceeding, are, therefore, of suspect relevance and value as a precedent concerning this issue at the present time. As explained in Deschler ' s Precedents , "The [ Powell ] decision apparently precludes the practice of the House or Senate, followed on numerous occasions during the 19 th and 20 th centuries, of excluding Members-elect for prior criminal, immoral, or disloyal conduct." There is no limitation apparent in the text of the Constitution, nor in the deliberations of the Framers, on the authority to expel a Member of Congress, other than the two-thirds vote requirement. One study of the expulsion clause summarized the Framers' intent as follows: [From] the history of Article I, Section 5, clause 2, and in particular its course in the Committee of Detail, it is clear that the Framers ... did not intend to impose any limitation on Congressional power to determine what conduct warranted expulsion .... Nor do the debates in the Convention suggest any desire to impose any other substantive restrictions on the expulsion power. Justice Joseph Story similarly concluded that it would be "difficult to draw a clear line of distinction between the right to inflict the punishment of expulsion, and any other punishment upon a member, founded on the time, place, or nature or the offense," and that "expulsion may be for any misdemeanor, which, though not punishable by any statute, is inconsistent with the trust and duty of" a Member. The Supreme Court of the United States, citing Justice Story's historic treatise on the Constitution, found an expansive authority and discretion within each house of Congress concerning the grounds and the timing for an expulsion. In In re Chapman , the Supreme Court noted the Senate expulsion case of Senator William Blount as supporting the constitutional authority of either house of Congress to punish a Member for conduct which in the judgment of the body "is inconsistent with the trust and duty of a member" even if such conduct was "not a statutable offense nor was it committed in his official character, nor was it committed during the session of Congress, nor at the seat of government." The Supreme Court has thus recognized a very broad discretion and authority of each house of Congress to discipline its Members under its own chosen standards, generally without established right to judicial review. Describing the congressional disciplinary process, the Supreme Court in United States v. Brewster , noted in dicta : The process of disciplining a Member in the Congress ... is not surrounded with the panoply of protective shields that are present in a criminal case. An accused Member is judged by no specifically articulated standards, and is at the mercy of an almost unbridled discretion of the charging body ... from whose decision there is no established right of review. It is thus likely that a court would find, in a similar fashion to the above quoted dicta of the Supreme Court in Brewster (regarding "no established right to review" of a congressional disciplinary action), that the issue of an expulsion of a Senator by the Senate (or a Representative by the House) is a non-justiciable "political question" in which there exists a "textually demonstrable constitutional commitment of the issue to a coordinate political department" of government. Unlike the factual premise in the Powell exclusion, an expulsion of a Member for misconduct would not appear to involve another, express constitutional provision which may be in conflict with the exercise of such authority of the legislature; nor would such action arguably impinge upon the constitutional rights of an individual. In fact, in Powell v. McCormack , Justice Douglas in his concurring opinion noted the difference in justiciability between that exclusion case based on "qualifications" other than those established in another, express provision of the Constitution, as opposed to an expulsion case based on misconduct, by noting that "if this were an expulsion case I would think that no justiciable controversy were presented." Although the authority and power of each house of Congress to expel appears to be within the broad discretion of the institution, or as noted by the Supreme Court in dicta "at the unbridled discretion of the charging body," policy considerations, as opposed to questions of power , may have generally restrained the Senate and the House in exercising the authority to expel a Member when the conduct complained of occurred prior to the time the individual was elected to be a Member of Congress, or when the conduct complained of occurred in a prior Congress when the electorate knew of the conduct but still reelected the Member to the current Congress. On occasion, this restraint has been characterized, such as in dicta by the Supreme Court, as evidence that "both Houses have distrusted their power to punish in such cases" of past misconduct. The Court in Powell v. McCormack, supra , in distinguishing the exclusion of Powell from an expulsion, observed that congressional precedents have shown that "the House will not expel a member for misconduct committed during an earlier Congress." The Court noted specifically, however, that it was not actually ruling on the House's authority to expel for past misconduct, and, as noted above, Justice Douglas, in his concurrence stated specifically that "if this were an expulsion case I would think that no justiciable controversy were presented," since Douglas agreed with Senator Murdock of Utah in a 1940 exclusion case that each house may "expel anyone it designates by a two-thirds vote." It should be noted that the principal congressional case cited by the Supreme Court for its assertion in Powell v. McCormack that the House "will not expel" for prior misconduct, the case involving Representative John W. Langley, involved many other relevant considerations. Although the committee in that instance did question the ability of the House to expel an individual for misconduct (resulting in a criminal conviction) "prior to his election as a Member," the committee also found that "the House could not permit in its membership a person serving a sentence for a crime." In resolving this apparent conflict, the committee reported to the House that Representative Langley, whose conviction prior to his reelection was pending on appeal, had agreed not to participate in House proceedings while the appeal was pending, and had agreed to resign if his appeals were denied. After Langley's appeals were denied by the Supreme Court, he resigned his office. It should also be noted that many of the arguments opposed to proceeding against a Member of the House for misconduct in a prior Congress were based on the concept that the existing House should not take recognition of injuries to a past House of Representatives. The Senate, however, has consistently considered itself to be a "continuing" body," and thus injuries to the integrity and dignity of the Senate in the past may not have the same character of being, arguably, against a "different" institution or body. In the report on the McCarthy censure, the Select Committee to Study Censure charges specifically stated the following: Precedents in both the Senate and House for expulsion or censure for conduct occurring during a preceding Congress may be found in Hinds (op. cit. 1275 to 1289). Precedents in the House cannot be considered as controlling because the House is not a continuing body. A careful reading of congressional precedents would appear to indicate that although there has certainly been some questioning of the "right" of the body to expel a Member for past misconduct when reelected, with knowledge of his constituents of that conduct, there have been divisions of opinions on this subject. For example, there were two conflicting opinions of two different House committees in the Credit Mobilier investigations on the discipline of Representatives Ames and Brooks in the 42 nd Congress in 1872. In adopting a disciplinary resolution of censure and not expulsion in that case, however, the House specifically refused to accept a preamble to the substitute resolution for censure which had expressly questioned its authority to expel for past misconduct. Differences of opinion also arose in other expulsion and disciplinary cases. In modern congressional practice, and in light of Supreme Court rulings and dicta , it would appear to be more accurate to say that restraint concerning a Member's expulsion after reelection has arisen from a questioning by the institution of the Senate or the House of the wisdom of such a policy , rather than a formal recognition of an absence of constitutional power to expel for past misconduct. The reticence of the House or the Senate to expel a Member for past misconduct after the Member has been reelected by his or her constituents, with knowledge of the Member's conduct, appears to reflect the deference traditionally paid in our heritage to the popular will and election choice of the people. Justice Story, while noting the necessity of expulsion of one who "disgrace[d] the House by the grossness of his conduct," noted that such power of the institution of the House to expel a duly-elected representative of the people is "at the same time so subversive of the rights of the people," as to require that it be used sparingly and to be "wisely guarded" by a two-thirds requirement. Similarly, Cushing noted that the power to expel "should be governed by the strictest justice," since in expelling a duly-elected Member without just cause "a power of control would thus be assumed by the representative body over the constituent, wholly inconsistent with the freedom of election." In 1807 Senator John Quincy Adams discussed in a select committee report on a proposed expulsion of Senator John Smith for his alleged part in the Aaron Burr conspiracy, the issues of the authority of the Senate to expel a Member even after the Senator's indictment had been dropped. Although the indictment, as well as the alleged misconduct, occurred subsequent to the time of Senator Smith's election to the Senate by the Ohio legislature, Senator Adams discussed in broad terms the Senate's authority to expel, finding that "By the letter of the Constitution the power of expelling a Member is given to each of the two Houses of Congress, without any limitation other than that which requires a concurrence of two-thirds." This sole limitation, that is, the two-thirds requirement, was in the opinion of the select committee "a wise and sufficient guard against the possible abuse of this legislative discretion." The distinction between the "power" of the House of Representatives to expel, and the judicious use of that power as a "policy" of the House, was cogently explained in a House Judiciary Committee report in 1914: In the judgment of your committee, the power of the House to expel or punish by censure a Member for misconduct occurring before his election or in a preceding or former Congress is sustained by the practice of the House, sanctioned by reason and sound policy and in extreme cases is absolutely essential to enable the House to exclude from its deliberations and councils notoriously corrupt men, who have unexpectedly and suddenly dishonored themselves and betrayed the public by acts and conduct rendering them unworthy of the high position of honor and trust reposed in them.... But in considering this question and in arriving at the conclusions we have reached, we would not have you unmindful of the fact that we have been dealing with the question merely as one of power , and it should not be confused with the question of policy also involved. As a matter of sound policy, this extraordinary prerogative of the House, in our judgment, should be exercised only in extreme cases and always with great caution and after due circumspection, and should be invoked with greatest caution where the acts of misconduct complained of had become public previous to and were generally known at the time of the Member's election. To exercise such power in that instance the House might abuse its high prerogative, and in our opinion might exceed the just limitations of its constitutional authority by seeking to substitute its standards and ideals for the standards and ideals of the constituency of the member who had deliberately chosen him to be their Representative. The effect of such a policy would tend not to preserve but to undermine and destroy representative government. The power to expel is thus used cautiously when the institution of Congress might be seen as usurping or supplanting its own institutional judgment for the judgment of the electorate as to the character or fitness for office of an individual whom the people have chosen to represent them in Congress. The principal manner of dealing with ethical improprieties or misconduct of a Representative (Senators were not at the time of the adoption of the Constitution, and until 1913, chosen directly by the people, but were selected by the state legislatures) was intended by the Framers to be, and has historically been, reliance upon the voters to keep their Members "virtuous" through the "restraint of frequent elections." However, there is no indication in the actual text of the Constitution or in the debates on the adoption of Article I, Section 5, clause 2, that such limitation has been imposed, nor has any judicial ruling on the authority or power of the Senate found an express or implied limitation on the expulsion power, to reach only conduct that was not known to an electorate prior to election or reelection of the Senator. Actual expulsions in the Senate (as well as in the House) have historically concerned cases of perceived disloyalty to the United States Government, or of a violation of criminal statutory law which involved abuse of one's official position. However, it should be noted that the Senate Select Committee on Ethics, in 1995, recommended the expulsion of a Member for conduct which had not been the subject of any criminal prosecution, but which involved allegations of an abuse of the authority of the Senator's office and position in making unwanted sexual advances to women, enhancing his personal financial position, and for obstructing and impeding the Committee's investigation. In the United States Senate, 15 Senators have been expelled, 14 during the Civil War period for disloyalty to the Union (one expulsion was later revoked by the Senate), and one Senator was expelled in 1797 for other disloyal conduct. Although the Senate has actually expelled relatively few Members, and none since the Civil War, other Senators, when facing a recommended expulsion for misconduct, have resigned their seat rather than face the potential expulsion action. In the House of Representatives, five Members have been expelled—3 during the Civil War period for disloyalty, one in 1980 after conviction of bribery and conspiracy in congressional office, and one Member in 2002 after his convictions for bribery, receipt of illegal gratuities, and other corruption charges, while several other Members, facing potential expulsion, resigned their offices prior to action by the full House of Representatives. The Senate has demonstrated that in cases of conviction of a Member of crimes that relate to official misconduct, that the institution need not wait until all of the Senator's judicial appeals are exhausted, but that the Senate may independently investigate and adjudicate the underlying factual circumstances involved in the judicial proceedings, regardless of the potential legal or procedural issues that may be raised and resolved on appeal. In the last expulsion action regarding a sitting Member of the Senate who had been convicted of a crime, the Senate Select Committee on Ethics went forward with the disciplinary investigation and hearing after the Senator's conviction, and issued its report recommending expulsion prior to the conclusion of the appellate procedure, but suggested that the Senate postpone consideration of the committee's report and recommendation of discipline until after the Senator's appeals were concluded. Subsequent to the Member's conviction, and up until the time the full Senate considered the Senate Select Committee on Ethics's recommendation of expulsion in this particular matter, the Senator who had been convicted of the felony offenses continued to participate and vote on the floor of the Senate. It may be noted, generally, that as to precedents in the Senate concerning the policy considerations and procedural decisions regarding disciplinary actions, as well as precedents in the House of Representatives, that such precedents are, of course, not necessarily binding on a subsequent Senate, but are given substantial weight and consideration in the formulation of each Member's consideration of the matter. The term "censure," unlike the term "expel," does not appear in the Constitution, although the authority is derived from the same clause in the Constitution at Article I, Section 5, clause 2, concerning the authority of each house of Congress to "punish its Members for disorderly Behaviour." The Standing Orders of the Senate provide that the Select Committee on Ethics may recommend to the Senate disciplinary action against a Member "including, but not limited to, in the case of a Member: censure, expulsion, or recommendation to the appropriate party conference regarding such Member's seniority or positions of responsibility ...." A "censure" in the Senate has traditionally meant the "punishment" imposed by the Senate when the full body formally disapproves of conduct or behavior of a Member by way of the adoption, by majority vote, of a resolution expressing such condemnation or disapproval. Under Senate Rules, no forfeiture of rights or privileges automatically follows a "censure" by the Senate, but the individual political party caucus or conference rules in the Senate may have relevance to party and committee leadership positions. The term "censure" is used to describe the formal action of the Senate adopting a resolution expressing the body's "censure," "condemnation," "denouncement," or general disapproval of a Member's conduct even when the word "censure" is not expressly included in the language of the resolution. In the two earliest Senate censure cases cited by historians and parliamentarians, the resolutions finally adopted by the Senate did not use any specific term of disapproval, such as "censure," "condemn," or "denounce," but merely stated the relevant findings and the conclusion that Senator Pickering, in 1811, "committed a violation of the rules of this body"; and that Senator Tappan, in 1844, was "guilty of a flagrant violation of the rules of the Senate and disregard of its authority." During the floor discussion of the 1844 censure it was stated by a Member of the Select Committee examining the matter that the use of no express word of disapproval in the previous censure resolution of Senator Pickering in 1811 was "evidently designed as a mild form of censure." Senators Bingham of Connecticut, in 1929, and McCarthy of Wisconsin, in 1954, were "condemned" by the full Senate in a resolution; while the resolutions adopted in the cases of Senators McLaurin and Tillman of South Carolina, in 1902, and Thomas Dodd of Connecticut, in 1967, used the term "censure." Senator Talmadge in 1979, and Senator Durenberger in 1990, were "denounced" in the resolutions adopted by the Senate. The term "condemn" has been used in two censure resolutions in the Senate, in 1929 and in 1954. It appears that no distinction of great import was made at the times of those actions in using the word "condemn" in the censure resolutions, as opposed to the term "censure," and that the terms were seen at the times employed as substantially synonymous. In the censure of Senator Joseph McCarthy from Wisconsin, the select committee considering the matter recommended in its report that on two of the charges investigated the "Senator from Wisconsin, Mr. McCarthy, should be censured," and reported out favorably the resolution referred to the committee which provided that the conduct of the Senator "is hereby condemned." In the floor consideration of the resolution, the Chairman of the Select Committee to Study Censure Charges, Senator Watkins of Utah, was questioned in a colloquy by another member of the Select Committee concerning the uses of the terms "censure" and "condemn": Mr. CASE. Let me ask the Senator from Utah how he refers to the adoption of a censure resolution which would have for its main substance section 1, which uses the word "condemn," and when he now proposes that section 2 be modified by including the words "and condemn"? How does the Senator from Utah think that modification will modify the censure proposed in Section 2? Mr. WATKINS. The modification strikes out the word "censure." Mr. CASE. Yes; but then we come to the words "and condemn" in section 1, although the Senator from Utah still refers to the resolution as a censure resolution. Mr. WATKINS. That is a difference of semantics. Some persons believe that "condemn" is a stronger word than "censure"; and some persons believe that "censure" is a stronger word than "condemn." I do not know which is which. The Select Committee and its Chairman in the McCarthy censure did not officially distinguish between the meaning of the two terms employed. However, it is clear that at least one Member of the Senate at the time felt that the term "condemn" was the stronger term, and that the Senator was not necessarily dissuaded from that perception by the Select Committee Chairman. At present, it may be argued that the use of the verb "condemn" in a censure resolution, although not officially distinguished from using any other word in such resolution, may be perceived to be a somewhat stronger disapproval than merely using the term "censure," based in large part on the feelings associated with the last Senator to be "condemned" for conduct in a censure resolution, the late Senator Joseph McCarthy. In a later Senate consideration of a censure resolution, the Chairman of the then Senate Select Committee on Standards and Conduct, Senator Stennis of Mississippi, stated that he had believed that the term "condemn" was a harder and a more "severe" term than "censure." The term "denounce" has been used in two relatively recent censure resolutions in the Senate. As discussed above, although distinctions were intentionally drawn in the Herman Talmadge case between using the word "denouncement" in the resolution on the one hand, and the use of the terms "censure" or "condemnation" on the other, historians and parliamentarians consider the disciplinary action voted in the Talmadge case, where the full Senate formally "denounced" his conduct in a resolution, as a "censure" of Senator Talmadge. The Senate Select Committee on Ethics in the Talmadge matter noted in its report that it was using the term "denounce" in the resolution to distinguish the facts in the Talmadge case "from those earlier matters in which the Senate 'censured' or 'condemned' a Member" so that the Committee may express "its judgments and recommendations ... with words that do not depend on analogy to dissimilar historical circumstances for interpretation." The Committee report did not expressly explain why the Talmadge matter was distinguishable from past matters, nor if it considered the term "denounce" as stronger or weaker than the terms "censure" or "condemn." In the additional views of Senator Schmitt in the Senate report, however, the Senator argued that the terms are essentially "equivalent," but that the term "denounce" was employed because only a "gross neglect" of duty of a Member towards the administration of his office affairs was found, while the actual wrongdoing was perpetrated by staff: Such words as "reprehensible" and "denounced" have no legal or historic precedents for their use as do "censured" and "condemned". However, they should by viewed now by history as equivalent in meaning to "censured" but applied to special cases where the financial duties of a senatorial office have been subject to gross neglect and where years of illegal activities by subordinates have been overlooked, if not encouraged. *** Thus, even though the Committee avoided the use of the word censure and even though the general historical precedents are strongly [sic], it none the less applied words defined in terms of "censure" to the misconduct of Senator Talmadge. From the full Senate consideration of the matter, it appears that a common opinion was that the term "denounce" was employed to recognize that there were "mitigating" circumstances involved in the case, and to recognize that it had not been concluded by the committee that the improprieties were engaged in by the Senator willfully and with actual knowledge, and thus the term "censure" would not be used. The Senate Select Committee on Ethics in its report in the matter of Senator Durenberger did not state an express reason or justification for using the term "denounce" rather than "censure" or "condemn" in the resolution it recommended for adoption, although the special counsel's report to the Committee suggested that the precise verb in a censure resolution is not as important as the Committee's characterization of the conduct in a resolution which is then formally adopted by the full Senate. During the Senate consideration of the resolution a member of the Select Committee on Ethics, Senator Lott of Mississippi, noted that an amendment offered during Committee procedures to substitute the term "censure" for "denounce" was defeated, and it was the Senator's opinion that a "denouncement" was intended to be a lesser term of disapproval than a "censure" because of the mitigating circumstances and the lack of venal intent in the case. Questions concerning the meaning of the term "denounce" employed in the resolution were directed to the Chairman of the Select Committee on Ethics, Senator Heflin of Alabama. The Chairman of the Committee, in an explanation somewhat similar to the one given by the Chairman of the Select Committee to Investigate Censure Charges in the McCarthy censure, explained that the actual term employed in the censure resolution voted on by the full body was a matter of semantics and personal interpretation, and that the action of the full Senate formally adopting a resolution using the term "denounce" was "within the broad parameters of the word `censure'": The denouncement terminology originated in the case of a former Senator from Georgia. The Parliamentarian, as I understand it, considered "denouncement" to be within the parameters of censure. I think some people in the instance of a Georgia Senator felt that the word "denouncement" was weaker than the word censure. Some, on the other hand, felt that it was stronger. I think it is more in the eyes of the beholder as to how you might view it. ... ... The major aspect of this is that the Senate as a whole acts. It acts to show its displeasure; it acts to show its disapproval in strong language, whether the language be denouncement, censure, or in one case condemnation. ... *** I think it is up to each individual to give whatever meaning and connotation he may wish. I would think that it falls within the broad parameters of the word "censure." The Constitution, in providing that either house of Congress may "expel" a Member by a two-thirds majority, does not specify the reasons for such expulsion, but does in that same provision state that either house of Congress may "punish its Members for disorderly Behavior." Article I, Sec. 5, cl. 2. Some early commentators thus felt that the authority to "punish" a Member by way of censure or condemnation was thus expressly limited, unlike expulsion, to cases concerning disorderly or unruly behavior or conduct in Congress, that is, conduct which disrupts the institution. The authority to discipline by way of censure, however, has come to be recognized and accepted in congressional practice as extending to cases of "misconduct", even outside of Congress, which the Senate or House finds to be reprehensible and to reflect discredit on the institution, and which is, therefore, worthy of condemnation. As stated in S.Rept. 2508, 83d Cong., 2d Sess. 22 (1954) by the Senate Select Committee to Study Censure Charges: It seems clear that if a Senator should be guilty of reprehensible conduct unconnected with his official duties and position, but which conduct brings the Senate into disrepute, the Senate has the power to censure. The House of Representatives has similarly taken a broad view of its authority to discipline its Members by way of expulsion or censure. In the 63 rd Congress the House Judiciary Committee described the power of the House to punish for disorderly behavior as a power which is "full and plenary and may be enforced by summary proceedings. It is discretionary in character ... restricted by no limitation except in case of expulsion the requirement of the concurrence of a two-thirds vote." In the report on Representative Adam Clayton Powell, the House Select Committee described censure cases as follows: Censure of a Member has been deemed appropriate in cases of a breach of the privileges of the House. There are two classes of privilege, the one, affecting the rights of the House collectively, its safety, dignity, and the integrity of its proceedings; and the other, affecting the rights, reputation, and conduct of Members, individually, in their representative capacity.... Most cases of censure have involved the use of unparliamentary language, assaults upon a Member or insults to the House by introductions of offensive resolutions, but in five cases in the House and one in the Senate [as of 1969] censure was based on corrupt acts by a Member, and in another Senate case censure was based upon noncooperation with and abuse of Senate committees. *** This discretionary power to punish for disorderly behavior is vested by the Constitution in the House of Representatives and its exercise is appropriate where a Member has been guilty of misconduct relating to his official duties, noncooperation with committees of this House, or nonofficial acts of a kind likely to bring this House into disrepute. The authority and grounds for censure, under the express Constitutional authority of the Senate, at Article I, Section 5, clause 2, as well as under the Senate's own Rules and precedents, thus extend to misconduct or improprieties which may or may not violate an express statute or a particular written rule of ethical conduct. Even when not a violation of a particular law or rule, the Senate has censured Members for conduct when found contrary to "acceptable norms of ethical conduct in the Senate," contrary to "good" or "accepted morals" and "senatorial ethics," when found to "derogate from the public trust expected of a Senator," and/or for "reprehensible" conduct which brings the Senate into "dishonor and disrepute." It should be noted that prior to 1968 there were no written Senate ethics rules. Upon the drafting of a code of conduct in the Senate Rules for the first time in 1968, it was made clear that the drafting and existence of such an express, written code would not preempt nor supersede the existing, unwritten standards or norms of ethical behavior against which a Senator's conduct has been and may always be judged. The earlier resolution in 1964 establishing and authorizing the Select Committee on Standards and Conduct (now the Select Committee on Ethics) was expressly intended to give to and to continue within that committee that portion of the Senate's traditional authority and jurisdiction to investigate, make findings, and report to the full body for consideration matters concerning official "misconduct" of Members, as well as violations of specific rules, codes, or statutes relating to official duties. The Senate has "censured" Members for violating orders of secrecy of documents in their possession; for fighting in the Senate; for allowing a lobbyist with interests in particular legislation to be on one's staff and on a committee considering such legislation, with access to the secret meetings and considerations of the committee; for non-cooperation and abuse of investigating committees of the Senate; and for financial irregularities concerning contributions, official expenses, and outside income. There is no precedent in the Senate for the full Senate to vote a resolution "reprimanding" a Member for misconduct, nor for any committee to recommend that the Senate "reprimand" a Senator, although such an action has been considered by the Senate and by at least one committee to which a disciplinary case was referred. In the censure case of the late Senator Thomas Dodd, Senator Tower introduced an amendment to substitute the word "reprimand" for that of "censure" in the resolution. Senator Tower argued that this "would give us the opportunity to express our displeasure, our disapproval, and our disassociation, but at the same time avoid the severity of censure, which ... is one of the most severe penalties that we could impose." Senator Stennis, the Chairman of the Select Committee on Standards and Conduct, argued against using the term "reprimand," contending that term had no historical context in Senate procedure and thus was without meaning in the Senate, and arguing that the term "censure" was appropriate to the facts and was less severe than using the term "condemn": Mr. STENNIS. ... The matter was given as careful consideration as our capacity on the subject permitted; and we found that, uniformly, the legislative history of the United States had tended, for serious matters, always to use the word "censure" or the word "condemn". We found that there was some precedent, in the House of Representatives, in connection with the use of the word "reprimand," after passing a resolution of censure, to require the Member to present himself at the bar of the House and be publicly reprimanded there by the Speaker. *** [I]t has been the custom in the House of Representatives in a censure resolution to require the Member of the House, if he is so censured by resolution, to come down before the bar and be publicly "reprimanded" by word of mouth by the Speaker. However, that has never been done in the Senate. We did not like the idea of doing that. *** Members of the Senate, I will put this in this way, as to what we found as to the meaning of "reprimand" in legislative parlance. It just does not mean anything. It means what you might call just a slap on the wrist. It does not carry any weight. *** We looked and looked and looked, and we feel certain that our research was complete, and therefore we totally rejected, for the reason I have given, the mild legislative word "reprimand," which has no meaning or means nothing more than just a disapproval, and put in the word "censure," which we thought was the mildest of the words that have a legislative meaning, and would carry the idea of the Senate taking a stand with reference to the matter. In the case of Senators Tillman and McLaurin who were "censured" by the full Senate in 1902 for fighting on the floor of the Senate, the Committee to whom the matter was referred considered the options for the Senate, including a "reprimand" of the Members which it considered "only a more formal reiteration [of an earlier contempt vote and] .. not sufficiently severe," found that the conduct should be "condemned" by the Senate and recommended a resolution which "censured" the Members. The Committee explained: The Senate may punish the Senators from South Carolina by fine, by reprimand, by imprisonment, by suspension by majority vote, or by expulsion with the concurrence of two-thirds of its Members. The offense is well stated in the majority report. It is not grave enough to require expulsion. A reprimand would be too slight a punishment. The Senate by a yea-and-nay vote has unanimously resolved that the said Senators are in contempt. A reprimand is in effect only a more formal reiteration of that vote. It is not sufficiently severe upon consideration of the facts. Prior to the 1970s in the House of Representatives, although there were some inconsistencies, the terms "reprimand" and "censure" were often considered synonymous and used together in a resolution. In 1921, for example, a resolution adopted by the House instructed the Speaker to summon Representative Blanton of Texas to the bar of the House "and deliver to him its reprimand and censure". More recently, however, there has come to be a distinction in the House whereby it is considered that a "reprimand" involves a lesser level of disapproval of the conduct of a Member than that of a "censure", and is thus a less severe rebuke by the institution. Procedurally in the House, a "censure" resolution will generally instruct the Member to go to the well of the House and for the Speaker of the House to read the resolution as a verbal castigation of the Member. In the case of a "reprimand," however, the resolution is merely adopted by a vote of the House. Such procedures are not relevant to the Senate which merely adopts a censure resolution and does not require a Member to "go to the well" for a verbal rebuke. A resolution which is adopted by a formal vote of the Senate using the word "reprimand" would thus have the same effect and be governed by the same procedures as a "censure" in the Senate, and might thus possibly be considered as a "distinction without a difference" in the Senate and, technically, a form of "censure" as have been the recent "denouncements" in the Senate. A resolution which uses the word "reprimand" in the Senate, although without historical precedent, might, however, be publicly perceived as similar to the modern House practice, that is, a minor rebuke, and may arguably be seen by the public as a lesser form of institutional disapproval or discipline than would the use of the words "condemn," "censure," or "denounce." Although not a disciplinary action employed by the full Senate, the Select Committee on Ethics may issue, and has issued a "reprimand" or other similar form of rebuke, in a report or in a letter to a particular Member, which is not voted upon by the full Senate. The Senate Select Committee on Ethics issued such a "reprimand" in a report concerning Senator Cranston and the so-called "Keating Five" investigations in 1991. The Committee found that the Senator's conduct "deserves the fullest, strongest and most severe sanction which the Committee has the authority to impose" and therefore the Committee "does hereby strongly and severely reprimand" the Senator. The Committee reprimand was reported to the full Senate, and discussion was taken on the Senate floor regarding the Committee's action, but no formal Senate action was required or taken by the full body. Under the current rules governing the Senate Select Committee on Ethics, the Committee may "dispose of" an ethics matter by issuing a "letter of admonition" after a preliminary inquiry (or after an adjudicatory review) if the Committee determines that a violation is "inadvertent, technical, or otherwise of a de minimis nature," and that such public or private letter "shall not be considered discipline." 1. William Blount of Tennessee. July 8, 1797. Blount wrote a private letter to a United States Government interpreter seeking his aid in a plan to seize Spanish Florida and Louisiana with British and Indian help. A select committee found that Senator Blount's conduct in attempting to incite the Indians against U.S. government officials was inconsistent with his public duty, amounted to a "high misdemeanor," and recommended expulsion. The report was adopted 25 - 1. 2. James M. Mason and Robert M. T. Hunter of Virginia; Thomas L. Clingman and Thomas Bragg of North Carolina; James Chestnut, Jr. of South Carolina; A.O.P. Nicholson of Tennessee; William K. Sebastian and Charles C. Mitchell of Arkansas; John Hemphill and Louis T. Wigfall of Texas. July 11, 1861. The resolution of expulsion was introduced on July 10, 1861, recognizing the attempt of some persons to withdraw certain states from the Union, who are "in arms against the Government," and expressly charging that the above named Senators "have failed to appear in their seats in the Senate, and to aid the Government in this important crisis, and it is apparent to the Senate that said Senators are engaged in said conspiracy for the destruction of the Union and Government, or with full knowledge of such conspiracy have failed to advise the Government of its progress or aid in its suppression." The resolution was agreed to 32-10, July 11, 1861. 3. John C. Breckinridge of Kentucky. December 4, 1861. The resolution of expulsion provided that Breckinridge "has joined the enemies of his country, and is now in arms against the Government he had sworn to support," and was agreed to 37 - 0. 4. Jesse D. Bright of Indiana. February 5, 1862. Bright was charged with writing a letter in 1861 recommending an arms manufacturer to Jefferson Davis, President of the Confederacy, arguably demonstrating disloyalty to the United States. The Judiciary Committee considering the expulsion resolution recommended against expulsion; however, the full Senate after a lengthy debate voted to expel 32 - 14. 5. Waldo P. Johnson of Missouri. January 10, 1862. Resolution of expulsion was referred to the Judiciary Committee which found that Mr. Johnson's failure to take his seat at the beginning of the session, and his failure to rebut allegations and indications of disloyalty to the Union, provide strong presumptive grounds against his fidelity to the Union. The expulsion resolution was adopted by a vote of 35 - 0. 6. Trusten Polk of Missouri. January 10, 1862. The Judiciary Committee reported the expulsion resolution which had been referred to it, concluding that Polk had written in a secession newspaper in favor of Missouri's joining "her Southern sisters," that he had failed to present himself to the Senate at the beginning of the session to rebut implications of disloyalty to the Union, and had in fact "gone clandestinely within the lines of the enemy" of the Union. The resolution of expulsion was adopted 36-0. 1. Thomas Pickering of Massachusetts. January 2, 1811. Senator Pickering had made a speech on the floor of the Senate in which he read from a letter from the French Minister of Foreign Affairs, which was a confidential communication from the President to the Senate. Although there was then no written Senate rule concerning confidential communications, the resolution charged Pickering with reading certain documents while the "Senate was in session with open doors" and concerning which "the injunction of secrecy not having been removed," and in so doing committed a "violation of the rules of this body." The resolution, after the Senate accepted an amendment striking the word "palpable" before the word "violation" and disagreed to an amendment seeking to add the word "unintentional" before the word "violation," was agreed to by a vote of 20 - 7. 2. Benjamin Tappan of Ohio. May 10, 1844. Tappan had delivered a document, furnished to the Senate under order of secrecy, to an individual to make available to the press. The resolution finally agreed to stated that Tappan, "in furnishing for publication in a newspaper documents directed by an order of the Senate to be printed in confidence for its use, has been guilty of a flagrant violation of the rules of the Senate and disregard of its authority." The resolution was agreed to by a vote of 38 to 7. 3. John L. McLaurin and Benjamin R. Tillman of South Carolina. February 28, 1902. On the floor of the Senate on February 22, 1902, after having exchanged disparaging remarks directed towards one another, Tillman struck McLaurin in the face and they both fought until separated by several persons. Immediately after the incident a resolution was adopted by a vote of 61 - 0 declaring both Senators "in contempt of the Senate," and referring the matter to the Committee on Privileges and Elections with instructions to report to the Senate what action should be taken. The Chair ruled that the Members would not be recognized unless on the motion of another Member and agreed to by a majority of the Senate. The Committee on Privileges and Elections then met and recommended a resolution of censure "for disorderly behavior and flagrant violation of the rules of the Senate during the open session of the Senate," and that such Senators are "so censured for the breach of the privileges and dignity of this body." The order of February 22 judging them in contempt was declared no longer in force or effect. The resolution for censure, and what amounted to, in effect, a six-day suspension, was agreed to by a vote of 54 - 12 on February 28, 1902. 4. Hiram Bingham of Connecticut. November 4, 1929. A special subcommittee of the Judiciary Committee investigated the facts concerning the Senator's placing on the Senate payroll, first as his deputy and later as a clerk of a committee, an individual who worked as a paid employee for a trade association, the Manufacturers Association of Connecticut, having a direct interest in tariff legislation before that committee. The employee had access to secret committee deliberations because of his position. The subcommittee report (S.Rept. 43, 71 st Cong., 1 st Sess.) did not aver that the relationship violated any law or Senate rule. However, the chairman of the full Judiciary Committee introduced a resolution (S.Res. 146, 71 st Cong.) condemning the actions of the Senator which "while not the result of corrupt motives on the part of the Senator from Connecticut, is contrary to good morals and senatorial ethics and tends to bring the Senate into dishonor and disrepute, and such conduct is hereby condemned." The resolution was agreed to 54 - 22. 5. Joseph R. McCarthy of Wisconsin. December 2, 1954. In 1951 and 1952 Senator McCarthy was under investigation by the Subcommittee on Privileges and Elections of the Rules and Administration Committee pursuant to a resolution of expulsion concerning conduct during an election, and since being elected to the Senate. Senator McCarthy first sought to bring formal charges against his accuser, and then challenged the investigation as designed to expel him "for having exposed Communists in Government." Although the subcommittee eventually made no disciplinary recommendation, it criticized the Senator for deliberately setting out "to thwart the investigation." In 1954 a resolution to censure Senator McCarthy was introduced and amended to include 46 separate counts of alleged misconduct. S.Res. 301, 83 rd Cong., 2d Sess. The Select Committee to Study Censure examined censure in five categories of charges including contempt of the Senate and obstruction of the legislative process. S.Rept. 2508, 83 rd Cong., 2d Sess. After floor debate, the full Senate voted to "condemn" McCarthy on two counts, for his "non-cooperation with and abuse of the Subcommittee on Privileges and Elections" in 1952 and for "abuse of the Select Committee to Study Censure." The modified resolution was adopted by a vote of 67 - 22. 6. Thomas J. Dodd of Connecticut. June 23, 1967. The Select Committee on Standards and Conduct investigated allegations of unethical conduct concerning the Senator's relationship with a private businessman with interests in West Germany; the conversion of campaign contributions to personal use; the free use of loaned automobiles; and the acceptance of reimbursements from both the Senate and private sources. The Committee recommended censure on the use of campaign funds for personal purposes and the double reimbursements. Although no law nor Senate Rule prohibited the use of campaign funds for personal use, the Committee found that the testimonial dinners in question were political in character, and that the Senator was "presumed" to have knowledge of their political character, and thus should not have used the proceeds for his own personal purposes. S.Rept. 193, 90 th Cong., 1 st Sess. (1967). After debate on the resolution, and a rejection of Senator Tower's amendment to substitute a "reprimand" for a "censure," among other proposed amendments, Senator Dodd was censured for having engaged in a course of conduct of "exercising the influence and power of his office as a United States Senator ... to obtain, and use for his personal benefit, funds from the public through political testimonials and a political campaign." Such conduct, although not violative of any specific law or Senate rule in force at that time was found "contrary to accepted morals, derogates from the public trust expected of a Senator, and tends to bring the Senate into dishonor and disrepute." S.Res. 112, 90 th Cong. The vote was 92 - 5. 7. Herman E. Talmadge of Georgia. October 11, 1979. The Select Committee on Ethics investigated charges of financial irregularities in the office of Senator Talmadge, concerning excess official reimbursements, inaccurate financial disclosure and reporting, failure to timely and properly file campaign disclosures, and the personal use of campaign funds, potentially in violation of various federal laws and Senate rules. The Committee found that Senator Talmadge "either knew, or should have known, of these improper acts and omissions, and, therefore, by the gross neglect of his duty to faithfully and carefully administer the affairs of his office, he is responsible for these acts and omissions." S.Rept. 96-337, 96 th Cong., 1 st Sess. 18 (1979). The Committee recommended a finding to the full Senate that the conduct is "reprehensible and tends to bring the Senate into dishonor and disrepute and is hereby denounced." The Senate adopted S.Res. 249 by a vote of 81 - 15. A "denouncement" was expressly recommended because the Committee felt that the facts were "distinguishable from those of earlier matters in which the Senate `censured' or `condemned' a Member", and that the judgment of the Committee and the Senate concerning such conduct could be made using "words that do not depend on analogy to dissimilar historical circumstances for interpretation." S.Rept. 96-337, supra at 18. The action of the Senate formally adopting a resolution disapproving of conduct by way of "denouncing" the Member's conduct, is categorized by historians and parliamentarians in the Senate as a "censure" of that Member. 8. David F. Durenberger of Minnesota. July 25, 1990. The Select Committee on Ethics recommended to the full Senate a "denouncement" of the Member, referral of the matter to the Senator's party conference "for attention," and restitution of certain moneys from the Senator for "knowingly and willingly" engaging in conduct "which was in violation of statutes, rules and Senate standards and acceptable norms of ethical conduct." S.Rept. 101-382, 101 st Cong., 2d Sess. 14 (1990). The two principal findings by the Committee concerned (1) "a mechanism to evade the statutory limits on honoraria" through a publishing and "book promotion" arrangement with a publisher whereby fees charged groups before whom the Senator made traditional honoraria-type appearances were directed to the publisher who would in turn pay the Senator quarterly "stipend" payments, ostensibly for book "promotions," which exceeded the statutory honoraria limits; and (2) for abuse of the Senator's office and misuse of funds through a pattern of concealment and other conduct indicating an absence of good faith in receiving official Senate reimbursements "for staying in a condominium which was essentially his personal residence." S.Rept. 101-382, supra at 11, 13-14. The Committee also made findings of violations concerning failure to disclose travel reimbursements from private parties; improper acceptance of gifts of travel from persons with interests in legislation; and improper conversion of campaign contributions to personal use. The full Senate accepted the Committee's recommendation in S.Res. 311 , 101 st Congress, on July 25, 1990 by a vote of 96 - 0. As noted above, the action of the Senate formally adopting a resolution disapproving of conduct by way of "denouncing" the Member's conduct, is categorized by historians and parliamentarians in the Senate as a "censure" of that Member. Expulsions in the United States Senate, as well as in the House of Representatives, have been generally reserved for the most serious misconduct of a Member of Congress, historically concerning disloyalty to the government, or the conviction (or evidence) of an offense involving official corruption and/or the abuse of one's official position in Congress. Other than expulsion, a formal "censure" by the Senate is the strongest statement of disapproval and rebuke that the Senate, as an institution, invokes upon one of its Members. It may be possible that in addition to a formal censure the Senate may also require financial restitution from a Member, limit a particular privilege of a Member, or under current practice, recommend to the appropriate party conference the diminution of seniority status of a Senator. Although there is no specific disability that automatically follows a censure by the Senate, the public reprobation and formal rebuke by one's peers in the Senate may have arguably contributed to the unsuccessful reelection efforts of Senators subject to censure in recent times. The action of the full United States Senate formally adopting, by a vote requiring the majority of Members present and voting, a resolution disapproving of a Senator's conduct is considered by parliamentarians and historians as a "censure" of that Member. There is no precise, technical requirement concerning the required words in a resolution of censure, nor is there an official "hierarchy" or ranking of terms employed in such a resolution. The Senate has thus "censured" its Members by way of a resolution "condemning", "censuring" or "denouncing" the Member or the conduct of the Member, as well as by way of resolutions which do not include any express term of opprobrium. In practice and perception, however, although there is no official ranking or officially recognized hierarchy of terms employed, it may be contended that the connotation of the verb "condemn" in a censure resolution is more severe than the term "censure," based in large part on the association of the term "condemn" with the discipline imposed by the Senate on the late Senator Joseph McCarthy; while the connotation of the term "denounce" in a censure resolution may be one of a less severe form of "censure" because of extenuating or mitigating circumstances that have been recognized in past disciplinary actions adopting that particular term. The authority and grounds for censure extend to misconduct which may or may not violate an express statute or a written Senate ethics rule. The full Senate has thus censured Members when the conduct was found to be contrary to "acceptable norms of ethical conduct in the Senate", contrary to "good" or "accepted morals" and "senatorial ethics", to "derogate from the public trust expected of a Senator", and/or to be "reprehensible" conduct which brings the Senate into "dishonor and disrepute."

The authority of the United States Senate (as well as of the House) to establish the rules for its own proceedings, to "punish" its Members for misconduct, and to expel a Member by a vote of two-thirds of Members present and voting, is provided in the Constitution at Article I, Section 5, clause 2. This express grant of authority for the Senate to expel a Senator is, on its face, unlimited—save for the requirement of a two-thirds majority. In the context of what the Supreme Court has characterized as, in effect, an "unbridled discretion" of the body, expulsions in the Senate, as well as the House, have historically been reserved for cases of the most serious misconduct: disloyalty to the government or abuses of one's official position. The Senate has actually expelled only 15 Members—14 of those during the Civil War period for disloyalty to the Union (one of these expulsions was subsequently revoked by the Senate), and the other Senator during the late 1700s for disloyal conduct. The House of Representatives has expelled only five Members in its history, three during the Civil War period, one in 1980, and another in 2002, after convictions for bribery and corruption offenses related to official congressional duties. In the Senate, as well as in the House, however, other Members for whom expulsion was recommended have resigned from office prior to official, formal action by the institution. The term "censure," unlike the term "expel," does not appear in the Constitution, and has traditionally been used to describe the "punishment" imposed by the Senate under authority of Article I, Section 5, clause 2, when the full body formally disapproves of conduct by way of the adoption of a resolution expressing such condemnation or disapproval. There is no specific forfeiture of rights or privileges that automatically follows a "censure" by the Senate. The term "censure" is used to describe the action of the Senate formally adopting a resolution expressing the body's "censure," "condemnation," "denouncement," or other expression of disapproval of a Member's conduct, even when the word "censure" is not expressly included in the language of the resolution. There is no specific or official hierarchy or ranking of the terms that have been employed in a censure resolution, although there may be certain connotations associated with the language used in a resolution because of precedents and associations with past Members disciplined. The Senate has censured nine Senators for various misconduct, including conduct not a violation of any law or specific written Senate ethics rule, when such conduct is found contrary to "acceptable norms of ethical conduct in the Senate," contrary to "accepted morals" and "senatorial ethics," when found to "derogate from the public trust expected of a Senator," and/or found to be "reprehensible" conduct which brings the Senate into "dishonor and disrepute." Conduct resulting in Senate "censure" has included violating orders of secrecy of documents; fighting in the Senate ("censure"); allowing a lobbyist with interests in particular legislation to be on official staff with access to the secret considerations of the legislation by committee ("condemn"); non-cooperation and abuse of investigating committees of the Senate ("condemn"); financial irregularities concerning political contributions ("censure"), office expenses and contributions ("denounce"), and excessive honoraria, official reimbursements and gifts ("denounce").

The nomination and confirmation of a Chief Justice or an Associate Justice to the U.S. Supreme Court is an infrequent event of major significance in American public life. To receive what may be lifetime appointment to the Court, a candidate must first be nominated by the President and then confirmed by the Senate. Midway in the appointment process, intensive hearings on a Supreme Court nomination, often taking at least three or four days, are routinely held by the Senate Judiciary Committee, which then can vote on whether to report the nomination to the Senate with a favorable recommendation. Nominating and confirming Supreme Court Justices is an interdependent process. Neither the President nor the Senate acts alone. The decisions that each branch makes determine how quickly nominations are made and considered, and whether the nomination is successful. This report provides information on the pace of all Supreme Court nominations and confirmations since 1900, focusing on the actual amounts of time that Presidents and the Senate have taken to act (as opposed to the elapsed time between official points in the process). As discussed below, the speed with which the President makes Supreme Court nominations and the Senate acts on those nominations has been of continuing concern to Congress in recent years. Especially since 2005, a high priority has been assigned to making appointments according to timetables designed to assure that vacancies taking effect while the Court is in summer recess are filled in time for the nine-member Court to be at full strength when it convenes its next annual term. On April 9, 2010, Associate Justice John Paul Stevens wrote to President Obama that he would retire from "regular active service" when the Court recesses for the summer. Speculation about the retirement had been reported in the media for weeks, but even days before writing to President Obama Stevens' plans remained at least publicly unknown. According to one media account, Stevens' letter arrived at the White House at 10:30 a.m. on April 9. White House counsel Robert Bauer then notified the President, who was traveling aboard Air Force One. Almost immediately, the President, Members of Congress, and members of the media began to comment on a potential schedule for considering Justice Stevens' replacement. In fact, the retirement letter itself referenced time concerns. Justice Stevens wrote he had concluded that "it would be in the best interests of the Court to have my successor appointed and confirmed well in advance of the commencement of the Court's next Term" in October 2010. President Obama also expressed his desire for a new Justice to be seated by the start of the fall term, saying that he would "move quickly to name a new nominee." He also urged the Senate to "move quickly in the coming weeks to debate and then confirm my nominee so that a new Justice is seated in time for the fall term." Senator Patrick Leahy, Chairman of the Judiciary Committee, has predicted that the new Supreme Court Justice would be confirmed by the Senate's August 2010 recess and said that there is "no question" that a nominee would be confirmed by the start of Court's fall term. On May 10, 2010, President Obama announced that he had selected Solicitor General Elena Kagan as his nominee to replace Justice Stevens. At that time, the President reiterated his call for quick action on the nomination, saying, "I hope that the Senate will act in a bipartisan fashion ... and that they will do so as swiftly as possible, so she can get busy and take her seat in time to fully participate in the work of the Court this fall." Senator Leahy subsequently announced, on May 19, 2010, that Ms. Kagan's confirmation hearings would begin on June 28, 2010. Calling that timetable "a reasonable schedule that is in line with past practice," Senator Leahy noted that the Sotomayor confirmation hearings had begun 48 days after her nomination was announced (as noted in Table 2 at the end of this report). That schedule proceeded as expected. Forty-nine days elapsed between the May 10 announcement of the Kagan nomination and the start of hearings on June 28. Both time spans (49 and 48 days respectively for the Kagan and Sotomayor nominations) are close to or at the median 49 days that elapsed between the nomination announcement and the start of hearings for all Supreme Court nominees between 1981 and 2010. Figure 1 and discussion in the rest of this report provide additional detail. The entire Kagan appointment process, starting with when President Obama first learned that Justice Stevens would leave the Court, until Senate confirmation on August 5, lasted 118 days. This interval was relatively close to, but longer than, the median duration of 113 days of the entire appointment process for Court nominations which received final Senate action during the 1981-2010 period. Some individual phases of the Kagan appointment process took longer than the corresponding intervals for previous Supreme Court nominations. One such phase, for example, is the time interval between final committee action and final Senate action. Sixteen days elapsed between final Judiciary Committee action on July 20, when the committee favorably reported the nomination, and August 5, when the Senate confirmed Kagan. That 16-day interval was almost twice the nine-day median elapsed time between final committee and final Senate actions on Supreme Court nominations between 1981 and 2010. In a few relatively recent instances, however, the full Senate has taken much longer to act on a reported Court nomination than it did with the Kagan nomination. Specifically, the Senate took 34 days to vote on the Rehnquist Chief Justice and the Scalia Associate Justice nominations in 1986. Overall, it took longer to announce and consider the Kagan nomination than any since Ruth Bader Ginsburg's in 1993. Although the Kagan appointment process lasted 118 days, then-Judge Ginsburg's lasted 137. The timetable for selecting and considering the Kagan nomination stretched 21 days beyond what was required for then-Judge Sotomayer's nomination in 2009. Timetables for action on Supreme Court nominations are affected by the selection process, the Senate schedule, and other factors. For any given nomination, the Senate may, of course, proceed at any pace it deems appropriate. Before the Stevens announcement, the Senate most recently considered a Supreme Court nomination during the spring and summer of 2009. On May 1, 2009, President Barack Obama announced that Justice David H. Souter intended to retire when the Court recessed for the summer. During his brief appearance at a White House press briefing on May 1, the President expressed the "hope that we can swear in our new Supreme Court Justice in time for him or her to be seated by the first Monday in October when the Court's new term begins." On May 26, 2009, President Obama announced his intention to nominate Sonia Sotomayor, then a judge on the U.S. Court of Appeals for the Second Circuit, to the Souter seat. Shortly thereafter, discussion of various timetables began to emerge. The President and some Senate Democrats expressed the hope that the Senate would vote to confirm Judge Sotomayor before the Senate's August 2009 recess, in order to afford time for her to prepare for the start of the Court's term in October. Some Senate Republicans, however, were less supportive of a Senate vote before September, saying they wished to have as much time to examine the Sotomayor nomination as Senate Democrats were given in 2005-2006 for the Supreme Court nominations of Samuel A. Alito, Jr. and John G. Roberts, Jr. The Senate Judiciary Committee began hearings on the Sotomayor nomination on July 13, 2009, and favorably reported it (by a vote of 13-6) on July 28. The Senate confirmed Sotomayor (68-31) on August 8, 2009—the same day the new Justice took the constitutional and judicial oaths of office. Late 2005 and early 2006 marked a period of transition among Supreme Court Justices. Associate Justice Sandra Day O'Connor's July 2005 retirement announcement marked the first pending Court vacancy since 1994. Within a few months, however, the Senate considered three nominations. As is discussed below, Judge John G. Roberts, Jr. was initially nominated to replace O'Connor, but that nomination was withdrawn when Chief Justice William H. Rehnquist died in early September. The Roberts nomination was withdrawn and re-submitted for the Chief Justice vacancy. The Senate confirmed Roberts in September 2005. Then-White House Counsel Harriet Miers was initially nominated to fill the again-pending O'Connor vacancy, but the Miers nomination was eventually withdrawn. Judge Samuel A. Alito, Jr. was confirmed to the O'Connor seat in January 2006. As is noted throughout this report, media accounts and other research suggest that when these and other Court vacancies arise, the President, members of the Senate, and their staffs, can begin work on nominations immediately, even if official nominations are days or weeks away. Particularly when multiple vacancies occur in close succession or simultaneously, as they did in 2005, the President and the Senate might have different preferences about how quickly new nominees should be considered. Until 1980, the President often took longer to announce a nominee than the Senate did to take final action on nominees. By contrast, since 1981, Presidents have been quicker to announce nominations than the Senate has been to confirm or reject those nominations. The President and members of the Senate (especially the Judiciary Committee) each proposed their own timetables regarding the Roberts, Miers, and Alito nominations. The following discussion provides additional details. On July 1, 2005, Associate Justice Sandra Day O'Connor surprised many in official Washington, and possibly President George W. Bush, with a one-paragraph letter announcing her retirement from the Supreme Court, effective upon the confirmation of her successor. Her announcement created the first vacancy on the Court in 11 years. The Court had just concluded its 2004-2005 term, and the opening session of the Court's next term, on October 3, 2005, was three months away. Finding a new Associate Justice took on added urgency, given the failing health of then-Chief Justice William H. Rehnquist. Departure of the Chief Justice as well as Justice O'Connor could result in the need for two Court appointments, and create the possibility of at least one vacancy on the Court when it reconvened in October—unless the new appointments were made expeditiously. Hours after Justice O'Connor announced her retirement, a senior aide to Senate Majority Leader Bill Frist told reporters that, "Our goal is to have the court back at full strength by the first Monday in October." Senate Judiciary Committee staff were reportedly "poised to begin reviewing background materials" on potential nominees. Nevertheless, appointment of a new Justice in time for the Court's opening session seemed like a challenging goal. In recent years, the Senate Judiciary Committee, and the full Senate as well, had been embroiled in controversies over some of the President's nominations to the lower federal courts. Continued controversy seemed likely surrounding any future nominations to the Supreme Court. On July 19, 2005, 18 days after receiving Justice O'Connor's retirement letter, President Bush announced his selection of John G. Roberts, Jr., a federal appellate judge, to be the next Associate Justice. Ten days later, on July 29, the President formally nominated Judge Roberts to the Court, with the nomination document immediately transmitted to the Senate, where it was referred to the Senate Judiciary Committee. Hearings on this nomination were scheduled to begin September 6, but those hearings would never take place. When Chief Justice William H. Rehnquist died on September 3, Judge Roberts became the first Supreme Court nominee to be withdrawn by the President for one seat on the Court and re-nominated for another. The Senate Judiciary Committee quickly cancelled its Associate Justice hearings, and began Roberts's Chief Justice hearings on September 12, 2005. After receiving a favorable 13-5 vote by the Judiciary Committee on September 22, the nomination of Judge Roberts to be Chief Justice was confirmed by the Senate on the morning of September 29, 2005, by a 78-22 vote. Later that day, the confirmed nominee took both his constitutional and judicial oaths of office at the White House. Due to the speed with which Judge Roberts was nominated to be Chief Justice and considered by the Senate Judiciary Committee and the full Senate, his appointment was completed in time for the Court to be at full strength at the start of its 2005-2006 term. With the start of that term, Justice O'Connor remained on the Court, in keeping with the intention stated in her retirement letter of stepping down only upon the confirmation of her successor. For his part, President Bush had declined to name a replacement for John Roberts to succeed Sandra Day O'Connor prior to the Senate vote on September 29 confirming Judge Roberts as Chief Justice. On October 3, 2005, President Bush announced his nomination of White House Counsel Harriet E. Miers to succeed Sandra Day O'Connor as Associate Justice on the Supreme Court. The President said that the Senate had shown during the confirmation of Chief Justice Roberts that it could act promptly, and called upon the Senate to "review [Miers's] qualifications thoroughly and fairly and to vote on her nomination promptly." At a press conference the next day, the President said that he expected the Senate "to hold an up-or-down vote on Harriet's nomination by Thanksgiving" (i.e., by November 24, 2005). Similarly, Senate Majority Leader Bill Frist called on his colleagues to move "expeditiously but carefully," and encouraged a floor vote "by Thanksgiving." Several news reports suggested that confirmation hearings could begin as early as November 7, 2005. Senator Arlen Specter, Chairman of the Senate Judiciary Committee, reportedly told reporters that he hoped the committee would complete hearings by Thanksgiving, but also reportedly emphasized that "thoroughness will be the objective," as opposed to meeting a particular timetable. He also reportedly said that the timing of hearings on the nomination would in part be up to Miers, who would have to study "so that she would have the grasp of these very complex decisions." On October 27, 2005, Miers delivered a letter to the President withdrawing her nomination as Associate Justice, and the President "reluctantly accepted" her withdrawal. Both Miers and the President indicated that the action was precipitated by the Senate's request for documents about her service in the White House. However, others suggested that other factors may have been involved. In his statement accepting the withdrawal, the President said that he expected to fill the vacancy "in a timely manner." Four days after Harriet Miers's withdrawal, on October 31, 2005, President George W. Bush announced his nomination of Samuel A. Alito, Jr., a judge on the U.S. Court of Appeals for the Third Circuit, to replace Justice O'Connor. President Bush called on the Senate to "act promptly on this important nomination so that an up or down vote is held before the end of this year." Senate Majority Leader Bill Frist also predicted a relatively quick timetable for Senate consideration, but other Senators, including Minority Leader Harry Reid, suggested that Senate consideration of the nomination could last into the new year. On November 3, 2005, Senate Judiciary Committee Chairman Arlen Specter and Ranking Minority Member Patrick Leahy announced that confirmation hearings on Judge Alito's nomination would not begin until January 9, 2006, with a vote by the committee scheduled for January 17, 2006, after five days of hearings. They said that the full Senate would vote on the nomination on January 20, 2006. Judiciary Committee hearings on the Alito nomination began and concluded as scheduled, although a targeted January 17 committee vote was postponed until January 24, 2006. A final floor vote was anticipated before President George W. Bush's January 31, 2006, State of the Union address. After Senators Specter and Leahy reportedly reached agreement on the revised committee schedule over the January 14-16 weekend, Majority Leader Bill Frist announced that "as soon as the Judiciary Committee reports the nomination, the full Senate will begin debate on Judge Alito the next day and move swiftly to a fair up-or-down vote." In a 10-8 party line vote, the Senate Judiciary Committee on January 24 reported Alito's nomination to the full Senate, which confirmed Alito, 58-42, on January 31, 2006. For many Supreme Court appointments, the timing of individual events is determined by the decisions of various key players—by sitting Justices planning to leave the Court; by the President, who selects nominees to fill Court vacancies; and by Senate committee and party leaders, who respectively schedule committee and floor action on Supreme Court nominations. First, Justices who retire or resign from the Court must decide whether to provide the President with advance notice of that decision. For example, Justice Harry A. Blackmun told President William J. Clinton of his decision to retire in 1994, more than four months before the decision became public on April 6 of that year. Justice O'Connor, on the other hand, did not appear to have given President George W. Bush any advance notice when she resigned on July 1, 2005. Also, the mode of presidential notification varies. While President Clinton learned of Justice Blackmun's plans to retire through an informal conversation, Justice O'Connor apparently notified President Bush of her decision through a formal letter. Once the President chooses a nominee, he alerts the Senate—by public announcement as well as by formal transmission of a written nomination to the Senate. Frequently, the President will announce and formally nominate his Supreme Court choice on the same day, or take both actions within a few days of each other. Less commonly, Presidents announce their intention to nominate a candidate, then make the official nomination a week or more later. The most extreme case of the latter involved President Ronald Reagan in 1981. On July 7 of that year, President Reagan announced he would send the nomination of Sandra Day O'Connor, then an Arizona state appeals court judge, to the Senate "upon completion of all the necessary checks by the Federal Bureau of Investigation." However, it was not until almost six weeks later, on August 19, that Judge O'Connor was officially nominated. As noted above, after the Senate receives a Supreme Court nomination, the Judiciary Committee normally holds hearings, followed by final committee action, and consideration before the full chamber. The measurement of how long the President and the Senate take to execute their official duties surrounding Supreme Court nominations necessarily focuses on official dates of action taken. The most important of these action dates include those on which (1) an outgoing Justice officially informs the President of the intention to step down from the Court (or, alternatively, the date on which a Court seat is vacated due to the death of a Justice), (2) a President formally nominates someone to the Court, the Senate receives the President's nomination, and the nomination is referred to the Senate Judiciary Committee (almost always all on the same date), (3) the Senate Judiciary Committee holds hearings on the nomination, (4) the committee votes on the nomination, and (5) the Senate votes on whether to confirm, or chooses to take no action. In addition to these dates, however, the President and the Senate usually consider Supreme Court nominations outside official timetables. Just as the President can begin considering a new nominee as soon as he knows a vacancy will arise, the Senate can begin preparing to consider a nominee as soon as the President announces his choice, even if the receipt of the formal nomination is still days or weeks away. Fundamentally, nominations and confirmations to the Supreme Court involve both formal and informal decisions. While formal decisions are easily accessible in historical records, informal decisions—sparsely mentioned in the formal record, or not mentioned at all—might, in many cases, provide better insight into how long the process truly takes. This report explores the speed of presidential and Senate decision-making surrounding nominations to the Supreme Court from 1900 to the present. The analysis concentrates on the period 1900-2010: (1) relevant historical data for this period are much more readily available and reliable than for earlier Court appointments, and (2) public confirmation hearings for Supreme Court nominations before the Senate Judiciary Committee—an important phase in the Supreme Court appointment process, and one of particular interest to this report—were unheard of before the 20 th century. Although research on Supreme Court nominations often focuses on either presidential or Senate decision-making, this analysis considers the time both institutions take to make decisions about, and act on, nominees. The report also takes a unique approach in discussing—as well as can be determined—how long Presidents actually take to decide who their nominees will be, and how long the Senate actually takes to act on nominations. For example, rather than starting the nomination clock with the official notification of the President of a forthcoming vacancy (e.g., the receipt of a formal retirement letter), this analysis focuses on when the President first learned of the vacancy (e.g., a private conversation with the outgoing Justice). Likewise, rather than starting the confirmation clock with the transmission the official nomination to the Senate, this analysis focuses on when the Senate became aware of the President's selection ( e.g., by a public announcement by the President). In many cases, establishing precisely when a President knew that he would have the opportunity to make a Supreme Court nomination is impossible. Such information might never have been recorded or known by anyone except the President and his inner circle. However, historical research reveals several instances when a President had advance knowledge of an impending vacancy, well before the public announcement of a Justice's intention to leave the Court. Data sources used to determine when Presidents first knew of vacancies included historical newspapers, official documents such as public presidential papers (which contain Justices' retirement letters to various Presidents), and CRS consultations with presidential libraries. Dates cited throughout this report and in Table 1 , Table 2 , and Table 3 , at the end of the report, are based on that research. The dates and intervals presented here may differ from those in other sources, such as media reports or even Congressional figures. In general, earlier starting dates and longer durations between dates presented here are likely due to this report's emphasis on when the President first learned of an opportunity to make a nomination and when the Senate first learned of an opportunity to act on a nomination—regardless of official timetables. In addition, events such as withdrawals, rejected nominations, and recess appointments can uniquely affect calculating intervals in the nomination and confirmation process. The tables and accompanying notes show which dates were selected to start and stop the nominations clock in these cases. Different methodologies could yield different results. This report takes no position on the appropriateness of other methodologies, and contrasting this report's methodology with alternatives is beyond the scope of the report. The need for a new appointment to the Court arises when a Justice position becomes vacant, due to death, retirement, or resignation, or when a Justice announces his intention to retire or resign. If the vacated seat is that of the Chief Justice, the President, if he chooses, may nominate a sitting Associate Justice to be Chief, thus setting the stage for the creation of an Associate Justice vacancy as well. Vacancies on the Court also will occur if Justices resign to receive new government appointments or to seek new government positions. When a nomination fails in the Senate, the President must select a new nominee (unless the President chooses to re-nominate his first choice). Supreme Court Justices receive what may be lifetime appointments, "good Behaviour" being the only constitutionally specified requirement for continued service. Lifetime tenure, interesting work, and the prestige of the office result in Justices often choosing to serve as long as possible. Historically, a number of Justices have died in office. Most recently, Chief Justice William H. Rehnquist died on September 3, 2005, after battling thyroid cancer for almost a year. Death in office was common on the Court during the first half of the 20 th century—14 of 34 vacancies between 1900-1950. In fact, all five Court vacancies occurring between 1946 and 1954 were due to death of a sitting Justice (see Table 1 ). Of the 23 vacancies since 1954, though, no Justice had died while still on the Court until Chief Justice Rehnquist in 2005. Since 1954, retirement has been by far the most common way in which Justices have left the bench (19 of 23 vacancies occurring after 1954 resulted from retirements). Resignation (i.e., leaving the bench before becoming eligible for retirement compensation) is rare. In recent history, two Justices have resigned from the Court. Justice Arthur Goldberg resigned in 1965 to assume the post of U.S. Ambassador to the United Nations. Justice Abe Fortas resigned in 1969 after protracted criticism over controversial consulting work while on the bench and a failed nomination to be elevated from Associate Justice to Chief Justice. When Justices retire or resign, the President is usually notified by formal letter. As noted previously, there is evidence in a few cases that a President informally learned of a forthcoming retirement in advance. Pursuant to a law enacted in 1939, a Justice (or any other federal judge receiving lifetime appointment) may also retire if "unable because of permanent disability to perform the duties of his office," by furnishing the President a certificate of disability. Prior to 1939, specific legislation from Congress was required to provide retirement benefits to a Justice departing the Court because of disability who otherwise would be ineligible for such benefits, due to insufficient age and length of service. In such circumstances in 1910, for instance, Congress took legislative action granting a pension to Justice William H. Moody. As the Washington Post reported at the time, although illness had kept Justice Moody from the bench for "almost a year," he was not yet eligible for retirement. When a Chief Justice vacancy arises, the President may choose to nominate a sitting Associate Justice for the Court's top post. If the Chief Justice nominee is confirmed, he or she must, to assume the new position, resign as Associate Justice, requiring a new nominee from the President to fill the newly vacated Associate Justice seat. However, this scenario is relatively rare. During the 1900-2009 period, Presidents attempted to elevate Associate Justices to Chief Justice four times, with the Senate confirming three nominees. Most recently, in 1986, President Ronald Reagan nominated then-Associate Justice William H. Rehnquist to be Chief Justice. Presidents may also nominate sitting Justices to other political posts, which (if accepted) require resignation from the Court. Between 1900 and 2009, three Justices resigned to pursue other formal public service. In 1916, Justice Charles Evans Hughes resigned to pursue the Republican nomination for President. Justice James F. Byrnes resigned on October 3, 1942, becoming Director of Economic Stability for President Franklin D. Roosevelt. As noted previously, Justice Arthur Goldberg resigned in 1965 to become the U.N. Ambassador. When any Court nomination (whether for an Associate or Chief Justice seat) fails in the Senate, the President may either re-submit the nomination or choose another candidate to fill the bench. The entire process thus begins anew. Withdrawals and rejections can greatly increase the amount of time taken to confirm Justices to the Court. Controversial nominees who are eventually confirmed also usually take more time to consider. The late 1960s and early 1970s were one of the most tumultuous periods of nominations and rejections in the Court's history. On May 14, 1969, Justice Abe Fortas resigned from the bench. Fortas had been embroiled in a scandal surrounding his consulting income, and failed to win confirmation as Chief Justice when President Johnson nominated him to the seat in 1968. Previously, on October 14, 1968, President Johnson had withdrawn the Fortas nomination as well as the nomination of Homer Thornberry to fill the vacancy that would have been created by Fortas's elevation. The Senate rejected President Richard M. Nixon's first two nominees to the Fortas seat—Clement F. Haynsworth, Jr. and G. Harrold Carswell. President Nixon's third choice, Harry A. Blackmun, was not confirmed until May 12, 1970—almost a year after Fortas's resignation. Table 1 (at the end of this report) lists dates for the following events regarding each nomination to the Supreme Court since 1900: (1) when the actual or prospective vacancy apparently became known to the President, (2) when the President announced the nominee, (3) when the Senate Judiciary Committee held its first hearing on the nominee, (4) when final committee action took place, and (5) when final Senate action took place. Table 2 presents the number of days elapsed for six related time intervals: (1) from when the President apparently learned of the actual or prospective vacancy to the his announcement of a new nominee, (2) from the nomination announcement to the first Judiciary Committee hearing, (3) from the first hearing to the committee's final action, (4) from the committee's final action to the Senate's final action, (5) from nomination announcement to final Senate action (duration of total Senate action), and (6) from the vacancy starting date (when the President apparently first became aware of the opportunity to make a nomination) to final Senate action. Table 3 provides summary statistics for the number of days elapsed during each of these intervals, for all nominations from 1900 until 2010, and for two periods within those dates—1900-1980 and 1981-2010. As discussed later in this report, those periods were chosen because the data indicate a sharp difference in the pace of most nominations before and after 1980. As noted previously, it is often difficult or impossible to determine the specific date that a President first knew he would have the opportunity to name a new Justice to the Supreme Court. The President always has the constitutional obligation to make nominations to the Court when vacancies arise, and is certainly aware of the possibility that vacancies could arise at any time. However, the "Actual or Prospective Vacancy Became Known to President" columns in Table 1 and Table 2 focus on documented, specific instances when the President knew he had, or soon would have, the opportunity to name a new Justice to the Court. These dates are based on extensive research about when the Justice's impending departure (or death) was made public, and whether the President had advance knowledge of the vacancy before it became public. In cases in which research revealed no public evidence that the President had advance notice (or in which the data are inconclusive), the date of the first public account of the vacancy marks the beginning of the process (the "When" column in Table 1 and Table 2 ). For example, Justice Sandra Day O'Connor announced her retirement, pending confirmation of a successor, on July 1, 2005. There is no evidence that President George W. Bush definitely knew that O'Connor would retire until her announcement. Therefore, July 1, 2005, is used as the starting point for what became the Associate Justice nomination of John G. Roberts, Jr. On the other hand, although Chief Justice Warren Burger's retirement letter to Ronald Reagan was not released until June 17, 1986, President Reagan's public papers reveal that Burger informed the President of his decision to retire on May 27, 1986. Therefore, May 27, 1986, is used as the starting point for what became the William H. Rehnquist elevation to Chief Justice. Notes throughout Table 1 and Table 2 provide information on historical context. Unless otherwise noted, the "President's Announcement-of-Nominee" date in Table 1 is the day when the President announced his nomination to the public or released the text of his nomination letter (whichever came first). This date is significant because it marks the Senate's first opportunity to begin considering the nomination, even if informally. There are a few cases, explained by table notes, in which Presidents announced their decisions less formally, but still publicly. For example, President Harry S. Truman casually told reporters during a July 28, 1949, press conference that he had offered an Associate Justice nomination to then-Attorney General Thomas C. Clark, even though Clark had not yet accepted the nomination. As discussed previously, in some cases, the announcement date differs by days or even weeks from the date the nomination was formally submitted to the Senate. Table 2 provides the duration of each major interval in the process of nominating and considering Supreme Court Justices. Table 3 provides the median number of days for each major interval in the process. The median is the middle number in a set of observations (in this case, the number of days involved in each stage of considering Supreme Court nominations). The median is generally the preferred measure of central tendency in social science research. As statistician William H. Greene notes, "Loosely speaking, the median corresponds more closely than the mean to the middle of a distribution [group of numbers]. It is unaffected by extreme values." In other words, the median represents the best example of the "average" case, regardless of extremely short or long individual confirmations. However, in describing the speed of the Supreme Court nomination-and-confirmation process, even median values should be considered carefully. Each nomination is different, and political context and historical factors can have a major impact on when various events occur. Several factors affecting individual nominations to the Court are discussed later in this report. During the entire period covered by this report (1900-2010), the President and the Senate have each taken varying amounts of time to act on Supreme Court nominations and confirmations. As Table 3 shows, from 1900-2010, Presidents took a median of 28 days after a vacancy occurred to announce their nominees, compared with a median of 23.5 days for final Senate action once the nomination was announced. The entire process, from actual or prospective vacancy to final Senate action, lasted a median of 79 days from 1900-2010. However, the amount of time involved in each stage of the nomination-and-confirmation process varies widely when individual cases are examined. Some Supreme Court nominations are unusually fast, coming immediately on the heels a sitting Justice's departure from the bench. In these cases, the President almost certainly knew in advance of the outgoing Justice's intention to retire yet delayed announcement of the retirement to coincide with announcing a new nominee. For example, on May 27, 1986, President Reagan simultaneously announced the retirement of Chief Justice Warren Burger, the elevation of William H. Rehnquist to Chief Justice, and the nomination of Antonin Scalia to assume the Associate Justice seat being vacated by Justice Rehnquist. On the other hand, some nomination decisions can take months—at least to become public. For example, although Justice Harold H. Burton submitted his retirement letter to President Dwight D. Eisenhower on October 6, 1958, Eisenhower did not publicly announce Potter Stewart's nomination until January 17, 1959—103 days after announcing Justice Burton's retirement. The entire interval between Burton's announced retirement and Stewart's confirmation lasted 211 days, the bulk of the interval due to a long congressional recess. The data indicate that the median decision-making intervals surrounding Supreme Court nominations have changed substantially since 1981. When comparing Supreme Court nominations from 1900-1980 with those from 1981-2010, five patterns stand out. First, after apparently learning of vacancies, Presidents have typically been quicker to announce nominees since 1981 than in the previous 80 years. As shown in Figure 1 (and Table 3 ), from 1900-1980, Presidents took a median of 34 days to announce their nominees after apparently learning of vacancies, compared with only 19.5 days from 1981-2010. Second, and perhaps most notably, the median interval between the President's announcement of his nominee and the first Judiciary Committee hearing was substantially longer from 1981-2009 than from 1900-1980. As shown in Figure 1 (and Table 3 ), this period almost quadrupled—from 12.5 days during the 1900-1980 period to 49 days from 1981-2010. Again, however, context is important. Even before hearings begin, the Senate can be actively working on the nomination. For example, prior to the start of John G. Roberts's hearings (and even before his nomination was submitted to the Senate), Senators met privately with Judge Roberts, and some pressed the White House to release records from Roberts's Department of Justice service. The Harriet Miers and Samuel Alito nominations followed similar patterns. Third, committee and floor action from 1981-2010 also took slightly longer than prior to 1981. From 1981-2010, the Judiciary Committee took a median of 15 days to reach a decision after starting hearings, while the interval between final committee action and final Senate action took nine days (compared with six and three days respectively from 1900-1980). Fourth, as shown in Figure 1 (and Table 3 ), total Senate activity (the interval between the President's announcement of the nominee and final Senate action) increased from a median of 17 days (1900-1980) to 84 days (1981-2010). Finally, the entire nomination-and-confirmation process took substantially longer after 1980 than during the previous 80 years. The median duration for the entire process (from when the President apparently became aware of a vacancy until the Senate's final action on the nomination) was almost twice as long from 1981-2010 than during 1900-1980 (113 days versus 59 days, respectively). Some elements of the decision-making process surrounding the naming and the confirmation or rejection of Supreme Court nominees are known only to Presidents, nominees, and a few select advisors. Other elements are more obvious. Each nomination has its own political context, making each nomination somewhat different. However, several factors appear to be relatively constant in affecting the speed of Supreme Court nominations and Senate decisions. How quickly the President announces his nominee and how quickly the Senate considers that nomination can depend on how the vacancy occurred. When Justices die unexpectedly, Presidents can be eager to bring the Court back to full strength as soon as possible. On July 19, 1949, for example, Justice Frank Murphy unexpectedly died of a heart attack after a brief illness. President Harry S. Truman announced his nomination of Thomas C. Clark at a press conference nine days later, on July 28. The Senate also considered the nomination quickly, beginning hearings on August 9. Clark's entire nomination-and-confirmation process lasted just 30 days. A few months later, Sherman Minton was confirmed even faster—in 24 days—after the death of Justice Wiley B. Rutledge. Nonetheless, sudden death does not guarantee that either the President or the Senate will make nomination-and-confirmation decisions quickly. For example, when Justice Rufus W. Peckham died unexpectedly on October 24, 1909, President William Howard Taft waited 50 days to announce a nominee. Once Taft announced his choice, the Senate confirmed Horace H. Lurton seven days later. Retirements and resignations are often expected, allowing the President time to prepare for his choice even before an official announcement that a sitting Justice will step down. For example, at the time of his retirement, Justice William O. Douglas's health had been so poor and abilities allegedly in such decline that seven of his fellow Justices voted on October 17, 1975, to "effectively strip Douglas of his power" and excluded the aging Justice from deliberations. By the time Justice Douglas officially wrote to President Gerald R. Ford on November 12, 1975, announcing his retirement, the President was prepared to act quickly. He announced the nomination of John Paul Stevens just 16 days later. Congress, too, acted quickly, confirming Stevens 19 days later, on December 17, 1975. Sometimes, though, even when retirements or resignations come with advance notice, the process moves slowly. For example, Justice Harry A. Blackmun privately told President William J. Clinton around January 1, 1994, that he was planning to leave the Court. Soon afterward, the White House staff began quietly considering replacements. However, President Clinton did not publicly announce Justice Blackmun's retirement until April 6, did not publicly announce Judge Stephen G. Breyer's nomination until May 13, and did not formally nominate Breyer until May 17. The Judiciary Committee began hearings 60 days after the nomination was announced, and the entire process surrounding Breyer's nomination lasted 209 days. However, decisions affecting the nomination were apparently being made even before Blackmun's retirement became public knowledge. Congress's schedule, especially whether the Senate is in session at all, plays an important role in how long Supreme Court nominations take to reach a conclusion. In the early 1900s, several vacancies arose during summer recess or election years when Congress was away from the Capitol. In 1910, for example, Congress adjourned on June 25 and did not return until December 5—a break of more than five months. In the interim, Chief Justice Melville W. Fuller died of a heart attack on July 4. As press coverage noted at the time, although potential nominees were immediately considered, President William Howard Taft waited to formally submit a nomination to the Senate until Congress reconvened. On December 12, five days after the Senate reconvened, President Taft announced and formally submitted to the Senate his nomination of former Senator Edward D. White of Louisiana to be Chief Justice. That same day, without referring the nomination to the Judiciary Committee, the Senate quickly confirmed Senator White. Three times during the 1950s, President Eisenhower resorted to recess appointments when Justices died or announced their retirement after Congress had already adjourned for the year. In each case, President Eisenhower formally submitted the nomination after the Senate convened the following January. Of the five persons whom he nominated to the Court, three first received recess appointments and served as Justices before being confirmed—Earl Warren (as Chief Justice) in 1953, William Brennan in 1956, and Potter Stewart in 1958. President Eisenhower's recess appointments, however, generated controversy, prompting the Senate in 1960, voting closely along party lines, to pass a resolution expressing opposition to Supreme Court recess appointments in the future. President Eisenhower's actions were the most recent recess appointments to the Supreme Court, and recess appointments to the lower federal courts also have become relatively rare since the late 1960s. While a President's constitutional power to make judicial recess appointments was upheld by a federal court in 1985, such appointments, when they do occur, may cause controversy, in large part because they bypass the Senate and its "advice and consent" role. Because of the criticisms of judicial recess appointments in recent decades, the long passage of time since the last Supreme Court recess appointment, and the relatively short duration of contemporary Senate recesses (which arguably undercuts the need for recess appointments to the Court), a President in the 21 st century might be expected to make a recess appointment to the Supreme Court only under the most unusual of circumstances. Today, Congress's availability is less of an obstacle to speedy consideration of nominations than in the past. Given Congress's increasingly year-round schedule, extended decision-making is more often the result of waiting for presidential decisions, background investigations of nominees, or preparations for Judiciary Committee hearings. Today, it would be highly unusual for the Judiciary Committee not to hold Supreme Court confirmation hearings lasting at least a few days. In the past, however, the Judiciary Committee often handled Supreme Court nominations without holding hearings at all. As Table 1 shows, of the 22 nominees to the Court from 1900 to 1937, only three had Judiciary Committee hearings (Louis D. Brandeis in 1916, Harlan F. Stone in 1925, and John J. Parker in 1930 (whose nomination was eventually rejected)). In contrast, of the 41 nominees after 1937, only three did not have hearings. Nominees did not begin regularly testifying at their own hearings until John M. Harlan did so in 1955. When the Judiciary Committee holds hearings, Senate floor consideration can be pushed back sometimes by weeks or even months. Controversial nominees often spur protracted hearings. For example, the Judiciary Committee spent 19 days considering Justice Louis D. Brandeis's nomination in 1916, and the interval between the start of hearings and final committee action lasted 105 days. The final Senate vote came eight days later. More recently, the Judiciary Committee, after learning of President Ronald Reagan's selection of Robert H. Bork, took 76 days to hold its first day of hearings on the nomination, and then 21 more days to conclude action on the nomination. Senate custom plays an especially large role when sitting or former Senators are nominated to the Court. The Senate has almost always considered their colleagues' nominations to the Court within days of receiving the nomination, often without committee hearings or floor debate. For example, although President Taft waited five months to nominate Edward D. White (a former Senator from Louisiana) for Chief Justice, the Senate confirmed the nomination with no debate in less than one hour. Since 1900, three sitting Senators—Hugo L. Black of Alabama (1937), James F. Byrnes of South Carolina (1941), and Harold H. Burton of Ohio (1945)—have been nominated to the Court, and all were quickly confirmed. Senators George Sutherland of Utah (1922) and Sherman Minton of Indiana (1949) were nominated to the Court after having concluded their Senate service. Sutherland was confirmed on the same day on which President Warren Harding announced the nomination, and Minton was confirmed in 19 days. The decades since 1945 have yet to test again the Senate tradition of bypassing the Judiciary Committee when the Supreme Court nominee is a sitting U.S. Senator; no President since then has nominated a sitting Senator. The last former Senator to be nominated to the Court, in 1949, was Judge Sherman Minton of Indiana. (After defeat for re-election to the Senate in 1940, he had been appointed by President Franklin D. Roosevelt to a federal appellate court judgeship.) In a break with tradition, the Supreme Court nomination of former Senator Minton was referred to the Judiciary Committee, and Senate confirmation followed the day after the committee approved the nomination. As noted previously, withdrawn, rejected, or controversial nominations can substantially lengthen the process. In these cases, although Presidents often name nominees fairly quickly, consideration of the nominations can be drawn out in the Senate. During Judge Robert H. Bork's controversial nomination, for example, Senate consideration of Bork lasted more than a month, from the first Judiciary Committee hearing on September 15, 1987, until the Senate's floor vote to reject the nomination on October 23, 1987. The entire process—from President Reagan's announcement of his intention to nominate Bork to Senate rejection—took 119 days. Controversy can also delay confirmation of nominees who are ultimately successful. Despite a relatively quick nomination-and-confirmation process of 42 days in late 1924 and early 1925 for then-Attorney General Harlan F. Stone, his nomination was temporarily set back when it was recommitted to the Senate Judiciary Committee, apparently because of Stone's investigation as Attorney General of Senator Burton K. Wheeler. More recently, although Judge Clarence Thomas narrowly won confirmation in 1991, nominating and confirming him took 110 days, including a second round of Judiciary Committee hearings surrounding law professor Anita Hill's allegations against Thomas of sexual harassment. Understanding how long the previous Supreme Court nomination-and-confirmation process has taken, and what factors affected that schedule, can provide useful perspective on presidential decision-making and the Senate's preparations for future nominations. While Presidents and supporters of nominees want Justices confirmed quickly, some Senators will continue to emphasize their right to consider nominees carefully and their responsibility to hold sufficient hearings. Against that political backdrop, this report demonstrates that the length of time required to nominate and confirm or reject a nominee varies widely. Even median durations must be interpreted cautiously. The context surrounding each nomination is particularly important in understanding how long the process takes. This report indicates that, from 1900-1980, the President's portion of the process took longer than the Senate's. Since 1981, though, there has been a substantial increase in the median duration between the President's announcement of a nominee and the start of Judiciary Committee hearings. As a result, the Senate's portion of the process has taken longer than the President's. Prior to 1981, lengthy nomination-and-confirmation processes usually occurred because either the Senate was out of session when a vacancy on the Court arose, or the nomination was controversial. In recent decades, by contrast, slower decision-making has taken place during an era when Congress is in session longer than during the early 20 th century. Since 1981, the nomination-and-confirmation process has lasted a median of 113 days—almost twice as long as the 59-day median from 1900-1980. Although the data in Table 1 , Table 2 , and Table 3 provide a median measure of the process, political context is an essential backdrop for understanding the numbers. The President and the Senate share decision-making responsibilities for placing new Justices on the Court. Ultimately, the choices each institution makes determine how long nominations and confirmations take. One possible explanation for the paradox of slower decisions despite more time in session is that, as some critics on both sides of the aisle contend, Supreme Court nominations have become battlegrounds for larger political debates. Another possibility is that the Senate is considering nominations more carefully than in the past, and therefore taking more time to make decisions about nominees. Similarly, the Senate might be using longer decision-making and scrutiny of nominees as a method of counterbalancing presidential power, especially when Senators believe that the President has chosen an unqualified nominee. Some early 20 th century appointments to the Supreme Court were confirmed within days of a vacancy occurring. More recent nominations and confirmations, by contrast, typically have taken several weeks or months. How and when a vacancy occurs, the Senate's schedule, Judiciary Committee involvement, institutional customs, and whether or not the nomination is controversial, all affect the speed with which the President nominates, and the Senate passes judgment, on prospective Justices.

The speed with which appointments to the Supreme Court move through various stages in the nomination-and-confirmation process is often of great interest not only to all parties directly involved, but, as well, to the nation as a whole. This report provides information on the amount of time taken to act on all Supreme Court nominations occurring between 1900 and the present. It focuses on the actual amounts of time that Presidents and the Senate have taken to act (as opposed to the elapsed time between official points in the process). For example, rather than starting the nomination clock with the official notification of the President of a forthcoming vacancy, this report focuses on when the President first learned of a Justice's intention to leave the Court (e.g., via a private conversation with the outgoing Justice), or received word that a sitting Justice had died. Likewise, rather than starting the confirmation clock with the transmission of the official nomination to the Senate, this report focuses on when the Senate became aware of the President's selection (e.g., via a public announcement by the President). The data indicate that the entire nomination-and-confirmation process (from when the President first learned of a vacancy to final Senate action) has generally taken almost twice as long for nominees after 1980 than for nominees in the previous 80 years. From 1900 to 1980, the entire process took a median of 59 days; from 1981 through 2010, the process took a median of 113 days. Although Presidents after 1980 have moved more quickly than their predecessors in announcing nominees after learning of vacancies (a median of 19.5 days compared with 34 days before 1980), the Senate portion of the process (i.e., from the nomination announcement to final Senate action) appears to take much longer than before (a median of 84 days from 1981 through 2009, compared with 17 days from 1900 through 1980). Notably, the amount of time between the nomination announcement and first Judiciary Committee hearing has almost quadrupled—from a median of 12.5 days (1900-1980) to 49 days (1981-2010). President Obama learned of another prospective vacancy on April 9, 2010. On May 10, 2010, President Obama announced he would nominate Solicitor General Elena Kagan to succeed Justice John Paul Stevens. From June 30 to July 1, 2010, the Senate Judiciary Committee held four days of hearings on the nomination, and on July 20, voted 13-6 to report the nomination to the Senate. On August 3, 2010, the Senate began its consideration of the nomination. The Senate confirmed Kagan as the nation's 112th Supreme Court Justice on August 5 by a 63-37 vote. The overall time for the Kagan appointment process was slightly longer than for other recent nominations. The entire period for presidential selection and Senate consideration and action on the 2009 Sonia Sotomayor nomination, for example, lasted 97 days, compared with 118 days for the Kagan nomination. Nonetheless, although the Kagan nomination took longer to move through the process than did the Sotomayor nomination, the total Kagan timetable was similar to those of other nominations since 1981. In fact, including the Kagan timetable data raised the median number of days for the entire process by only a day and a half—to 113 days, compared with 111.5 days for all Supreme Court nominations between 1981 and 2009. This report will be updated as events warrant.

This report discusses the FY2017 budget request for the U.S. Department of Energy's (DOE's) Office of Energy Efficiency and Renewable Energy (EERE) as proposed by the Obama Administration in February 2016, the amended FY2017 appropriations request proposed by the Trump Administration in March 2017, and the status of FY2017 congressional appropriations for EERE. It also discusses the Trump Administration's FY2018 budget blueprint released in March 2017 with regard to EERE. On March 16, 2017, the Trump Administration requested an $18 billion decrease in nondefense appropriations for FY2017. It is not clear how such a cut would apply to EERE. Additionally, the Administration released a budget blueprint for FY2018. The blueprint states that funding for EERE would focus on "limited, early-stage applied energy research and development activities where the Federal role is stronger." The blueprint requests $28.0 billion for DOE, a decrease of $1.7 billion, or 5.6%, from the FY2017 annualized continuing resolution level. The blueprint does not specify how much of the proposed $1.7 billion cut would apply to EERE programs. The blueprint specifies two program eliminations: the Weatherization Assistance Program and the State Energy Program, which received FY2016 appropriations of $211.6 million and $50.0 million, respectively (see Table 1 ). In February 2016, the Obama Administration requested both discretionary funding ($2.9 billion) and mandatory funding ($1.3 billion) for EERE for FY2017, for a total of $4.2 billion. The total $4.2 billion request is an increase of $2.2 billion (104%) from the enacted FY2016 level of $2.1 billion. The Obama Administration's discretionary portion of the FY2017 request was 40% higher than the FY2016 enacted level ($2.1 billion). The Senate-passed energy and water appropriations bill for FY2017 included $2.1 billion for EERE. The funding level Congress decides to provide could impact goals set by EERE, including sustainable transportation goals (e.g., vehicle electrification and biofuels), renewable energy goals (e.g., grid modernization for solar energy, enhanced geothermal technologies), and energy efficiency goals (e.g., establishment of one additional Clean Energy Manufacturing Innovation Institute). It also could affect EERE's involvement in the proposed 21 st Century Clean Transportation Plan and EERE assistance with industry competitiveness. This report does not discuss the opportunities, challenges, economic value, or commercial status of the various renewable energy technologies and energy efficiency initiatives selected by EERE, nor does it delve into the goals of the individual EERE programs or congressional oversight of certain EERE issues. EERE leads the DOE's effort to accelerate development and facilitate deployment of energy efficiency and renewable energy technologies and market-based solutions intended to strengthen U.S. energy security, environmental quality, and economic vitality. EERE is led by the Assistant Secretary for Energy Efficiency and Renewable Energy, and it is organized into four offices: Office of Transportation, Office of Renewable Power, Office of Energy Efficiency, and Office of Operations. EERE contends that it invests in only what it considers to be the highest-impact activities. EERE collaborates with industry, academia, national laboratories, and others to develop technology-specific road maps and then focuses on early stage research and development (R&D), technology validation and risk-reduction activities, and the reduction of market barriers to the adoption of market-ready new technologies. EERE also manages a portfolio of research and development programs that support state and local governments, tribes, and school leaders. In addition, EERE oversees the National Renewable Energy Laboratory (NREL)—the only national laboratory solely dedicated to researching and developing renewable energy and energy efficiency technologies. EERE receives its appropriations from the annual energy and water development (E&W) appropriations bill. During the last several years of the Obama Administration, the budget request was to increase funding to support EERE programs and objectives. Congress's response has been to provide funding at levels lower than what was requested. Appropriations for EERE have averaged $1.86 billion annually for the last six years in current dollars (see Table 1 ). The appropriations are split into four major categories: sustainable transportation, energy efficiency, renewable energy, and corporate support (e.g., program administration). From FY2011 to FY2016, approximately 65% of the appropriations were spent on sustainable transportation and energy efficiency, while approximately 25% of the appropriations were spent on renewable energy and approximately 12% was spent on corporate support. The Obama Administration requested $4.2 billion to support EERE programs and objectives for FY2017 ($2.9 billion in discretionary funding and $1.3 billion in mandatory funding). The total $4.2 billion request would represent an increase of $2.2 billion (104%) from the enacted FY2016 level of $2.1 billion. The discretionary portion of the Obama Administration request, $2.9 billion, would be an increase of $829 million (40%) over the FY2016 enacted level of $2.1 billion (see Table 1 ). The discretionary portion of the EERE FY2017 request is approximately 10% of the discretionary portion of the overall DOE FY2017 request of $30.2 billion. The FY2017 EERE request would allocate approximately 61% of the appropriations to sustainable transportation and energy efficiency, combined. However, energy efficiency would receive less in its share of the two categories combined than it did in FY2016 (32% in the FY2017 request, as compared with 35% in FY2016). The FY2017 request allocates close to 21% and 10% of the request for renewable energy and corporate support, respectively. Some of the goals, highlights, and major changes presented in the EERE FY2017 Obama Administration request, as reported by DOE, include the following: Sustainable Transportation [$852.9 million] Continues support for the Electric Vehicle (EV) Everywhere Grand Challenge by reducing the combined battery and electric drive system costs of a plug-in electric vehicle by up to 50% (by 2022, from a 2012 baseline). [$282.7 million] Continues support for the SuperTruck II initiative started in FY2016 to research, develop, and demonstrate a suite of technologies with the goal of improving the freight-hauling efficiency of heavy-duty Class 8 long-haul vehicles by 100% by 2020 (with respect to comparable 2009 vehicles) and demonstrating applicability of these technologies to heavy-duty regional-haul vehicles as well. [$60 million] Explore opportunities for energy efficiency above the program's traditional vehicle-level focus at the overall transportation system level with the Transportation as a System (TAS) initiative by evaluating how transportation assets, travelers, and the transportation system interact and i nfluence each other using multi scale, multisystem models, with the longer-term goal of optimizing efficiency of the transportation system. [$20 million] Support the conversion of cellulosic and algal-based feedstocks to bio-based gasoline, diesel, and jet fuel at a target cost of $3.00 per gallon of gasoline equivalent (gge) by the end of 2017, with an emphasis on drop-in hydrocarbon biofuels from nonfood sources. [$30 million for the Advanced Algal Systems subprogram] Develop a Synthetic Biology Foundry to improve efficiencies in the conversion of biomass to fuels and products. [$35 million] Support reduced cost and increased durability of a fuel cell system and invest in R&D for technologies that can lower the cost of hydrogen from renewable resources to less than $4.00/gge by 2020. [$35 million for fuel cell R&D; $44.5 million for hydrogen fuel R&D] Renewable Energy [$620.6 million] Support the SunShot Initiative goal of making solar power cost-competitive without subsidies by 2020, equivalent to a cost of solar power of $0.06 per kilowatt-hour, and support solar grid integration. [$43 million for concentrating solar power; $83 million for systems integration] Issue a competitive solicitation to establish an Offshore Wind R&D Consortium to accelerate fundamental R&D for offshore wind-specific technology barriers. [$25 million] Competitively fund new R&D projects for new stream reach development for innovative hydropower designs and construction methods. [$7.8 million] Commence procurement and construction for the critical infrastructure needed for an open-water, fully energetic, grid-connected wave energy test facility to assist with the development of marine and hydrokinetic technologies. [$20 million] Support research, development, and demonstration activities for a hydrothermal (geothermal) subprogram subsurface initiative focusing on technologies that provide for effective, adaptive, and safe control of fractures and fluid flow. [$33 million] Energy Efficiency [$919 million] Establish one additional Clean Energy Manufacturing Innovation Institute (CEMI) [$14 million] and continue support for five existing CEMIs [$70 million]. Continue support for activities that assist and enable federal agencies to meet aggressive energy, water, greenhouse gas, and other sustainability goals. Establish a Low-Global Warming Potential (Low-GWP) Advanced Cooling (HVAC) R&D funding opportunity announcement for advanced cooling and heating technologies. [$40 million] Create a Metropolitan Systems initiative that enables the use of historic and real-time, data-driven tools to support the design and development of low-energy, resilient infrastructure that will help U.S. cities meet their climate and energy targets. [$15 million] Support appliance and equipment standards. Provide access to home weatherization services for low-income households across the country to reduce their income spent on energy. Establish the Cities, Counties, and Communities Energy Program (3C Energy Program) to provide technical assistance and competitively awarded funds to catalyze more extensive clean energy solutions in community development and revitalization efforts. [$26 million] Other Obama Administration EERE initiatives included technology-to-market activities (e.g., National Incubator Initiative for Clean Energy) and international activities (e.g., expanding the number of Chinese cities using DOE's low-carbon planning tools and conducting demonstration projects featuring low-carbon technologies from U.S. companies). Additionally, under the Obama Administration's FY2017 request, EERE would establish a new crosscutting innovation initiative program introduced as a separate line item in the EERE budget table. The program would focus on providing funding for research, development, and demonstration activities, with the goal of strengthening regional clean energy innovation ecosystems, accelerating next-generation clean energy technology pathways, and encouraging clean energy innovation and commercialization collaborations between the National Laboratories and American entrepreneurs. Approximately 51% of the $215 million requested for the crosscutting innovation initiative would be spent on regional energy innovation partnerships. The Obama Administration requested that the new 21 st Century Clean Transportation program, a multiagency effort, be funded at $320 billion over 10 years. This program would aim to be a key step in "making smart and strategic investments to create a cleaner, more sustainable transportation system." The program is to be funded by both a new fee paid by oil companies—a $10 per barrel fee on oil gradually phased in over five years—and "one-time revenues from pro-growth business tax reform." The Administration stated that some benefits of the proposed plan include carbon pollution reduction, economic strengthening (i.e., job creation), and transportation expansion. The EERE FY2017 budget request would provide $1.3 billion of mandatory funding to support the program. More than half, approximately 56%, of the funding would be spent on deployment of low-carbon fueling infrastructure. DOE reports that EERE will seek to support this effort with $11.3 billion over 10 years. EERE participation in the program would include the following activities. Develop regional low-carbon fueling infrastructure, including charging stations for electric vehicles, biofuels, hydrogen, and other low-carbon options in partnership with others that take into account the unique economies, resources, and development needs of different regions. [$750 million] Conduct R&D to accelerate cutting the cost of battery technology and establish public-private partnerships to achieve lowest carbon end-to-end intermodal transport for freight and fleets. [$200 million] Establish a smart mobility research center that will investigate the intersection of information and communication technologies, vehicle technologies, low carbon fuels, and disruptive transportation business models with the goal of reducing overall system level greenhouse gas emissions and petroleum consumption. [$200 million] Conduct R&D that focuses on transformational developments that address technical barriers in biofuel feedstock logistics, lower conversion costs, enhanced economics of biofuel production by focusing on high value coproducts, and the certification of new fuel pathways. [$100 million] Accelerate the transition to a cleaner vehicle fleet by issuing challenge grants to encourage cleaner state, tribal, and local government vehicle fleets. [$85 million] The Obama Administration requested significantly more funding for EERE compared to the FY2016 enacted appropriations—at least an $829 million increase, and possibly a $2.1 billion increase if the mandatory funding request is taken into account. The funding requested would support numerous programs and activities. The $1.3 billion in mandatory funding requested to support the 21 st Century Clean Transportation Plan is part of a multiagency effort that depends on the enactment of a new revenue source. It could be a significant undertaking for EERE to implement the clean transportation plan's activities in addition to current responsibilities given that the funding requested for the plan would represent 64% of the FY2016 EERE enacted appropriations. In addition, it is possible that the plan may involve efforts previously dismissed by Congress. For instance, EERE stated that it would use the mandatory funding, in part, to "establish regional fueling infrastructure to support the deployment of low-carbon fuels." It is not known if EERE would consider blender pumps to be a part of this regional fueling infrastructure. If so, Congress rejected a related effort in the 2014 farm bill ( P.L. 113-79 ) by forbidding the use of Renewable Energy for America Program (REAP) funds to support blender pump installation. Congress may want to examine what impact such a program may have on clean transportation expansion, clean energy sources, or conventional energy sources; how quickly such a program may be implemented; and how effective such a program would be given its scope and that multiple participants—government and others, with various objectives—need to be involved to achieve the proposed outcomes. The Senate passed the Energy and Water Development and Related Agencies Appropriations Act, 2017 ( H.R. 2028 ) on May 12, 2016. The bill would have provided $2.1 billion for EERE, $825 million below the Obama Administration's FY2017 discretionary request and $3.8 million above the FY2016 enacted level. On May 26, 2016, the House rejected an Energy and Water Development and Related Agencies Appropriations Act for 2017 ( H.R. 5055 ). The bill would have provided $1.8 billion for EERE, $1.1 billion below the Obama Administration's FY2017 discretionary request and $244 million below the FY2016 enacted level. Funding is currently being provided by a continuing resolution.

The U.S. Department of Energy's (DOE's) Office of Energy Efficiency and Renewable Energy (EERE) is the principal government agency responsible for renewable energy technologies and energy efficiency efforts. EERE works with industry, academia, national laboratories, and others to conduct research and development (R&D) and to issue grants to state governments. EERE oversees nearly a dozen technologies and programs—from vehicle technologies to solar energy to advanced manufacturing to weatherization and intergovernmental programs—each with its own respective mission and program goals. EERE receives funding from the annual energy and water development (E&W) appropriations bill. At issue for the 115th Congress is not only the level of EERE appropriations but also which activities EERE should support, including whether to continue support for specific initiatives and programs. On March 16, 2017, the Trump Administration released a budget blueprint for FY2018. The blueprint states that funding for EERE would focus on "limited, early-stage applied energy research and development activities where the Federal role is stronger." The blueprint requests $28.0 billion for DOE, a decrease of $1.7 billion, or 5.6%, from the FY2017 annualized continuing resolution level. The blueprint does not specify how much of the proposed $1.7 billion cut would apply to EERE programs. The blueprint specified that the Trump Administration's request includes two specific program eliminations: the Weatherization Assistance Program and the State Energy Program, which received FY2016 appropriations of $211.6 million and $50.0 million, respectively. The Trump Administration also requested an $18 billion decrease in nondefense appropriations for FY2017; it is not clear how such a cut would apply to EERE. For FY2017, the Obama Administration requested $2.9 billion of discretionary funding for EERE and $1.3 billion of mandatory funding for a new program, bringing the total FY2017 budget request to $4.2 billion. This total request, if enacted, would be an increase of $2.2 billion (104%) over the enacted FY2016 level of $2.1 billion (the Consolidated Appropriations Act, 2016; P.L. 114-113, Division D). The $2.9 billion of discretionary funding requested would be an increase of $829 million (40%) over the FY2016 enacted level of $2.1 billion. The bulk of the discretionary portion of the request would be split among three areas: nearly 32% for energy efficiency programs, about 21% for renewable energy programs, and about 29% for sustainable transportation programs. The discretionary funding portion of the request is nearly 10% of the $30.2 billion discretionary portion of the FY2017 request for DOE. The Obama EERE request included new and ongoing efforts that range in scale and cost. EERE would continue to support the EV Everywhere Grand Challenge, concerning the adoption and use of plug-in electric vehicles; the SunShot Initiative to make solar energy cost-competitive by 2020; and the establishment of energy efficiency requirements for equipment and appliances. With the discretionary funding, EERE requested $40 million to establish a new R&D program focused on reducing the climate impacts of heating, ventilation, and air conditioning systems. Further, the Obama Administration requested $215 million for a new EERE Crosscutting Innovation Initiatives program, which has several goals, including the establishment of regionally focused clean energy innovation partnerships across the country and the acceleration of next-generation clean energy technology pathways. A relatively significant new measure contained in the Obama budget request was $1.3 billion in mandatory funding for EERE's portion of the Obama Administration's 21st Century Clean Transportation System—a new multiagency initiative to build a clean transportation system. EERE reports that this initiative would "expand investment in transportation technologies of the future; establish regional fueling infrastructure to support the deployment of low-carbon fuels; and accelerate the transition to a cleaner vehicle fleet." On May 12, 2016, the Senate passed the Energy and Water Development and Related Agencies Appropriations Act, 2017 (H.R. 2028). The bill would have provided $2.1 billion for EERE, $825 million below the Obama Administration's FY2017 discretionary request and $3.8 million above the FY2016 enacted level. On May 26, 2016, the House rejected an Energy and Water Development and Related Agencies Appropriations Act for 2017 (H.R. 5055). The bill would have provided $1.8 billion for EERE, $1.1 billion below the Obama Administration's FY2017 discretionary request and $244 million below the FY2016 enacted level. Funding is currently being provided by a continuing resolution.

Congress has been active in establishing federal policy for the agricultural sector on an ongoing basis since the 1930s. Over the years, as economic conditions and technology have evolved, Congress has regularly revisited agricultural policy through periodic farm legislation. Over these decades, the breadth of policy areas addressed through such farm bills has expanded beyond providing support for a limited number of agricultural commodities to include establishing programs and policies that address a spectrum of related areas, such as agricultural conservation, credit, rural development, domestic nutrition assistance, trade and international food aid, organic agriculture, and support for beginning and veteran farmers and ranchers, among others. On June 21, 2018, the House voted 213-211 to approve H.R. 2 , the Agriculture and Nutrition Act of 2018, an omnibus farm bill that would establish farm and food policy for the next five years, covering FY2019-FY2023. The vote to approve H.R. 2 followed a failed vote of 198-213 on the same bill on May 18, 2018. The final passage vote on June 21 followed a vote of 233-191 approving a motion to reconsider, which was made after the unsuccessful vote on final passage of May 18. The Committee on Agriculture marked up and ordered reported H.R. 2 on April 18, 2018. The House-passed version of H.R. 2 continues the tradition of multi-year farm bills that would establish policy for farm programs and nutrition assistance. To this end, H.R. 2 addresses agriculture and food policy across 11 titles that cover commodity support programs, agricultural conservation, trade and international food aid, domestic nutrition assistance, credit, rural infrastructure and economic development, research and extension, forestry, horticulture, and a variety of other policies and initiatives. The Congressional Budget Office (CBO) projected that spending on mandatory programs under H.R. 2 would total $867 billion over the 10-year period FY2019-FY2028, which equals the cost of extending the current 2014 farm bill for 10 years. H.R. 2 would supersede the current slate of farm programs and policies authorized by the 2014 farm bill, P.L. 113-79 , many of which will expire in 2018 unless Congress acts to reauthorize them or to extend them. Certain programs, such as crop insurance, are permanently authorized and would continue to operate in the absence of new farm legislation or an extension of the current farm bill. But if the current farm law were to expire, many other programs—such as commodity support programs that provide a safety net for producers of major agricultural commodities, such as corn and wheat, milk, sugar, and others—would be governed by so-called permanent laws, which do not expire and date from the late 1930s and 1940s. These permanent laws, including the Agricultural Adjustment Act of 1938 (P.L. 75-430) and Agricultural Act of 1949 (P.L. 81-439), emphasize supply controls to support price support regimes that would raise prices of these basic farm commodities well above existing market levels. A change in farm policy along these lines from the market-driven and export-oriented model that characterizes most existing commodity support programs could prove to be broadly disruptive for farmers, farm input suppliers, agricultural exporters, food manufacturers, and consumers. Many other programs, such as conservation programs and rural development programs, would cease to function. In the past, when Congress has faced the prospect of expiring farm legislation without enacting successor legislation, it has acted to extend the existing policies, as it did when the 2002 and 2008 acts expired. This report provides a title-by-title summary of the policies and provisions in H.R. 2 and compares them with current law. Following an analysis of the budgetary implications of H.R. 2 , summaries of major changes the bill would make in each of its 11 titles are provided. These summaries are followed by side-by-side comparison tables for each of the bill's 11 titles that briefly describe the provisions in H.R. 2 and compare them with current law. During the floor debate on H.R. 2 , the House adopted a number of amendments to the bill, which are listed in Table A-1 . A farm bill authorizes funding in two ways. It authorizes and pays for mandatory outlays with multiyear budget estimates when the law is enacted. It also sets the parameters for discretionary programs and authorizes them to receive future appropriations but does not provide funding. Mandatory programs often dominate farm bill policy and the debate over the farm bill budget. The budgetary impact of mandatory spending proposals is measured relative to an assumption that certain programs continue beyond the end of the farm bill. The benchmark is the CBO baseline —a projection at a particular point in time of future federal spending on mandatory programs under current law. The baseline provides funding for reauthorization, reallocation to other programs, or offsets for deficit reduction. When a new bill is proposed that would affect mandatory spending, the score (cost impact) is measured in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score. Budget enforcement uses these baselines and scores and may follow "PayGo" and other budget rules (that in part may require no increase to the federal deficit). In April 2018, CBO released a baseline for farm bill programs with mandatory spending that will be used for the rest of the legislative year. It projects that, if current law were extended, farm bill programs would cost $867 billion over the next 10 years, FY2019-FY2028, 77% of which is in the nutrition title for the Supplemental Nutrition Assistance Program (SNAP). The remaining $203 billion baseline is for agricultural programs, mostly in crop insurance, farm commodity programs, and conservation. Other titles of the farm bill contribute less than 1% of the baseline ( Figure 1 ), some of which are funded primarily with discretionary spending. Relative to this baseline, CBO released its score of H.R. 2 on April 13, 2018. CBO estimates that H.R. 2 is essentially budget neutral over the procedural 10-year budget window ( Table 2 ). The bill would increase mandatory (direct) spending by $458 million and is offset by increases in revenue of $465 million, reflecting fees paid by contractors in the SNAP electronic benefits transfer (EBT) program. Under H.R. 2 , the baseline of the three largest titles (nutrition, crop insurance, and commodities) is projected to remain within roughly 0.5% of current law. Within individual titles, the conservation and nutrition titles would experience larger shifts among programs within their respective titles. For example, the conservation title's 10-year baseline would be reduced by $795 million (-1.3%), reflecting a $12.6 billion reduction (21%) from repealing the Conservation Stewardship Program (CSP), which is the offset for increases in other conservation programs ( Table 3 ). The nutrition title's 10-year baseline would increase by $463 million (+0.07%), although this includes reductions of $20 billion (3%) in benefits that are reallocated to other programs in the nutrition title. Moreover, the overall nutrition title increase, $463 million, is more than offset by the projected $465 million increase in revenue attributed to that title. Bioenergy programs, which had their own title in recent farm bills, are addressed in the rural development title of H.R. 2 , where their mandatory funding is eliminated (-$517 million over 10 years). Animal disease and preparedness programs, including a vaccine bank, receive new mandatory funding (+$450 million) in the miscellaneous title. Farm safety net program outlays would be essentially flat overall, with crop insurance title reductions (-$161 million over 10 years) nearly offsetting net increases in farm commodity title programs ($+193 million). For several of the subset of programs in the 2014 farm bill that received mandatory funding but do not have a baseline beyond the end of FY2018, H.R. 2 would provide new mandatory funding. Two research title programs would receive $250 million in mandatory funds, while trade title programs would receive $450 million and be provided with permanent baseline. A food insecurity program in the nutrition title would receive $472 million in mandatory funding and gain permanent baseline. Title I commodity programs authorize support programs for dairy, sugar, and covered commodities—including major grain, oilseed, and pulse crops—as well as agricultural disaster assistance. Major field-crop programs include the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs and the Marketing Assistance Loan (MAL) program. The dairy program involves protecting a portion of the margin between milk and feed prices. The sugar program provides a combination of price support, border protection, and producer production allotments. Four disaster assistance programs that focus primarily on livestock and tree crops were permanently authorized in the 2014 farm bill. These disaster assistance programs provide federal assistance to help farmers recover financially from natural disasters, including drought and floods. Title I also includes several administrative provisions that suspend permanent farm law from 1938 and 1949; assign payment limits for individuals, joint ventures or partnerships, and corporations; specify the adjusted gross income (AGI) threshold for program payment eligibility; and identify other details regarding payment attribution and eligibility. H.R. 2 extends authority for current commodity programs but with some modifications to programs for covered commodities and dairy as well as agricultural disaster assistance. The sugar program is extended but is otherwise unchanged. H.R. 2 also amends both payment limits and the AGI limit to expand the list of producer exemptions from payment and income limits under certain conditions. In general, program changes affecting covered commodities under H.R. 2 make PLC a more attractive option for producers than ARC. In particular, H.R. 2 includes an escalator provision that would raise a covered commodity's effective reference price (used in the PLC payment formula) by as much as 115% of the statutory PLC reference price based on 85% of the five-year Olympic average of farm prices. In addition, producers participating in PLC that experienced at least 20 consecutive weeks of severe drought during 2008-2012 would be allowed to update their program yields (used in the PLC payment formula). In contrast, producers enrolled in the county-level ARC program (or the stacked income protection plan for cotton) would be ineligible for crop insurance coverage under an area yield and loss basis or the supplemental coverage option. Furthermore, the individual, farm-level ARC program is eliminated. The MAL program would be retained as is under H.R. 2 , but any program benefits would be exempted from inclusion under both payment limits and the AGI limit. Payment limits would also be affected by H.R. 2 's treatment of eligible payment entities. Under current law, partnerships and joint ventures are treated as collections of individuals, each with their own payment limits, whereas a corporation is treated as a single individual subject to a single payment limit. H.R. 2 would alter the treatment of certain corporations by defining a "qualified pass through entity" (QTPE) as including partnerships, joint ventures, limited liability corporations, and S corporations. This would allow each separate owner of a QTPE (meeting all program eligibility criteria) to have an individual payment limit. Also, H.R. 2 would redefine family farm to include first cousins, nieces, and nephews, thus increasing the potential pool of individuals eligible for an individual payment limit on family farming operations. With respect to agricultural disaster assistance programs, H.R. 2 amends the limits on payments received under the programs and waives the AGI requirement if more than 75% of the producer's income comes from farming, ranching, or silviculture. The bill also expands payments for livestock losses caused by disease. H.R. 2 expands producer coverage choices under the current Margin Protection Program (MPP) and renames it the Dairy Risk Management Program (DRMP). Like MPP, the DRMP pays participating dairy producers the difference (when positive) between a producer-selected margin and the national milk margin (calculated as the all-milk price minus an average feed cost ration). Under H.R. 2 , the U.S. Department of Agriculture (USDA) is required to conduct studies on whether the feed cost ration is representative of actual feed costs used in the margin calculation and on the cost of corn silage versus the feed cost of corn. The bill also directs USDA to report alfalfa hay prices in the top five milk producing states. Under current law, for a $100 administrative fee, participating dairy producers automatically receive payments on 90% of their first 5 million pounds or less of milk production when the milk margin falls below $5.00 per hundredweight (cwt.). Under DRMP, the catastrophic margin is lowered to $4.00/cwt. Also, under current law dairy producers select a margin protection level in $0.50/cwt. increments from $4.00/cwt. to $8.00/cwt. and a percent coverage ranging from 25% to 90% of the farm's historical milk production. Premiums paid by producers vary with coverage levels selected and across two production tiers: Tier I is the first 5 million pounds of milk production; Tier II is milk production above 5 million pounds. Under DRMP, additional margin levels of $8.50/cwt. and $9.00/cwt. are available for Tier I. Premiums are reinstated for the $4.50/cwt. and $5.00/cwt. margins under Tier I, while premiums are reduced substantially for the other Tier I margins ranging from $5.50/cwt. to $8.00/cwt., and the percent coverage range is extended to 5% to 90% of a farm's milk production history. Premiums for Tier II would be left unchanged. A difference under DRMP from current law is that dairy producers would make a single one-time election of a margin coverage level and a percentage of milk production to cover. This election would last the duration of the farm bill. H.R. 2 would also repeal the Dairy Product Donation Program; extend through FY2023 the Dairy Forward Pricing Program, the Dairy Indemnity Program, and the Dairy Promotion and Research Program; and eliminate the provision prohibiting dairy producers from participating in both the DRMP and the Livestock Gross Margin-Dairy insurance program, although dual coverage cannot be on the same milk production. Finally, H.R. 2 amends the formula for the Class I skim milk price used for calculating the Class I price under Federal Milk Marketing Orders. USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These can be broadly grouped into working land programs, land retirement and easement programs, watershed programs, emergency programs, technical assistance, and other programs. H.R. 2 amends portions of programs in all of these categories. However, the general focus is on the larger working lands, land retirement, and easement programs. All current conservation programs are reauthorized with the exception of the largest—CSP—which is repealed. New spending on the conservation title is projected to increase by $656 million over five years but over 10 years would be reduced by nearly $800 million. In general, working land programs provide technical and financial assistance to assist farmers to improve land management practices. The two largest working lands programs—Environmental Quality Incentives Program (EQIP) and CSP—account for more than half of all conservation program funding. H.R. 2 repeals CSP, which currently has an enrollment of more than 70 million acres. CSP provides financial and technical assistance to producers to maintain and improve existing conservation systems and to adopt additional conservation activities in a comprehensive manner on a producer's entire operation. A more limited version of the CSP stewardship contract is included in EQIP with the proviso that no more than 50% of EQIP funding may be used for these contracts. Existing CSP contracts would remain active until completion. Repealing CSP is the primary driver behind the projected decline in spending under the conservation title over 10 years, since CSP contracts are five years in duration and would all be completed by FY2023. H.R. 2 also amends EQIP by expanding options for irrigation entities, removing a requirement that 60% of payments relate to livestock production, limiting the EQIP Conservation Innovation Grants to $25 million, and increasing the overall funding in annual increments through FY2023 to $3 billion from $1.75 billion in FY2018. Land retirement and easement programs provide federal payments to private agricultural landowners for permanent or long-term land-use restrictions. The Conservation Reserve Program (CRP), the largest land retirement program, is reauthorized and amended by H.R. 2 . CRP provides annual rental payments to producers to replace crops on highly erodible and environmentally sensitive land with long-term resource-conserving plantings. Total CRP enrollment would be authorized to increase incrementally through FY2023 to 29 million acres from the current limit of 24 million acres. In order to offset this increased enrollment level, the bill would reduce payments to participants, allow for a one-time early termination of select CRP contracts without penalty in FY2019, and reduce incentives for continuous contracts and reenrollment. A number of other changes are made to CRP that would further expand grazing and commercial uses on CRP acres. The Agricultural Conservation Easement Program (ACEP) USDA's easement program, is also reauthorized and amended by H.R. 2 . ACEP provides financial and technical assistance through two types of easements: agricultural land easements that limit nonagricultural uses on productive farm or grasslands and wetland reserve easements that protect and restore wetlands. Most of the changes to ACEP focus on the agricultural land easements in which USDA enters into partnership agreements with eligible entities to purchase agricultural land easements from willing landowners. H.R. 2 would provide additional flexibilities to ACEP eligible entities. It would also remove planning requirements, waive the AGI requirement, allow for mineral development and participation in environmental markets, and increase overall funding to $500 million annually. The 2014 farm bill created the Regional Conservation Partnership Program (RCPP), which enrolls land through existing conservation programs in partnership with eligible partners. Under RCPP, partners define the scope and location of the project, provide 50% or more of the project cost, and work with eligible landowners to enroll in existing conservation programs. H.R. 2 expands funding for the program as well as the existing set of conservation programs covered under program. H.R. 2 would also provide for longer partnership agreements and project renewal options. The trade title deals with statutes concerning U.S. international food aid and agricultural export programs. Under the farm bill authority, U.S. international food assistance is distributed through three main programs: (1) Food for Peace (emergency and nonemergency food aid); (2) Food for Progress (agricultural development programs); and (3) the McGovern-Dole International Food for Education and Child Nutrition program (school lunch and feeding programs). The largest of these, the Food for Peace (FFP) program, receives about $1.5 billion in annual appropriations. Traditionally, these three programs have relied on donated U.S. agricultural commodities as the basis for their activities. However, recent farm bills have increasingly added flexibility to purchase food in local markets or to directly transfer cash or vouchers to needy recipients. FFP is administered by the U.S. Agency for International Development (USAID), while the other two programs are administered by the Foreign Agricultural Service of USDA. H.R. 2 reauthorizes all of the international food aid programs along with several associated fellowship programs. FFP is amended to remove a minimum monetization requirement of 15% of FFP funds; raise the minimum requirement used for nonemergency programs to $365 million (up from $350 million) or not more than 30% of FFP funding; and require food vouchers, cash transfers, and local and regional procurement of non-U.S. foods to avoid market disruption in the recipient country. H.R. 2 also extends authority for several other related international programs—including the Farmer-to-Farmer program, Bill Emerson Humanitarian Trust, Cochran Fellowships, Borlaug Fellowships, and Global Crop Diversity Trust. Current U.S. export promotion programs include the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP) and Technical Assistance for Specialty Crops (TASC). These programs are administered by the Foreign Agricultural Service. Under H.R. 2 , all four export programs—MAP, FMDP, EMP, and TASC—are combined into a single program named the International Market Development Program (IMDP) while maintaining existing activities and eligibility requirements. IMDP would be authorized to receive $255 million in annual mandatory Commodity Credit Corporation (CCC) funds for FY2019-FY2023. Of that, no less than $200 million shall be spent on promotional activities for both generic and branded U.S. agricultural products; no less than $35 million on promotional activities for generic commodities; no more than $9 million for technical assistance to specialty crop groups looking to export their crops; and no more than $10 million on promoting U.S. agricultural goods to emerging markets. These funding levels reflect current spending across MAP, FMDP, TASC and EMP. H.R. 2 further creates the Biotechnology and Agricultural Trade Program in Title III to assist with the removal of nontariff and other trade barriers to U.S. agricultural products produced with biotechnology and other agricultural technologies. Finally, H.R. 2 reauthorizes direct credits or export credit guarantees for the promotion of agricultural exports to emerging markets of not less than $1 billion in each fiscal year through 2023. The Nutrition title in H.R. 2 proposes a number of policy changes to SNAP and related programs, while in some respects continuing current policy and operations. The bill would reauthorize SNAP and related programs for five years through the end of FY2023. Altogether, CBO estimates that the Nutrition title would increase spending by $463 million over 10 years (FY2019-FY2028). Certain individual policies are estimated to have large effects on SNAP spending, especially those expected to impact SNAP eligibility and benefit calculation. H.R. 2 proposes a number of changes to the determination of households' financial and nonfinancial eligibility for SNAP benefits. Three of these policies were debated during committee markup: 1. Broad-based categorical eligibility. The bill proposes to place additional limits on households that are eligible for SNAP based on their receipt of Temporary Assistance for Needy Families benefits. CBO estimates that these changes would reduce SNAP spending by more than $5 billion over the 10-year window. CBO also estimates that in an average year about 400,000 households would lose SNAP eligibility. As SNAP recipients are also eligible for free school meals, CBO estimated that in an average year, 265,000 children would lose access to free meals. 2. Work-related requirements. The bill proposes to replace SNAP's general work requirements and able-bodied adults without dependents time limit with a work requirement for all states. Beginning with FY2021, the proposal would require a minimum of 20 hours of work per week for nonexempt able-bodied adults. Unlike the current-law time limit, which applies to 18- to 49-year-olds who do not have children, the proposed requirement would apply to 18- to 59-year-olds and would not exempt parents or caretakers of children six years old and older. The proposal continues to give states authority to exempt a portion of the caseload and to request geographic waivers based on labor-market measures, with some amendments to current law. Unlike the current law time limit, the proposal requires states to offer employment or training opportunities to those individuals subject to the requirements. The bill increases SNAP Employment and Training funding for the states, increasing mandatory funding in a formula grant for states from $110 million in current law to $270 million in FY2020 and to $1 billion in FY2021 and each year thereafter. CBO estimates that these work-related changes would reduce spending on SNAP benefits by approximately $9.2 billion over 10 years, and administration of the changes would increase spending by approximately $7.6 billion—a net reduction of $1.5 billion. In FY2028, CBO estimates that in an average month approximately 1.2 million recipients would no longer receive benefits, with each recipient losing an average annual SNAP benefit amount of $1,816. This provision was amended on the House floor (see Table A-1 ). 3. LIHEAP and b enefit c alculation. Under current law, an eligible household's receipt of a Low Income Home Energy Assistance Program (LIHEAP) payment over $20 has the potential to increase monthly benefit amounts, because this payment allows the household to have their benefits calculated using a standard utility allowance. For households without elderly members, under this bill (as amended on the House floor), LIHEAP, regardless of the amount provided, would no longer confer this advantage. CBO estimates that this provision would reduce 560,000 households' SNAP benefits by an average of $84 per month. In addition to these three eligibility changes, the proposal increases asset limits and changes how vehicles and savings accounts are counted. It also amends the way certain income is counted or excluded, increases the deduction for earned income, and requires households' cooperation with child support enforcement. The bill includes measures intended to address SNAP retailer and recipient fraud and to improve payment accuracy. This includes establishing a Duplicative Enrollment Database, making changes to the Quality Control system, and increasing USDA's oversight of state performance. The bill repeals funding for performance bonuses, which, under current law, financially rewards states' performance. The bill also proposes a number of policy changes for SNAP's EBT system and benefit redemption. The bill proposes some changes to SNAP-related grants. It would make some amendments and increases funding for bonus incentives for fruits and vegetables under the (renamed) Gus Schumacher Food Insecurity Nutrition Incentive Program. It would also authorize and fund a pilot for retailers to receive federal funding for operating bonus incentive projects that incentivize fruit, vegetable, and milk purchases. It also proposes some changes to USDA's operations and funding of the Nutrition Education and Obesity Prevention Grant Program. For many of the food distribution programs and other nutrition title programs and policies, the bill would extend them through FY2023 without substantive policy changes. The Emergency Food Assistance Program would receive an increase of approximately $45 million (adjusted annually for inflation) each year and would also include authority for a "Farm to Food Bank Fund." The Fresh Fruit and Vegetable Program would be renamed to "Fruit and Vegetable Program," and participating schools could serve fresh, canned, dried, frozen, or pureed fruits and vegetables. The National School Lunch Program and School Breakfast Program are not reauthorized in this bill. However, an amendment incorporated on the House floor requires USDA to review and change its 2012 regulations updating school meal nutrition standards and 2016 regulations adding nutrition standards to foods sold outside the meals programs. H.R. 2 would make several permanent changes and reauthorize provisions in the Consolidated Farm and Rural Development Act that governs the USDA farm loan programs, make several permanent changes to the Farm Credit Act that governs the Farm Credit System, and reauthorize the State Agricultural Loan Mediation Program through FY2023. For the farm loan programs of FSA, H.R. 2 would add specific conditions that the Secretary may use to reduce the requirement for three years of farming experience in order for beginning farmers to qualify for loans (e.g., coursework, military service, mentoring). It raises the maximum loan size for guaranteed farm ownership loans and guaranteed farm operating loans from a statutory base of $700,000 in FY1996 ($1.4 million in FY2018 after adjusting for inflation) to a higher base of $1.75 million per borrower, which inflation adjusts to an effective maximum guaranteed loan amount of about $3.5 million in FY2019. The bill also makes several technical corrections. For the government-chartered, cooperative Farm Credit System (FCS), H.R. 2 would eliminate a host of obsolete references to outdated names and transition periods from the 1980s and 1990s. It adds clarification that FCS entities may share privileged information with the Farm Credit Administration (FCA) for regulatory purposes without altering the privileged status elsewhere. It expands FCA's jurisdiction to hold accountable "institution-affiliated parties" (e.g., including agents and independent contractors) and makes the scope retroactive for a six-year period. For the Federal Agricultural Mortgage Corporation (FarmerMac), it increases the acreage exception from 1,000 acres to 2,000 acres for the dollar limit to remain a qualified loan, subject to a study by FCA. It also directs FCA to study the risks and capitalization of loans in the FCS and FarmerMac portfolios. Finally, it deletes the compensation limit for FCS bank boards of directors. For the State Agricultural Loan Mediation Program, H.R. 2 reauthorizes the program to FY2023 so that it may continue to provide matching grants for mediation of credit and certain other agricultural disputes. The Rural Infrastructure and Economic Development title of H.R. 2 amends the Rural Development Act of 1972 (P.L. 92-419) to propose a new Subtitle A, Improving Health Outcomes in Rural Communities. The four sections of the proposed subtitle would permit the Secretary of Agriculture, after consultation with public health figures, to announce a temporary reprioritization of certain rural development loans and grants to assist rural communities in responding to a specific rural health emergency. The announced emergency would expire either when the Secretary has determined that the emergency has ended or 360 days after the announcement, whichever date is earlier. While the emergency is in effect, 10% of the funds available for the Distance Learning and Telemedicine Program would be made available to identify and treat individuals affected by the emergency. Under the Community Facilities program, priority would be given to entities providing prevention, treatment, and recovery services to those affected by the emergency. The subtitle would also reauthorize the Farm and Ranch Stress Assistance Network and authorize a new loan and grant program to help establish group health plans offered by agricultural associations. Subtitle B of H.R. 2 makes changes to the Enhancing Broadband Telecommunications Services in Rural Areas Program. Provisions under this subtitle would establish minimum acceptable standards of broadband service of 25 megabits per second downstream transmission capacity and 3 megabits per second upstream transmission capacity and develop projections of broadband service 5, 10, 15, 20, and 30 years into the future. Other provisions would require broadband infrastructure loan guarantees, provide incentives to reach more isolated rural areas by establishing a residential density measure for loan guarantee applicants, permit the Rural Utility Service to obligate but not disburse broadband funding support, and give priority to applicants who would provide broadband service to areas not predominantly for business. Other provisions would authorize loans for middle-mile broadband infrastructure, modify build-out requirements for loan applicants from three to five years, and reduce reporting requirements for borrowers. Subtitle C of the bill concerns provisions for rural communities, business development, and rural infrastructure. Its provisions would prioritize project applications that support implementation of strategic plans on a multi-jurisdictional basis and reserve a portion of funds for such projects, raise the maximum loan amount for water and waste water projects, increase funding for water and waste water technical assistance, and reauthorize a range of rural development programs authorized under the Consolidated Farm and Rural Development Act. Subtitle D reauthorizes programs under the Rural Electrification Act of 1936 (P.L. 74-605), including expanding 911 access in rural areas and extending the rural economic development loan and grant program. Subtitle E amends and reauthorizes all of the agricultural energy programs in the 2014 farm bill that were previously in a separate title, extending most through FY2023. H.R. 2 also modifies the type of funding available for these programs. In prior farm bills, many of these programs were provided with mandatory funding, whereas H.R. 2 authorizes only discretionary funding. Subtitle F reauthorizes the Value-Added Grants program and increases its discretionary funding authorization. The regional development commissions established in the 2008 farm bill are also reauthorized, and the current definition of rural area for the Rural Housing Service's programs is retained until the 2030 decennial census. Subtitle G repeals several unfunded programs, including the Rural Telephone Bank, the Rural Collaborative Investment Program, and the Delta Region Agricultural Development Grants Program. Subtitle H makes technical corrections to certain provisions of the Consolidated Farm and Rural Development Act (P.L. 92-419) and the Rural Electrification Act. USDA is authorized under four major laws to conduct agricultural research at the federal level and to provide support for cooperative research, extension, and postsecondary agricultural education programs in the states through formula funds and competitive grants to land-grant universities. H.R. 2 reauthorizes funding for these activities through FY2023, subject to annual appropriations. With respect to the land-grant entities, H.R. 2 authorizes a new scholarship program for the 1890 land-grant institutions. A provision in the bill would also prohibit any further entities from being designated as eligible to receive formula funding under the Hatch Act (24 Stat. 440), Smith-Lever Act (P.L. 63-95), and McIntire-Stennis Act (P.L. 87-788). Permissible indirect cost recovery for federal funding of agricultural research and extension would increase to 30% from 22% of funding. Several new research areas in the High Priority Research and Extension program are designated to be high priorities: macadamia tree health, national turfgrass research, fertilizer management, cattle fever ticks, and laying hen and turkey research. The bill also reauthorizes the Organic Agriculture Research and Extension Initiative and increases mandatory funding levels to $30 million annually for FY2019-FY2023. The Specialty Crop Research Initiative (SCRI) would be reauthorized through FY2023 and continues to include carve-out funding for the Emergency Citrus Disease Research and Extension Program. SCRI also expands program eligibility to include "size-controlling rootstock systems for perennial crops" and "emerging and invasive species," among other production practices and technologies. The Agriculture Committees have jurisdiction over forestry issues generally, as well as over some—but not all—National Forest System (NFS) lands managed by the USDA Forest Service (FS). Previous farm bills have primarily addressed forestry research and assistance programs and have sometimes included provisions addressing management of federal forest land. The forestry title in H.R. 2 would reauthorize and modify several existing assistance programs and establish new assistance programs, and it also contains several provisions that would address management of the NFS and the public lands managed by the Bureau of Land Management (BLM) in the Department of the Interior. Forestry assistance programs are authorized under two main laws: the Cooperative Forestry Assistance Act (CFAA) and the Healthy Forests Restoration Act of 2003. Most federal forestry assistance programs are permanently authorized to receive such sums as necessary in annual discretionary appropriations and thus do not require reauthorization in the farm bill. H.R. 2 , however, would amend two forestry assistance programs by replacing their permanent authority to receive annual appropriations with an authorization limit through FY2023. H.R. 2 would also establish some new assistance programs—generally by providing explicit statutory authorization and congressional direction for current programs that are operating under existing, but broad, authorizations. The bill would also reauthorize funding for the National Forest Foundation. H.R. 2 would also address federal and tribal forest management issues. For example, the bill would direct the Secretary of Agriculture to exempt unprocessed dead and dying trees on NFS lands in California from the export prohibition for 10 years. Subtitle B would amend the Secure Rural Schools and Self-Determination Act of 2000, a program that authorizes payments to counties containing NFS lands and certain BLM lands. The bill would also change how the FS and BLM comply with the requirements under the National Environmental Policy Act (NEPA) and the consultation requirements under the Endangered Species Act for specified management activities. For example, the bill would establish 10 categories of actions that would not be subject to the requirements to prepare an environmental assessment or environmental impact statement under NEPA. (Six apply to both FS and BLM actions; four apply to just FS actions.) H.R. 2 would also authorize federally recognized Indian tribes to enter into good neighbor agreements with the FS and BLM and to request to conduct forest management activities on NFS lands, among other provisions. H.R. 2 reauthorizes many of the existing farm bill provisions supporting farming operations in the specialty crop, certified organic agriculture, and local foods sectors. These provisions cover several programs and provisions benefitting these sectors, including block grants to states, support for farmers markets, data and information collection, education on food safety and biotechnology, and organic certification, among other market development and promotion provisions. Other provisions in H.R. 2 would amend certain regulatory requirements under some federal statutes. H.R. 2 makes changes to funding for farmers markets and local foods promotion. Whereas the 2014 farm bill provided $30 million in mandatory CCC funding for each of FY2014 through FY2018 for the Farmers Market Promotion Program and Local Food Promotion Program, H.R. 2 reauthorizes discretionary appropriations for these programs in the amount of $30 million annually for FY2019-FY2023. The bill does not provide any mandatory funding beyond FY2018. H.R. 2 also makes changes to USDA's National Organic Program (NOP). It would enact several provisions in H.R. 3871 (Organic Farmer and Consumer Protection Act of 2017), including limiting the types of operations excluded from NOP certification, requiring electronic import documentation, establishing mechanisms for collaborative investigations and enforcement, requiring increased documentation and reporting, and increasing USDA accreditation authority over certifying agents, among other changes. In addition, it requires USDA to establish procedures for expedited petitions under the NOP's "National List of Approved and Prohibited Substances" and amends the eligibility and consultation requirements of the National Organics Standards Board (NOSB). H.R. 2 reauthorizes NOP appropriations above current levels, increasing to $24 million by FY2023, and reauthorizes funding for the Organic Production and Market Data Initiatives. It also provides $5 million for technology upgrades to improve tracking and verification of organic imports. H.R. 2 does not reauthorize current mandatory funding for the National Organic Certification Cost Share Program, although the program remains authorized. CBO estimates a total budget authority of $850 million (FY2019-FY2023) for programs in the Horticulture title. Under H.R. 2 , CBO estimates an increase in mandatory spending of $10 million (FY2019-FY2023) for programs under this title, which would cover data collection and technology updates under NOP. Provisions affecting the specialty crop and certified organic sectors, however, are not limited to the Horticulture title but are contained within several other titles of the new law. These include programs in the research, nutrition, and trade titles, among others. For example, under H.R. 2 , CBO estimates an increase in mandatory spending of $101 million (FY2019-FY2023) for the Organic Agriculture Research and Extension Initiative in the bill's Research title. Other programs in the Research title, such as SCRI, would maintain current funding levels of more than $320 million (FY2019-FY2023). Budget estimates for other programs outside Title IX that benefit the specialty crop, certified organic agriculture, and local foods sectors—such as the Fresh Fruit and Vegetable Program (Snack Program) and Section 32 purchases for fruits and vegetables under the Nutrition title, among other farm bill programs—are not available. Title IX includes several exemptions from certain regulatory requirements, amending existing provisions in the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA, 7 U.S.C. 136 et seq. ), the Clean Water Act (33 U.S.C. §1251 et seq. ), the Plant Protection Act (7 U.S.C. 7701 et seq. ), and the Occupational Safety and Health Act (OSHA, 29 U.S.C. 651 et seq. ). H.R. 2 amends FIFRA to clarify federal and state roles in the regulation of pesticides, to exempt certain pesticide discharges from point source discharge permitting requirements, and to not require that the Environmental Protection Agency consult with other federal agencies regarding pesticide registrations and their potential impact on endangered species. H.R. 2 would also enact into law H.R. 1029 (Pesticide Registration Improvement Enhancement Act of 2017), amending FIFRA to extend the authority to collect pesticide fees and other purposes. Finally, H.R. 2 amends the Plant Protection Act regarding the use of methyl bromide in response to an emergency event and also amends OSHA to exempt agricultural retailers from process safety management requirements. Crop insurance is designed cover economic losses from a variety of natural causes, as well as certain adverse market developments. The federal crop insurance program makes available subsidized crop insurance to producers who purchase policies to protect against losses in yield, crop revenue, margin, or whole farm revenue. The crop insurance title of H.R. 2 makes several modifications to the existing federal crop insurance program, which is permanently authorized by the Federal Crop Insurance Act. According to CBO, the crop insurance title of H.R. 2 would decrease authorized spending for crop insurance relative to baseline levels by $70 million during the FY2019-FY2023 period. The largest component for projected savings ($52 million) is attributed to eliminating the crop insurance education and information program for targeted states carried out by the Risk Management Agency and the Agricultural Management Assistance program. Up to $15 million per year of CCC funds could be saved from the elimination of the AMA program alone. Additional savings ($32 million) occur by increasing the administrative fee for catastrophic risk protection (commonly referred to as CAT fees) from $300 per crop per county to $500. CBO also projects another $23 million in savings from provisions that would eliminate several past research and development (R&D) priorities, discontinue R&D partnerships, and reduce CCC funding for R&D contracting from $12.5 million to no more than $8 million annually. Among other adjustments, H.R. 2 expands coverage for forage and grazing by allowing separate crop insurance policies to be purchased for crops that can be both grazed and mechanically harvested on the same acres during the same growing season. Such separate policies can be independently indemnified for each intended use. CBO projects this expanded coverage to cost the government $40 million during the FY2019-FY2023 period. Similarly, by redefining "beginning farmer or rancher" as having actively operated and managed a farm or ranch for less than 10 years, the federal subsidy benefits available for the purposes of research, development, and implementation of whole farm insurance plans on such participating operations would result in a projected additional cost of $4 million during FY2019-FY2023. Crops for which the producer has elected ARC or that are enrolled in stacked income protection would be ineligible for coverage based on an area yield and loss basis or for the supplemental coverage option. H.R. 2 also clarifies requirements for FCIC approval of reimbursement for the development of private submissions for modifying old plans of insurance or creating new plans of insurance. The Miscellaneous title of H.R. 2 contains seven subtitles: Livestock; Beginning, Socially Disadvantaged, and Veteran Producers; Textiles; United States Grain Standards Act; Noninsured Crop Disaster Assistance Program; Protect Interstate Commerce; and Other Matters. The Livestock subtitle would establish the National Animal Disease Preparedness and Response Program to address the risk of the spread of animal pests and diseases and the National Animal Health Vaccine Bank to prioritize the acquisition of foot-and-mouth disease vaccine. H.R. 2 would provide a combined $250 million in mandatory funding in FY2019 for these two new programs and to operate the National Animal Health Laboratory Network, as well as $50 million for the same purposes each year from FY2020 to FY2023. The livestock subtitle would also authorize appropriations for the National Aquatic Health Plan, amend a program for veterinarian training, and require USDA to conduct a study on the Food Safety and Inspection Service's guidance and outreach to small and very small meat processing plants. The Beginning, Socially Disadvantaged, and Veteran Producers subtitle includes mandatory funding of $10 million each year from FY2019 to FY2023 for its outreach and assistance program for socially disadvantaged and veteran farmers and ranchers. H.R. 2 would prioritize youth agricultural employment and volunteer programs and establish an Agricultural Youth Organization Coordinator position to promote the role of youth-serving organizations and school-based agricultural education programs. The bill would also create a Commission on Farm Transition to study issues affecting the transition of farm operations from established farmers and ranchers to the next generation. The Textile subtitle would repeal the trust funds for Pima Agriculture Cotton and Agriculture Wool Apparel Manufacturers. It would also repeal grant funding under the Wool Research and Promotion program. In place of these funds, H.R. 2 would establish the Textile Trust Fund to reduce injury for domestic users of imported pima cotton and wool fabric whose tariffs may exceed the tariffs on certain finished imported pima cotton and wool apparel. For each calendar year from 2019 to 2023, USDA would transfer $8 million and $15 million to the trust fund for domestic manufacturers who import pima cotton and wool fabric, respectively, and $2.25 million for grants for wool research and promotion. In addition, for FY2019, H.R. 2 would provide $2 million for strengthening and enhancing the U.S. sheep industry. The United States Grain Standards Act (USGSA) would restore exceptions in grain inspection regulations that were implemented in 2003, and revoked in 2015, that allowed grain to be inspected by more than one designated official agency. The Noninsured Crop Disaster Assistance Program (NAP) subtitle would amend NAP crop eligibility to include crops that may be covered by crop insurance but only under whole farm policies. It would also raise the service fees and reauthorize buy-up coverage through crop year 2023. The Protect Interstate Commerce subtitle would prohibit a state or local government from setting standards or conditions on agricultural commodities produced in another state if the commodities are produced or manufactured in accordance with federal or state laws and regulations. The bill provides that producers, consumers, trade associations, governments, and other agents may bring an action against the standard or condition in the appropriate court. The Other Matters subtitle would make technical amendments to various laws to account for USDA reorganizational changes that created the Under Secretary for Trade and Foreign Agricultural Affairs, the Under Secretary for Farm Production and Conservation, and the Assistant to the Secretary for Rural Development. H.R. 2 would also create a Food Loss and Waste Reduction Liaison within the Office of the Secretary, a Century Farms Program under the Secretary that recognizes farms in continuous operation for at least 100 years, and a National Agriculture Imagery Program within the Farm Service Agency. The subtitle would further prohibit the slaughter of dogs and cats for human consumption and would require a report on the importation of dogs. In addition, the subtitle would require a report on including natural stone in a promotion and research program and a report on agriculture innovation in gene editing and precision plant breeding. It would amend the hiring authority for cotton classification employees to allow for noncompetitive rehiring of qualified individuals and add South Carolina to the Virginia/Carolina region of the Peanut Standards Board.

Congress sets national food and agriculture policy through periodic omnibus farm bills. The 115th Congress has the opportunity to establish the future direction of farm and food policy because many of the provisions in the current farm bill (the Agricultural Act of 2014, P.L. 113-79) expire in 2018. The 2014 farm bill addresses a broad range of farm and food programs and policies, including commodity support, crop insurance, conservation, domestic food assistance, trade and food aid, credit, rural development, research, horticulture, forestry, and bioenergy, among others. On June 21, 2018, the House voted 213-211 to approve H.R. 2, the Agriculture and Nutrition Act of 2018, an omnibus farm bill that would establish farm and food policy for the next five years, covering FY2019-FY2023. The vote to approve H.R. 2 followed a failed vote of 198-213 on the same bill on May 18, 2018. The final passage vote of June 21 occurred after a vote of 233-191 approving a motion to reconsider, which was made following the unsuccessful vote on final passage of May 18. In terms of cost, the most recent Congressional Budget Office (CBO) score of the programs in the bill with mandatory spending, such as nutrition programs, commodity support programs, major conservation programs, and crop insurance, amounts to $867 billion over a 10-year budget window (FY2019-FY2028). This amount is equivalent to CBO's baseline scenario in which existing farm bill programs would be extended with no changes. H.R. 2 would reauthorize most existing programs for five years through FY2023. Overall, the bill provides continuity with the existing framework of farm and food programs even as it modifies numerous programs, alters the amount and type of program funding certain programs receive, and exercises the committee's discretion not to reauthorize others. Among its many policy provisions, H.R. 2 would make changes to the eligibility requirements for individuals participating in the Supplemental Nutrition Assistance Program (SNAP), including expanding the population that is subject to work requirements, while requiring states to offer employment or training opportunities and increasing funding to the states for those purposes. Among the changes to commodity programs, an escalator provision could raise the effective reference price for crops enrolled in the Price Loss Coverage program (PLC) under certain market conditions. H.R. 2 would also amend payment limits and the adjusted gross income limit on eligibility for farm program payments to expand the list of producer exemptions from payment and income limits. Payment limits on certain disaster assistance programs would also be raised. The Dairy Margin Protection Program for milk producers is recast as the Dairy Risk Management Program, featuring an expanded range of coverage choices and lower premium rates on the first 5 million pounds of annual milk production. Within the conservation title, H.R. 2 would repeal the Conservation Stewardship Program (CSP), which has an enrollment of 70 million acres, and uses some of the savings to increase funding for the Environmental Quality Incentives Program (EQIP). It also raises the acreage enrollment limit under the Conservation Reserve Program (CRP). The bill further increases the loan limits for guaranteed farm ownership and operating loans. Bioenergy programs that comprise a separate title in the 2014 farm bill are included in a title on rural infrastructure and economic development. Also, while many of these bioenergy programs are currently authorized for mandatory funding in addition to being authorized for discretionary funds, H.R. 2 authorizes only discretionary funding. For rural communities, the bill authorizes the Secretary of Agriculture to reprioritize certain loan and grant programs to respond to specific health emergencies and to develop prevention, treatment, and recovery services. It would also require the Secretary to promulgate minimum acceptable standards for broadband service from the present day up to 30 years into the future.

The Workforce Investment Act of 1998 (WIA; P.L. 105-220 ) is the primary federal program that supports workforce development. WIA includes four main titles: Title I—Workforce Investment Systems—provides job training and related services to unemployed or underemployed individuals. Title I programs, which are primarily administered through the Employment and Training Administration (ETA) of the U.S. Department of Labor (DOL), include three state formula grant programs, multiple national programs, Job Corps, and demonstration programs. In addition, Title I authorizes the establishment of a One-Stop delivery system through which state and local WIA training and employment activities are provided and through which certain partner programs must be coordinated; Title II—Adult Education and Literacy—provides education services to assist adults in improving their literacy and completing secondary education; Title III—Workforce Investment-Related Activities—amends the Wagner-Peyser Act of 1933 to integrate the U.S. Employment Service (ES) into the One-Stop system established by WIA; and Title IV—Rehabilitation Act Amendments of 1998—amends the Rehabilitation Act of 1973, which provides employment-related services to individuals with disabilities. The authorizations for appropriations for most programs under the Workforce Investment Act (WIA) of 1998 ( P.L. 105-220 ) expired at the end of Fiscal Year (FY) 2003. Since that time, WIA programs have been funded through the annual appropriations process. In the 108 th and 109 th Congresses, bills to reauthorize WIA were passed in both the House and the Senate; however, no further action was taken. In the 112 th Congress, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released discussion drafts in June 2011 of legislation to amend and reauthorize WIA. While markup of this legislation was scheduled, it was ultimately postponed indefinitely. No legislation has been introduced. The House Committee on Education and the Workforce, however, has ordered reported H.R. 4297 —the Workforce Investment Improvement Act of 2012. This bill was introduced on March 29, 2012, by Representative Virginia Foxx of North Carolina, the chair of the Subcommittee on Higher Education and Workforce Training, (for herself, Representative Howard P. "Buck" McKeon of California, and Representative Joseph Heck of Nevada). A legislative hearing on H.R. 4297 was held before the full Committee on Education and the Workforce on April 17, 2012. On June 7, 2012, the committee, after considering 23 amendments to H.R. 4297 , ordered the bill reported by a vote of 23 to 15. This report summarizes each of the WIA titles and highlights the major features of H.R. 4297 pertaining to each title. The report also compares the proposed provisions of H.R. 4297 to current law in the following tables: Table 1 . Major Provisions of Title I. This table covers provisions governing the "workforce investment systems" that provide for, among other things, state formula grants, state and local planning procedures, and the establishment of the One-Stop delivery system. WIA established the One-Stop delivery system as a way to co-locate and coordinate the activities of multiple employment programs for adults, youth, and various targeted subpopulations. The delivery of these services occurs primarily through more than 3,000 career centers nationwide. Table 2 . Major Provisions of Title II. This table covers provisions for adult education and literacy activities. Table 3 . Major Provisions of Title III. This table covers changes to the Wagner-Peyser Act of 1933, which was also amended in Title III of WIA. Wagner-Peyser provides authorization for the Employment Service. Table 4 . Major Provisions of Title IV of WIA and Title V of H.R. 4297 . This table addresses amendments to the Rehabilitation Act of 1973, in particular to the Vocational Rehabilitation and other employment-related provisions of that act, which authorizes various employment services for individuals with disabilities. Title I of the Workforce Investment Act—Workforce Investment Systems—authorizes the establishment of a One-Stop delivery system through which state and local WIA training and employment activities are provided and through which certain partner programs must be coordinated. Title I also authorizes funding for the three major state formula grant programs (Adult, Youth, and Dislocated Worker), Job Corps (a DOL-administered program for low-income youth), and several other national programs that are directed toward subpopulations with barriers to employment (e.g., Native Americans). H.R. 4297 takes a fundamentally different approach from current law to the federal role in the delivery of workforce development services by consolidating multiple programs into a single block grant that is allocated to states by formula. At the same time, H.R. 4297 maintains the One-Stop delivery system as the delivery mechanism for employment and training services. The Adult Education and Family Literacy Act (AEFLA) is the current law that authorizes funds supporting programs related to basic education (i.e., instruction at the secondary school level and below) for individuals who are beyond school age, not enrolled in school, and lacking a high school diploma or equivalent. The program also funds educational services for English learners. The largest portion of AEFLA funds are grants to states that are subsequently allotted to local entities that conduct educational programs. H.R. 4297 reauthorizes Title II programs through 2018. It limits the annual authorized appropriation level to FY2012 levels and changes several AEFLA provisions to emphasize the relationship between adult education and employment. AEFLA is also amended to align with the new WIA performance indicators. Title III of the Workforce Investment Act—Workforce Investment-Related Activities—makes amendments to the Wagner-Peyser Act of 1933 (29 U.S.C. 49 et seq. ), which authorizes the Employment Service (ES). The ES is the central component of most states' One-Stop delivery systems, as ES services are universally accessible to job seekers and employers and ES offices may not exist outside of the One-Stop delivery system. Although the ES is one of the required partners in the One-Stop delivery system, its central mission—to facilitate the match between individuals seeking work and employers seeking workers—makes it critical to the functioning of the workforce development system under WIA. Title III adds Section 15 ("Employment Statistics") to Wagner-Peyser, which requires the Secretary of Labor to develop, provide, and improve various types of labor market information. H.R. 4297 repeals Sections 1-14, which authorize the Employment Service. Funding from the ES is consolidated into the new Workforce Investment Fund. The Rehabilitation Act, as amended, authorizes grants to support programs related to employment and independent living for individuals with disabilities. Most programs under the Rehabilitation Act are administered by the Rehabilitation Services Administration (RSA) of the Department of Education (ED). In FY2012, the Vocational Rehabilitation (VR) grants to the states program accounted for the majority of the funds that were appropriated under the Rehabilitation Act. VR is a mandatory One-Stop partner program. Title V of H.R. 4297 reauthorizes the VR grants to the states program through FY2018 and limits authorization to the prior year's appropriation plus an increase equal to inflation. It also increases emphasis on students transitioning out of school by requiring state plans to address how they will serve this population and requiring that 10% of each state's federal allotments be set aside for services to transitioning students. H.R. 4297 also repeals several smaller programs that were authorized under the Rehabilitation Act.

The Workforce Investment Act of 1998 (WIA; P.L. 105-220) is the primary federal program that supports workforce development activities, including job search assistance, career development, and job training. WIA established the One-Stop delivery system as a way to co-locate and coordinate the activities of multiple employment programs for adults, youth, and various targeted subpopulations. The delivery of these services occurs primarily through more than 3,000 One-Stop career centers nationwide. The authorizations for appropriations for most programs under the WIA expired at the end of Fiscal Year (FY) 2003. Since that time, WIA programs have been funded through the annual appropriations process. In the 108th and 109th Congresses, bills to reauthorize WIA were passed in both the House and the Senate; however, no further action was taken. In the 112th Congress, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released discussion drafts in June 2011 of legislation to amend and reauthorize WIA. While markup of this legislation was scheduled, it was ultimately postponed indefinitely. No legislation has been introduced. The House Committee on Education and the Workforce, however, has ordered reported H.R. 4297—the Workforce Investment Improvement Act of 2012. This bill was introduced on March 29, 2012, by Representative Virginia Foxx of North Carolina, the chair of the Subcommittee on Higher Education and Workforce Training (for herself, Representative Howard P. "Buck" McKeon of California, and Representative Joseph Heck of Nevada). A legislative hearing on H.R. 4297 was held before the full Committee on Education and the Workforce on April 17, 2012. On June 7, 2012, the committee, after considering 23 amendments to H.R. 4297, ordered the bill reported by a vote of 23 to 15. H.R. 4297 would maintain the One-Stop delivery system established by WIA but would repeal numerous programs authorized by WIA and other federal legislation, and it would consolidate other programs into a new single funding source—the Workforce Investment Fund. In addition, H.R. 4297 would increase the role of business representatives in the state and local governance structure of WIA and would increase the ability for states to propose further program consolidation in the funding and delivery of workforce services. Adult Education and Vocational Rehabilitation retain separate titles and funding in H.R. 4297. This report first provides a brief introduction to the four main titles of WIA and then compares the proposed provisions of H.R. 4297 to the current law provisions by each of the four titles.

On November 12, the House, and on November 13, the Senate, approved a conferenceagreement on the FY2003 defense authorization bill ( H.R. 4546 ), and the Presidentsigned the bill into law on December 2 ( P.L. 107-314 ). Earlier, on October 10, the House, and onOctober 16, the Senate, approved a conference agreement on the FY2003 defense appropriationsbill ( H.R. 5010 ), and the President signed it into law on October 23 ( P.L. 107-248 ). The conference agreement on the defense appropriations bill provides $355.1 billion for programsit covers. This is $11.7 billion below the Administration's request. The bill does not include $10billion that the Administration requested as a contingency fund for costs of counter-terrorismoperations in FY2003. FY2003 Defense Authorization Bills. On May1, the House Armed Services Committee marked up its version of the FY2003 defense authorizationbill, H.R. 4546 . The committee also considered, but did not report, a companionmeasure, H.R. 4547 , to provide funds for the war on terrorism. The House passed H.R. 4546 early on the morning of May 10. On May 9, the Senate Armed ServicesCommittee completed marking up its version of the FY2003 defense authorization, S. 2514 , and a report was issued on May 15. On June 13, the committee approved an amendment tobe offered on the floor regarding the Crusader artillery system. On June 18, the full Senate beganconsidering the bill, and the Senate passed the bill on June 27. On July 18, the House ArmedServices Committee reported H.R. 4547 , entitled the Cost of War Against TerrorismAuthorization Act (COWATAA), and the full House approved the bill under suspension of the ruleson July 24. On November 12, a conference report on the bill was filed. The conference agreementwas approved in the House under suspension of the rules on November 12. The Senate approvedthe conference report on November 13 by voice vote. The President signed by bill on December 2. FY2003 Defense Appropriations Bill. On June 19, the House Defense Appropriations Subcommittee marked up its version of the FY2003 defenseappropriations bill, and on June 24, the full committee marked up the bill ( H.R. 5010 )and ordered it to be reported. The House passed the bill on June 27. On July 18, the SenateAppropriations Committee reported its version of the bill (also H.R. 5010 ). The Senatepassed the bill on August 1. On October 9, conferees announced agreement on a compromiseversion of the bill. The House approved the conference report on October 10 and the Senate onOctober 16. The President signed the bill into law on October 23. FY2003 Congressional Budget Resolution. On March 20, the House passed its version of the annual congressional budget resolution, H.Con.Res. 353 , and the Senate reported its version, S.Con.Res. 100 , onMarch 22. Both versions recommended funding levels for defense in FY2003 very close to what theAdministration requested. The full Senate never considered the resolution on the floor, however,and it the two chambers were not able to agree on a common budget. On May 22, as part of the rulegoverning debate on supplemental appropriations, the House approved a measure deeming thebudget resolution, as approved in the House, to have been passed for purposes of guiding later actionon funding legislation. FY2002 Supplemental Appropriations. On March 21, the Administration submitted a request for $27.1 billion in supplemental FY2002 appropriationsfor activities in response to last year's terrorist attacks, of which $14 billion was for defenseprograms. On May 24, the House approved its version of the bill, H.R. 4775 , providing$28.8 billion using Office of Management and Budget (OMB) scoring of a key provision (asassumed by the appropriations committee) and $30.1 billion using Congressional Budget Office(CBO) scoring. The Senate approved its version of the bill on June 7, providing $31.4 billion. OnJuly 18, conferees announced agreement on a compromise bill that provides $28.9 billion, including$14.5 billion for defense. The House approved the conference report on July 23 and the Senate onJuly 24, and the President signed the bill on August 2 ( P.L. 107-206 ). Of the total in the bill, $5.1billion was provided in contingent emergency appropriations, and on August 13, the White Houseannounced that the President would not designate those amounts as emergency funding. Withoutthose amounts, the total available for defense in the bill is $13.983 billion offset by $613 million inrescissions. Table 1a. Status of FY2003 Defense Appropriations Table 1b. Status of FY2003 DefenseAuthorization On February 4, 2002, the Administration submitted its formal FY2003 budgetrequest to Congress. The Administration proposed $396.8 billion for the nationaldefense budget function, about $46 billion above the estimated FY2002 level (for anoverview of the request, see Appendix B ). Of the total requested, $3.4 billion wasfor full accrual accounting of civilian personnel retirement benefits, which Congressultimately did not approve. Without the accrual accounting change, the request was$393.4 billion. Of this amount, $366.7 billion was requested for programs coveredby the defense appropriations bill, $9.7 billion by the military constructionappropriations bill, $16.5 billion for Department of Energy defense-related activitiesfunded in the energy and water appropriations bill, and the remainder in otherappropriations bills. With a global war against terrorism underway, Congress was not inclined to make substantial changes in the Administration's request for a defense increase. Early in the year, however, there was some skirmishing, particularly between thedefense committees and the budget committees, over two issues: first, how to treat the Administration's request for $10 billion in FY2003 in an unallocated contingency fund for the war against terrorism and, second, how to treat the Administration's request for full accrual accounting of civilian retirement benefits, which, across the wholegovernment, would increase discretionary spending by about $9 billion and reducemandatory spending by an equal amount (see Appendix B for a discussion of accrualaccounting). For their part, the congressional defense committees would have preferred to be able to allocate the entire amount the Administration requested for national defenseas they saw fit. The House Budget Committee, however, set aside the $10 billionrequested for war costs in a reserve fund available only for that purpose. The Housealso set aside funds for civilian accrual accounting in a reserve fund, while the SenateBudget Committee rejected the shift to full accrual accounting altogether. Table 2 shows amounts recommended for national defense in the House and Senate versionsof the budget resolution, compared to the Administration request. The House approved its version of the FY2003 budget resolution, H.Con.Res. 353 , on March 20 by a vote of 221-209. In all, the measurerecommended $393.8 billion for the national defense budget function in FY2003, but$10 billion of that amount was in the reserve fund available only for costs of theglobal war against terrorism. An additional $3.4 billion, not shown in the nationaldefense total, was available for defense in the reserve fund to cover costs of accrualaccounting, if Congress approved it. The Senate Budget Committee version of the resolution, S.Con.Res. 100 , was reported on March 22 but was never brought up onthe Senate floor. The committee recommended $393.4 billion for national defensein FY2003 and explicitly rejected a shift to full accrual accounting for civilianemployees. The committee also recommended lower levels of defense spending afterFY2004 than either the House or the Administration, though the committee set asidefuture funds in a reserve to be available either for defense or deficit reduction. Recommended national defense funding levels in the budget resolution are notbinding on the appropriations committees, however, which are free to allocate fundsfor discretionary programs as they decide. Table 2. Congressional Budget Resolution, Recommended Amounts for National Defense, FY2003-FY2007 (billions of dollars) Sources: H.Con.Res. 353 ; S.Con.Res. 100 . The $9 billion requested for full civilian accrual accounting was at the center of debate over the total amount available for appropriations bills. The House-passedbudget resolution provided $759 billion in total discretionary funding to theappropriations committee, which is equal to the Administration request without the$9 billion government-wide cost of shifting civilian accrual payments from themandatory to the discretionary side of the budget. The Senate reported version of thebudget resolution, however, provided $768 billion in discretionary funds, though itdid not assume that Congress would approve the shift of accrual funding. As a result,without the $9 billion for accrual accounting, the House ended up marking upappropriations bills with $9 billion less than the Senate. Eventually, this contributedto a deadlock, and none of the appropriations bills, except for defense and militaryconstruction, have been enacted. How to treat the $10 billion that the Administration requested as an unallocated contingency for war costs was a matter of ongoing discussion. On May 22, theHouse approved H.Res. 428 , the rule governing debate on the FY2002supplemental appropriations bill ( H.R. 4775 ), which includes aprovision "deeming" the budget resolution, as passed by the House, to be in effectfor purposes of subsequent House action on appropriations and other funding bills. Appropriators wanted the "deeming" language amended to allow the appropriationscommittee to remove the reserve fund designation for the contingency funding, thusletting the committee use the $10 billion as it decided. In the face of objections fromsome conservatives, however, the House leadership did not agree, and the deeminglanguage refers to the measure as passed by the House on March 20. The debate over treatment of the $10 billion contingency fund for war costs played out further in congressional action on the defense authorization bill. TheHouse Armed Services Committee approved the $10 billion in a separate bill, H.R. 4547 , the Cost of War Against Terrorism Authorization Act, andused part of the money in that bill to finance programs that otherwise would havebeen included in the regular authorization bill - see below for a full discussion. Inthe end, however, the conference agreement on the defense authorization billapproved the $10 billion as requested as an unallocated contingency fund for costsof the war against terrorism. That amount was not appropriated, however. Theappropriations committees did not act on the $10 billion contingency request at all,though funding for counter-terrorism activities may be addressed next year in asupplemental appropriations measure. The House version of the defense appropriations bill, H.R. 5010 , approved on June 27, provided $354.7 billion for defense activities it covers(excluding military construction programs, Department of Energy defense-relatedactivities, and defense-related activities of some other agencies). This was $12.1billion below the amount requested, of which $10 billion was the counter-terrorismcontingency amount. The additional $2.1 billion reduction in defense was thenavailable for other appropriations bills, including the military construction bill, whichwas $541 million above the request, and the energy and water bill, which includesdefense-related programs. The Senate version of H.R. 5010 , approvedon August 1, provided $355.4 billion, $11.4 billion below the request. Theconference agreement on the defense appropriations bill provides $255.1 billion,$11.6 billion below the request. (See Table C2 in the Appendices for details). Along with negotiations about the overall level of defense spending, there wasconsiderable debate in Congress about priorities within the budget and about anumber of specific programs. The most contentious issue was whether to permitconcurrent receipt of military retired pay and veterans disability benefits. The Houseauthorization bill included a provision to phase in partial concurrent receipt. TheSenate bill included a measure approved on the floor to provide immediate, fullconcurrent receipt. The White House Statement of Administration Policy on theSenate bill threatened to veto any bill that includes either partial or full concurrentreceipt. The conference agreement on the defense authorization bill provides abenefit payment only to military retirees with a disability determined to be caused bya combat or combat-related injury. Another major issue emerged at the beginning of May, on the eve of the House Armed Services Committee markup of the defense authorization bill, when thecommittee received word that the Office of the Secretary of Defense (OSD) haddecided to terminate the Army Crusader self-propelled artillery program. Thecommittee did not agree to end the program, however, and it included full fundingfor the Crusader in the bill that passed the full House. Subsequently, however, aswork on defense funding bills proceeded, Congress agreed to terminate the program,though it added money for a new artillery system that the Administration had notrequested. A major issue in the Senate debate over the authorization bill was the level of funding for missile defense. The Senate Armed Services Committee reducedrequested missile defense R&D funds by more than $800 million, freeing up fundsfor, among other things, increased shipbuilding. Eight Republicans on theCommittee voted against reporting the bill, several citing the missile defense cut asthe reason. In floor action, however, the Senate voted to allocate $814.3 million inanticipated inflation savings either to missile defense or to counter-terrorism. Other major issues over the course of the year included provisions concerning environmental limitations on military training, missile defense funding andmanagement, and nuclear weapons development and testing. The following discussion provides an overview of major elements of the Administration's request and of congressional action to date, with particularlycontroversial items highlighted. The Administration requested a total of $19.4 billion in the FY2003 defense budget for costs of the global campaign against terrorism. Of the total, $10 billionwas requested as an unallocated reserve for future, as yet unplanned militaryoperations, and the remaining $9.4 billion was requested for specified activities. Allof the money, and an additional $700 million to support programs identified in theAdministration's Nuclear Posture Review, was requested to be appropriated to theDefense Emergency Response Fund (DERF), a transfer account from which moneywould then be allocated to operating accounts of the services. This would allow theDefense Department considerable flexibility in using the money, since funds can beshifted to different activities without going through normal reprogrammingprocedures. The counter-terrorism amounts requested for FY2003 are to carry on activities that were financed in FY2001 and FY2002 mainly through emergency supplementalappropriations. Last autumn, Congress appropriated $40 billion for responding to theterrorist attacks of September 11, of which $17.1 billion was devoted to defenseprograms. On March 21, 2002, the Administration sent Congress a request for anadditional $27.1 billion in FY2002 supplemental appropriations for responding to theterrorist attacks, of which $14.0 billion was for defense. On July 23, the House, andon July 24, the Senate, approved a conference agreement on a bill providing $28.8billion in supplemental appropriations for FY2002, of which$14.5 billion is fordefense. Of the total in the bill, $5.1 billion was appropriated as contingentemergency funding, which requires the President to designate the funds as anemergency before it is made available. The White House has announced that it doesnot intend to designate the funds as an emergency, however. Of the $5.1 billion thatwill not, therefore, be available, $983 million is for defense. (For a full discussion,see CRS Report RL31406 , Supplemental Appropriations for FY2002: CombatingTerrorism and Other Issues, by [author name scrubbed] and [author name scrubbed].) Congressional Action. None of the congressional defense committees agreed to provide the $9.4 billion requested forspecific counter-terrorism programs in the DERF. Instead, all the committeesallocated funding to regular operating and acquisition accounts in the authorizationand appropriations bills. All the committees also reduced funding for combat airpatrols and for some other programs requested in the DERF. In the end, Congress did not provide the $10 billion requested as an unallocated contingency fund, though it may provide part or all of the amount requested next yearin a supplemental appropriations measure. The House Armed Services Committeeconsidered the $10 billion in a separate bill, H.R. 4547 . In preliminarymarkup of the bill on May 1, the committee allocated $3.6 billion to specificprograms - later, that amount was reduced to $3.1 billion. All but about $200million of that amount is for programs the Administration requested as part of the$9.4 billion in specifically allocated counter-terrorism money. In effect, thecommittee freed up about $3 billion of funds for other programs in the regularauthorization bill by using some of the $10 billion in the unallocated contingencyfund for counter-terrorism projects that otherwise would have been financed in theregular authorization. The Senate Armed Services Committee authorized the full $10 billion in a general provision (Section 1003) of its version of the authorization bill. Theprovision authorized the full $10 billion for continuation of the war on terrorism,subject to a specific request for the funds and to subsequent appropriations. On July 3, after considerable prodding from Congress, the Administration submitted a formal budget amendment revising its request for the $10 billion. TheAdministration did not provide significantly more detail on the allocation of thefunds, however. Instead, the revised request would authorize the Secretary ofDefense to transfer the $10 billion to various DOD appropriations accounts 15 daysafter notifying Congress of the transfer. The letter accompanying the requestestimated that up to $2.55 billion would be for military personnel accounts, up to$5.57 billion for operation and maintenance accounts (including the Defense HealthProgram and Overseas Humanitarian, Disaster, and Civic Aid), military constructionor working capital funds; and up to $1.88 billion for appropriations for procurementor research development. (The full text of the request is available electronically at: http://w3.access.gpo.gov/usbudget/fy2003/pdf/15dod_amend.pdf .) On July 18, the House Armed Services Committee marked up and reported a revised version of H.R. 4547 . It provided $3.1 billion allocated tospecific programs, with another $6.9 billion in very broad categories. The Housetook up the bill under suspension of the rules late in the evening of July 23, and thebill was passed on July 24. Taken together, the regular defense authorization bill, H.R. 4546 , and the Cost of War Against Terrorism Authorization, H.R. 4547 , as passed by the House, authorized $392.8 billion fornational defense. In the end, however, Congress did not approve the House Armed Services Committee's effort to use part of the contingency fund for war costs to finance anincrease in other defense programs. The conference report on the defenseauthorization bill provides $10 billion as an unallocated reserve for war costs, asrequested, and as in the Senate version of the bill. More importantly, the disposition of the $10 billion requested for counter-terrorism ultimately depended on what happened in appropriations bills. Theconference report on the defense appropriations bill does not provide any of themoney, and the appropriations committees did not take up separate legislation toprovide additional funding for the war on terrorism. The Administration request included a 4.1% pay raise for military personnel; additional selective pay increases for mid-grade personnel that could increase theirpay raise to 6.5%; the extension of special pays and bonuses to bolster retention ofpersonnel with critical skills; and continued incremental increases in the basicallowance for housing intended to eliminate out-of-pocket off-base housing costs byFY2005. Congressional Action. Pay raises and benefits for uniformed military personnel and authorized military end-strengthare under the jurisdiction of the Armed Services Committees and are addressed in theannual defense authorization bill. The defense appropriations bill formally providesfunding for military personnel, but it does not authorize the pay raise or benefits,though it sometimes makes changes in some personnel-related activities. Both the House and the Senate Armed Services Committees approved the Administration's proposed pay and benefits increases, and the authorizationconference report provides the full 4.1% pay raise and other targeted pay increasesas requested. A number of significant personnel related issues emerged, however. The major issue concerned concurrent receipt of retirement and disability benefits. Other issues included House cuts in funding for health benefits accrual and a Houseand Senate increase in authorized active duty military end-strength. Concurrent Receipt of Retirement and Disability Benefits. Under current law, military retirees - who leaveafter 20 years or more of service - are eligible for payments from the VeteransAdministration (VA) for service-connected disabilities, but their military retirementpensions are reduced by the amount of disability benefits received. Individuals whoqualify often accept the disability benefits, however, because VA disability paymentsare not taxed, while pensions are. Veterans organizations have long argued that individuals should be able to receive both full retirement pensions and VA disability benefits without any offset. Last year, Congress approved a measure to phase in partial concurrent receipt (as inthe House plan this year), but it was contingent on the Administration taking stepsto fund the measure, and the Administration did not do so. This year, concurrentreceipt was a critical issue both in the House and in the Senate. The House-passed authorization bill approved a plan to phase in a measure that would allow military retirees with a disability of 60% or greater to receive bothdisability benefits and retirement pensions. Allowing phased in, partial concurrentreceipt, as in the House bill, would cost an estimated $516 million in FY2003, $5.8billion over the five years from FY2003 through FY2007, and $17 billion over tenyears through FY2012. These amounts would be scored not as discretionary fundingin the defense bills, but as mandatory spending coming either from mainly from themilitary retirement trust fund. The measure would also require an increase in contributions to the military retirement fund to cover the accrual cost of the increased benefits payable in thefuture to current military personnel. The House measure provides that the accrualpayments will be made from the general Treasury, however, rather than fromdiscretionary funds in the defense budget. Including both increased payments toretirees and payments from the general fund into the military retirement fund, theCongressional Budget Office estimates that the total budget cost of the House planwould be $1.1 billion in FY2003, $8.8 billion over the five years, FY2003-FY2007,and $22.6 billion over the next ten years through FY2012. (1) The Senate Armed Services Committee included a similar, phased in, partial measure in its reported bill, but the committee also voted to offer an amendment onthe floor that would immediately allow full concurrent receipt of disability and retiredpay regardless of the level of disability. Senators Levin and Warner brought up thatamendment on the floor on June 19, and it was approved by a voice vote. TheSenate-passed measure did not insulate the Defense Department from the accrualcosts of the increased benefits as the House measure did. CBO estimated that theSenate version of concurrent receipt would cost $4.3 billion in FY2003, $25.8 billionover the next five years, and $61.0 billion over the next ten years. Of those amounts, the Defense Department would have to provide $1.1 billion in FY2003, $2.5 billionover the next five years and $6.4 billion over the next ten years in its budget to coveraccrual payments for its current military personnel. (For a full discussion of thebudget issues, see CRS Report RS21327, Concurrent Receipt of Military Retirementand VA Disability Benefits: Budgetary Issues , by [author name scrubbed].) For its part, the Administration opposed permitting concurrent receipt. In its "Statement of Administration Policy" on the Senate authorization bill (available at http://www.whitehouse.gov/omb/legislative/sap/107-2/S2514-s.html ), the WhiteHouse threatened to veto the defense authorization if it provided for either partial orfull concurrent receipt. The Defense Department also threatened a veto in thepackage of appeals of provisions in the House and Senate authorization bills that itsent to the Armed Services Committees on July 24 and in a letter that Secretary ofDefense Rumsfeld sent to Senator Levin and Senator Warner on September 24. The dispute over concurrent receipt held up a conference agreement on the defense authorization bill until after the November elections. On November 12,during the 107th Congress's lame duck session, authorizers announced a compromiseon the issue that provides a new benefit for retirees who are determined to have adisability caused by a combat or combat-related injury. Payments would be made toall retirees with a disability of 10% or greater resulting from an injury or wound forwhich the retiree was awarded a Purple Heart. Payments would also be made toretirees with a disability of 60% or more resulting from combat-related activities,which include injuries received as a direct result of armed conflict, while engaged inhazardous service, while performing duty under conditions simulating war, orthrough an instrumentality of war. As explained by the bill managers on the Housefloor on November 12 (see Congressional Record , pp. H8536-8537), injuries causedby instrumentalities of war include an injury cause by a mine, accidents duringcombat, or sickness caused by fumes, gas, or military ordnance. The amount of thepayment to each individual will be equal to the amount that would be paid as a VAdisability benefit. Exactly how many retirees will qualify for the new benefit is not known; preliminary estimates are in the range of 30,000. The Defense Department isresponsible for administering the program, and it will have to establish criteria fordetermining eligibility. Table 3 shows a preliminary Congressional Budget Office(CBO) estimate of the costs. Table 3: Preliminary CBO Estimate of Costs ofCombat Related Disability Benefits (by fiscal year in millionsof dollars) Source: Congressional Budget Office. As the provision is written, these amounts will be paid directly by the Defense Department out of its current budget rather than from the military retirement fund. These amounts, therefore, will be subject to annual appropriations. The FY2003defense appropriations bill, which was passed before the authorization bill, did notprovide funding. To cover the costs, the Defense Department may reprogram moneyor request supplemental appropriations. Reduction in Funding for Estimated Cost of Retiree Health Care Benefits. When it submitted its budget request, theAdministration estimated that the Defense Department would have to pay $8.1 billionin FY2003 into the retiree health care reserve fund for accrual costs of 65-and-overhealth care benefits (see the discussion of accrual accounting in Appendix B, below). Later officials said that DOD actuaries were expected to reduce the estimated costwhen they convened later in the year. The House Armed Services Committeereduced military personnel funding by $810 million, 10% of the estimated cost ofhealth benefits accrual. Representative Spratt, the second ranking Democrat on thecommittee, criticized this measure, saying that the $810 million is at the upper limitof the amount DOD said might be saved. If defense actuaries did not revise their costestimate as much, there could be a shortfall of several hundred million dollars inmilitary personnel accounts. The House Appropriations Committee reduced funding for health benefits accrual by $405 million, the lower end of DOD estimates of likely savings. TheSenate Appropriations Committee reduced accrual contributions by $372.6 millionto reflect changes in retiree health benefits that were approved in the FY2002 defenseauthorization act ( P.L. 107-107 ). The committee also said it would revisit theamount of accrual contributions after defense actuaries met. The Administrationpackage of appeals on the House and Senate authorization bills opposed the Houseauthorization measure. The conference agreement on the defense appropriations billreduces funding for health benefits accrual by $405 million. Increase in Personnel End-Strength. The House Armed Services Committee approved an increase of 12,552 in active dutyend-strength, including increases in full time guard and reserve personnel. TheHouse-passed authorization bill provided $528 million in FY2003 to cover associatedcosts in the military personnel accounts. Each of the military services has requestedan increase of personnel end-strength recently, with Army seeking the largestincrement of as many as 40,000 additional soldiers over the next few years. Secretary Rumsfeld has resisted increases, however, arguing repeatedly that addedpersonnel would be very expensive over the long term and that measures shouldinstead be taken to reduce demands on the force. It was not clear whether the House Armed Services Committee intended the end-strength increase to be a temporary measure related to the war against terrorismor a permanent addition to the force. Once fully phased in, an increase of 12,552 inend-strength would cost more than $1 billion a year in the personnel accounts (see Table 4 ), with additional costs required in operation and maintenance accounts tofully train, sustain, and equip the added troops. Table 4. Congressional Budget Office Estimate of the Costs of the House Armed Services Committee Increase in Active Duty End-Strength (budgetauthority in millions of dollars) Source: Congressional Budget Office. The Senate Armed Services Committee did not include an increase in end-strength in the authorization bill it reported. But on the floor on June 27, theSenate approved an amendment offered by Senators Cleland and McCain to increaseauthorized active duty end-strength by 12,000. Senator Cleland called for an increaseof 40,000 service members over the next five years. The Defense Department'spackage of appeals on the authorization opposed any increase in end-strength. The House Appropriations Committee did not approve an increase in end-strength, arguing that requirements are uncertain. The committee report said thatany increase that might be needed in FY2003 should be addressed in a supplementalappropriations request. The Senate Appropriations Committee also did not approvean increase in end-strength. The appropriations conference report does not includefunds for an overall increase in end-strength. The conference agreement on the defense authorization bill does not include an increase in end-strength. In report language, conferees said that an increase is neededbut that the appropriations bill did not provide enough money. The conferenceagreement also allows the Secretary of Defense to increase end-strength by up to 3%above the authorized level - standing law had allowed a 2% increase - and it givesthe military service secretaries independent authority to increase end-strength by upto 2%. The agreement also establishes a floor on end-strength equal to the requestedlevels, and it repeals a measure that allowed the Secretary of Defense flexibility toreduce end-strength below authorized levels. The Army's modernization plan involves three overlapping initiatives: one, to upgrade and recapitalize the existing "legacy" force of heavy armored forces; asecond to build new, more easily deployable "interim brigade combat teams"; and athird to develop the "objective force" of the future. Key elements of legacy force modernization include upgrading existing weapons with digitized communications links and new surveillance and reconnaissancecapabilities. The most controversial elements of the plan have been the Comanchehelicopter, which has experienced repeated development delays and cost increases,and the Crusader artillery system. The central element of the interim force is a new light armored vehicle, recently named the "Stryker." Congress has supported the interim force concept, althoughthere has been some debate about the characteristics of the armored vehicle. In thepast, the issue was whether it should be a tracked vehicle instead of the wheeledsystem the Army has selected. More recently, the issue has been whether the newvehicle will be transportable on C-130 airlift aircraft. The key element of the objective force is the "Future Combat System," which is an integrated suite of capabilities, including new armored systems and alsoimproved communications, intelligence, and surveillance capabilities. The Army'sFY2003 budget request includes funds to accelerate FCS development. Congressional Action. Congress has generally supported the Army's modernization plan, including plans for theinterim combat brigade teams and development of the Future Combat System. Butseveral issues have been contentious, including funding for the Crusader artillerysystem, and for some Army helicopter programs. Crusader Artillery System. One of the most contentious issues in the defense budget this year was the fate of the Crusaderself-propelled artillery system. Advocates of defense transformation have long beencritical of the program, arguing that the 40-ton system is not readily deployable. Supporters of the system responded that the weight has been reduced substantiallyand that the system was needed to allow artillery to keep up with rapidly movingarmored forces on the battlefield. On the eve of the House Armed ServicesCommittee markup of the defense authorization bill, Deputy Secretary of DefenseWolfowitz informed committee members that DOD was ordering the Army toprepare an analysis of alternatives to the Crusader within 30 days, a step towardcanceling the $11 billion program. DOD officials later confirmed that SecretaryRumsfeld intended to terminate the project. The Crusader had considerable support in Congress, however. In the authorization markup the House Armed Services Committee provided the full $475.6million for Crusader R&D that was in the Administration's February budget request. The Committee also included language in its report on the bill, though not in thestatutory language of the measure, that prohibits a cut in funding until after a moreextensive, formal analysis of alternatives was completed, which likely would not beuntil April 2003. This prompted the White House to threaten a presidential veto ofany bill if it included any statutory provisions limiting the Administration's abilityto cancel the program. The Rules Committee did not permit any floor amendmentsto reduce Crusader funding. When it marked up its version of the authorization bill on May 9, the Senate Armed Services Committee deferred action pending a committee hearing on theCrusader. The reported bill included $475.6 million for Crusader. But whenreporting the bill, committee Chairman Carl Levin said that the committee mightoffer an amendment to reduce funding when the bill is on the floor. Later, SenatorLevin said that DOD's civilian leadership had not given the Army adequate time toreview the alternatives to the Crusader that civilian officials supported. On May 29, the Administration formally submitted an amendment to its defense budget request asking Congress to allocate the Crusader funding to other Army R&Dprograms, including the Future Combat System, the Excalibur precision artilleryprojectile, the Army tactical unmanned aerial vehicle, and a new precision guidedmortar munition (see Table 5 ). Table 5: Crusader Budget Amendment/Non-Line of Sight Cannon Funding: Appropriations Action (budget authority in thousands ofdollars) Source: FY2003 Defense Appropriations Conference Report, H.Rept. 107-731 , p. 257. On June 13, the Senate Armed Services Committee held a closed session to consider action on the Crusader. The committee approved an amendment that wouldfence Crusader funding for 30 days after the bill is signed into law and require theArmy to complete a study of alternatives during that time. Subsequently the measure would permit the Secretary of Defense to submit a request to the congressionaldefense committees to reprogram the money into other Army indirect fire weaponsdevelopment. Senator Levin proposed the committee amendment on the floor onJune 19. Senator Warner then offered a second degree amendment to permit theSecretary of Defense to allocate funds to other development programs withoutseeking congressional permission through a reprogramming request. The Warneramendment was agreed to by unanimous consent, and the Levin amendment, asamended by Warner, was subsequently approved by a vote of 96 to 3. Subsequent to House and Senate action on the defense authorization bill, however, the issue was resolved in a fashion acceptable to the Administration. In itsversion of the defense appropriations bill, the House Appropriations Committeeagreed to terminate the Crusader program and to fund the alternatives that theAdministration proposed in its May 29 budget amendment. But the committee alsosaid that development of an alternative indirect fire system must be coupled withdevelopment of an appropriate platform to carry a new cannon. The committeetherefore added $173 million to develop a platform and new munitions andspecifically earmarked funds for that purpose in a general provision. The generalprovision also required a system to be delivered by 2008. Like the House, the SenateAppropriations Committee added $173 million for a non-line of sight cannon to bedeployed by 2008. The conference agreement on H.R. 4775 , providing supplemental appropriations for FY2002, includes legislative language directing the Army to enterinto a follow-on contract immediately to develop and field a next generation non-lineof sight cannon artillery system by 2008. Subsequently, on July 31, August 1, andAugust 2, all four of the congressional defense committees sent letters to the DefenseDepartment approving a DOD request to reprogram FY2002 funds from the Crusaderto the Army's Future Combat System development program. Like the House and Senate appropriations bills, the conference agreement on the defense appropriations provides most of what the Administration proposed in itsCrusader budget amendment and adds $173 million for a non-line of sight cannon tobe deployed by 2008. UH-60, CH-47, and TH-67 Helicopters. The defense committees took different actionson several Army helicopter programs. The House authorization bill added $115million for 8 additional UH-60 Blackhawk utility helicopters and one simulator andspecified what versions to buy. The House appropriations bill added funds for 4helicopters and a simulator. The Senate authorization and appropriations bills added$96.7 million for 9 aircraft allowing the Army to allocate the funds. The conferencereport on the defense appropriations bill provides $269.9 million for 19 Blackhawks,an increase of $116.6 million for seven additional aircraft, and, as in the Houseauthorization, specifies which models to procure and which components will receivethem. Funding for the CH-47 cargo helicopter was more contentious. The House authorization added $13.5 million to the on-going modification program forcrashworthy seats. The Senate authorization as reported had $4 million forcrashworthy seats, but this was reduced in floor action as offsets for other programs. The Senate appropriations bill added just $1 million for crashworthy seats. TheHouse appropriations bill, however, added $45 million to the modification plan toincrease the production rate and instructed the Army to plan to upgrade all CH-47sto the most modern "F" version over the next several years. The appropriationsconference adds $39.1 million to support an increased production rate and directs theArmy to ensure that all requirements for upgraded aircraft are fulfilled by 2016. The House authorization and appropriations bills and the Senate appropriations bill added funds for 6 TH-67 training helicopters. The Senate authorization providedno funds. The appropriations conference agreement provides $9.6 million for sixaircraft. Comanche Helicopter. The Comanche helicopter program has also been a target of criticism from some transformationadvocates. Last year, the program cost increased, the development plan wasrestructured, and projected procurement was delayed. DOD reportedly consideredcanceling the Comanche as one of a number of steps to reduce the procurement "bowwave" at the end of the decade. The House Armed Services Committee included ameasure in its version of the defense authorization bill to establish a cap of $6 billionon total engineering and manufacturing development (EMD) costs for the Comanche- a level that now appears to be below the amount the Army is projecting fordevelopment of just the first versions of the aircraft. The House bill also required anannual review of the EMD program by the Defense Department's Inspector General. In its report on the defense appropriations bill, the House Appropriations Committeewarned that its support for the Comanche program is in jeopardy because of delaysand cost growth, and the committee urged the Army to begin exploring low-costalternatives. For its part, the Defense Department has also been scrutinizing the program, and in October the DOD's decision-making body, the Defense Acquisition Board,decided to cut planned procurement of the Comanche by about half. The conferencereport on the authorization bill eliminates the House cap on EMD costs and therequirement for an Inspector General review but requires quarterly reports toCongress on the status of the program. Other Army Weapons Programs. There were a number of significant differences between the various bills on severalother Army programs. The House and Senate appropriations bills eliminated fundsfor the Wide Area Munitions program and instructed DOD to terminate it. TheHouse authorization and appropriations bills added $60 million for Bradley fightingvehicle upgrades for the National Guard, while the Senate authorization andappropriations bills added no money. The House authorization also added $45million to upgrade tank recovery vehicles for the National Guard. The House billsand the Senate appropriations bill added money for up-armored HMMWVs. TheHouse bills both cut money for ATACMs Block II missiles, but the Houseauthorization added back money to upgrade some Block I missiles. The Senateappropriations bill eliminated funds for Block II missiles. The House authorizationadded $61 million for SINGCARS radios and the House appropriations added $17million. The Senate authorization, however, cut $22.1 million that was requested forthe program in the DERF. The Senate appropriations bill provided the amountrequested, including the$22.1 million requested in the DERF. Both the House andthe Senate appropriations bills eliminated R&D funds for the Brilliant Anti-ArmorSubmunition (BAT) Product Improvement Program, though neither version of theauthorization bill reduced funding. Both House bills shifted funds for PAC-3anti-aircraft missile procurement from the Army to the Missile Defense Agency, butthe Senate bills did not. The defense appropriations conference report terminates the Wide Area Munitions program, adds $48 million for Bradley upgrades, eliminates funds for theATACMS Block II, but adds money to upgrade Block I missiles, adds $11.9 millionfor SINGCARS radios, provides funds for up-armored HMMWVs, and terminatesthe BAT Product Improvement Program. The conference agreement also follows theHouse and shifts Patriot PAC-3 procurement from the Army to the Missile DefenseAgency. Stryker-Equipped Interim Combat Brigades. The Army now plans to outfit six brigades (acombat division has three brigades plus support and command units) with the new"Stryker" light armored combat vehicle. These brigades are designed to be morerapidly deployable than heavy armored units but more capable and survivable thanlight infantry or airborne units. These units are intended to be an interim approachto transformation of the Army while development of the Future Combat Systemproceeds. Recently, there have been reports that the Defense Department isconsidering a measure that would reduce the number of Interim Combat Brigades tothree. This is one of many options DOD is considering in preparing theFY2004-FY2009 defense plan. Congress has not debated any specific proposal toreduce the number of new brigades, and the Administration has not yet decided onthe proposal. But the appropriations conference report adds $59.5 million for Strykerbrigade deployment and includes a general provision, Section 8121, that requires theArmy to budget for six brigades. Table 6: Appropriations Action on Major Army Acquisition Programs (amounts in millions of dollars) Source: H.Rept. 107-532 ; S.Rept. 107-213 ; H.Rept. 107-732 . The pace of Navy shipbuilding was a major focus of attention in Congress this year. The FY2003 budget request included funds for five new ships, far short of the8.5 ships per year needed, in principle, to sustain a fleet of 300 ships, which has longbeen the Navy's goal. Congressional Action. The House Armed Services Committee provided funds to procure an additional DD-51 destroyeron condition that the Justice Department reach as settlement with General DynamicsCorporation in the long-standing A-12 termination lawsuit. The tentative settlementwould have provided $385 million in advance procurement for Virginia-classsubmarine acquisition. By the time the authorization and appropriations conferenceagreements were being negotiated, however, that settlement had failed. In the absence of a settlement, the House authorization added $810 million to be distributed among several shipbuilding programs, including $415 million forVirginia class submarine advance procurement, $210 million for cruiser conversionadvance procurement, and $185 million for a nuclear submarine refueling overhaul. The committee also added funds to accelerate procurement of the next aircraft carrier,the CVN(X). The Navy plan to procure the ship had slipped by one year, with halfthe funding to be requested in FY2007 and the remainder in FY2008. The committeeadded $229 million in advance procurement to accelerate production and instructedthe Navy wants to move the start date back to FY2006. The Senate Armed Services Committee also added a significant amount for Navy shipbuilding, including $690 million that Senator Levin said was transferredfrom missile defense R&D. The committee additions included $415 million inadvance procurement for Virginia-class attack submarines, $200 million for refuelingrather than retiring an SSN-688 Los Angeles-class attack submarine, $150 millionin advance procurement for LPD-17 amphibious ships, and $125 million in advanceprocurement for DDG-51 destroyers. Like the House Armed Services Committee,the Senate Armed Services Committee provided $229 million to accelerate CVN(X)procurement. The House Appropriations Committee took a substantially different approach to shipbuilding in general and to aircraft carrier procurement in particular. Ratherthan provide money to accelerate CVN(X) procurement, the committee added $250million for the CVN-77 carrier, which is now being built, and instructed the Navy toincorporate a more advanced radar and other electronic systems into the ship as atransition to the CVN(X). The committee did not add money for other majorshipbuilding programs, and it eliminated $253 million requested for the LHD-8amphibious assault ship - this ship was started in FY2001 and is being incrementallyfunded through FY2006. The Senate Appropriations Committee added a substantial amount for shipbuilding, but it allocated funding quite differently from the other committees. The committee added $530.9 million to cover cost overruns on LPD-17 amphibiousships, DDG-51 destroyers, and Virginia-class submarines approved in prior years,while it reduced funding requested for advance procurement for the same programs. The committee also criticized the Navy for overusing advance procurement, sayingthat it should only be employed for long lead components of ships and that it shouldnot comprise as large a share of the total cost of ships as it has in recent years. Thecommittee also added $306 million to pay for the cost of an agreed transfer of workon LPD-17s and DDG-51s between the two major shipbuilders. Like the authorizingcommittees, the committee provided $229 million to accelerate CVN(X) procurementand about $200 million for an SSN-688 attack submarine refueling overhaul. The appropriations conference report adds $90 million, rather than the $250 million in the House bill, to incorporate advanced electronics on CVN-77. Theconference report provides $160 million, rather than the $229 million in the Senatebill, to restore the CVN(X) procurement schedule. As in the Senate bill, theconference report provides $530.9 million in added money for prior year cost growth. The agreement provides $243 million for LHD-8, rejecting the House reduction. Asin the Senate bill, the agreement provides $165 million for an additional SSN-688refueling overhaul. After congressional action on the authorization and appropriations bills was well underway, a new issue arose when the Navy announced that it planned to acceleratedevelopment of a new, smaller vessel called the Littoral Combat Ship (LCS). TheLCS program was one element of the Navy's plan to develop a series of new shipsunder the DDX program that was announced in 2001 after the DD-21 destroyerprogram was canceled. During the summer of 2002, the Navy said it wanted topursue the LCS more rapidly, and it informally asked Congress for additional moneyto begin studying alternatives. The Senate report on the authorization bill included$4 million for the program. The program had not undergone the review process thathas normally been part of the acquisition process, however, which includes, amongother things, a formal assessment of requirements for a new system, projections ofthe program schedule and costs, and an analysis of alternatives. The defenseauthorization conference report provides $4 million for the program, but it includesa long discussion of the need for a thorough review of program requirements andalternatives, and it requires DOD and the Navy to report to Congress on theassessments that had previously been required under DOD acquisition regulations. Table 7: Appropriations Action on Major Navy Shipbuilding Programs (amounts in millions of dollars) Sources: H.Rept. 107-532 ; S.Rept. 107-213 ; H.Rept. 107-732 . Funding for several major aircraft programs was included in the FY2003 Administration request, including Marine Corps V-22 tilt rotor aircraft developmentand procurement; Air Force F-22 fighter development and procurement; Air Forceand Navy F-35 Joint Strike Fighter development; Navy F/A-18E/F multirole fighterprocurement; and C-17 cargo aircraft procurement. The Navy has reportedly beenconsidering reducing future planned F-35 procurement, but this has not affectedcongressional support for the program to date. Congressional Action. Both the House and Senate Armed Services Committees approved requested funding for mostmajor aircraft programs, including the F-22, F-35, V-22, and C-17. The HouseArmed Services Committee added funds for a few lower profile programs, includingtrainer aircraft, Navy helicopters, and F-15 communications upgrades. The SenateArmed Services Committee added funds to procure an additional 4 F/A-18EFfighters for the Navy and Marine Corps. Both committees added funds for EA-6Belectronic warfare aircraft upgrades. The House Appropriations Committee addedfunding for F-22 R&D, but otherwise made few changes in the request for majoraircraft programs. The Senate Appropriations Committee added funds for 4additional F/A-18E/F fighters. The committee also added money to fully fundprocurement of C-17 aircraft. The appropriations conference report adds $120 million for 2 additional F/A-18E/F aircraft, half as many as in the Senate bill. The committee also addedmoney to fully fund C-17 procurement. C-17 Funding Profile. One rather technical, but potentially significant issue this year was whether the funding approachthat the Air Force proposed for future C-17 procurement sets a precedent that woulderode DOD policies designed to promote long-term fiscal discipline. In the past,DOD typically requested enough money to procure a specific number of fullyequipped end-items - funding requested for 15 C-17 aircraft, for example, would besufficient to buy 15 deployable aircraft. This year, however, the Air Force requestedonly enough money to finance progress payments on a new 5-year contract formulti-year procurement of the aircraft. The effect is to reduce amounts requestedearly in the multi-year contract and increase costs in the later years. This is technically at odds with longstanding DOD policy which calls for full funding of the cost of end-items being requested in any given year, and it is the firsttime a significant breach of the full funding policy has occurred in an area apart fromNavy shipbuilding. (For an extensive discussion, see CRS Report RL31404 , DefenseProcurement: Full Funding Policy - Background, Issues, and Options for Congress ,by [author name scrubbed] and [author name scrubbed].) The House Armed Services Committee approved the requested C-17 procurement profile, but warned DOD against using this funding approach in thefuture. The House Appropriations Committee rejected the Air Force approach andrequired the Air Force to use C-17 funding in FY2004 to procure complete aircraft. The committee also instructed the Defense Department to restructure future fundingplans for the C-17 to use full funding. The Senate Appropriations Committeespecifically rejected the Air Force's incremental funding approach and instead added$585.9 million to finance the full cost of procuring 15 aircraft. The appropriationsconference agreement mandates full funding of the C-17 - as in the Senate bill, itadds $585.9 million for full funding in FY2003, and it retains House languageinstructing the Air Force to request full funding in the future. Tanker Aircraft Leasing. Last year, the conference report on the defense appropriations bill included a provision allowingthe Air Force to pursue negotiations with the Boeing Corporation to lease tankeraircraft for a ten-year period. The provision was structured so that the aircraft wouldbe returned to the manufacturer after the lease expired. As a result, the lease isconsidered an "operating lease" rather than a "lease-purchase" agreement, so thatonly the annual cost of actual payments on the lease would be scored in the Air Forcebudget on a year-to-year basis - otherwise, the full cost of the contract would haveto be scored in the years when the money would be obligated. Boeing has offered tolease 100 767 aircraft as tankers. Senator McCain and some others have objected to the leasing provision, arguing that it will cost the government more in the long run than simply procuring additionaltanker aircraft. Both the Office of Management and Budget and the CongressionalBudget Office have prepared analyses which project considerably higher costs forleasing than for regular procurement. (The text of the CBO letter is availableelectronically at ftp://ftp.cbo.gov/34xx/doc3413/tankers.pdf .) Mitch Daniels, theDirector of OMB, has criticized the plan, insisting that it will be cheaper either to buynew tankers or to re-engine older aircraft. In its markup of the defense authorizationbill, the Senate Armed Services Committee approved an amendment proposed bySenator McCain that would require Congress to authorize and appropriate funds forany tanker lease agreement. In floor action on the defense appropriations bill,however, Senator McCain offered but then withdrew a similar amendment. Recently,the Air Force has reported that it is very close to reaching an agreement with Boeingon the tanker leases. The appropriations conference agreement provides $3 million for the tanker lease program (in Operation and Maintenance, Air Force). The agreement alsoincludes a general provision, Section 8117, that provides that payment for tankerleases may be made one year in advance and that permits funds either forprocurement of aircraft or for operation and maintenance to be used for the leases. On October 16, Senator McCain made a floor statement that was strongly critical ofthe leasing provisions in the conference report ( Congressional Record , pp.S10519-10520). The authorization conference report includes a provision (Section 133) revising Senator McCain's amendment. The revised provision prohibits the leasingagreement unless funds have been specifically authorized and appropriated for theprogram, or unless a reprogramming notification has been submitted to thecongressional defense committees. In report language, the conference agreementsays that it expects the Secretary of Defense to seek congressional approval for a newtanker lease. Table 8: Appropriations Action on Major Aircraft Programs (amounts in millions of dollars) Sources: H.Rept. 107-532 ; S.Rept. 107-213 ; H.Rept. 107-732 . Notes: Funding for 4 KC-130Js was requested in the Defense Emergency Response Fund(DERF). B-2 requestincludes $50 million for R&D requested in the DERF. The Administration requested $7.8 billion for missile defense programs in FY2003. The request included $3.2 billion for mid-course defenses, including funds for the National Missile Defense program to develop ground-based systems to protect theentire United States, and the Navy Theater Wide program, which is a theater defensesystem to be based on navy ships; $1.1 billion for battle management and related supportprograms; $935 million for the ground-based Theater High Altitude AreaDefense (THAAD) system; $858 million for Patriot PAC-3 development and procurement; $797 million for boost phase defense systems, including theAirborne Laser (ABL) and the Space-Based Laser (SBL); and $373 million for space-based sensors, including theSpace-Based Infrared System-Low (SBIRS-Low); an additional $815 million in the Air Force budget for theSpace-Based Infrared System-High (SBIRS-High). The SBIRS-High program has experienced very large cost increases, and early in the year, the program was under review because the cost growth violated Nunn-McCurdycost cap provisions. DOD decided to continue the program, however, though itsstatus remains a matter of concern. There continues to be extensive debate inCongress about the status of the National Missile Defense program, which theAdministration has tried to accelerate, and about space-based systems like the SBL. Congressional Action. The House Armed Services Committee generally supported the Administration's request. Thecommittee reduced funding for the ABL (now funded under the title "Air-BasedBoost" defense) by $77.5 million, on the premise that a second test aircraft, that wasincluded in the request, may not yet be needed. That judgment was disputed inHouse floor action on the defense appropriations bill (discussed below). Thecommittee distributed the savings to a number of other missile defense programs. The House Armed Services Committee also refused to fund Patriot PAC-3 orMedium Extended Air Defense System (MEADS) development in the Army budget,as requested, but instead shifted the money back to the Missile Defense Agency. During the House Armed Services Committee markup, Representative Spratt offered an amendment to reduce funding for the SBL and for space-based kineticinterceptor development and to transfer the savings to the PAC-3 and Arrow theatermissile defense programs. The amendment was defeated in the committee. On thefloor, the House approved an alternative offered by Representative Hunter to addfunds for PAC-3 and Arrow to be financed from funds available to the MissileDefense Agency, but without specifying the offsetting source of funds. In committee markup, Representative Spratt also offered an amendment to prohibit deployment of nuclear tipped interceptor missiles for missile defense, whichwas rejected. On the floor, the Rules Committee did not make in order anamendment on the issue, but Representative Spratt offered a motion to recommit thebill to committee with instructions to prohibit nuclear interceptor development, andthat motion was defeated. The Senate Armed Services Committee reduced overall missile defense funding by $814.3 million (see Table 9 for a detailed tabulation of funding), promptingseveral Republicans on the committee to vote against reporting the bill. Most of thereductions were in systems engineering and other support activities, which thecommittee argued are not adequately justified in support material provided by DOD.This became a major issue on the Senate floor. The Senate Armed ServicesCommittee also reduced ABL funding by $135 million and SBIRS-High funding by$100 million. In addition, the committee approved several provisions designed to require stricter oversight of missile defense programs and adherence to more traditionalacquisition procedures in the development programs. One provision would requirethe independent Director of Operational Test and Evaluation to conduct an annualassessment of specific missile defense programs. Another provision requires theSecretary of Defense to provide annual schedule and cost estimates for majorelements of the program to Congress. On June 12, Secretary Rumsfeld send at letter to Senator Levin opposing the Senate Armed Services Committee reduction in missile defense funding andobjecting to the committee's provisions regarding acquisition procedures. Thecommittee's measures, said Rumsfeld, "would impose a number of burdensomestatutory restrictions that would undermine our ability to manage the programeffectively." The Secretary said he would recommend a veto if a final authorizationbill includes either the Senate cuts in missile defense funding or the Senateprovisions regarding management of the program. OMB's June 19 "Statement ofAdministration Policy" repeated the veto threat. On June 26, the Senate approved an amendment offered by Senator Warner, with a second degree amendment by Senator Levin, to restore some or all of themissile defense funding that the committee cut. The amendment would permit thePresident to allocate up to $814.3 million of anticipated inflation savings either tomissile defense or to counter-terrorism programs. The Levin amendment stipulatesthat priority should be given to counter-terrorism. The Senate did not consider anymeasures to revise committee provisions on program management. Also on June 26, the Senate approved an amendment proposed by Senators Feinstein and Stevens to prohibit development or deployment of nuclear armedinterceptors for missile defense. This measure is similar to the Spratt amendmentthat the House turned down. The House Appropriations Committee made a number of changes in requested missile defense funding. The committee denied funding for Navy sea-based terminaldefense, a replacement for the terminated Navy Area Defense program, saying thatDOD had not presented a plan for using the research funds. The committee alsodenied funding for the Russian-American Observation Satellite Program (RAMOS)because the Russian government has not yet responded to a U.S. proposal toimplement the program. The committee said it would revisit the issue in conferenceif the two governments sign an agreement. The committee also cut funding forsea-based and space-based boost phase defenses, saying that requested large increasesin funding were not justified in view of requirements for near term programs like thePAC-3 system. The committee added $30 million for additional PAC-3 testing andrequired a report on planned testing of the Theater High Altitude Area Defense(THAAD) system. In floor action, the House approved an amendment by Representative Spratt to reduce funding for the space-based kinetic interceptor program by $30 million andshift the funds to the Airborne Laser program. The Senate Appropriations Committee largely followed the Senate authorization bill. In a general provision, it provided an additional $814.3 million for missiledefense or for counter-terrorism programs, offset by anticipated inflation savings. The provision also itemized the programs to and amounts for which funds are to berestored, should the President choose to allocate these funds to missile defense. The appropriations conference report provides most of what the Administration requested for missile defense. In all, it reduced funding by $43 million. It added $45million for Patriot PAC-3 procurement (offset by a $25 million reduction in supportfunding) and $70 million for the U.S.-Israeli Arrow program. It reduced funding forRAMOS but did not eliminate it as in the House bill. The authorization conference report includes revised provisions governing management of missile defense programs. It requires that DOD submit annualreports to Congress on performance goals and development baselines for eachdevelopment block of each missile defense system as part of annual budgetjustification material; it requires year-by-year funding profiles for each block of eachsystem that could be fielded; and it requires the Defense Department's JointRequirements Oversight Council (JROC), which is chaired by the Deputy Chairmanof the Joint Chiefs, to provide to Congress a one-time review of cost, schedule, andperformance criteria. The agreement also requires that DOD provide a life-cycle costestimate for the Theater High Altitude Area Defense (THAAD) program - the Senatehad prohibited obligation of more than 50% of the money authorized for THAADuntil the report is submitted, while the conference agreement permits 85% to beobligated. The conference report also requires the director of the Missile DefenseAgency to provide reports to Congress on each flight test of the Ground-BasedMid-Course National Missile Defense System. The authorization conferenceagreement drops provisions in the Senate bill requiring annual JROC reviews ofmissile defense programs and operational assessments of some programs by theDirector of Operational Test and Evaluation. The authorization conference report also prohibits the use of FY2003 funds for development of a nuclear-armed interceptor for missile defense - the Senate versionof the bill had flatly prohibited development. Table 9: Congressional Action on Missile Defense Funding byProgram Element and Project (millions of dollars) Sources: Department of Defense, FY2003 RDT&E Program Descriptive Summaries; H.Rept.107-436 ; S.Rept. 107-151 ; H.Rept. 107-532 ; S.Rept. 107-213 ; H.Rept. 107-732 . * Note: Warner/Levin amendment to the Senate authorization bill provides up to $814.3million formissile defense and counter-terrorism programs. In January, the Administration completed a congressionally mandated Nuclear Posture Review and submitted a classified report on the review, with an unclassifiedsummary, to Congress. Parts of the classified report were later leaked to the press,prompting considerable public debate about several issues, including the potentialuse of nuclear weapons against non-nuclear states that use or threaten to usenon-nuclear weapons of mass destruction, plans to shorten the time needed to resumenuclear testing, and potential development of new nuclear weapons for missions suchas destruction of deeply buried and hardened targets. The review also reaffirmedAdministration plans to reduce offensive nuclear warhead numbers. Later, on May13, the White House announced an agreement with Russia on a treaty to reducestrategic offensive force levels to between 1,700 and 2,200 warheads. Congressional Action. In the House Armed Services Committee markup, Representative Tauscher offered anamendment to limit strategic nuclear force levels to 1,700. The proposal was rejectedin committee. On the floor, the House approved a Tauscher amendment to requirea report on options for achieving a level of 1,700 to 2,200 warheads. RepresentativeSpratt offered an amendment, also rejected in committee, to require one-year advancenotification of a decision to resume nuclear testing. The Rules Committee did notpermit a floor vote on the amendment. The full House also rejected an amendmentoffered by Representative Markey to prohibit development of a nuclear earthpenetrator weapon. The Senate Armed Services Committee version of the authorization eliminates $15.5 million requested in the Department of Energy weapons budget fordevelopment of a "Robust Nuclear Earth Penetrator" warhead and requires a detailedreport on the proposed program. On July 26, the Senate approved an amendment tothe bill, offered by Senators Feinstein and Stevens, to prohibit development ordeployment of nuclear armed interceptors for missile defense (see the discussion ofmissile defense programs, above). The Senate bill also includes a provision that would require the Secretary of Energy to request funds before beginning research and development or productionof any new or modified nuclear weapon. The provision also requires a specificauthorization for a new or modified nuclear weapon program before funds could beobligated or expended. The authorization conference report provides funds for the Robust Nuclear Earth Penetrator warhead but prohibits obligation of the money until 30 days after Congressreceives the report required by the Senate version of the bill. The conferenceagreement also includes a revised version of the Senate requirement that theDepartment of Energy specifically request funds to develop any new nuclearweapons. The conference report also requires a report on options for resumingnuclear testing. The Defense Department has voiced increasing concern in recent years about the effect on training of environmental regulations. Shortly before the House ArmedServices Committee markup of the defense authorization bill, the Administrationproposed legislation to exempt DOD training activities from the requirements ofseveral environmental statutes ranging from the Endangered Species Act to the CleanAir Act. Congressional Action. The House-passed version of the authorization bill includes provisions exempting DODfrom or waiving application of the Endangered Species Act, the Migratory BirdTreaty Act, and the Wilderness Act to areas used for military training exercises. Onthe Endangered Species Act, Section 312 of the House bill would allow DOD tosubstitute its own Integrated Natural Resource Management Plan to protectendangered species rather than having installations designated as a critical habitat. DOD would, however, still be prohibited from taking any actions that would harmendangered or threatened species. In designating new critical habitats, the bill wouldalso require that the effect on national security, as well as the economic impact, mustbe considered. Section 311 of the House bill provides that in the case of military training activities, DOD would not be subject to the part of the Migratory Bird Treaty Actthat designates certain types of activities as unlawful. According to the committeereport, this provision was intended to permit DOD to carry out military exerciseseven if they might unintentionally harm migratory birds. The language adoptedwould exempt DOD more broadly from any activity deemed to be unlawful under theAct. The House bill also permits DOD to conduct training activities and have emergency access to the Utah Test and Training Range, despite the fact that a portionof that range has been designated as a wilderness area with certain restrictions onnoise and disturbances. The House bill also includes provisions that would designateseveral areas owned by the Bureau of Land Management that are adjacent to the UtahTest and Training Range as wilderness areas although DOD's training activities inthese areas would also not be covered by Wilderness Act restrictions. (For adiscussion of these and other provisions, see CRS Report RL31456 , Defense Cleanupand Environmental Programs: Authorization and Appropriations for FY2003 , byDavid Michael Bearden, and CRS Report RL31415 , The Endangered Species Act,Migratory Bird Treaty Act, and Department of Defense Readiness Activities: CurrentLaw and Legislative Proposals , by [author name scrubbed].) The House Armed Services Committee did not address other environmentalmeasures that DOD included in its legislative proposal. In the House ArmedServices Committee markup, Representative James Maloney offered an amendmentto remove the environmental waiver provisions, but the proposal was rejected. TheRules Committee did not permit a similar amendment proposed by RepresentativesRahall, Dingell and Maloney to be offered on the floor. The Senate Armed Services Committee did not address these environmental issues in its version of the authorization bill. Instead, it referred the Administration'sproposals to the Environment and Public Works Committee, which recently held ahearing on those proposals. The Senate bill authorizes $20 million to allow theSecretary of Defense to acquire lands adjacent to military installations to serve as abuffer zone and provide additional natural habitat areas for endangered species inareas where animals have moved to military installations as a result of development. The authorization conference report includes a revised version of the House provision regarding the Migratory Bird Treaty Act. The House provision would havealtered the Act to exempt military training from certain provisions. The conferencerevision temporarily exempts training activities and requires the Secretary of theInterior to prescribe regulations to exempt DOD. The conference report does not include the House provision regarding the Endangered Species Act, but it includes without change the House provisionsregarding the Utah Test and Training Range. Under current law, there is a cap of 400 on the number of U.S. military personnel who can operate in Colombia. The cap specifically excludes personnelserving diplomatic functions or performing emergency missions. The Houseauthorization bill included a provision that would establish a cap of 500 on thenumber of U.S. military personnel in Colombia who are supported or maintained byDepartment of Defense funds. The measure also would permit the Secretary ofDefense to waive the cap for national security reasons and provided he informsCongress within 15 days of a waiver. The authorization conference report does notinclude the House provision. Last year, Congress approved a measure that will permit a new round of military base closures in 2005, following procedures that were used in earlier rounds in 1991,1993, and 1995. In the House Armed Services Committee markup of theauthorization bill, Representative Taylor offered an amendment to repeal last year'sbase closure provisions. The committee defeated the amendment by a vote of 38-19. The Rules Committee did not allow the amendment to be offered on the floor, whichwas a matter of considerable contention when the bill was debated. Abortions are readily available in the United States, but are often not available to U.S. personnel deployed abroad. Congress has perennially debated measures toallow abortions for U.S. military personnel at military hospitals overseas. Congressional Action. In the House Armed Services Committee markup, the committed rejected an amendmentby Representative Sanchez to allow abortions at U.S. military hospitals abroad; thefull House rejected the proposal in a floor vote. On June20 the Senate debated andon June 21 approved by a vote of 52-40 an amendment to the authorization bill bySenators Murray and Collins that would remove the prohibition on privately fundedabortions at overseas military facilities. The authorization conference report dropsthe Senate provision. Like other House FY2003 appropriations bills, the House-passed measure includes a provision, Section 8122, that prohibits the transfer of funds to any otheragency unless approved in an appropriations act. One effect would be to prevent thetransfer of defense funds to the new Department of Homeland Security without theapproval of the appropriations committees. That provision is not included in theappropriations conference agreement. H.Con.Res. 253 (Nussle) A concurrent resolution establishing the congressional budget for the UnitedStates government for fiscal year 2003 and setting forth appropriate budgetary levelsfor each of fiscal years 2004 through 2007. Reported by the House BudgetCommittee ( H.Rept. 107-376 ), March 15, 2002. Passed by the House, 221-209,March 20, 2002. S.Con. Res. 100 (Conrad) An original concurrent resolution setting forth the congressional budget for theUnited States government for fiscal year 2003 and setting forth the appropriatebudgetary levels for each of the fiscal years 2004 through 2012. Reported by theSenate Budget Committee, March 22, 2002. Written report filed ( S.Rept. 107-141 ),April 11, 2002. H.R. 4546 (Stump) A bill to authorize appropriations for fiscal year 2003 for military activities ofthe Department of Defense, and for military construction, to prescribe militarypersonnel strengths for fiscal year 2003, and for other purposes. Marked up andordered to be reported by the House Armed Services Committee, May 1, 2002. Report filed ( H.Rept. 107-436 ), May 3, 2002. Considered by the House andapproved, with amendments (359-58), May 10, 2002. Laid before the Senate, Senatestruck all after the enacting clause and substituted the language of S. 2514 , and passed by the Senate by unanimous consent, June 27, 2002. Conferencereport filed ( H.Rept. 107-772 ), November 12. Conference report agreed to in theHouse on suspension of the rules by voice vote, November 12. Conference reportagreed to in the Senate by voice vote, November 13. H.R. 4547 (Stump) A bill to authorize appropriations for the costs of the war against terrorism. Considered by the House Armed Services Committee, May 1, 2002. Marked up andordered reported by the House Armed Services Committee July 18, 2002. Reportfiled ( H.Rept. 107-603 ), July 23, 2002. Considered under suspension of the rules,yeas and nays ordered, and further consideration postponed, July 23-24, 2002. Approved by the House (413-3), July 24, 2002. S. 2514 (Levin) An original bill to authorize appropriations for fiscal year 2003 for militaryactivities of the Department of Defense, for military construction, and for defenseactivities of the Department of Energy, to prescribe personnel strengths for suchfiscal year for the Armed Forces, and for other purposes. Marked up and ordered tobe reported by the Senate Armed Services Committee, May 9, 2002. Report filed( S.Rept. 107-151 ), May 15, 2002. Considered by the Senate, June 18, 19, 20, 21, 24,25, 26, 27. Approved by the Senate as amended (97-2), June 27, 2002. P.L. 107-248 , H.R. 5010 Making appropriations for the Department of Defense for the fiscal year endingSeptember 30, 2003, and for other purposes. Marked up and reported by the HouseAppropriations Committee ( H.Rept. 107-532 ), June 25, 2002. Considered by theHouse and approved as amended (413-18), June 27, 2002. Marked up and reportedas amended by the Senate Appropriations Committee ( S.Rept. 107-213 ), July 18,2002. Considered by the Senate July 31 and August 1, 2002. Approved by theSenate, as amended (95-3), August 1, 2002. Conference report filed ( H.Rept.107-732 ), October 9, 2002. Conference report agreed to in the House (409-14),October 10, 2002. Conference report agreed to in the Senate (93-1), October 16,2002. Signed into law October 23, 2002. P.L. 107-249 , H.R. 5011 Making appropriations for military construction, family housing, and baserealignment and closure for the Department of Defense for the fiscal year endingSeptember 30, 2003, and for other purposes. Marked up and reported by the HouseAppropriations Committee ( H.Rept. 107-533 ), June 25, 2002. Considered by theHouse and approved, as amended (426-1), June 27, 2002. Senate struck all after theenacting clause and substituted the text of S. 2709 , as reported, July 17,2002. Approved by the Senate, with an amendment (96-3), July 18, 2002. Conference report filed ( H.Rept. 107-731 ), October 9, 2002. Conference reportagreed to in the House (419-0), October 10, 2002. Conference report agreed to in theSenate by unanimous consent, October 11, 2002. Signed into law October 23, 2002. S. 2709 (Feinstein) An original bill making appropriations for military construction, family housing,and base realignment and closure for the Department of Defense for the fiscal yearending September 30, 2003, and for other purposes. Marked up and ordered to bereported by the Senate Appropriations Committee, June 27, 2002. Report filed( S.Rept. 107-202 ), July 3, 2002. P.L. 107-206 , H.R. 4775 Making supplemental appropriations for the fiscal year ending September 30,2002, and for other purposes. Reported by the House Appropriations Committee( H.Rept. 107-180 ), May 20, 2002. Considered by the House, May 22-23, 2002. Approved by the House (280-138), May 24, 2002. Measure laid before the Senateand Senate struck all after the enacting clause and substituted the language of S. 2551 to be used as original text, June 3, 2002. Cloture motionspresented in the Senate, June 4, 2002. Cloture motion invoked (87-10), June 6, 2002. Approved by the Senate (71-22), June 7, 2002. Conference agreement reported( H.Rept. 107-593 ), July 19, 2002. Conference report agreed to by the House(397-32), July 23, 2002. Conference report agreed to by the Senate (92-7), July 24,2002. Signed into law August 2, 2002. S. 2551 (Byrd) An original bill making supplemental appropriations for further recovery fromand response to terrorist attacks on the United States for the fiscal year endingSeptember 30, 2002, and for other purposes. Marked up and ordered to be reportedby the Senate Appropriations Committee, May 22, 2002. Written report filed( S.Rept. 107-156 ), May 29, 2002. CRS Report RL31310 . Appropriations for FY2003: Military Construction , by DanielH. Else. CRS Report RS21327. Concurrent Receipt of Military Retirement and VA Disability Benefits: Budgetary Issues , by [author name scrubbed]. CRS Report RS21218 . Crusader XM2001 Self-Propelled Howitzer: Background and Issues for Congress , by [author name scrubbed] and Steven R. Bowman. CRS Report RL31456 . Defense Cleanup and Environmental Programs: Authorization and Appropriations for FY2003, by David Michael Bearden. CRS Issue Brief IB10062. Defense Research: DOD's Research, Development, Test and Evaluation Program , by John Dimitri Moteff. CRS Report RL31415 . The Endangered Species Act, Migratory Bird Treaty Act, and Department of Defense Readiness Activities: Current Law and LegislativeProposals , by [author name scrubbed]. CRS Issue Brief IB93103. Military Medical Care Services: Questions and Answers , by Richard A. Best, Jr. CRS Issue Brief IB10089. Military Pay and Benefits: Key Questions and Answers , by [author name scrubbed]. CRS Report 95-469(pdf) . Military Retirement and Veterans' Compensation: Concurrent Receipt Issues , by Robert Goldich and Carolyn Merck. CRS Issue Brief IB85159. Military Retirement: Major Legislative Issues , by [author name scrubbed]. CRS Report RL31111 . Missile Defense: The Current Debate , coordinated by [author name scrubbed] and [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 RS20643 . Navy CVNX Aircraft Carrier Program: Background and Issues for Congress , by [author name scrubbed]. CRS Report RS21059. Navy DD(X) Future Surface Combatant Program: Background and Issues for Congress , by [author name scrubbed]. CRS Issue Brief IB94040. Peacekeeping: Issues of U.S. Military Involvement , by Nina Maria Serafino. CRS Report RL31297(pdf) . Recruiting and Retention in the Active Component Military , by [author name scrubbed]. CRS Issue Brief IB92115. Tactical Aircraft Modernization: Issues for Congress , by [author name scrubbed]. CRS Report RL31187(pdf) . Terrorism Funding: Congressional Debate on Emergency Supplemental Allocations , by [author name scrubbed] and Larry Q. Nowels. CRS Report RS21133(pdf) . The Nuclear Posture Review: Overview and Emerging Issues , by [author name scrubbed]. CRS Report RL31384 . V-22 Osprey Tilt-Rotor Aircraft , by [author name scrubbed]. Congress provides funding for national defense programs in several annualappropriations measures, the largest of which is the defense appropriations bill. Congress also acts every year on a national defense authorization bill, whichauthorizes programs funded in all of the regular appropriations measures. Theauthorization bill addresses defense programs in almost precisely the same level ofdetail as the defense-related appropriations, and congressional debate about majordefense policy and funding issues usually occurs mainly in action on theauthorization. Because the defense authorization and appropriations bills are soclosely related, this report tracks congressional 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 maintenance of weapons and facilities, weapons procurement, andresearch and development, as well as for other purposes. Most of the funding in the bill is for programs administered by the Department of Defense, though the bill also provides (1) relatively small, unclassified amountsfor the Central Intelligence Agency retirement fund and intelligence communitymanagement, (2) classified amounts for national foreign intelligence activitiesadministered by the CIA and by other agencies as well as by DOD, and (3) very smallamounts for some other agencies. Five other appropriations bills also provide fundsfor 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 familyhousing, all administered by DOD; the energy and water development appropriations bill, which funds atomic energy defense activities administered by the Department ofEnergy; the VA-HUD-independent agencies appropriations bill, which finances civil defense activities administered by the Federal Emergency ManagementAgency, activities of the Selective Service System, and DOD support for NationalScience Foundation Antarctic research; the Commerce-Justice-State appropriations bill, which funds national security-related activities of the FBI, the Department of Justice, and someother agencies; and the transportation appropriations bill, which funds some defense-related activities of the Coast Guard. On February 4, 2002, the Administration submitted its formal FY2003 budgetrequest to Congress. The Administration proposed $396.8 billion for the nationaldefense budget function, about $46 billion above the estimated FY2002 level (notincluding supplemental FY2002 appropriations of $14 billion proposed on March21). (2) The increase between FY2002 and FY2003is the largest since at least the firstyears of the Reagan Administration. And with supplemental counter-terrorismfunding for FY2001 and FY2002 included, the total increase in defense in the lastyear is the largest, in inflation-adjusted dollars, since the Vietnam War. TheAdministration projects continued growth in defense through FY2007, though at amuch more modest pace - Table B1 shows the long term trend in defense spendingunder the Administration's plan. The large increase requested for defense has not been enough, however, to allay the concerns of defense advocates in Congress. In their view, the budget is notadequate to accommodate needed increases in weapons procurement. In the House,several Members threatened to vote against the proposed budget resolution becauseit set aside $10 billion for defense in a reserve fund available only for costs of theglobal counter-terrorism campaign. The Administration requested the $10 billion asan unallocated contingency fund for costs of counter-terrorism operations in FY2003,but several members of the Armed Services Committees both in the House and in theSenate have said they would prefer using that money to increase spending on majorweapons programs, especially shipbuilding. Table B1. National Defense Budget Function and Department of Defense Budget, FY2000-FY2007, AdministrationProjections (current and constant FY2003 dollars in billions) Sources : U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2003 , February 2002. Constant dollar figuresare CRS calculations using deflators from DOD Comptroller. Notes: This and other tables in this report use OMB data that reflect enacted and proposed changes in accounting for retirement benefits. Figures reflect (1) enactedaccrual accounting for health care benefits for over-65 military retirees beginning inFY2003; (2) proposed accrual accounting for health care benefits for under-65 militaryretirees beginning in FY2004; and (3) proposed accrual accounting for all civilianretirement pension and health benefits beginning in FY2003. OMB has also adjustedFY2001 and FY2002 to be consistent with FY2003 and later treatment of civilianretirement benefits. Data in these tables also reflect OMB scoring of funds provided inthe Emergency Terrorism Response (ETR) supplemental appropriations act approvedin September 2001. OMB figures do not show the allocation of $9.8 billion of fundingprovided for defense in the ETR supplemental. One important complicating element in the FY2003 defense budget is a series of changes in accounting for military and civilian personnel retirement benefits. Most federal retirement benefits, including benefits for uniformed military servicemembers and DOD civilian personnel, have long been funded on the basis of"accrual accounting," in which the cost of future benefits for current employees ischarged to the employing agency as the benefits are accrued. Under accrualaccounting procedures, federal agencies pay the actuarily determined cost of futurebenefits into a fund. Payments to retirees are then charged to the fund, not to theagency. In the FY2003 and FY2004 defense budgets, three substantial adjustmentsinvolving accrual accounting have a large effect on budget totals. These are: Accrual accounting for over-65 health care benefits for uniformed personnel: The FY2001 Defense Authorization Act, P.L. 106-398 ,included a provision, known as "Tricare-for-Life," that guarantees DOD-providedhealth care to 65-and-over military retirees and their dependents. Beginning inFY2003, these benefits are being funded on an accrual basis. This results in (1) anincrease of $8.1 billion in FY2003 in the military personnel accounts to reflect theaccrual cost of future benefits for current uniformed personnel and (2) a reduction of$5.6 billion in operation and maintenance accounts to reflect a payment from thehealth care trust fund to DOD for providing care to over-65retirees. Accrual accounting for all civilian personnel retirement pension and health benefits: While most federal civilian retirement benefits havebeen funded on an accrual basis, a small part has not been. The Administration hasproposed funding all retirement benefits on an accrual basis. In FY2003, theproposed change results in an increase of $3.4 billion (both in budget authority andin outlays) in the Department of Defense budget. OMB has adjusted FY2001 andFY2002 figures - though not figures for earlier years - to be comparable to the new,proposed treatment of civilian retirement and health benefits. Thus, OMB figuresinclude $3.0 billion in FY2001 and $3.2 billion in FY2002 Department of Defensebudget totals (both in budget authority and in outlays) for increased civilianretirement accrual even though this accounting procedure was not in place in thoseyears. Accrual accounting for under-65 health care benefits for uniformed personnel: Beginning in FY2004, the Administration is also proposingto finance health care benefits for under-65 military retirees on an accrual basis, inwhich, again, DOD would pay into a fund the cost of future benefits for currentemployees and would receive reimbursement from the fund for costs of under-65retiree health care that it provides. Both the contributions to the fund andreimbursements from the fund are reflected in budget projections from FY2004on. Table B2 shows the year-by-year impact of these changes in accrual accounting on the defense budget through FY2007. Table B2. Effects of Accrual Accounting on the Defense Budget (millions of dollars) Source: Office of Management and Budget. The cost of changes in accrual accounting is only one of a number of so-called "fact of life" or "must pay" bills in the FY2003 defense budget. Much of theFY2002-2003 budget increase is taken up by accounting changes, inflation, payraises, changes in weapons cost estimates, and costs of the global counter-terrorismcampaign rather than by increases in weapons investment. DOD Comptroller DovZakheim has told congressional committees that such "must pay" bills leave less than$10 billion for new initiatives. According to the Defense Department, increased costs include: $6.7 billion for inflation; $2.7 billion for pay raises; $8.1 billion for accrual payments for 65-and-over health carebenefits for current uniformed personnel when they retire (discussedabove); $3.3 billion for increased accrual payments to retirementaccounts for current civilian DOD personnel (also discussed above - the OMBestimate is $3.4 billion for FY2003); $7.4 billion for what DOD calls "realistic costing," half forrevised estimates of weapons costs (including the F-22 fighter and already contractedNavy ships) and half for closer to full funding of projected operating costs;and $19.4 billion for counter-terrorism, including $10 billion in anunallocated contingency fund for continuing the war and $9.4 billion for specificcosts associated with ongoing operations. In all, this adds up to $47.5 billion in new costs, but the total is offset by $9.3 billion in savings from procurement programs that were in the FY2002 budget but are notin the FY2003 plan. So an increase of almost $50 billion in the defense budget, bythis account, still leaves relatively little available for new programs. Although the point is generally well taken, some items are missing from the arithmetic. For one thing, DOD is receiving $5.6 billion in payments from the retireehealth care trust fund in FY2003 to cover costs of providing services to 65-and-overretirees - money it did not receive in FY2002. Also, some counter-terrorism costswere included in the FY2002 budget, so the increased cost in FY2003 is $16 billionrather than $19 billion. Moreover, OMB budget figures (though not some of thefigures DOD used in its early briefings on the budget), show $3.2 billion in costs ofcivilian accrual accounting in the FY2002 budget for purposes of comparison withthe FY2003 request, so the added cost in FY2003 is only $0.2 billion. And, finally,a substantial part of the $9.4 billion for specifically allocated war-related funding willgo to procure material, such as Unmanned Aerial Vehicles (UAVs), intelligenceinfrastructure, and communications equipment, that will be in the force for some time- DOD officials have said that at least $3 billion of the amount for counter-terrorismis for weapons procurement. So, in all, the money available for new initiatives inFY2003, compared to FY2002, is more like $20-25 billion - not the whole of thedefense budget increase, but still not insubstantial. The impact of "fact of life" cost increases on the FY2003 budget is relatively large because of some special factors, but it is by no means unique. Table B3 compares the FY2003 defense request with FY2002 estimated funding byappropriations title - a fairly common way of looking at the budget - with commentson major reasons for some of the changes. What stands out is how much of the largeincrease between FY2002 and FY2003 is going to military personnel and to operationand maintenance (O&M) rather than to procurement or to research and development(though, as noted, some procurement is being financed from war-related fundsrequested in the operation and maintenance title). Table B3. Changes in Requested National Defense Funding by Appropriations Title (budget authority in billions ofdollars) Source: Office of Management and Budget; CRS calculations. Notes: OMB figures include $3.4 billion for civilian retirement benefits accrual in FY2003and $3.2 billion in FY2002. FY2002 estimate does not include $14.0 billion insupplemental appropriations requested for counter-terrorism operations on March 21,2002. Military personnel accounts have grown especially rapidly in recent years because of pay and benefits increases that Congress approved beginning with theFY2001 defense authorization act ( P.L. 106-398 ), passed in October, 2000. That billincluded: a 3.7% across-the-board pay raise; "pay table reform" that provided additional substantial payraises to mid-career personnel to bolster retention; the first increment of a Clinton Administration proposal toreduce out-of-pocket off-base housing costs by increasing basic allowance forhousing benefits; "Tricare for Life," guaranteeing DOD-provided health care toover-65 military retirees; and a requirement that future military pay raises be equal to the"employment cost index," a broad measure of personnel costs in the economy as awhole, plus 0.5%. Last year, the FY2002 defense authorization bill included some additional changes in the pay table to further boost income for selected mid-career personnel, and the billalso increased special pays and bonuses. Increased pay and benefits appear to have improved military recruitment and retention, though recent gains may, in part, also be due to a less robust economy. Theincreases have also driven up personnel costs dramatically. Table B4 illustrates thepoint. Under the Administration's plan, total military personnel funding will growfrom less than $70 billion as recently as FY1998 (in current year dollars - i.e., notadjusting for inflation) to $94 billion in FY2003 and to $117 billion by FY2007. After adjusting for inflation (using the Consumer Price Index), personnel costs willgrow from about $48,000 per active duty troop to more than $65,000 in FY2003prices over the same period. Table B4. Trends in Military Personnel Funding, FY1990-FY2007 (budget authority) Source: CRS calculations based on data from the Office of Management and Budget. *Notes: "CY$" refers to "current year" dollars - i.e., not adjusted for inflation. FY2003 constant dollar figures are calculated using CPI-W deflators. DOD militarypersonnel deflators are not appropriate to use because they count the amount ofannual pay raises and benefits increases simply as inflation. A similar, though much longer-term upward trend applies to operation and maintenance (O&M) accounts. A very simple measure of the trend is to calculatetotal O&M funding per active duty troop in constant, inflation adjusted prices. Making some adjustments to reduce inconsistencies from year to year, the resultshows a very constant pattern of growth of about 2.5% per year above inflation fromthe mid-1950s on - Figure 1 illustrates the trend. Continuing, unabated growth in personnel and in O&M costs takes up a substantial share of projected increases in overall defense spending over the next fewyears. Table B5 shows Administration projections of defense funding byappropriations title through FY2007. Between FY2000, the last full year of theClinton Administration, and FY2007, overall national defense funding is projectedto increase by $166 billion. Of the increase, $90 billion is for personnel and O&Mand $63 billion is for procurement and R&D. Table B5. National Defense Budget Function by Appropriations Title, FY2000-FY2007 (budget authority, current year dollars in billions) Source: Office of Management and Budget. Note: OMB figures show $3.0 billion in FY2000 and $3.2 billion in FY2001 for full accrual accounting for civilian retirement benefits, though it was not in effect in those years and is proposedto begin in FY2003. One key issue in congressional debate about the defense budget has been whether the $70 billion or so requested for procurement in FY2003, or even the $99billion projected for procurement in FY2007, is enough to reverse what formerSecretary of Defense William Perry called the "procurement holiday" in defensebudgets that followed the end of the Cold War. A decline in new weapons purchases,said Perry in 1996, was justified in the early 1990s, first, because threats haddeclined, second, because many new weapons ordered in the 1980s had just enteredthe force, and, finally, because older weapons were retired first as the size of theforce declined, so the average age of equipment was dropping even without newacquisitions. But the holiday would have to end soon, said Perry, in order to avoidcreating an unaffordable "bow wave" of costs in the future to replace large numbersof rapidly aging weapons. At the time, the Joint Chiefs set $60 billion per year for procurement by FY1998 as the goal, a target reached in the Clinton Administration's final budget for FY2001. In the years since Perry laid out the argument, however, the debate has shifted. Nowthe issue, at least among defense advocates, is no longer whether $60 billion a yearis adequate, but rather, how much more than $60 billion is needed to meetmodernization needs. Much of the discussion has been shaped by a series of studies of the amounts needed to sustain a "steady state" procurement rate for major weapons: i.e., howmuch is needed to replace the existing stock of weapons with more modern systemsas weapons reach the ends of their planned service lives. A study by the Center forStrategic and International Studies estimated $160 billion a year, in FY2000 prices,if strategic nuclear weapons are included in the calculus, and $110 billion a yearwithout strategic modernization. The Congressional Budget Office made its ownestimate of about $90 billion a year, and the Center for Strategic and BudgetaryAssessments said $80 billion, both also in FY2000 prices. Most recently theChairman of the Joint Chiefs, General Richard Myers, said that a Joint Staff study,not released for public review, concluded that $100-110 billion a year, in FY2001prices, is needed. (3) After adjusting for inflation, the$99 billion projected forprocurement in FY2007 does not quite reach CBO estimates of steady-stateprocurement requirements: $99 billion in FY2007 prices equals about $83 billion inFY2000 prices. Many members of the congressional defense committees have expressed concern that the Administration's budget plan - both in FY2003 and in future years- does not appear sufficient, despite large increases in the defense total, to financeplanned weapons procurement programs. In the FY2003 request, committeemembers have been especially critical of the shipbuilding budget, which calls forprocuring just five new ships. Assuming a 35-year service life for Navy ships, itwould take an average of 8.5 new ships per year to maintain a force of 300 ships inthe fleet. Only in the later years of the FY2003-2007 defense plan does theshipbuilding rate reach the nominal "steady-state" replacement rate. Some argue thathelicopters, munitions, and other programs are inadequately funded as well. Most recently there have been reports that DOD has been discussing how to cope with a substantial "bow wave" of procurement costs in FY2007 and beyond. Analytically, a "bow wave" refers to the normal pattern of funding for weaponsprograms. The annual budget for any major acquisition program tends to grow as asystem moves from technology development to full scale engineering developmentto production. Then the acquisition cost will decline again as production windsdown. Thus the shape of a bow wave. A very large cumulative bow wave candevelop if many new systems are scheduled to begin full production at about thesame time. This situation now appears to be facing the Defense Department at the end of the decade, when a number of new systems will be in production, including the F-22and F-35 (Joint Strike Fighter) aircraft, the Comanche helicopter, and several newNavy ships. According to numerous press accounts, the Defense Department hasbeen considering how to cope with the substantial projected shortfalls in procurementfunding. The Navy, reportedly, is proposing to cut back substantially on plannedprocurement of F-35 fighters, and Secretary of Defense Rumsfeld is reportedlyconsidering terminating several weapons programs - perhaps some in addition to theCrusader self-propelled artillery system - in order to safeguard future funds for more"transformational" weapons (see below). During the presidential election campaign, then-candidate George Bush strongly endorsed the notion of a defense transformation to meet the needs of a dramaticallynew security environment. Both President Bush and Secretary of Defense Rumsfeldhave reaffirmed their commitment to transformation in major policy speeches inrecent months. (4) Defense transformation has beendefined in diverse ways, however,and the Administration has been under some pressure from Congress to articulate itsdefinition more fully. Most recently, using categories of transformation laid out in the Quadrennial Defense Review that was released last September, (5) Deputy Secretary of Defense PaulWolfowitz gave a rough estimate of the amount of money requested fortransformation-related initiatives in FY2003 and future years. In testimony beforethe Senate Armed Services Committee on April 9, (6) Wolfowitz said The six specific transformation goals identified in the QDR are first, to defend the U.S. homeland and other bases ofoperation and defeat nuclear, biological and chemical weapons and their means ofdelivery. Second, to deny enemy sanctuary, depriving them of the ability to run orhide, any time, any where. Third, to project and sustain forces in distant theaters inthe face of access denial threats. Fourth, to conduct effective operations in space.Fifth, to conduct effective information operations. And sixth, to leverage ourinformation technology to give our joint forces a common operationalpicture. In all, Wolfowitz said, about $21 billion is requested in FY2003 for such transformational goals, and $136 billion is planned over the next 5 years. Table C1. Congressional Action on Defense Authorization by Title (budget authority in billions of dollars) Sources: H.Rept. 107-436 ; S.Rept. 107-151 ; H.Rept. 107-772 . Note: DERF allocation as shown by the Senate Armed Services Committee in S.Rept. 107-151 . Table C2. Congressional Action on Defense Appropriations by Title (budget authority in billions of dollars) Sources: H.Rept. 107-532 , S.Rept. 107-213 , H.Rept. 107-732 . Note: DERF request as shown in the appropriations conference report is reduced by $716.849 million that is transferred to military construction appropriations. DERF allocation is as shown bythe Senate Armed Services Committee in S.Rept. 107-151 . Table C3: Summary of Congressional Action on Defense and Military Construction Appropriations (budget authority in millions of dollars) Source: Summary tables of appropriations conference reports in Congressional Record , October10, 2002, pp. 7807 and 7816.

Congress has completed action on the FY2003 defense authorization ( H.R. 4546 ) and defense appropriations ( H.R. 5010 ) bills. The President signed the FY2003 defenseappropriations act into law on October 23 ( P.L. 107-248 ), and he signed the FY2003 defenseauthorization act into law on December 2 ( P.L. 107-314 ). In addition, Congress has approved, andthe President has signed, the military construction appropriations bill ( H.R. 5011 , P.L.107-249 ). The House and Senate Appropriations Committees did not, however, take up bills toprovide $10 billion that the Administration requested as a contingency fund for costs ofcounter-terrorism operations in FY2003. The conference agreement on the defense appropriations bill establishes final funding levels for key defense programs, and it resolves a number of matters that were at issue during the year. Asthe Administration requested, the bill eliminates funds for development of the Crusader artillerysystem and instead provides increased funding for other Army indirect fire programs. Confereesadded funds to develop an alternative tube artillery system to be deployed by 2008. Earlier, theconference report on the FY2002 supplemental appropriations bill ( H.R. 4775 , P.L.107-206 ) directed the Army to enter into a follow-on contract to use Crusader technology indeveloping such a system. Conferees on the defense authorization bill reached agreement on several contentious issues, though some may recur next year. The key issue, which held up the conference agreement until afterthe mid-term elections, was whether to permit concurrent receipt of military retired pay and veteran'sdisability benefits. The Senate authorization bill included a provision to allow immediate, fullconcurrent receipt, while the House bill phased in a program to allow concurrent receipt for thosewith 60% or greater disabilities. The White House threatened to veto a bill that included eitherprovision. The conference agreement provides a new benefit, paid by the Defense Department, tomilitary retirees who have a disability determined to be caused by a combat or combat-related injury. The conference agreement on the defense authorization also resolved a number of other issues. The agreement includes amended versions of Senate provisions tightening oversight of missiledefense programs; it drops a House provision concerning application of the Endangered Species Actto defense facilities, but includes a provision concerning the Migratory Bird Treaty Act; it prohibitsFY2003 funds from being used to develop nuclear armed interceptors for missile defense; it providesfunds for developing a nuclear-earth penetrator warhead, but only after the Defense Departmentsubmits a report on the project that includes a review of non-nuclear alternatives; and it drops aSenate provision permitting service members to have access to abortions at military facilitiesoverseas. Key Policy Staff

C ongress has created numerous federal agencies charged with carrying out a broad array of delegated statutory responsibilities. Agencies administer their delegated authority in a variety of ways, including by promulgating rules and regulations that bind the public, advising regulated parties of an agency's enforcement priorities via guidance documents, bringing enforcement actions against private individuals or corporations for violation of a statute or regulation, and determining whether to grant a benefit or license. These agency actions, in turn, often generate questions about the legitimacy of an agency's decision. Individuals affected by an agency decision can sometimes challenge that action in federal court as violating a legal requirement. The U.S. Constitution vests the judicial power in the Supreme Court and any inferior courts established by Congress, limiting the power of federal courts to the context of a of a "case" or "controversy." Pursuant to this authority, Congress has established federal courts below the Supreme Court of the United States to hear a variety of cases, both criminal and civil. Federal legislation authorizes courts to adjudicate challenges to actions taken by government officials and agencies in a variety of contexts. Federal courts are, however, courts of limited jurisdiction—they must adhere to limits placed on their authority by Congress and the Constitution. The circumstances under which a federal court will review the actions of a U.S. government agency or official thus involve complicated questions of statutory and constitutional law. This report offers a brief overview of some of the most important issues arising when individuals bring suit in federal court to challenge agency actions. The Administrative Procedure Act (APA) is perhaps the most prominent modern vehicle for challenging the actions of a federal agency. Enacted in 1946 following the New Deal era, during which the size of the administrative state was expanded, the statute represents the first government-wide attempt to "systematize" requirements on the actions of federal agencies. The APA functions as the most prominent authorization of judicial review of agency action, including for agency compliance with substantive legal requirements—such as an agency's "organic," or authorizing, statute. In addition, the APA imposes various procedural requirements on federal agencies and authorizes courts to review agency's compliance with these requirements. Accordingly, the focus of this report is largely centered on judicial review of agency actions under the APA. The report opens with a discussion of the circumstances in which federal courts are empowered to review agency actions and follows with a look at the scope of review authorized by the APA. It then continues by describing the mechanics of a federal court's review of an agency's statutory authority, as well as the standards employed in the review of an agency's discretionary decisions. The report concludes with a brief examination of judicial review of agency compliance with statutorily prescribed procedural requirements. Not every agency action is necessarily subject to judicial review. Whether judicial review of agency action is available in federal court turns on a number of factors, including constitutional, prudential, and statutory considerations. Courts must possess statutory jurisdiction to adjudicate a lawsuit, and plaintiffs must generally rely on a cause of action that allows a court to grant legal relief. Disputes must also present "cases" or "controversies" that satisfy the requirements of Article III of the Constitution. Finally, a suit must be presented to a court at the proper time for judicial review. The federal courts are courts of limited jurisdiction. Their authority is restricted to matters entrusted to them by Congress. Consequently, in order to adjudicate a case, a statute must bestow subject matter jurisdiction in a federal court over a particular claim. In addition, suits against the United States are barred absent a statutory waiver of sovereign immunity. As a threshold matter, courts must possess subject matter jurisdiction over a claim to hear a case. Subject matter jurisdiction refers to a court's "power" to hear a case. The Supreme Court has held that the APA itself does not provide subject matter jurisdiction. In other words, when bringing suit under the APA, plaintiffs must rely on a separate statutory provision to establish jurisdiction in court. A variety of statutes authorize jurisdiction in particular courts to review certain types of claims. For example, certain statutes permit review of particular agency actions in the U.S. Courts of Appeals, and some statutes may specify that review occurs in a particular federal appellate court. In addition, 28 U.S.C. Section 1331 bestows upon federal district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." This grant of subject matter jurisdiction authorizes federal courts to hear claims arising under the APA as well as "nonstatutory" and constitutional claims. In addition to the requirement that a court exercise jurisdiction pursuant to the terms of a federal statute before adjudicating a case, the doctrine of sovereign immunity shields the United States from suits unless immunity has been waived by statute. Absent such a waiver, federal courts lack jurisdiction over lawsuits against the United States. A waiver of sovereign immunity will not be implied from legislative history or the background context of a statute; rather, it must be clearly expressed in the statutory text. Three primary statutes waive sovereign immunity, thereby permitting lawsuits against the United States in federal court under certain circumstances. First, the APA was amended in 1976 to permit individuals aggrieved by agency action to bring suit in federal court against the United States and government employees in their official capacity. However, this statutory waiver does not authorize money damages as a remedy. Second, the Federal Tort Claims Act (FTCA) permits suits to be heard in federal court for certain torts committed by agency employees in the course of their employment. In these cases, the United States is substituted as a defendant for the employee who allegedly committed the tort. Unlike the APA, the FTCA permits money damages as a remedy. Third, the Tucker Act permits suits against the United States for breach of contract and certain other monetary claims that do not arise in tort. Assuming a federal court has jurisdiction over a suit challenging an agency action, in order to challenge the actions of a federal agency, a plaintiff must also demonstrate that he or she posesses a legal right to seek judicial redress. A plaintiff will have a "cause of action" if he or she "is a member of the class of litigants that may, as a matter of law, appropriately invoke the power of the court." Various statutes explicitly provide such causes of action to enforce legal requirements against federal agencies. Absent a specific statutory framework creating a cause of action, the APA provides a general cause of action for individuals aggrieved by a "final agency action" if "there is no other adequate remedy in a court." There are other, less common bases for challenges to agency actions. In very limited situations, even lacking an express statutory cause of action, individuals may seek "nonstatutory" review of a agency action that is "ultra vires." In addition, when a federal official owes a plaintiff a "clear nondiscretionary duty," federal district courts and appellate courts may issue mandamus relief, which is an order compelling an official "to perform a duty owed to the plaintiff." However, the remedy is to be invoked only in "extraordinary circumstances" when "no adequate alternative remedy exists." Finally, the Supreme Court in Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics recognized a common law cause of action against federal officers for damages resulting from violations of constitutional rights. This remedy does not apply to federal agencies. In addition to statutory prerequisites for judicial review, certain constitutional and prudential considerations limit when courts will entertain a suit in a case challenging agency action. Plaintiffs must demonstrate that they have standing to challenge a federal agency's action and must also bring a lawsuit at the appropriate time. Article III of the Constitution defines the proper scope of the federal court jurisdiction as limited to adjudicating "cases" and "controversies." The Supreme Court has articulated several legal doctrines emanating from Article III, as well as various prudential considerations, that further limit the circumstances under which the federal courts will adjudicate disputes respecting federal agencies, such as standing, ripeness, and mootness. In particular, the doctrine of standing is a frequent barrier to plaintiffs challenging agency action. The Supreme Court has noted the important separation of powers principles that underlie the doctrine, emphasizing that while the judiciary is authorized to say what the law is, invalidation of congressional legislation or actions of the executive branch should not be taken lightly. Courts must, of course, vindicate individual rights, but the judicial power may not be harnessed into a monitoring role over federal agencies that should be conducted by Congress. In order to satisfy the constitutional requirement of standing, a plaintiff must "demonstrate that he has suffered 'injury in fact,' that the injury is 'fairly traceable' to the actions of the defendant, and that the injury will likely be redressed by a favorable decision." A plaintiff must assert more than a generalized interest in governance shared by all citizens and instead must have suffered an injury in fact or invasion of a legally protected interest that is (1) concrete and particularized and (2) actual or imminent. In addition, a "causal connection" between the alleged injury and challenged conduct is required, such that the injury is "fairly traceable to the challenged action of the defendant." Finally, it must be likely, rather than "merely speculative, that the injury will be redressed by a favorable decision." The doctrine of standing often operates to bar suits challenging agency action, for example, when plaintiffs seek to vindicate the public interest but have not suffered a concrete injury traceable to an agency action. A variety of factors also influence when it is proper for a federal court to adjudicate a challenge to agency action. Foremost among these are statutory deadlines and the doctrines of ripeness, mootness, and exhaustion. Many statutes authorizing judicial review of particular agency actions also impose filing deadlines for such challenges. Absent a specific statutory deadline, civil actions against the United States must be filed within six years of when the claim accrued or originated. A controversy must also be "ripe" for a federal court decision. The doctrine of ripeness derives from Article III limitations on the judiciary's authority, as well as prudential considerations. By avoiding the adjudication of suits prematurely, the doctrine aims to protect courts "from entangling themselves in abstract disagreements over administrative policies, and also ... protect[s] the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." In deciding whether a case is ripe, a court considers whether the issues presented in the case are ready for a judicial decision and whether a delay would cause hardship to the parties in the case. For example, a court may require a party to show that an agency's action has "adverse effects of a strictly legal kind" or requires the party to adjust their behavior in some way. In the context of a challenge to an agency rule, for example, the promulgation of a regulation can make a judicial challenge sufficiently ripe when the rule requires parties to comply with new restrictions or risk serious penalties. In contrast, if a regulation does not require parties to alter their day-to-day conduct, judicial review may be more appropriate in the future after application of a rule to parties in a concrete way. Likewise, if "further factual development would 'significantly advance [a court's] ability to deal with the legal issues presented,'" the issue may not be ripe for review. Federal courts may also decline to hear a case if it is moot. A case is moot if the controversy initially existing at the time the lawsuit was filed is no longer "live" due to a change in the law or in the status of the parties involved; an act of one of the parties that dissolves the dispute can render the case moot as well. Finally, a court might deny review because a party failed to exhaust its administrative remedies before suing in federal court. Among other things, the doctrine of exhaustion seeks to avoid unnecessary litigation by requiring the full development of a record before a court examines a case. However, the Supreme Court has held that in suits brought under the APA, federal courts lack the power to require parties to exhaust their administrative remedies if no statute or agency rule requires such exhaustion. Nonetheless, where the APA does not apply, exhaustion requirements could preclude immediate challenges to federal agency action. The APA permits judicial review of final agency actions. However, the statute sets important limits on particular matters and entities that qualify for judicial examination under its terms. As discussed above, the APA contains a waiver of the sovereign immunity of the United States under certain circumstances, providing a cause of action for individuals aggrieved by agency actions to seek judicial review of an agency's decision. The APA directs reviewing courts to "compel agency action unlawfully withheld or unreasonably delayed" and to "hold unlawful and set aside agency action, findings, and conclusions" that are: (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title [concerning formal rulemaking and adjudicatory proceedings] or otherwise reviewed on the record of an agency hearing provided by statute; or (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court. As a result, courts are generally authorized to direct an agency to comply with the law and can invalidate actions that are inconsistent with the agency's statutory authority. Courts may also review an agency's compliance with statutory procedural requirements, such as notice-and-comment rulemaking procedures imposed by other provisions of the APA. In addition, a court may examine an agency's discretionary decisions, such as a denial of a rulemaking petition, and invalidate actions that are arbitrary or capricious. Judicial review under the APA is limited to examining final agency action that is not committed to agency discretion or precluded from review by a different statute. Consequently, defining terms such as "agency," "action," "final," and "committed to agency discretion" is important in understanding when courts will hear a challenge to the decisions of a federal agency. The scope of review authorized by the APA is limited. The statute imposes restrictions on the types of actions courts may review. For example, a federal court is limited to reviewing the actions of a federal agency , which is defined as an "authority of the United States." This definition generally includes all executive branch agencies, including the independent regulatory agencies, but specifically excludes Congress and the judiciary, as well as courts martial, military commissions, and military authorities in times of war or in the field. Notably, the Supreme Court has held that the definition of agency in the APA does not encompass the President, although lower courts had held that entities within the Executive Office of the President may qualify as agencies. Review under the APA is also limited to agency action . Agency "action" is defined as "the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act." Courts thus may review a wide variety of issues, including agency rules, denials of licenses and permits, and sanctions issued against private parties. However, it is important to note that this definition is not comprehensive—courts will deny review if the agency's challenged conduct does not fit within the statutory definition. For example, some courts have denied requests for review of agency publications and press releases, as those documents do not necessarily qualify as rules, orders, or sanctions within the meaning of the APA. Review under the APA is also limited to final agency action. The Supreme Court has articulated two requirements for an agency's action to qualify as final. First, the action may not be tentative or interlocutory in nature, but must represent the "'consummation' of the agency's decisionmaking process." Second, it must be an action "by which 'rights or obligations have been determined,' or from which 'legal consequences will flow.'" This principle limits the judicial review of a variety of agency "actions" that do not have a final, legally binding consequence. For example, this restriction may bar judicial review of an agency's recommendation to the President to take certain actions, at least as long as that recommendation does not legally bind the President. The finality requirement can also, at times, serve to shield certain agency guidance documents from judicial review if such guidance does not legally bind the public. On the other hand, individuals are not necessarily required to wait for an enforcement action to be brought against them to challenge an agency's determination. Some actions, such as the issuance of binding regulations, may qualify as final agency action that is subject to judicial review before an enforcement action is brought against a third party. Judicial review of agency action under the APA is unavailable in two important situations: (1) when a statute precludes review and (2) when the agency's action is legally comitted to an agency's discretion. The Supreme Court has interpreted the APA as establishing a "basic presumption of judicial review" of agency decisions absent another statute that clearly precludes review in federal court. Some statutes expressly preclude judicial review of agency actions. In other situations, review may be precluded by implication. Determining whether another statute precludes review under the APA may include an examination of that statute's "express language[,] ... the structure of the overall statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved." In some cases, judicial review may be precluded because it would contradict congressional intent, such as by disrupting or impeding the intended swift operation of a complex regulatory framework. However, in the context of lawsuits alleging constitutional violations, courts have read preclusion provisions narrowly to preserve a federal court's role of reviewing constitutional claims. Finally, review under the APA is unavailable if the agency's action is legally committed to the agency's discretion. The Supreme Court has noted that an agency's action is committed to its discretion when a statute's terms are so broad that there simply is "no law to apply" in evaluating its requirements. In other words, if "the statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion," then judicial review is unavailable. A prominent example of a matter usually committed to an agency's discretion is the decision not to initiate an enforcement action against a third party. The Supreme Court has noted that the decision to initiate an enforcement action involves a "complicated balancing of a number of factors which are peculiarly within [an agency's] expertise" and is "generally committed to an agency's absolute discretion." Similarly, the Court has held that an agency's decision to allocate funds from a lump-sum appropriation is committed to an agency's discretion, because the whole purpose of such an appropriation is to grant the agency flexibility to spend funds. Likewise, the Court has held that the decision by the Director of the Central Intelligence Agency (CIA) to discharge an employee for reasons in the "interests of the United States" is committed to agency discretion, a ruling based in part on the overall structure of the relevant statute directing the CIA to gather and protect intelligence sources. Once a court finds that it has jurisdiction to hear a challenge to an agency's action, one relevant consideration will be whether the challenged action complies with the law. The APA authorizes courts to "set aside" agency action that is "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right" or otherwise "not in accordance with law." Courts thus must often interpret the meaning of statutory provisions to determine if the agency's actions accord with its statutory authority or contradict a legal mandate. This means that courts will invalidate agency actions that contravene the meaning of a governing statute. Courts have developed a number of doctrinal tests for conducting this inquiry, with varying amounts of judicial "deference" given to an agency's interpretation of the relevant statute. When reviewing a challenge to an agency's interpretation of a statute that it administers and has the force of law, courts apply the two-step framework outlined by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council . Pursuant to that rubric, at "step one," courts examine "whether Congress has directly spoken to the precise question at issue." If so, "that is the end of the matter," and courts must enforce the "unambiguously expressed intent of Congress." In the case of silence or ambiguity in the statute, however, "step two" requires courts to defer to a reasonable agency interpretation, even if the court would have otherwise reached a contrary conclusion. This deference is appropriate in certain circumstances because Congress has delegated "authority to the agency to elucidate a specific provision of the statute" and an agency may possess significant expertise concerning the law's administration. Some commentators have noted that agency statutory interpretations are more likely to be upheld if the doctrine applies, particulary if the court reaches Chevron 's second step. In addition to sanctioning an agency interpretation that may depart from a court's reading of a statute, the Chevron doctrine permits agencies to shift their interpretations over time, provided that its new interpretation is a reasonable construction of the statute. While a judicial finding that Congress clearly spoke to an issue "displaces a contrary agency construction," a finding of ambiguity, in contrast, may permit an agency to alter its interpretation as a result of changed circumstances. Chevron does not apply to every agency interpretation of a statute. The Supreme Court has noted that the Chevron doctrine applies where Congress has delegated to the agency the authority to "speak with the force of law" and the relevant interpretation was "promulgated in the exercise of that authority." An important factor in determining whether the doctrine applies—an inquiry sometimes referred to as Chevron "step zero" —is the formality of the procedures used when issuing the interpretation. The Court has explained that if an agency has been conferred the power to engage in formal adjudications or notice-and-comment rulemaking, this likely evidences congressional intent to delegate the authority to speak with the force of law. In contrast, "interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law," are generally not accorded Chevron deference . However, an agency's interpretation may sometimes warrant Chevron deference in circumstances with less procedural formality than that used in notice-and-comment rulemaking. Courts may examine the "interstitial nature" of the issue, the agency's expertise, "the importance of the question to the administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time" to determine whether Chevron supplies the appropriate lens through which to review the agency's interpretation. In addition, the Court has declined to apply Chevron deference in certain cases that present "extraordinary" questions. For example, in King v. Burwell , the Court upheld the Internal Revenue Service's determination that the Affordable Care Act "allows tax credits for insurance purchased on any Exchange created under the Act." The Court noted that Chevron deference is predicated on the theory that a statute's ambiguity constitutes an implicit delegation from Congress to the agency to fill in statutory gaps. But the Court noted that whether such tax credits were available was a question of "deep 'economic and political significance'" that was "central to th[e] statutory scheme." If Congress had wanted to delegate that determination to the agency, the Court explained, it would have done so explicitly. Because the statute did not expressly delegate that decision to the agency, the Court gave no deference to the agency's interpretation and analyzed the statute independently of the agency's position. The Court's opinion reaffirms a principle enunciated in a prior case, FDA v. Brown & Williamson . In that case, the Food and Drug Administration (FDA), after years of "having expressly disavowed any such authority since its inception," asserted for the first time in 1996 jurisdiction to regulate tobacco products. In reviewing the agency's interpretation, the Court noted that "[i]n extraordinary cases ... there may be reason to hesitate before concluding that Congress has intended" to implicitly delegate authority to an agency to fill in statutory gaps. The Court noted that the FDA asserted jurisdiction to regulate an industry constituting a significant portion of the American economy and concluded that "Congress could not have intended to delegate a decision of such economic and political significance to an agency" without doing so expressly. When Chevron does not apply in a case, courts may give statutory interpretations by agencies less deference. This is not to say, however, that agency interpretations necessarily receive no weight at all. The Court indicated in Skidmore v. Swift & Co . that when an agency interprets a "highly detailed" "regulatory scheme" and the agency has "the benefit of specialized experience," then the court accords the agency's interpretation "a respect proportional to its 'power to persuade.'" In other words, a court applying Skidmore deference accords an agency's interpretation of a statute a certain amount of respect or weight correlated with the strength of the agency's reasoning. Courts will give consideration to the agency's interpretation, the "weight" of which "will depend upon the thoroughness evident in [the agency's] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade." At bottom, Skidmore deference recognizes an agency's "power to persuade" based on its "body of experience and informed judgment," but it does not require that agency interpretations be "controlling on the courts." Finally, when courts review the legal interpretations of an agency regarding its compliance with statutes it does not administer or the Constitution, such review can be more stringent: Courts sometimes review such matters de novo, or without any deference at all to the agency's interpretation. For example, judicial review of an agency's compliance with the APA's procedural provisions, certain Freedom of Information Act provisions, and the Constitution may be conducted de novo because those legal requirements are not entrusted to the discretion of any particular agency. Courts will also examine an agency's interpretation of its own regulations. Just as ambiguities arise in statutory provisions that agencies implement, similar uncertainties sometimes accompany agency regulations. Supreme Court doctrine, reiterated in Auer v. Robbins , instructs courts to defer to an agency's interpretation of its own regulations unless the agency's position is "plainly erroneous." Functionally, " Auer deference" to an agency's interpretation of a regulation seems to operate in a similar fashion as does Chevron deference. So long as the agency's interpretation of its regulation is reasonable, courts must give that interpretation "controlling weight." Importantly, Auer deference can extend to a broader scope of agency interpretations than does Chevron deference, including positions developed without formal procedures, such as statements made during the course of litigation. That said, Auer deference is not applicable to all agency interpretations of a regulation. For example, if an agency regulation simply "parrot[s]" or "paraphrase[s]" the relevant statutory language, then the agency possesses no special authority to interpret the regulation. Auer deference also does not apply "when the agency's interpretation is plainly erroneous or inconsistent with the regulation." However, whether an inconsistent agency interpretation of its own regulation receives Auer deference appears to be unresolved. In recent years, a number of Justices signaled some disapproval of the doctrine and a willingness to reconsider the practice in an appropriate case. However, the only evidence of Auer 's potential demise emerges primarily from concurring or dissenting opinions. Consequently, while some Justices certainly do wish to reconsider the doctrine, it is unclear whether a majority might be assembled in the future to cabin the scope of Auer deference or eliminate it altogether. In addition to statutory review of agency actions, another important basis for judicial review under the APA concerns an agency's factual determinations and certain discretionary decisions. Courts are authorized to "hold unlawful and set aside agency actions, findings, and conclusions found to be arbitrary, capricious, [or] an abuse of discretion." This "catch-all" provision of the APA applies to factual determinations made during "informal" proceedings, such as notice-and-comment rulemaking, and most other discretionary determinations an agency makes. The seminal Supreme Court decision elaborating this standard, Motor Vehicle Manufacturers Association v . State Farm Auto Mutual Insurance Co ., explains that the scope of this review is "narrow," as "a court is not to substitute its judgment for that of the agency." However, courts will invalidate agency determinations that fail to "examine the relevant data and articulate a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.'" When reviewing that determination, courts must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." In general, the Court noted, an agency decision is arbitrary if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Given the broad scope of federal agency actions that are subject to judicial review, whether an agency decision is arbitrary and capricious is largely a situation-specific question. Importantly, the Supreme Court has clarified that it is not arbitrary and capricious for agencies to change their policies. In FCC v. Fox Television Stations, Inc. , the Supreme Court held that review under the arbitrary-and-capricious standard is not heightened or more stringent simply because an agency's action alters its prior policy. An agency must acknowledge such change when it occurs, but so long as the agency's action is permissible under its authorizing statute and supported by good reasons, agencies are not required to show that new policies are better than old ones. In other words, an agency may be authorized to pursue a range of policy outcomes under its statutory authorization, and courts may not scrutinize such change more strictly than other agency decisions. In general, the arbitrary-and-capricious standard requires an agency to demonstrate that it engaged in reasoned decisionmaking when reaching its determination. Importantly, courts "must judge the propriety of [an agency's] action solely by the grounds invoked by the agency," and they may not create their own justifications to support an agency's decision beyond the reasons presented by the agency. Further, courts require agencies to provide the "essential facts upon which the administrative decision was based" and explain what justifies their determinations with actual evidence beyond a "conclusory statement." An agency's failure to provide an adequate explanation for its decision will typically result in remand or invalidation of its decision. Among other things, this requirement plays an important role in judicial review of agency regulations. Thus, an agency's failure to explain its reasoning in response to significant comments raised during notice-and-comment rulemaking will be considered arbitrary and capricious. Beyond those circumstances in which courts find that an agency failed to provide an adequate explanation for its decision, courts may also find the decision itself to be arbitrary and capricious. For example, courts will invalidate agency actions that are the product of "illogical" or inconsistent reasoning. In addition, courts will find an agency action to be arbitrary and capricious if the agency simply failed to consider an important factor relevant to its action, such as the policy effects of its decision or vital aspects of the problem in the issue before it. Likewise, courts may invalidate or remand a determination to the agency if the agency decision failed to consider regulatory alternatives that would similarly serve the agency's goals or provide "less restrictive, yet easily administered" options. It bears mention that courts are particularly deferential to agencies' expertise when making predictive judgments based on scientific or technical determinations. Because of the wide range of statutory authorities and agency missions, what counts as a relevant factor that must be considered by an agency when reaching a decision can be context specific. An illustrative case is Judalong v. Holder , where the Supreme Court found the Board of Immigration Appeals' (BIA's) policy for deciding whether resident aliens may apply for relief from removal to be arbitrary and capricious. The Court noted that the relevant factors for the BIA to consider were the "purposes of the immigration laws or the appropriate operation of the immigration system." Because the agency failed to root its determination in consideration of such factors and instead based its policy on an "irrelevant comparison between statutory provisions" unconnected to the merits of a removal decision or the administration of immigration laws, the Court held that the agency's determination was arbitrary and capricious. Other examples of agency actions found to be arbitrary and capricious include failing to consider circumstances that "warrant different treatment for different parties"; reaching a conclusion that contradicts the underlying record; justifying "its decision on a premise the agency itself has already planned to disrupt"; taking rulemaking action that undercuts another simultaneous rulemaking by the same agency; "fail[ing] to provide any coherent explanation for its decision"; contradicting the "expert record evidence" without explanation; failing to consider a relevant and important factor in making a decision; issuing a rule that was based on "pure political compromise, not reasoned scientific endeavor"; failing to "exercise sufficiently independent judgement" by deferring to private parties; and utilizing a model for studying risk that was inconsistent with the underlying data. In addition to authorizing judicial review of agency actions, the APA also imposes various procedural requirements that agencies must follow depending on the type of agency action. The APA makes two important distinctions in categorizing the actions of an agency. First, it distinguishes between rulemaking—the agency's process for promulgating and repealing a rule —and adjudications—the agency's "process for the formulation of an order." A rule applies generally to a group of individuals or the public, while an adjudication is an individualized decision. Second, the APA distinguishes between formal and informal proceedings. Formal proceedings are subject to more stringent procedures than informal proceedings and are required when the agency's decision must be made "on the record." According to the APA, every agency action falls into these categories, resulting in four types of agency decisions. First, although such instances are rare, an agency may conduct a "formal rulemaking," in which it provides a formal, public hearing before promulgating a regulation. Second, and much more commonly, an agency may engage in informal rulemaking, in which it offers the public notice and an opportunity to comment on the proposed rule. Third, an agency may conduct a "formal adjudication" in which it provides a trial-type hearing for a particular individual before an administrative law judge. Finally, an agency may make a decision subject to the "informal adjudication" procedures of the APA. Agencies enjoy substantial discretion under this standard to formulate their own procedures, subject to the requirements of the Due Process Clause of the Fifth Amendment. These categories of agency actions are shown in Table 1 . Importantly, agency actions can be challenged for failing to comply with "procedure[s] required by law." Consequently, assuming that a court is otherwise authorized to adjudicate a case, individuals aggrieved by agency conduct may challenge an agency's failure to comply with the procedures mandated by the APA or another statute. For example, before engaging in "informal" rulemaking under Section 553 of the APA, agencies must provide the public with advance notice and an opportunity to meaningfully comment on the proposed rule. Such regulations are often referred to as "legislative rules." However, "nonlegislative" rules, such as interpretive rules and policy statements, are exempt from this requirement. Federal courts will thus remand or invalidate an agency document issued without notice-and-comment procedures if a court concludes that it qualifies as a legislative rule. Courts doing so will sometimes review the issue de novo, refusing to grant any deference to the agency because Congress has not granted the agency authority to administer the APA. In addition, the APA's "good cause" provision permits agencies to bypass these requirements if compliance would be "impracticable, unnecessary, or contrary to the public interest." For example, in 2004, the D.C. Circuit upheld on security grounds the Federal Aviation Administration's rule, promulgated without notice and comment, covering the suspension and revocation of pilot certificates. The court accepted the agency's contention that the regulation was necessary to protect the public against security threats, ruling that the "legitimate concern over the threat of further terrorist acts involving aircraft in the aftermath of September 11, 2001," supported the good cause finding. Nonetheless, the appropriate standard of review for determining what constitutes "good cause" under the APA is unsettled. Similarly, parties may challenge the procedures used in agency adjudications. When conducting "formal" or "on the record" adjudications, agencies must provide trial-type procedures during the hearing before the agency. While agencies are generally free to choose between utilizing rulemaking or adjudications to set policy, certain legal requirements nevertheless apply to adjudications. Formal adjudications require trial-like procedures and must be conducted before an administrative law judge (ALJ) or agency head; informal adjudications have fewer procedural requirements and need not take place before an ALJ. An agency's choice to adjudicate an issue with informal procedures rather than formal ones may be challenged as violating the APA. Importantly, the Supreme Court has consistently ruled that courts may not add to the procedural requirements imposed on agencies in the APA. Agencies enjoy discretion to develop and apply their own procedures that supplement the APA's requirements, but courts lack authority to impose additional requirements upon agencies. In the past, lower federal courts had required agencies to adopt additional procedures not spelled out in the text of the APA. In the context of informal rulemaking, the Supreme Court's 1978 decision in Vermont Yankee Nuclear Power Corporation v. Natural Resource Defense Council, Inc . ruled that courts may not require agencies to utilize additional procedures beyond those mandated by the APA's notice-and-comment requirements. Likewise, the Court's 2015 decision in Perez v. Mortgage Bankers Association held that courts may not require agencies to undergo notice-and-comment rulemaking if the APA exempts the agency action from those requirements. In other words, the APA "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." The Constitution confers Congress with expansive authority to define the jurisdiction of federal courts, determine the types of agency actions subject to judicial review, and subject agencies to certain procedural requirements when implementing their statutory authority. Important constitutional limits also determine when a federal court may render a decision. The circumstances in which federal courts will review the actions of agencies are thus informed by complicated statutory, constitutional, and prudential considerations. Perhaps the most prominent of such statutes, the APA, subjects a broad scope of agency decisions to judicial review, subject to important limitations. Judicial interpretation of the APA's provisions consequently plays a central role in determining what types of agency actions are subject to review in federal court. These developments are, nonetheless, subject to future modification by Congress, which enjoys authority to alter the APA or any other statute to shape the contours of judicial review of agency action.

The U.S. Constitution vests the judicial power in the Supreme Court and any inferior courts established by Congress, limiting the power of federal courts to the context of "cases" or "controversies." Pursuant to constitutional and statutory requirements, courts may hear challenges to the actions of federal agencies in certain situations. This report offers a brief overview of important considerations when individuals bring a lawsuit in federal court to challenge agency actions, with a particular focus on the type of review authorized by the Administrative Procedure Act (APA), perhaps the most prominent modern vehicle for challenging the actions of a federal agency. Whether judicial review of agency action is available in federal court turns on a number of factors. Courts must possess statutory jurisdiction to adjudicate a lawsuit, and plaintiffs must generally rely on a cause of action that allows a court to grant legal relief. Disputes must also present "cases" or "controversies" that satisfy the requirements of Article III of the Constitution. Finally, a suit must be presented to a court at the proper time for judicial review. The APA directs reviewing courts to "compel agency action unlawfully withheld or unreasonably delayed" and to "hold unlawful and set aside agency action, findings, and conclusions" that violate the law or are otherwise "arbitrary and capricious." This review is limited, however, to "final agency action" that is not precluded from review by another statute or legally committed to the agency's discretion. Pursuant to this mandate, courts are authorized to review agency action in a number of contexts. First, courts will examine the statutory authority for an agency's action and will invalidate agency choices that exceed these limits. In addition, a court may examine an agency's discretionary decisions, or discrete actions with legal consequences for the public. Finally, courts may also review an agency's compliance with statutory procedural requirements, such as the notice-and-comment rulemaking procedures imposed by the APA. This report provides a broad overview of the issues that may be relevant to any number of present and future challenges to agency action in federal court.

The European Union (EU) is an important partner or interlocutor of the United States on a large number of global political and economic issues. The EU is also a complex, multi-layered entity whose structure and institutional dynamics are not always clearly understood in Washington, DC (or in Europe, for that matter). Some Members of the U.S. Congress and other U.S. officials regularly meet with their counterparts from EU institutions and national governments of EU member countries. Just as many Europeans are admittedly unclear about the role of the Congress in U.S. foreign policy, Americans often express confusion about the exact role of a particular EU official or institution, or about how EU institutions relate to one another. Take, for example, the term "president": in the EU today, there is a President of the European Council, a President of the European Commission, a President of the European Parliament, and a rotating country presidency of the EU that has a corresponding national president or prime minister. U.S. officials dealing with the European Union may still wonder, "who should we be talking to?" or even "who am I talking to?" To complicate matters further, the EU is also an entity whose institutional arrangements and governance structure remain in a state of evolution following the entrance into force of the Lisbon Treaty, the EU's latest institutional reform effort. In early 2010, President Obama announced that he was not planning to attend the U.S.-EU Summit that was expected to be held in late May 2010 in Madrid, Spain. The U.S. State Department indicated at the time that confusion caused by changes to the EU's leadership and governance arrangements resulting from the Lisbon Treaty had contributed to the decision. This episode reflected a wider lack of clarity in the United States about the implications of the Lisbon Treaty on EU leadership, and in particular on the status of the EU's "rotating presidency," the role of the EU's new "permanent president," and the role of other EU actors involved in representing the European Union on the world stage. On December 1, 2009, following a lengthy process of ratification by each of the 27 member states, the EU adopted the Lisbon Treaty. The treaty introduces reforms intended to remedy perceived shortcomings in the EU's institutional arrangements and decision-making procedures—it aims to create a more cohesive and coherent EU capable of assuming a stronger global role; to streamline EU decision-making; and to increase transparency and democratic accountability. Changes introduced by the Lisbon Treaty have a significant impact on the leadership of the European Council, the Council of Ministers, and the EU's rotating presidency system. The European Council and the Council of Ministers are two separate but related institutions of the European Union. The similar names of these entities frequently lead to confusion. The official name of the Council of Ministers is the Council of the European Union; it is often referred to as "the Council." The European Council consists of the leaders (the heads of state and/or government) of the 27 EU member states plus the President of the European Commission. The European Council meets at least four times per year—its meetings are commonly termed "EU summits." The European Council does not adopt legislation or legal texts: the conclusions published after each meeting define general political guidelines for the EU. The institution provides high-level political direction for EU policy-making and a forum for working out consensus on difficult problems and broad strategic issues. The Council of Ministers is the main decision-making body of the EU: it enacts legislation, usually based on proposals put forward by the European Commission. A minister from each member country takes part in Council meetings, with participation configured according to the subject under consideration (e.g., foreign ministers would meet to discuss the Middle East, agriculture ministers to discuss farm subsidies). There are currently 10 different configurations under which the Council of Ministers meets. Most decisions are made by a formula of Qualified Majority Voting (QMV), but some areas—such as foreign and defense policy or accepting new members—require unanimity. Many Council decisions also require the joint consent of the European Parliament. Every six months—on January 1 and July 1 of each year—the "EU Presidency" rotates among the member states. The presidency rotates in a pre-determined order designed to alternate between big and small countries, and between older and newer members. Prior to the adoption of the Lisbon Treaty, the rotating presidency applied to both the European Council and the Council of Ministers. The leader of the presidency country chaired the European Council for six months, seeking to forge political consensus and shape the EU agenda. He or she also assumed an enhanced role in representing the EU externally, alongside the President of the Commission and the High Representative for the Common Foreign and Security Policy. At the same time, ministers of the presidency country would chair the meetings of the Council of Ministers, leading in the meetings and configurations relevant to their portfolio. During the debate over ratification, it was widely repeated that the Lisbon Treaty would "replace" the EU's rotating presidency system with the creation of a new, permanent "EU President." In fact, this assertion grew to become a fairly common misconception. The rotating presidency system continues in a modified format. The treaty creates the new position of President of the European Council, who replaces the leader of the presidency country in that role. Meanwhile, the rotating country presidency retains considerable responsibility in managing the work of the Council of Ministers, and continues to have an important role in helping to set priorities for the EU agenda. As noted above, the Lisbon Treaty creates the new position of President of the European Council to chair the meetings of the 27 EU heads of state or government. The President is elected by the member states for a term of two-and-a-half years, renewable once. Some had envisioned this position as a driver of EU policy, a heavyweight presidential figure who would command a high degree of international visibility. In choosing former Belgian Prime Minister Herman Van Rompuy, however, EU leaders have initially defined this position as more of a manager who will coordinate the activities of the Council, help ensure policy continuity, and work to facilitate consensus. According to some analysts, the choice of Van Rompuy confirms that even as its members pursue a stronger and more integrated EU, considerations of national influence and prestige remain key: leaders from both large and small countries sought to avoid establishing a powerful President who might overshadow or marginalize their own roles. Nevertheless, the intention of the treaty is that Von Rompuy is now expected to represent the EU externally as its spokesman on political issues and as the main EU interlocutor for foreign leaders at international summits. Van Rompuy is not a well-known international statesman, and will have to work hard at it if he is to gain visibility on the global stage. The Lisbon Treaty also creates another important new position to boost the EU's international visibility: High Representative of the Union for Foreign Affairs and Security Policy, which some observers have labeled "EU foreign minister." Former EU Trade Commissioner Catherine Ashton was appointed for the first five-year term of this new position. Some were surprised at this choice, citing Ashton's relative lack of foreign policy experience. Ashton is now the EU's chief diplomat, exercising the former responsibilities of the Council of Ministers' High Representative for the Common Foreign and Security Policy (formerly Javier Solana) and the Commissioner for External Relations (formerly Benita Ferrero-Waldner), who oversaw the EU's foreign aid and development policies. The new High Representative is therefore be an agent of the Council of Ministers and holds the title of a Vice President of the European Commission, an institutional adjustment intended to impart greater coherence by marrying the EU's political and economic clout in one powerful new office. The High Representative is to have extensive staff support with the creation of a new EU diplomatic corps called the European External Action Service. Within the Council of Ministers, Ashton, rather than the foreign minister of the presidency country, now chairs the meetings of the member state foreign ministers that are held under the Foreign Affairs configuration. The other nine configurations are to continue to be chaired by the relevant ministers of the rotating country presidency. The General Affairs configuration—which considers "general policy questions" and works to ensure continuity in the overall work of the Council—is chaired by the foreign minister of the rotating country presidency. Prior to the Lisbon Treaty, General Affairs and External Relations had been combined in one Council configuration. Many of the day-to-day duties of the presidency country continue as before the Lisbon Treaty. The presidency country is expected to work with the new President of the European Council to help prepare and arrange EU summits and summits between the EU and other countries. It is expected to continue preparing, arranging, and chairing the meetings of the Council of Ministers, other than in the Foreign Affairs configuration. This responsibility includes working in the Council of Ministers to forge agreement on legislative proposals. The presidency country is also expected to continue setting out a few broad policy priorities for its tenure. In the past, such priorities have often been coupled with the launch of strategic initiatives that have covered a wide range of topics such as international security and development issues, economic and trade matters, judicial affairs, social policy, and issues specific to particular regions such as the Mediterranean, the Baltic, or the EU's eastern neighbors. Advocates of the Lisbon Treaty express hope that the new arrangements will have a considerable impact in this context. The President of the European Council is charged with ensuring greater continuity, coherence, and consistency in EU policies. In the past, analysts have asserted that the rotating presidency system made the EU too susceptible to frequent shifts in focus, as successive presidencies chose to emphasize their own preferred initiatives and priorities. Van Rompuy is to impart a longer-term view as he works with the presidency countries to set and manage the EU agenda. Renewed emphasis has also been placed on the "troika" concept, in which three consecutive rotating presidencies coordinate priorities in an 18-month program. EU external affairs issues generally fall into one of two categories, differentiated from one another by both the nature of decision-making and the EU institutions relevant to that process. First, foreign policy decisions of a political nature, as well as all decisions related to EU security and defense policy, are the province (in EU terminology, the "competence") of the member states. Decisions that are adopted unanimously by all 27 member countries are what make up the EU's Common Foreign and Security Policy (CFSP). This process of "intergovernmental" decision-making takes place in the European Council and the Council of Ministers. Thus, it is in political matters and CFSP that the new President of the European Council and the new High Representative of the Union for Foreign Affairs and Security Policy are expected, as described above, to play the most prominent role (possibly with an occasional assist, as requested, from the leader or foreign minister of the rotating presidency country). Second, in many areas of policy-making, the member countries of the EU have agreed to pool their sovereignty. Areas of shared sovereignty that have relevance in external affairs include trade policy, environmental policy, and development aid. Such topics are said to fall under the "Community competence," and decision-making takes place through the "Community method." Typically, the European Commission initiates proposed legislation, which is then voted on in the Council of Ministers through a system of Qualified Majority Voting—although the EU generally seeks as broad a consensus as possible in its decision-making, unanimity is not required in these cases. In the Community method, approval of a measure also usually requires the joint consent of the European Parliament (i.e., "co-decision"). Measures approved in this way are subsequently regulated or enforced by the European Commission, often with oversight by the European Parliament. The Commission also represents the EU internationally in negotiations on these topics (e.g., on trade) or in managing the policies that fall under its competence (e.g., foreign aid). The President of the European Commission will therefore continue to play an important role in representing the EU externally on issues that are managed by the Commission, including, as mentioned above, many economic, trade, and environmental issues. José Manuel Barroso is in his second five-year term as Commission President. Along with the new President of the European Council and the new High Representative, Barroso is expected to participate on behalf of the EU in major international summits. The individual Commissioners also have a representative role on those issues which fall under their portfolio (some portfolios have more external aspects than others) and the staff working under each Commissioner in the Commission directorates-general may maintain working relationships with various foreign officials as their duties require. Prior to the enactment of the Lisbon Treaty, the EU "embassies" in many countries around the world, including in Washington, DC, were actually delegations of the European Commission. Reflective of the EU's consolidated legal identity under the treaty, these diplomatic posts are now delegations of the European Union, and their staffing by the newly created External Action Service is expected to consist of a mixture of personnel drawn from the Commission and the Council, as well as secondees from national diplomatic services. Many of the issues in which the European Parliament acts as a "co-legislator" bear on external affairs in some way. For example, under the Lisbon Treaty the European Parliament now has an enhanced role in EU trade policy and must approve all of the EU's external agreements. As an additional example, the Parliament's role in privacy and data protection issues can affect transatlantic homeland security and counterterrorism cooperation, as seen in its rejection of a U.S.-EU agreement on bank data transfers earlier this year which required the Commission to re-negotiate a new agreement with the United States. Although it has no formal role in the CFSP, some observers suggest that the Parliament has become an increasingly important forum for debating international issues. The President of the European Parliament, currently former Polish Prime Minister Jerzy Buzek, is its top representative and spokesman. The Parliament has 20 standing committees, including a foreign affairs committee, which often play an influential role in the formulation and oversight of EU policies and legislation. The European Parliament also plays a role in the EU's international presence with 36 delegations that maintain parliament-to-parliament contacts and relations with representatives of most countries around the world. Because the language of the Lisbon Treaty is fairly vague as to the exact duties of the newly created positions, analysts assert that the roles of the key positions in EU external affairs—the President of the European Council and the High Representative, as well as the President of the Commission, the rotating country presidency, and the European Parliament—will be worked out and defined in practice as the new arrangements are implemented. The changes of the Lisbon Treaty are designed to give the EU better tools with which to develop a stronger and more coherent global role, but change is seen as occurring over time and the impact of these changes could take years to measure.

Changes introduced by the Lisbon Treaty, the European Union's (EU's) reform treaty that took effect on December 1, 2009, have a significant impact on EU governance. The EU is an important partner or interlocutor of the United States in a large number of issues, but the complicated institutional dynamics of the EU can be difficult to navigate. The Lisbon Treaty makes substantial modifications in the leadership of the EU, especially with regard to the European Council, the Council of Ministers, and the EU's rotating presidency. Every six months, the "EU Presidency" rotates among the 27 member states. Under the treaty, however, the leader of the presidency country no longer serves as the temporary chair and spokesman of the European Council, the grouping of the EU's 27 national leaders. This duty now belongs to the newly created President of the European Council, who serves a once-renewable two-and-a-half-year term. In addition, the foreign minister of the presidency country no longer chairs the meetings of EU foreign ministers in the Council of the EU (commonly known as the Council of Ministers). This duty is now performed by the High Representative for Foreign Affairs and Security Policy, another newly created position whose holder serves a five-year term and is both an agent of the Council of Ministers and a Vice President of the European Commission. Many of the day-to-day duties of the rotating presidency country, however, will continue under the Lisbon Treaty. Ministers of the presidency country will still chair all of the meetings of the Council of Ministers other than in the area of foreign policy. The presidency country is expected to continue preparing and arranging these activities, and playing a leading role in the Council of Ministers to forge agreement on legislative proposals. The presidency country is also expected to help formulate a few broad policy priorities for its tenure. The EU remains in an extended phase of institutional transition as the new arrangements of the Lisbon Treaty are implemented, and the rotating presidency country is expected to support the development of the new institutions and positions. Hungary holds the rotating presidency for the first half of 2011, and Poland will hold it for the second half of the year. Spain and Belgium held the rotating presidency in 2010. EU foreign policy decisions of a political or security-related nature require unanimous intergovernmental agreement among the 27 member states. In many other issues which may relate to external affairs, however, EU members have agreed to pool their decision-making sovereignty. A number of additional EU actors often have particular relevance in these matters. The President of the European Commission represents the EU externally on issues that are managed by the Commission, including many economic, trade, and environmental issues. Many of the issues in which the European Parliament acts as a "co-legislator," such as trade and data protection, relate to external affairs. Some observers also suggest that the Parliament has become an increasingly important forum for debating international issues. Changes in the structure of EU governance may be of interest to the 112th Congress. For more information, also see CRS Report RS21372, The European Union: Questions and Answers, by [author name scrubbed] and [author name scrubbed] and CRS Report RS21618, The European Union's Reform Process: The Lisbon Treaty, by [author name scrubbed] and [author name scrubbed].

America's current account (CA) (exports less imports plus net income payments and net unilateral transfers) has been in deficit every year but one since 1982. After a year in surplus in 1991, it steadily rose as a share of gross domestic product (GDP) to a record high of 6.1% of GDP in 2005 and 2006. It fell slightly in 2007 and 2008, and reached 3% of GDP in 2009 (see Figure 1 ). The 2009 CA relative to GDP still exceeded the share reached in most years before the 2000s. By accounting identity, the CA deficit is equal to net inflows of foreign capital to the United States and reflects the imbalance between domestic saving and investment. If the CA deficit continued its decline since 2007, it would soon reach a sustainable level. The decline may be attributed to cyclical causes that are short-lived, however. As a result of the recession and financial crisis, domestic saving is higher, domestic private investment is lower, and so the need to borrow from abroad has diminished. As the economy returns to normal, domestic saving may fall and domestic investment is expected to rebound, either of which would increase the reliance on foreign borrowing. Further, the large increase in the federal budget deficit since 2007 requires financing—if maintained—from foreign or domestic sources. Without fundamental changes in underlying saving and investment patterns, the decline in the CA deficit will only be temporary. Some observers have questioned whether the CA deficit is sustainable. It has not prevented the economy from generally attaining full employment—the United States has run large CA deficits since the mid-1990s, yet unemployment has remained low in most of those years. The CA deficit has both positive and negative effects on the economy. Production of exports and import-competing goods is arguably lower than it would be in the absence of a CA deficit, but interest rates are also lower than they would be in the absence of foreign capital inflows. As a result, interest-sensitive spending on capital investment, residential investment, and consumer durables (e.g., automobiles and appliances) is higher. Those expressing concern about the CA deficit typically define unsustainability to mean that the United States would have difficulty financing the CA deficit at some point in the near future, and the resulting adjustment process would harm the U.S. economy. Basically, the CA deficit is sustainable as long as foreigners are willing to continue buying American assets. It is not enough for foreigners to reduce their demand for U.S. assets, since this would cause yields on U.S. assets to automatically rise until the market once again cleared. But if the desirability of U.S. assets were to change rapidly (due to a loss in confidence in the U.S. economy, for example), foreign capital inflows and the value of the dollar could decline quickly; at a minimum, foreigners would require significantly higher interest rates than they do at present for inflows to continue. For the U.S. to literally be unable to continue financing its current account deficit, foreign demand would have to fall so much that asset yields could not rise enough for foreigners to be willing to hold U.S. assets again. But what would make foreign investors change their minds about U.S. assets? Federal Reserve Chairman Ben Bernanke has argued that foreigners will continue to increase their holdings of U.S. assets as long as a "global savings glut" remains that leaves them with few other desirable investment alternatives. If both lender and borrower are rational, many economists believe that the CA deficit can be mutually beneficial—it allows the lender to enjoy a higher rate of return than could be enjoyed at home and allows the borrower to operate with a larger capital stock than could be financed from domestic saving. As long as those investments yield a high enough rate of return to service the debt, borrowing should not reduce future domestic income in absolute terms. Some economists, however, doubt this interpretation and are concerned that the large CA deficit is symptomatic of wider economic imbalance. They argue that a country cannot persistently rely on foreign borrowing to finance its investment needs, so the United States must eventually raise its low saving rate. They maintain that by financing a large budget deficit and housing boom (until 2006), much of the foreign borrowing is being used in ways that do not expand the economy's productive capacity, and therefore such borrowing does not enhance our ability to service foreign debt. Because foreign borrowing is not sustainable, they argue, Americans will eventually be forced to significantly increase their saving (equivalently, to reduce their consumption) and reduce their investment rates, and the U.S. economy will slow. As a long-term solution, these economists prescribe policy measures to raise saving and reduce overall spending as the appropriate response to an excessively large CA deficit. This could be done through microeconomic policies, such as policies to encourage higher private saving, and macroeconomic policies, such as a tightening of monetary and fiscal policy, although this response would risk inducing the same recession that they fear the CA deficit may eventually cause (particularly if the economy were weak already). As a consequence of large CA deficits, a growing share of the U.S. capital stock is owned by foreigners and a rising fraction of U.S. income will need to be diverted overseas in the form of interest and dividends to foreigners. The process cannot continue indefinitely, or else foreigners would eventually hold a larger share of American assets in their portfolios than they desire. But though economists may feel confident that the CA deficit will decline in the long run, long run predictions do not offer much help in predicting short-term trends. Foreigners may wish to increase their holdings of American assets (in which case the CA deficit would persist) in the near term. One common assumption is that the CA deficit would, at most, continue until the share of American assets held in foreign portfolios equaled America's share of world output; by this measure, foreigners still hold too few American assets. For example, citizens of the euro area hold an estimated 53% of their wealth in euro-denominated assets and 19% in U.S. dollar-denominated assets, whereas the Japanese hold an estimated 63% of their wealth in yen-denominated assets and 4% in dollar-denominated assets. This is referred to as a "home bias" in saving because all countries hold more of their own assets, and fewer foreign assets, than optimal portfolio diversification would suggest. This bias is considered unlikely to disappear entirely, in which case CA deficits will ease before this benchmark is met. In any case, the reason why home bias would decline for foreigners but not Americans, as continuing CA deficits would imply, remains unclear. On the other hand, if the U.S. economy grows faster than the rest of the world in the future, then (small) CA deficits would be needed for foreigners to maintain U.S. asset holdings equal to the U.S. share of world GDP. One reason that U.S. imports cannot exceed exports indefinitely (and the dollar could eventually fall) is that today's CA deficits have a consequence for future trade balances. The accumulation of net debt that Americans owe to foreigners will need to be serviced in the future, and debt service will take the form of a payment from the United States. To offset the payment, the United States must export more or borrow more. But, all else equal, foreigners will only be induced to buy more exports if the dollar depreciates. Net investment income payments make up a small fraction of the CA deficit today, but economist Edwin Truman estimates that if CA deficits continued to equal 6% of GDP, net income payments would eventually reach 4.5% of GDP, leaving a trade deficit of only 1.5% of GDP. In other words, a constant trade deficit would imply a growing CA deficit because of growing net investment income payments. In 2008, the United States had a net foreign debt of $3.5 trillion, but received net investment income of $126 billion from the rest of the world. What is surprising about these data is that the United States still consistently has positive net investment income despite its large net debt, and shows no long-term downward trend as the foreign debt grows. That is because U.S. holdings of foreign assets have earned a higher rate of return than U.S. debt owed to foreigners. Between 1981 and 2008, the United States earned an average estimated real rate of return of 3.1% more on its foreign assets than its foreign liabilities. This estimated rate of return differential has prevented foreign borrowing from becoming burdensome and suggest that the U.S. net foreign debt could become significantly larger before debt payments would become burdensome. Kouparitsas estimates that if these rate-of-return differentials were to continue, the United States could maintain a current account deficit of 0.9-1.3% of GDP indefinitely without any increase in its net foreign debt. However, this favorable rate-of-return differential may not continue in the future if foreigners believe that the dollar will depreciate and demand a higher rate of return on U.S. borrowing as compensation. If U.S. interest rates rose, the debt could become burdensome quickly. Although some reduction in the CA deficit is inevitable (although not necessarily in the near future), it need not be sudden. It should be emphasized that economic theory suggests that a slow decline in the CA deficit and dollar would not be troublesome for the overall economy. In fact, a slow decline could have an expansionary effect on the economy, because the increase in net exports could have a more stimulative effect on aggregate demand in the short run than the decrease in investment and other interest-sensitive spending caused by lower capital inflows. More realistically, the trade deficit would not decline exogenously, but in response to a slowing of overall domestic demand. Therefore, a falling trade deficit may tend to coincide with slower economic growth in practice, but that does not indicate that a falling trade deficit has caused growth to slow. Historical experience seems to support the idea that a slow decline in the trade deficit need not be harmful to the economy—the dollar declined by about 40% in real terms and the CA deficit declined continually in the late 1980s, from 2.8% of GDP in 1986 to nearly zero during the early 1990s. Yet economic growth was strong throughout the late 1980s. (More recent experience is considered in the next section.) A potentially serious short-term problem would emerge if foreigners suddenly decided to reduce the fraction of their saving that goes to the United States in the form of a capital inflow, or if they suddenly decided to repatriate part of their liquid financial assets. The initial effect could be a sudden and large depreciation in the value of the dollar, as the supply of dollars on the foreign exchange market increased, and a sudden and large increase in U.S. interest rates, as an important funding source for investment and the budget deficit was withdrawn from the financial markets. Most likely, the direct trade effects of these shifts in lending patterns by foreigners would not cause a recession because the dollar depreciation would lead to a trade surplus (or smaller deficit), which expands aggregate demand. (Empirical evidence suggests that the full effects of a change in the exchange rate on traded goods takes time, so the dollar may have to "overshoot" its eventual depreciation level in order to achieve a significant adjustment in trade flows in the short run.) However, the indirect interest rate effects, which typically only partially offset the direct effects, could cause a recession if the change is sudden. Large increases in interest rates could cause problems for the U.S. economy, as these increases reduce the market value of debt securities, cause prices on the stock market to fall, and jeopardize the solvency of various debtors and creditors. Resources may not be able to shift quickly enough from interest-sensitive sectors to export sectors to make this transition fluid. The Federal Reserve could mitigate the interest rate spike by reducing short-term interest rates, although this reduction would influence long-term rates only indirectly and could increase inflation. Is a scenario where the dollar crashes a likely one? Economic theory typically assumes that financial market participants act rationally. If the rationality assumption is a good one, then the potential for a sudden decline is slim. After all, foreigners would be demanding high rates of return to buy U.S. assets today if they could foresee that the foreign currency value of these assets is likely to fall sharply in the near future. Of course, financial markets do not always seem driven by rational behavior in practice, but as a result, theory has little predictive power of the timing or likelihood of a "sudden stop." Given the traditional role the United States has played as an investment safe haven, sudden capital outflows seem unlikely. On the contrary, investment might be attracted to U.S. assets in a liquidity crisis because the U.S. offers more liquid financial markets (e.g., U.S. Treasury bond markets) than do most foreign counterparts. As discussed above, a destabilizing interruption in the financing of the CA deficit would likely be triggered by some sudden change in investor sentiment about U.S. assets. The financial crisis, beginning in August 2007 with the illiquidity of the U.S. subprime mortgage market and deepening in September 2008, would seem to be a good test case for how a large change in investor sentiment would affect the CA deficit. Overall, the CA to GDP ratio declined by about half between 2007 and 2009, but this did not lead to sharp changes or negative effects for the dollar or interest rates that could be harmful to the economy. The dollar continued its long and gradual downward trend until April 2008, before it started rising—through the worst of the crisis—until March 2009. Interest rates on U.S. Treasuries fell to extremely low levels during the crisis despite the large increase in the budget deficit, as U.S. Treasuries continued to be seen as a desirable destination during the "flight to quality." Other interest rates generally fell along with U.S. Treasury yields, although risk premiums on private assets rose and some private borrowers were shut out of credit markets entirely because of the crisis. Problems recently experienced in U.S. financial markets have been widely viewed as "once in a lifetime" events. If these events failed to cause a sudden flight from U.S. assets and an inability to finance the CA deficit, it is hard to imagine what would. While the overall data provides little evidence to support fears of a "sudden stop" in financing the CA deficit, a closer look at the data is less reassuring. The crisis led to a large decline in private capital flows in 2008—both foreign purchases of U.S. assets and U.S. purchases of foreign assets that had countervailing effects on the CA balance. (Private foreign demand for Treasuries was high in 2008 and 2009, but foreigners sold private U.S. securities on net.) In 2009, private U.S. net purchases of foreign assets returned to half of their pre-crisis level, but private foreigners continued to sell U.S. assets on net. Were the U.S. reliant on private purchases alone, the CA would have seen a large swing from deficit in 2008 to surplus in 2009, all else equal. Had such a large swing occurred, interest rates and the dollar may not have been as stable as they were. Instead, the CA remained in deficit because of large purchases of U.S. assets from official sources (foreign governments or international institutions). This trend was not new—the steady financing of the CA deficit has depended heavily on official capital inflows since 2002. Official capital inflows have exceeded $200 billion per year since 2003, and $400 billion since 2006. Had these central banks decided not to increase their dollar-denominated foreign reserves, the CA deficit and the value of the dollar might have fallen precipitously. Further, the 25% fall in the dollar from 2002 to 2008 was larger than average against some trading partners who do not intervene in foreign exchange markets, and very small against trading partners who do intervene. Going forward, some analysts fear that official capital inflows could prove unreliable or provide foreign governments with leverage that would undermine U.S. policy aims. Because official inflows are likely financed by considerations other than rate of return, it is difficult to predict how they will evolve in the future. (In the past few years, official inflows have proven much steadier than private.) But given the importance of the United States as a foreign export market, deliberately taking a step that could potentially precipitate a U.S. economic crisis could be against a foreign country's economic self-interest, and reduce the value of the U.S. assets already owned by the country. The financial crisis has demonstrated that foreign governments, desiring to maintain the status quo, have been willing to increase their purchases of U.S. securities while others are reducing their U.S. holdings. The story told in this section is based on capital flow data, but these data should be viewed with caution during the financial crisis. Private capital flows are hard to track. Individual entries in the capital accounts have shown large swings from quarter to quarter during the crisis that raise issues of reliability, and the statistical discrepancy in 2008 and 2009 was about half the size of the current account deficit. Furthermore, there is a problem of causality in interpreting these results. The instability in the economy and international capital flows are generally viewed as being caused by the financial crisis, but causality could also run in the other direction, making it hard to distinguish to what extent the financial crisis should be attributed to movements in international capital flows. Problems with financing large budget and CA deficits in Greece from 2009 to 2010 are a reminder that problems around the world with CA sustainability are not unusual. But the usefulness of most comparisons to historical experience abroad is limited by the fact that the United States economy and financial system are so much larger than those of other countries. As a result, an economic occurrence in the United States has ramifications for the world economy that could have feedback effects for the U.S. economy, whereas changes in the CA balance of most small countries will most likely not affect the world economy. It also means that the amount of borrowing required to finance the U.S. CA deficit is a much larger share of world saving. Another difference is the role that the dollar plays as the world's "reserve currency." Because the dollar is the world's preferred currency for a store of value, medium of exchange, and unit of account, holders may be less willing to abandon it than they would any other currency. If so, the United States may be able to run higher sustainable CA deficits than other countries. In the developing world, a large CA deficit has often been a leading indicator of financial and currency crisis. This was the case in many recent crises, including Mexico, East Asia, Turkey, Brazil, and Argentina. The applicability of these experiences to the United States may be limited, however, because of three key differences between the United States and these countries. First, the United States has a flexible exchange rate regime. Countries with fixed exchange rates can be forced into crisis when their foreign exchange reserves are exhausted by "speculators" betting against the currency; similar bets are harder to make against flexible exchange rates. Second, the United States has traditionally been seen as a "safe haven" for investment. Third, unlike developing countries, the United States is able to borrow in its own currency, so that depreciation reduces rather than increases the burden of servicing its debt. Therefore, historical comparisons have tended to focus on the experience of other industrialized countries. Economist Sebastian Edwards found that since 1970, only two other industrialized countries, Ireland and New Zealand, had high CA deficits that were long-lasting (seven and five years, respectively). He found that large countries that experienced sharp declines in their CA also saw per capita GDP growth decline by 3.6% to 5.0%. Economists at Goldman Sachs, a financial firm, analyzed all episodes in industrialized countries since 1980 where the CA improved by more than 2% of GDP. It found 31 cases where the adjustment occurred under circumstances of economic disruption and 13 where there was no comparable disruption. In the disruption episodes, the economy typically started from a position of overheating and the output gap (the difference between actual and potential output) worsened by an average of 3.6% of GDP, whereas in the benign episodes, the economy started from a position of excess capacity and the output gap improved by 1.9%. The fact that the economy was initially overheating in the disruption episodes suggests that causality may run in the opposite direction—the CA shift may be a symptom rather than a cause of economic slowdown. In the disruption cases, there was little real exchange rate depreciation; in the benign cases, it averaged 5.1%. In most cases, the adjustment took several years. In all cases, consumption growth was negative on average and (surprisingly) interest rates on average fell. In only two cases (Portugal in the early 1980s and Finland in the early 1990s) was the CA decline associated with a severe recession. (The recession and CA decline in Finland were widely attributed to the collapse of the Soviet Union, among other factors.) Some of these cases may not be applicable to the U.S. experience, however, because the sample includes countries that had a small CA deficit or CA surplus. Only eight of these episodes involved a larger CA deficit as a share of GDP than the U.S. deficit today, and all eight episodes involved small countries. The International Monetary Fund conducted a similar study. It found 42 cases where an advanced economy had an initial CA deficit of at least 2.5% of GDP, and the CA deficit subsequently declined by at least 50%. It found, on average, that the real exchange rate declined by a cumulative 12.2%, causing a shift in the CA of 5.7% of GDP over the next 4.6 years, moving the CA from deficit to surplus (on average). GDP growth fell by an annual average of 1.4% during the reversal, causing the output gap to deteriorate by an average of 3% of GDP, from peak to trough of the business cycle. In 11 of these cases, the slowdown in economic growth was large, but, unlike the United States, 9 of these 11 did not have a floating exchange rate. In 10 other cases, there was no slowdown in growth following the CA reversal. However, not all cases of large CA deficits end in a reversal. Besides the United States, the IMF identified five other advanced economies that have had large CA deficits that have persisted to date: Australia (which has run a CA deficit of more than 2% since 1980), Greece (since 1996), New Zealand (1989), Portugal (1996), and Spain (1999). All except Australia have had CA deficits that were considerably larger than the U.S. in recent years. Greece, Portugal, and Spain have fared badly in the recent economic downturn, but Australia and New Zealand have fared relatively well. In a similar study, economists Debelle and Galati found little evidence that CA adjustments historically lead to significant disruption in financial markets. They found little change in the composition of capital flows before adjustment, which they argue is evidence that current account adjustment is caused by, rather than the cause of, broader macroeconomic imbalances. Economists Hung and Kim use statistical regressions to estimate the probability of an exchange rate crash based on several macroeconomic variables across many industrialized countries over time, and estimate that the United States had a 9% probability of a dollar crash in 2006. They find that the current account balance (and the regression overall) has relatively little predictive power for a currency crash. The size of the CA deficit in any given year may be less important in determining sustainability than how persistent CA deficits increase a country's net foreign debt over time. Economists Maurice Obstfeld and Kenneth Rogoff found that in 2003 the net debt owed to foreigners was about 23% of GDP for the United States, near an all-time high. (It was about 24% of GDP in 2008.) Were CA deficits to continue at more than 5% of GDP per year, U.S. net debt to foreigners would reach 70% of GDP within 30 years. Although this implies a relatively small yearly debt service burden, many countries that have experienced CA reversals in the postwar period had smaller net foreign debt-to-GDP ratios, between 20% and 80% of GDP. Obstfeld and Rogoff identify only one country (Ireland) with a net foreign debt-to-GDP ratio that has exceeded 80%. Thus, the authors conclude that large U.S. CA deficits cannot be sustained indefinitely. Similarly, simulations by Federal Reserve economists Bertaut et al. suggest that the net foreign debt could increase to 60% of GDP by 2020, but this would result in annual net investment income payments of only 0.5% of GDP. They found net foreign debt of 20% of GDP to be fairly typical by international standards, found 16 countries where net investment income payments exceeded 1% of GDP, and found five other countries with net debt around 60% of GDP. The authors found econometric evidence that countries with high net foreign debt had modestly higher interest rates and mixed effects on the exchange rate. Five recent academic papers address the sustainability issue. In the papers, the models used to estimate changes in the dollar and CA are not empirically derived; they are simulations based on theoretical assumptions meant to be consistent with reality. Obstfeld and Rogoff have estimated how much the dollar would need to depreciate in order to make the CA deficit disappear. In their model, shocks to aggregate demand or shifts in the demand or supply of tradeable goods could cause the CA deficit to decline; their model does not allow for exogenous changes in the demand for U.S. assets to affect the CA deficit. They estimate that the real exchange rate would depreciate between 14.7% and 33.6% if a CA deficit equal to 5% of GDP were eliminated by a change in aggregate demand, and between 9.8% and 25.5% if eliminated by a change in the supply of tradeable goods. They estimate that depreciation would be accompanied by a 3.9% to 7.1% decline in the terms of trade. The predicted dollar depreciation is so large because about three-quarters of U.S. output is nontradeable, production cannot be quickly shifted into tradeable goods to take advantage of the depreciation, and import and export prices change much more slowly than the exchange rate. This model does not predict how much larger the CA deficit could get or how quickly it will eventually fall. Economists Blanchard, Giavazzi, and Sa explicitly allow asset demand to influence the exchange rate, and they assume that assets from different countries are not perfect substitutes. In their model, a CA deficit would eventually decline because demand for U.S. assets is finite. Although an increase in the demand for U.S. assets would initially cause the dollar to appreciate, they argue, it would later depreciate to finance debt service (though it would remain above its pre-appreciation value). They estimate that a 15% decline in the dollar would be associated with a decline in the CA deficit equal to 1.4% of GDP. About one-third of the decline in the CA deficit results from U.S. debt being denominated in U.S. dollars, because a depreciation reduces its value. Blanchard et al. estimate that stabilizing the net-debt-to-GDP ratio at 2003 levels would require the dollar to immediately depreciate by 56% and the CA deficit to decline to 0.75% of GDP. However, assuming foreigners desire to maintain holdings of U.S. assets at their current share, their model predicts that the depreciation would be stretched over a few decades, depreciating by 2.7% a year, at most. If foreigners decided to reduce their holding of U.S. assets, the model predicts a larger, but still gradual, depreciation. Edwards uses a similar model to simulate how much the dollar would depreciate from its 2004 level depending on different assumptions about the foreign demand for U.S. assets. Unlike Blanchard et al., he projects fairly rapid declines in the CA deficit and dollar in the future. Under his optimistic scenario, in which he assumes that the U.S. net debt will rise to 60% of GDP by 2010 and then remain constant, the CA deficit would peak at 7.3% of GDP in four years, before eventually declining to 3.2% of GDP (with most of the decline occurring in the first four years after the peak). The real value of the dollar would appreciate while the deficit was increasing, but it would decline 21% in the first three years after the deficit began falling. If net debt were to decline to 50% of GDP after 2010 instead of remaining at 60% of GDP, which would still be about double its current level, the decline in the CA deficit and dollar would be greater. Edwards calculates that the deficit would fall by 5.3% of GDP and the dollar would depreciate by 28% after three years, which would bring both measures close to their long-term projected levels. Economists Roubini and Setser simulate what would happen to the net foreign debt over the next 10 years under three scenarios. In the first scenario, imports and exports continue to grow at historical rates. The CA deficit would exceed 12.8% of GDP and the net foreign debt would exceed 80% of GDP by 2012. In this scenario, the authors do not believe it is plausible to assume that foreigners would be willing to finance borrowing of this magnitude, and use this scenario to argue that the current path is unsustainable. In the second scenario, the trade deficit stabilizes at 5% of GDP. The CA deficit would still increase to 8.8% of GDP in 2012 (because of higher net investment income payments), at which point the net foreign debt would exceed 70% of GDP. Servicing a debt of this size, they estimate, would cost 3% of GDP in 2012. To reduce the trade deficit to 5% of GDP, they estimate that the dollar would need to depreciate by about 10% from its 2004 level. This scenario (and the first scenario) is not sustainable in the long run because the net foreign debt would grow continuously. In the third scenario, the trade deficit declines by the end of the projection to the point where the net foreign debt stabilizes as a share of GDP. They estimate that the net foreign debt would stabilize with a trade deficit of 0.8% and a CA deficit of 1.3% of GDP. If the CA deficit gradually declined to this level in 2012, the net foreign debt would stabilize at nearly 60% of GDP, which would cost an estimated 1.75% of GDP to service in 2012. To achieve a reduction in the CA deficit of this magnitude, they estimate that the dollar would need to depreciate substantially and the federal budget would need to be balanced. All of these scenarios assume that relative interest rates remain similar to past values as the net foreign debt rises; if foreigners demanded higher interest rates, then this would feed through to a much larger CA deficit and debt path than simulated. Economist Paul Krugman estimates that the dollar would need to depreciate by at least 35% from its 2005 value in real terms in the long run for the trade deficit to be reduced to zero. He looks for evidence of whether this depreciation will happen gradually or abruptly. For the depreciation to be smooth, Krugman argues that it must be anticipated by rational investors, in which case they would currently require a rate of return premium to hold U.S. assets (to offset the loss suffered from the future dollar depreciation). To determine how large the premium would have to be, he considers two hypothetical paths for the dollar. In one path, the dollar declines by 1.75% annually, and net foreign debt peaks at 118% of GDP, or at least one-third of the total U.S. capital stock. If foreigners are unwilling to hold that much U.S. debt, the dollar would have to depreciate more rapidly. In the other path, the dollar declines by 3.5% annually, and net foreign debt peaks at 58% of GDP. Yet he finds no evidence of a rate of return premium anywhere near the magnitude of either 1.75% or 3.5%—after adjusting for inflation, U.S. interest rates are very close to foreign rates. This implies that foreigners do not foresee any significant dollar depreciation in the future. Therefore, he argues that when investors eventually realize how much the dollar will depreciate, they will likely sharply reduce their demand for U.S. assets, causing the dollar to plummet. Recent experience suggests that the dollar depreciation required to put the CA deficit on a sustainable path may indeed be large. From 2002 to 2006, the dollar depreciated by 16% in inflation-adjusted terms. Despite the depreciation, the CA deficit continued to rise, both in dollar terms and as a share of GDP, from 4.5% of GDP in 2002 to 6.1% of GDP in 2006. In response to the weaker dollar, exports rose rapidly from 2004 onward, but this did not lead to a lower current account deficit because imports also continued to rise rapidly. This experience points to the fact that external factors, which can be held constant in the models discussed in this section, also influence the CA and the dollar in reality. The CA deficit began declining in 2007, along with the continued decline in the dollar through 2008. Paradoxically, the largest decline in the CA deficit has occurred in 2009, although the real value at the end of 2009 was nearly the same as the value at the end of 2007. The wide dispersion of estimates on the dollar depreciation associated with a decline in the CA deficit points to the complex and imperfectly understood factors that determine the dollar's value, the lack of a consensus exchange rate model that performs well empirically, and the sensitivity of theoretical models to changes in uncertain empirical parameters. Further complicating model-based projections, the path of CA adjustment is also subject to non-market forces, such as the accumulation of foreign reserves by central banks. Furthermore, no model reliably answers the underlying question of how much and how quickly the CA deficit will potentially decline. In the long run, running a CA deficit at current trend levels (i.e., growing faster than GDP) would result in net foreign debt continually growing relative to GDP. This is unsustainable if foreigners have a limited appetite for U.S. assets. Thus, in the long run, the CA deficit will most likely decline, although it need not decline to zero to stabilize the net foreign debt relative to GDP. Relative to GDP, the CA deficit declined by about half between 2007 and 2009. It is too soon to say whether this decline is being caused by temporary cyclical factors or represents the beginning of a long-term adjustment process. To date, the net foreign debt has placed no burden on the U.S. economy because U.S.-owned foreign assets have earned more than foreign-owned U.S. assets. Whether policymakers should be concerned about a future decline in the CA deficit depends on whether the decline were to happen in an orderly or disruptive way. There is little reason to think that a gradual decline would have a deleterious effect on the overall economy. But a sudden decline, brought on by a sudden reduction in foreign capital inflows, could be disruptive to U.S. financial markets, causing negative spillover effects for the broader economy. While a sudden reduction in foreign capital inflows cannot be ruled out—it has happened to foreign countries—it seems highly unlikely. The United States is different in a number of ways from the countries that have experienced CA crises—it is much larger, its financial markets and economy are highly developed, it has a floating exchange rate, and it is seen as a safe haven in times of financial turmoil. Nonetheless, even if the risk of a sudden CA reversal is small, it is arguably worth policy consideration since it could be highly costly to the U.S. economy. The recent financial crisis in the United States bears resemblance to the sort of scenario envisioned by economists concerned about a sudden, destabilizing outflow of capital. Yet when the crisis worsened in September 2008, the dollar began appreciating and heightened demand for certain U.S. assets, such as U.S. Treasuries, drove their prices up to unusually high levels. A large and potentially destabilizing net withdrawal of private foreign capital in 2008 and 2009 was offset by official capital net inflows (primarily purchase of U.S. assets by foreign governments), however.

America's current account (CA) deficit (the trade deficit plus net income payments and net unilateral transfers) rose as a share of gross domestic product (GDP) from 1991 to a record high of about 6% of GDP in 2006. It began falling in 2007, and reached 3% of GDP in 2009. The CA deficit is financed by foreign capital inflows. Many observers have questioned whether such large inflows are sustainable. Even at 3% of GDP, the deficit is probably still too large to be permanently sustained, and many economists fear that the decline is temporary and caused by the recession. Further, a large share of the capital inflows have come from foreign central banks in recent years, and some are concerned about the economic and political implications of this reliance. Some fear that a rapid decline in capital inflows would trigger a sharp drop in the value of the dollar and an increase in interest rates that could lower asset values and disrupt economic activity. However, economic theory and empirical evidence suggest that the most plausible scenario is a slow decline in the CA deficit, which would not greatly disrupt economic activity because production in the traded goods sector would be stimulated. The financial crisis that worsened in September 2008 would seem to be a good test case of the type of event that could lead to the feared "sudden stop" in foreigners' willingness to finance the CA deficit. While the recession deepened following the crisis, it has not been via a sudden decline in the dollar or a sudden broad spike in U.S. interest rates. On the contrary, the dollar appreciated in value in the months after the crisis and foreign demand for U.S. Treasury bonds has risen since the crisis worsened. On the other hand, there was a large decline in private foreign capital inflows beginning in 2008; had it not been for foreign government purchases of U.S. securities, the CA would have been in surplus in 2009, all else equal. One long-term consequence of large and chronic CA deficits has been the growing foreign ownership of the U.S. capital stock. A large CA deficit is not sustainable in the long run because it increases U.S. net debt owed to foreigners, which cannot rise without limit. A larger debt can be serviced only through more borrowing or higher net exports. For net exports to rise, all else equal, the value of the dollar must fall. This explains why many economists believe that both the dollar and the CA deficit will fall further at some point in the future. To date, debt service has not been burdensome. Because U.S. holdings of foreign assets have earned a higher rate of return than U.S. debt owed to foreigners, U.S. net investment income has remained positive, even though the United States is a net debtor nation. Since 1980, most episodes of a declining CA deficit in industrialized countries have been associated with slow economic growth. Only two episodes were associated with a severe disruption in economic activity. Because most of the episodes involved small countries, these cases may differ in important ways from any corresponding episode in the United States. Historically, a few other countries have had a higher net foreign debt-to-GDP ratio than the United States has at present; however, if CA deficits continue at current levels, the U.S. net foreign debt could eventually be the highest ever recorded. This report also reviews studies on the CA deficit's sustainability. Some of the studies suggest that a large dollar depreciation could eventually be required to restore sustainability. But the inflation-adjusted 25% depreciation of the dollar from 2002-2008 had little effect on the CA deficit, which kept growing until 2007. The CA deficit did not decline rapidly until after the financial crisis of September 2008—a period with little trend movement in the dollar.

Hurricane Katrina struck the Gulf Coast in late August 2005, causing extensive wind damageand catastrophic flooding, and leading to Presidential disaster declarations for Alabama, Florida,Louisiana and Mississippi. The storm was one of the worst natural disasters in the nation's history. Hurricane Rita, which made landfall along the Gulf Coast in late September 2005, was somewhatless severe than Katrina when it hit. But a few days earlier in the Gulf it had been a powerfulcategory five hurricane. Government officials and citizens shaken by the devastation of the earlierstorm mounted aggressive preparedness efforts in anticipation of Hurricane Rita, drawing on lessonslearned from Katrina just weeks earlier. Hurricane Katrina is estimated to have killed more than 1,200 people, and displaced about2 million. The death toll continues to be revised, as bodies continue to be found, and investigationsinto the causes of death of others continue. (1) More than 4,000 persons are still reported missing. The FederalEmergency Management Agency (FEMA) recently increased its estimate of the number of personsdisplaced by Hurricanes Katrina and Rita to about 2 million. (2) The logistical hurdles posed by Hurricane Katrina were formidable. Communications wereknocked out in hard-hit areas, which compromised the process of assessing and prioritizing needs. Physical access was blocked in some areas, and civil disorder was a problem in some others. Eachkept responders from delivering aid. In some cases, victims were isolated without water andmedicines, and hospitals that had not been evacuated before the hurricane were unable to sustainoperations. Each circumstance required the emergency evacuation of critically ill patients to a triagecenter, which then itself became overwhelmed. Federal, state, and local governments, businessesand corporations, the faith community and other volunteers all pitched in to speed relief to Katrina'svictims, but keeping all of it coordinated was a challenge. Responding to a catastrophe of the scope of Hurricane Katrina requires that a variety ofpublic health and medical activities be carried out and coordinated. Public health activities are thosethat identify, address or prevent health problems in populations. Examples include assuring thesafety of food and water, preventing the spread of disease in shelters, evaluating the safety ofneighborhoods for rehabitation, and assuring the health and safety of responders. Medical activitiesare those that deliver healthcare services to individuals. Examples include treatment of injuries,continuity of care for those with chronic illnesses, mental health counseling, and cause-of-deathinvestigation. The medical response to Hurricane Katrina may have posed the greater challenge. The publichealth response required the coordination of variety of agencies, community-based organizations,and private parties at different levels of government, though these entities had generally workedtogether in the past. The medical response, in contrast, required the coordination of a broader mixof federal, state and local government agencies, private parties and others, with no comparable recentprecedent or experience in such an effort on this scale. Over the past decade, in response to the Oklahoma City bombing, the terror attacks of 2001and several serious natural disasters, Congress and the Administration created new authorities,structures and plans to assure that government at all levels can respond well to disasters likeHurricane Katrina. Local and state governments are to be the first responders in a disaster. Whentheir resources are overwhelmed, federal assistance is provided under the Robert T. Stafford DisasterRelief and Emergency Assistance Act (the Stafford Act) and other authorities. A new NationalResponse Plan (NRP) places the Secretary of Homeland Security in charge of coordinating theoverall federal response. The Secretary of Health and Human Services (HHS) is in charge ofcoordinating the federal public health and medical response during a disaster. In the wake of Hurricanes Katrina and Rita, Congress is likely to review response efforts,recent public health preparedness laws and the NRP. While even the best plan and response maybe overwhelmed in a disaster of the scope of Hurricane Katrina, Congress may nonetheless findopportunities to revisit management structures, programs and goals in order that national responsecapability can be steadily improved. This report will discuss relevant authorities and response plans that guided the public healthand medical response to the 2005 hurricanes. Given its catastrophic scope, the response to HurricaneKatrina will be the primary focus of this report, with reference to the Hurricane Rita response whenrelevant. The roles and response activities of selected agencies in HHS and DHS will be discussed.Finally, a number of policy issues will be discussed. This report will be updated as circumstanceswarrant. For a broader discussion of all-hazards public health and medical preparedness, see CRS Report RL31719 , An Overview of the U.S. Public Health System in the Context of EmergencyPreparedness . The Stafford Act authorizes the President to issue major disaster and emergency declarations,whereupon federal agencies are authorized to provide assistance to affected states. (3) Through executive orders, thePresident has delegated to the Federal Emergency Management Agency (FEMA), within DHS,responsibility for administering the major provisions of the Stafford Act. In calendar year 2005,President Bush issued 48 major disaster declarations, including those for Alabama, Florida,Louisiana, and Mississippi for Hurricane Katrina, and for Texas and Louisiana for HurricaneRita. (4) Activities undertaken under authority of the Stafford Act are provided through fundsappropriated to the Disaster Relief Fund (DRF). Federal assistance supported by DRF money is usedby states, localities, and certain non-profit organizations to provide mass feeding and shelter, restoredamaged or destroyed facilities, clear debris, and aid individuals and families with uninsured needs,among other activities. Federal agencies that receive mission assignments from DHS and provideassistance pursuant to the NRP are also reimbursed through funds appropriated to the DRF. Inaddition to the FEMA assistance authorized by the Stafford Act, a wide range of aid is provided byother federal agencies under their general statutory authority. The National Response Plan (NRP) is the framework under which federal and voluntaryagencies are instructed to operate when a disaster occurs. (5) The NRP was released by DHS in December 2004, replacing theprevious Federal Response Plan. The NRP is an administrative plan and does not establish newfederal authorities. In general, federal responsibilities in the plan are intended to assist state andlocal authorities, not to replace them. According to the NRP, which is under the overall coordination of the Secretary of HomelandSecurity, the Secretary of HHS is tasked with Emergency Support Function (ESF) #8, thecoordination of public health and medical services, as laid out in the plan's ESF#8 annex. (6) HHS is responsible forcoordinating the following activities under ESF#8, and may request assistance from 14 designatedsupport agencies and the American Red Cross as needed: Assessment of public health and medical needs; Health surveillance; Medical care personnel; Health and medical equipment and supplies; Patient evacuation; Patient care; Safety and security of human drugs, biologics, and medical devices, veterinarydrugs, and other HHS-regulated products; Blood and blood products; Food safety and security; Agriculture safety and security (principally with regard to food-producinganimals and animal feeds and drugs); Worker health and safety; All-hazard public health and medical consultation, technical assistance andsupport; Behavioral health care; Public health and medical information; Vector control (e.g., control of disease-carrying insects androdents); Potable water, wastewater and solid waste disposal; Victim identification and mortuary services; and Protection of animal health (principally with regard to HHS-regulated animalfeeds and drugs). The HHS Concept of Operations Plan (CONOPS) for Public Health and MedicalEmergencies outlines how HHS plans to implements its emergency preparedness and responseauthorities and establishes the department's policies for emergency preparedness and response. (7) The CONOPS plan designatesthe Secretary of HHS as the official responsible for the overall response to public healthemergencies. The Assistant Secretary for Public Health Emergency Preparedness (ASPHEP) is toact on behalf of the Secretary to direct and coordinate the department's efforts, including on-sceneoperations and liaison with the DHS and other federal agencies. The plan lays out additionalresponsibilities of HHS offices and agencies during an emergency. (8) HHS does not bear primary responsibility for mass care, which is the coordination ofnon-medical services such as shelter, feeding, emergency first aid, and efforts to reunite displacedfamily members. Mass care is the responsibility of DHS and is carried out by FEMA and theAmerican Red Cross according to ESF#6. HHS is also not responsible for urban search and rescue, which is also the responsibility of DHS and FEMA pursuant to ESF#9. Furthermore, HHS maydepend on numerous other agencies to carry out certain of their ESF activities (e.g., public safety,road clearing and power restoration) before some ESF#8 activities can commence. Many of HHS's responsibilities under ESF#8 are within the department's primary control. An important exception is the National Disaster Medical System (NDMS), which comprises teamsof medical professionals who are pretrained to deploy and provide medical services in the immediateaftermath of a disaster before other federal assets arrive. NDMS, which previously operated underthe Public Health Service in HHS, was transferred to DHS in the Homeland Security Act of 2002( P.L. 107-296 ), and now operates under FEMA. NDMS will be discussed in greater depth insubsequent sections of this report. Certain other critical components of the medical response arehoused in the Departments of Defense and Veterans Affairs, and the private sector. Absent an emergency, most public health authority, such as mandatory disease reporting,licensing of healthcare providers and facilities, and quarantine authority, rests with states as anexercise of their police powers. Most states have considerable powers in responding to public healthevents, and most can also declare public health emergencies to expand their powers further whenneeded. (9) The federal roleis largely assistive through the provision of funding, additional personnel, and specialized servicessuch as laboratory testing and surveillance. This model does not change substantially inemergencies, though there are statutory provisions for some specific emergency expansions offederal public health authority. Section 319 of the Public Health Service Act provides broad authority for the Secretary ofHHS to declare a public health emergency at the federal level. Following the 2001 terror attacks,Congress updated this authority in the Public Health Security and Bioterrorism Preparedness andResponse Act of 2002 ( P.L. 107-188 ). One provision in the bioterrorism act allows the Secretary,during a public health emergency, to waive certain requirements for provider participation in servingindividuals enrolled in Medicare, Medicaid and the State Children's Health Insurance Program(SCHIP.) (10) Otherwise,the statutory authority for a federal declaration of a public health emergency rests in broad language,as follows: If the Secretary determines, after consultation with suchpublic health officials as may be necessary, that -- (1) a disease or disorder presents a public healthemergency; or (2) a public health emergency, including significantoutbreaks of infectious diseases or bioterrorist attacks, otherwise exists, the Secretary maytake such action as may be appropriate to respond to the public health emergency, including makinggrants, providing awards for expenses, and entering into contracts and conducting and supportinginvestigations into the cause, treatment, or prevention of a disease or disorder as described inparagraphs (1) and (2). (11) The declaration expires upon the Secretary's determination that an emergency no longer exists, orin 90 days, whichever comes first, but is renewable upon the Secretary's finding that an emergencypersists. In response to Hurricane Katrina, the HHS Secretary Michael Leavitt declared public healthemergencies in Alabama, Florida, Louisiana and Mississippi on August 31, 2005, two days after thestorm made landfall along the Gulf Coast. On September 4, as thousands of evacuees from thedevastated city of New Orleans began arriving in Texas, the Secretary declared a public healthemergency in that host state. The additional host states of Arkansas, Colorado, Georgia, NorthCarolina, Oklahoma, Tennessee, West Virginia, and Utah were declared by the Secretary onSeptember 7. On December 31, HHS Secretary Leavitt renewed the determinations of public healthemergency for all Katrina-affected states through January 31, 2006. (12) On September 23, inanticipation of Hurricane Rita's landfall the following day, the Secretary declared public healthemergencies in Texas and Louisiana. These declarations have since expired. (13) Prior to Hurricane Katrina,the only recent incident for which a federal public health emergency had been declared was the terrorattack of September 11, 2001. That declaration applied to all states. There is no additional statute or regulation that clarifies this authority with regard tostipulating thresholds or conditions of the determination. The decision to declare emergencies incertain host states in response to Hurricane Katrina, but not in all states, appears to be an exerciseof the Secretary's discretion. There is also no precedent for this authority to be used to supercede orassume public health authorities that are generally reserved to states, though the Secretary does havespecific emergency authorities elsewhere in statute, such as the authority to impose domesticquarantine restrictions when warranted. (14) Federal leadership for public health emergency response rests with the Secretary of HHS,with important responsibilities in the Office of Public Health Emergency Preparedness (OPHEP) andthe Centers for Disease Control and Prevention (CDC). Much of the support provided by HHS to affected states and communities could normallybe provided in the absence of federal or state declarations of public health emergencies or disasters,through assistance mechanisms that are used regularly in response to public health threats such asoutbreaks of foodborne disease. Because there has been a presidentially-declared disaster and HHShas received mission assignments from DHS in the wake of Hurricanes Katrina and Rita, the costsof HHS response activities will generally be reimbursed through the DRF administered byFEMA. (15) Given the scope of the public health disaster caused by Hurricane Katrina, virtually allagencies and offices in HHS were engaged in the response. (16) Key public healthchallenges and response efforts are described below. A number of HHS agencies have medicalresponse roles as well, which are discussed in a subsequent section. Many of the public health challenges posed by Hurricane Katrina were familiar andanticipated, based on experience with other hurricanes and floods. Flooding compromises the safetyof water supplies and the integrity of sewage disposal, leading to threats of food and waterborneillness. Power line damage and power outages increase the risk of foodborne illness andelectrocution. Hurricane wind damage may cause primary traumatic injury, while also setting thestage for subsequent chain saw injuries, punctures, and other wounds. Bites from dogs, venomoussnakes, and insects are also seen. Hurricanes and floods also carry in their wake some predictablecauses of death, including drowning, automobile crashes, carbon monoxide poisoning, and chronicconditions exacerbated by the loss of access to the healthcare system. (17) CDC notes that before 1990, the majority of hurricane-related deaths in the United Statesresulted from drowning caused by storm surges. (18) With more attention to early warning and evacuation since then,indirect causes of death such as electrocution, carbon monoxide poisoning and injury associated withcleanup have predominated. But despite warnings of the advancing storm, the majority of deathsfrom Hurricane Katrina resulted from coastal storm surges and from flooding in New Orleans. The catastrophic scope of Hurricane Katrina presented some unusual public health threats. News reports suggested that deaths may have resulted from dehydration and heat stress, especiallyin situations in which fresh water was scarce and where victims were crowded into poorly ventilatedareas, especially where they had pre-existing medical conditions. There were also reports ofhomicide, suicide and euthanasia. HHS Office of the Secretary. The HHS Officeof the Secretary is the point of coordination for all ESF#8 public health and medical supportfunctions under the NRP. HHS set up a website cataloging departmental and agency actions andother information regarding Hurricanes Katrina and Rita. (19) As noted above, the HHS Secretary declared federal publichealth emergencies in several states. The Office of the Surgeon General and the OPHEP sought toidentify and mobilize healthcare professionals and relief personnel to assist in relief efforts. Inaddition, more than 2,000 Commissioned Corps officers were deployed to the Gulf region before,during, and after Hurricanes Katrina and Rita, to assist in a number of public health and medicalactivities. (20) One immediate element of HHS response was the activation of Emergency OperationsCenters (EOCs) at HHS headquarters in Washington, DC and at numerous HHS agencies. Whenactivated, the EOCs are staffed round-the-clock, are electronically connected with each other, andare also connected with the Homeland Security Operations Center (HSOC) at DHS, which in turnreceives inputs from other Cabinet departments. This system of continuous communication andcoordination is an example of the changes that have been made in national public health responsecapability in the aftermath of the September 11 and anthrax attacks of 2001, though there is stillwork to be done in assuring that all relevant state agencies have continuous EOC communicationwith those at the federal level. (21) Agency for Toxic Substances and DiseaseRegistry. The Agency for Toxic Substances and Disease Registry (ATSDR), whichis administratively under the Centers for Disease Control and Prevention (CDC), is directed bycongressional mandate to perform specific functions concerning the effect on public health ofexposure to hazardous substances in the environment. (22) These functions include public health assessments of hazardouswaste sites, health consultations concerning specific hazardous substances, health surveillance andregistries, response to emergency releases of hazardous substances, applied research in support ofpublic health assessments, information development and dissemination, and education and trainingconcerning hazardous substances. ATSDR has conducted health hazard assessments following alarge oil spill in St. Bernard Parish, LA, that resulted from Hurricane Katrina. (23) Centers for Disease Control and Prevention. TheCDC launched a website to provide public health information in the aftermath of HurricaneKatrina. (24) The siteincludes a variety of fact sheets and other information for health professionals, response and cleanupworkers, evacuation center staff, school officials, state grantees and the general public. In addition,the site provided regular updates from the CDC Director's EOC through October 7. (25) Once activated, the EOCwas the point of contact for state health departments, other CDC grantees, and other interestedparties to request assistance or to provide the agency with new or updated information about publichealth concerns on the ground. CDC deployed several hundred of its staff to affected states, including individuals in thefollowing specialties: medicine, epidemiology, sanitation, environmental health, assessment, diseasesurveillance, public information and health risk communication. In addition, the agency deployedmore than 600 staff to its EOC response. The agency also deployed the Strategic National Stockpileof drugs and medical supplies to affected states. Among the specific supplies delivered for thisdisaster were: 1) many thousands of doses of vaccines for tetanus/diphtheria, and hepatitis A and B;2) vials of insulin; 3) prescription pain medications; and 4) ventilator kits. The agency also made numerous public health recommendations to address the anticipatedand atypical threats posed by Hurricane Katrina and its aftermath. CDC made several specificrecommendations for infectious disease control, including the immunization of emergencyresponders, relief workers and evacuees. The agency expressed particular concern about the risksof tetanus from wounds, and of influenza, measles, chickenpox and hepatitis A in crowdedconditions, especially if some children may not have had current immunizations. (26) CDC also alerted healthofficials and others to cases of Vibrio infection in hurricane victims, which caused 22 illnesses, fiveof them fatal. (27) Vibrio, a bacterial pathogen found in salty and brackish waters, can cause foodborne illness or severe woundinfection. CDC made an effort to alert health workers to this unusual hazard because Vibrio infections are especially severe, leading to loss of an affected limb or death within a matter of days,sometimes despite aggressive treatment. On September 17, CDC and the Environmental Protection Agency (EPA) issued a jointreport of their initial assessment of environmental health and infrastructure hazards in New Orleans,to assist state and local officials in planning for reoccupation of the city. (28) FEMA requested CDCassistance in evaluating any potential health effects of housing displaced persons in trailers sited onformer agricultural fields. The agency has also evaluated the potential health threat posed byexposure to mold, (29) and provided assistance in the federal environmental cleanup effort. (30) Responders may be at increased risk from certain hazards in the aftermath of disasters. CDC'sNational Institute for Occupational Safety and Health (NIOSH) developed resources for occupationalsafety and health for responders, and in hospitals, health departments, and shelters involved in theresponse to Hurricane Katrina. (31) Food and Drug Administration. In the aftermathof Hurricane Katrina, the Food and Drug Administration (FDA) issued numerous recommendationsregarding the handling of drugs, biologics and medical devices that may have been harmed byexposure to floodwaters or loss of refrigeration. The agency also issued guidance in ensuring thesafety of food, and participated in evaluations of the safety of fish and shellfish in affected GulfCoast waters. (32) The medical response to a disaster may be more challenging than the public health response. Most public health activities are inherently governmental and involve agencies that work togetherregularly, though often at different levels of government. Medical response capabilities, in contrast,span a wide array of sectors, both public and private, and involve more non-traditional partneringssuch as the coordination of DHS and Department of Defense (DOD) activities by HHS. A successfulmedical response to a disaster requires the coordination of six elements: patients in need; a sitewhere care is provided; the needed drugs, supplies and equipment; a provider workforce; a systemof record keeping; and a financing mechanism. Though national disaster planning has long anticipated the need to respond to a mass casualtyincident, such a situation, with overwhelming numbers of non-fatal illness and injury victims, hasnot happened recently in the United States. While certain recent events (e.g., the September 11,2001 attack and some jetliner crashes) have tested the national system for mass fatality management,Hurricane Katrina is the only event in recent times that has caused non-fatal mass casualties of ascope that could not easily be absorbed into the existing healthcare system. Scrutiny of the responseto this challenge is ongoing. As discussed earlier, federal leadership for medical emergency response is based in HHS perits coordinating responsibility under NRP ESF#8. Numerous medical response programs andactivities reside in HHS agencies within the Public Health Service (PHS). In addition, theCommissioned Corps of the PHS, headed by the Surgeon General, is composed of many healthcareprofessionals who are expected to maintain current skills and deploy to support emergency responseswhen needed. (33) Another critical medical response asset, the National Disaster Medical System (NDMS) wastransferred from HHS to DHS in March 2003. Additional critical assets such as personnel, bedcapacity, equipment and patient transport capability are based in the Departments of Defense andVeterans Affairs, as well as the private sector. Hurricane Katrina posed a number of challenges to the healthcare system, many withoutrecent precedent. Physical access to healthcare facilities was hampered across the Gulf Coastfollowing the storm, and many facilities sustained primary damage. Several facilities that did notevacuate prior to the storm found their patients in dire circumstances when rising floodwaters madeit progressively more difficult to maintain standards of care. Individuals with pre-existing healthconditions worsened as they were cut off from access to essential medications and treatments suchas oxygen, insulin, or kidney dialysis. In some flooded areas, access to fresh water was so scarce thatvictims and their caregivers suffered from dehydration. In the wake of large-scale evacuations ofNew Orleans beginning on September 1, victims from shelters and from failing healthcare facilitieswere evacuated to a temporary field hospital at the New Orleans airport, where medical responseteams, initially overwhelmed, conducted triage and prioritized victims for airlift to availablehealthcare facilities outside the flood zone. Meanwhile, medical workers continued their efforts toreach numerous isolated communities along the Mississippi and Louisiana coast. Morgues were setup in Louisiana and Mississippi to house and identify the dead. In the wake of the catastrophe, victims were sent for treatment to numerous permanent andtemporary healthcare facilities across a wide area of the south central United States, often becomingseparated from their loved ones and important medications and medical records along the way. Public health emergencies were declared in nine states that did not suffer primary impacts fromHurricane Katrina but that became hosts to large numbers of evacuees needing care. Healthcarefacilities sought assistance in covering the costs of care for those who were previously or newlyuninsured. The short-and long-term mental health needs of victims and responders had to be assessed. Immediate problems such as Post-Traumatic Stress Disorder receive considerable popular attention,but some evidence shows that victims of catastrophic disasters may continue to suffer from majordepression and other disorders for several years. Mental health services following disasters mustalso account for pre-existing mental health and substance abuse problems in some victims. Centers for Medicare and Medicaid Services. TheCenters for Medicare and Medicaid Services (CMS), which administers the Medicare, Medicaid andSCHIP programs, took several actions to streamline access to healthcare for those displaced byHurricanes Katrina and Rita. Many evacuees crossed state lines without proper documentation ofprogram eligibility. HHS Secretary Leavitt exercised certain authorities under Sections 1115 and1135 of the Social Security Act and waived several program requirements, in order to assistdisplaced victims and their providers. (34) Health Resources and Services Administration. The Health Resources and Services Administration (HRSA) provides grants to Federally QualifiedHealth Centers, Ryan White HIV/AIDS outpatient providers and some other providers and clinicsthat offer health services to underserved populations. HRSA administers several relevant programsin emergency preparedness. One is a grant program for state and local hospital preparedness forpublic health emergencies, which is meant to help states identify and coordinate hospital bedcapacity, personnel and medical supplies in an emergency. Another is a program for the advanceregistration of volunteer health professionals. (35) The latter program is discussed in a subsequent section on Issuesfor Congress . HRSA undertook a number of response efforts following Hurricane Katrina, including staffdeployments. (36) OnSeptember 9, HHS Secretary Leavitt announced that HRSA would advance approximately $2.3million in FY2005 funds to establish 26 new health center sites in areas impacted by HurricaneKatrina. (37) The agencyissued a notice clarifying that providers who normally provided services under the liabilityprotections of federal employment in certain HRSA-supported health centers would continue toreceive protection while serving at temporary locations established in response to the hurricane. Inaddition, in affected areas, the agency offered expedited procedures for designating HealthProfessions Shortage Areas, and for reviewing loan repayment applications for National HealthService Corps personnel. National Institutes of Health. The NationalInstitutes of Health (NIH) set up a phone-based medical consultation service for providers treatingvictims or evacuees from the Hurricane Katrina disaster, which it operated through September 2005.The agency also identified hospital bed capacity within its medical system, among otheractivities. (38) TheNational Institute of Environmental Health Sciences developed an interactive GeographicInformation System (GIS) for Texas, Louisiana and Mississippi to help model the movement ofcontaminants and identify sources of human exposure. (39) Substance Abuse and Mental Health ServicesAdministration. (40) The Substance Abuse and Mental Health ServicesAdministration (SAMHSA) has as its mission to build resilience and facilitate recovery for peoplewith or at risk for substance abuse and mental illness. SAMHSA's Center for Mental HealthServices (CMHS) focused on providing resources to aid in the recovery process followingHurricanes Katrina and Rita, and established a toll-free hotline for people in crisis in the aftermathof this disaster. (41) SAMHSA has three main mechanisms to provide funding to address disaster victims' mentalhealth needs: 1) the Crisis Counseling Assistance and Training program (CCP), 2) SAMHSAEmergency Response Grants (SERG), and 3) supplemental appropriations. The CCP is administeredby SAMHSA through an interagency agreement with FEMA. Eligible entities (state mental healthagencies and tribal authorities) work with SAMHSA to apply for and receive grants for counselingoutreach and training local crisis counselors to provide assistance after federal relief workers leavethe area. SERG are available when local resources are overwhelmed and other resources areunavailable. SAMHSA may provide SERG for crisis mental health and substance abuse servicesin accordance with SAMHSA's Mental Health and Substance Abuse Emergency ResponseCriteria. (42) Supplemental appropriations may be used by SAMHSA for emergency mental health and substanceabuse counseling and related services not addressed by the CCP, the SERG, or other existingfunding. These may include, for example, substance abuse and mental health treatment services,psychotropic medication expenses, methadone treatment, suicide prevention programs, and majoradministrative expenses for mental health and substance abuse resulting from the disaster. National Disaster Medical System. The NationalDisaster Medical System (NDMS) was established in HHS in 1984 to provide medical and ancillaryservices when a disaster overwhelms local emergency services. (43) NDMS was most recentlyreauthorized through 2006 in the Public Health Security and Bioterrorism Preparedness andResponse Act ( P.L. 107-188 ), (44) and was transferred to DHS in the Homeland Security Act ( P.L.107-296 ) effective in March 2003. (45) NDMS is administered by FEMA and is a partnership of HHS,DHS, the Departments of Defense and Veterans Affairs, state and local governments, and the privatesector. NDMS consists of a number of response teams that can deploy to a scene rapidly and set upfield operations that are self-sustaining for up to 72 hours, until additional federal support arrives. NDMS also provides for transportation of large numbers of casualties from an impacted site todistant locations for care. There are several types of NDMS teams, which are typically comprisedof 20-35 individuals. Team members train as a group between deployments, under a defined teamcommander, and are versed in incident command and other emergency management protocols inaddition to their disaster medicine skills. NDMS teams can be requested by the Secretary of HHSpursuant to NRP ESF#8. Medical professionals on the teams must be licensed to practice in at leastone U.S. jurisdiction and are not generally federal employees unless deployed, at which time theyare considered federalized for liability and compensation purposes. On September 9, 2005, FEMAreported that it had deployed more than 87 NDMS teams in response to Hurricane Katrina. Information about specific deployment activities follows. Disaster Medical Assistance Teams (DMATs) are teams of physicians, nurses and othermedical professionals who provide medical care. FEMA reported that it deployed all of the nation'smore than 50 DMATs in the initial response to Hurricane Katrina. At least one team waspredeployed to the New Orleans Superdome shelter. (46) The Louis Armstrong International Airport outside New Orleansserved as a temporary field hospital for hurricane victims as they were evacuated from the city. DMAT members from a dozen teams deployed at the airport reported overwhelming numbers ofpatients, some of whom could not be saved under the austere conditions they faced. Teams fannedout across the affected Gulf Coast, doing what they could to accommodate victims of the hurricanewhich, by some reports, also robbed the region of 6,000 hospital beds. (47) Disaster Mortuary Operational Response Teams (DMORTs) are composed of medicalexaminers, coroners, pathologists, forensic dentists, radiologists, mental health counselors, funeraldirectors and support personnel. Teams typically consist of 26 members. They assist in handlingthe dead and conducting two types of investigations in mass fatality incidents: disaster victimidentification (DVI) and death investigation. DVI involves the identification of victims, in order thattheir loved ones can have documentation of their deaths, claim the remains, and carry out funeralrites. It is considered an essential responsibility of governments in assisting survivors in theirrecovery. Death investigation involves establishing the cause, time and other circumstances of death. These investigations are conducted under the authority of state or local medical examiners, withassistance from DMORT personnel and federal funding through FEMA. DMORT sites were set upin Gabriel, Louisiana, and Gulfport, Mississippi, each site with four DMORT teams and one portablemorgue. (48) Veterinary Medical Assistance Teams (VMATs) are composed of veterinarians, techniciansand support personnel who provide animal rescues, health assessments and other services during adisaster. Following Hurricane Katrina, all four VMAT teams were deployed to the Gulf Coast toprovide care for displaced companion animals and support for damaged or destroyed veterinarypractices. (49) NDMS also supports National Pharmacy Response Teams of pharmacists, pharmacytechnicians, and students of pharmacy who assist in mass-dispensing of medications during disasters,and National Nurse Response Teams to assist if a disaster such as a bioterrorism event were torequire a mass prophylaxis or mass vaccination campaign, or if the healthcare workforce is otherwiseoverwhelmed. Federal Coordinating Centers (FCCs) are based in the Departments of Defense (DOD) andVeterans Affairs (VA), where they identify available nationwide hospital bed capacity in civilian andmilitary hospitals, and coordinate planning and distribution of patients evacuated from a disasterarea. (50) Since NDMS deploys in situations other than disasters (e.g., National Special Security Eventssuch as political conventions) and much of its work is, therefore, not eligible for reimbursement fromthe DRF, the program has a regular annual appropriation. NDMS is funded through the PublicHealth Programs account under the DHS Preparedness and Response title, and received $34 millionin FY2005 and in FY2006. (51) On September 8, the President signed the second emergencysupplemental appropriation for Hurricane Katrina relief ( P.L. 109-62 ), which authorized the transferof up to $100 million from the DRF to maintain Katrina-related NDMS response operations. In itsweekly report to Congress on Hurricane Katrina expenditures, FEMA reported that it had transferredthe entire amount. (52) During a presidentially-declared disaster and pursuant to the NRP, the DOD assists theSecretary of HHS with numerous ESF#8 responsibilities. These include evacuating patients, locatingor providing hospital beds, additional personnel and supplies, and providing specialized laboratorytesting and other technical assistance. (53) On September 13, DHS reported that DOD had: 1) 789 beds available in field hospitals atLouis Armstrong New Orleans International Airport in New Orleans, the 14th Combat SupportHospital, and aboard USS Bataan, USS Iwo Jima, USS Tortuga and USS Shreveport; and 2) 20 Navyships on station in the region to provide medical support, humanitarian relief, andtransportation. (54) During a presidentially-declared disaster and pursuant to the NRP, the Department ofVeterans Affairs (VA) assists the Secretary of HHS with numerous ESF#8 responsibilities. Theseinclude coordinating available hospital beds, additional personnel and supplies, and providingtechnical assistance. (55) The VA evacuated veterans from two of its own medical centers impacted by HurricaneKatrina, one in Biloxi, Mississippi, which was evacuated prior to landfall and demolished by thestorm, and the other in New Orleans, which was evacuated after the city was flooded. The VA alsoactivated 17 of its NDMS Federal Coordinating Centers to coordinate the relocation of evacuatedveterans, as well as of civilian patients who were evacuated from permanent and temporary hospitalsin storm-ravaged areas (56) In the aftermath of Hurricane Katrina there were concerns that federal readiness for thedisaster had been hampered by an overemphasis on planning for terrorism at the expense of planningfor natural disasters. A similar debate exists for public health preparedness, namely how the balanceshould be struck between all-hazards preparedness versus readiness for specific threats such as acyanide attack or pandemic influenza. In comprehensive bioterrorism preparedness legislation afterthe 2001 terror attacks, Congress authorized grants to states to "address the following hazards in thefollowing priority: (i) Bioterrorism or acute outbreaks of infectious diseases (and) (ii) Other publichealth threats and emergencies." (57) Discussions have followed about whether a focus on terrorism(e.g., the civilian smallpox vaccination program) has hampered preparedness for other threats, or,on the other hand, whether flexible all-hazards grant guidance has failed to assure state preparednessfor some specific threats (e.g., a cyanide or plague attack). (58) Some reports suggest that the public health response to Hurricane Katrina was streamlinedby some all-hazards improvements made since 2001. For example, when the Louisiana state publichealth laboratory in New Orleans was disabled by the storm, operations were quickly diverted tobranch public health laboratories in Shreveport, Lake Charles and Amite, or to other states asneeded. (59) The swiftresponse was facilitated by inter-state electronic communications systems and relationships that hadbeen established since 2001. Upon completing their missions, disaster response personnel are typically required to reportto supervisors on their activities. These after-action reports are expected to be prepared andsubmitted to a variety of agencies involved in the response to Hurricane Katrina. As after-actionreports become available, Congress may review the public health and medical response to HurricaneKatrina to determine how well it met the goals Congress laid out for achieving a flexible, efficientnational system for response to health emergencies. Part of this review may be the consideration ofthe process of developing standards for federal, state and local public health preparedness, a processwhich has proven difficult in the past. Needs assessments are considered critical in the response to catastrophic disasters. Whenit is likely that response assets will be overwhelmed, lives may be saved by prioritizing the responseas effectively as possible (e.g., matching the deployment of NDMS teams as well as possible todefined areas of medical need). However, the response to public health and medical needs may haveto be delayed until response has been made to other problems such as civil disorder or a lack ofphysical access. Therefore, coordinating the assessments across all sectors is essential. Following a disaster, the NRP calls for the early deployment of Emergency Response Teamsfor Assessment (ERT-A), which are FEMA-led teams that work with state Emergency OperationsCenters (EOCs) and others to conduct initial and ongoing impact assessments. Early assessmentsdefine the extent of problems such as flooding, the integrity of roads and bridges, and damage to theelectricity grid. Representatives from selected ESF support agencies are to be included in ERT-Adeployments. The ERT-A teams are to report back to an Interagency Incident Management Group(IIMG), which is tasked to report to the Secretary of DHS with recommendations for those areas inmost critical need of response assets and activities. (60) The CDC manages a program in Disaster Epidemiology and Assessment, which includesdevelopment of a disaster rapid needs assessment tool designed to quickly provide emergencymanagers with reliable information about potential public health threats. (61) The CDC has conductedthese assessments for several domestic and foreign disasters, including Hurricane Katrina. (62) The tool is not designedfor the rapid assessment of medical or mental health needs. CDC has reported on longer-termassessments of medical and mental health needs in areas affected by Hurricanes Katrina and Rita,and on surveillance systems, set up in evacuee shelters, that allowed for the measurement of theburden of certain chronic diseases such as diabetes and mental illness. (63) Further review of thisinformation will inform efforts to improve the tools used for needs assessment, though it is not knowwhether there are efforts underway to develop a process specifically for the rapid assessment ofmedical and mental health needs in the immediate aftermath of a disaster. Policy issues may include the performance of the FEMA ERT-A process in supporting themore specific goals of assessing public health, medical and mental health needs following HurricaneKatrina, and, indeed, whether an effective process of medical and mental health needs assessmentexists. In particular, are the federal mechanisms to support rapid public health, medical and mentalhealth needs assessments in place and adequate to support a capable national response? Also, arethese processes integrated well within the larger FEMA-led process of overall assessment, in orderthat appropriate public health, medical and mental health responses can reach their targets quicklyand efficiently? Overview. Following Hurricane Katrina, therewere numerous reports of problems experienced by fragile or medically needy persons. Theseproblems included 1) drownings and dehydration in facilities that did not evacuate and were floodedby the hurricane storm surge; 2) emergency evacuations of deteriorating patients from hospitals thatwere unable to care for patients after power, water and food had been cut off for several days; and,3) chronic conditions exacerbated by the loss of access to needed care such as insulin, oxygentherapy or kidney dialysis. In preparing for Hurricane Rita, authorities in many communities on theTexas and Louisiana coast paid particular attention to identifying and helping those with specialhealth needs, providing public transportation to support the evacuation of nursing homes and thosereceiving other health services. Hurricane Katrina also exposed a number of problems that healthcare facilities experiencedas a result of the scope of the disaster. The failure of communications systems across the Gulf Coastmade it difficult for facilities to seek assistance, or for emergency responders to know that a facilitywas in need. In addition, since all facilities were simultaneously affected, the use of shared resources("double-counting") led to problems. For example, single ambulance companies had contracted toevacuate multiple facilities. This arrangement, which would work well if facilities had been affectedin isolation, was untenable in a wide scale disaster. Following the hurricanes, experts have stressed the need for coordinated disaster planningin healthcare. They note that in addition to assuring that facilities are well prepared on their own,they must be integrated into community-wide emergency management activities. Further, identifyingvulnerable non-institutionalized populations and assuring their care before, during and after adisaster also requires a community-wide coordinated approach. Regulation of Institutions and Services. Healthcare facilities (e.g., hospitals and nursing homes) are regulated by state and local authorities,with varying degrees of federal involvement. Regulations provide an opportunity for oversight oftwo critical disaster planning functions: evacuation and continuity of operations. (In this context,continuity of operations, the ability to sustain life-saving operations in the absence of power, waterand other external supplies, could also be considered sheltering in place. ) Given the nature of theirbusiness, hospitals are generally able to continue operations in the face of power outages, at leasttemporarily, because they employ generators to maintain critical life-support functions in anemergency. Furthermore, it is difficult to evacuate hospital or nursing home patients as their specialneeds may require special transport and host facilities. This may motivate better preparedness forcontinuity of operation as a more feasible option than evacuation. Healthcare facilities should beable to do both, though, as different types of disasters would require one or the other response. Hospitals in New Orleans that initially chose to continue operations ultimately had to evacuate. Evacuation policies and regulations for healthcare facilities have long focused on fire safety,for which the need to evacuate is evident, and for which drills are regularly conducted by local firesafety authorities. Evacuation planning for a predicted threat such as a hurricane may be morechallenging. The decision to evacuate or not may hinge on emergency management rather thanhealthcare expertise, and may be guided by local officials rather than facility managers. Forexample, the mandatory evacuation order issued by the city of New Orleans on August 28 excluded"essential personnel of hospitals and their patients," but did not exempt other types of healthcarefacilities. (64) Inpreparing for Hurricane Charley in Florida in 2004, one county issued a countywide mandatoryevacuation order, while a neighboring county issued a mandatory order for nursing homes only. (65) While healthcare facilities are licensed and regulated by state and local authorities, there isa role for federal oversight of their disaster preparedness and response capabilities through standardsdeveloped by the Occupational Safety and Health Administration (OSHA) and the Joint Commissionon Accreditation of Healthcare Organizations (JCAHO), as well as through conditions ofparticipation (CoPs) for Medicare and Medicaid. (66) Following Hurricane Katrina, a JCAHO witness testified thatthe commission certifies 85% of U.S. hospitals encompassing 96% of hospital beds. (67) JCAHO-certified hospitalsare deemed by federal law as meeting the conditions of participation for Medicare and Medicaidreimbursement. The commission's 2005 accreditation manual for hospitals includes standardsregarding emergency management, in addition to standards addressing certain specific threats suchas fire and hazardous materials. (68) The Government Accountability Office (GAO) has reportedconcerns regarding enforcement of JCAHO certification standards. (69) While JCAHO has certification programs for other types of healthcare institutions besideshospitals, some of the programs are voluntary or do not cover a majority of the relevant industry.Conditions of participation for Medicare and Medicaid reimbursement for other institutions, as wellas for various non-institutional services (e.g., home-based care), vary in the degree to which disasterplanning is addressed. The role of state and local authorities in assuring disaster preparedness forthese facilities and services appears to dominate. Community-based Disaster Planning. InCongressional testimony following Hurricane Katrina, a JCAHO witness stressed the need forhospitals to prepare for disasters within a community-wide structure, not in isolation. (70) The commission's 2005emergency management standards include a requirement that hospitals conduct a "hazardvulnerability analysis" to determine the types of hazards the facility is likely to face. There are alsoseveral standards requiring that hospitals have and test emergency backup systems for electricity andother utilities. Careful planning of this type could prevent planning errors such as the placement ofback-up generators in the basement of a flood-prone facility. In addition, hospitals are required tocoordinate various planning tasks with local emergency management authorities. Problems in delivering care to the chronically ill after hurricanes were described in reportsfollowing four hurricanes in Florida in 2004. (71) The emphasis of disaster planning for non-institutional servicesis based on assuring continuity of care during and after a disaster. Some communities havedeveloped programs to identify vulnerable individuals and assure continuity of care. The massivedislocation of the victims of Hurricane Katrina demonstrates how challenging this task can be. Following the terror attacks in 2001, Congress created a national program of grants to statesto improve the ability of communities to respond to emergencies that cause mass casualties. (72) The National BioterrorismHospital Preparedness Program is administered by the Health Resources and Services Administration(HRSA). (73) Grants areawarded to state health officials to develop coordinated state and regional mass casualty plans. Though grant guidance directs that a majority of funds be passed through to healthcare institutions,the program is not designed to assure preparedness for each facility or service in a state. It could bea means, however, for states to develop reliable communications systems between hospitals andemergency management authorities, or to address other aspects of coordination. There is limitedpublicly available information on how states have used hospital preparedness grant funds. Promising Practices. Some states andcommunities with disaster experience have come up with approaches to address problems of disasterplanning in healthcare. (74) For example, Florida has a requirement (in statute andregulation) that home health agencies include in patients' records individual disaster plans (e.g., anindividual evacuation plan) that have been discussed with the patient and the patient'scaregivers. (75) Floridaalso established Special Needs Shelters for vulnerable persons during the 2004 hurricanes. The statefacilitated evacuation to the shelters of individuals who were pre-identified by county healthdepartments. This arrangement facilitated care of those whose needs were not so great that theyrequired hospitalization, but that nonetheless exceeded the expertise available in Red Cross and othercommunity shelters. (76) In New York City, the Office of Emergency Management serves as the focal point ofcoordination for the Department of Aging and other city agencies to identify and plan for the careof special-needs populations during a disaster. Individuals are pre-identified from certain databasessuch as home-delivered and group meals programs and the electric utility's list of clients who are onlife support equipment. The Greater New York Hospital Association has testified on the value ofredundant communications systems that were established in city hospitals and the Office ofEmergency Management prior to the northeast blackout in 2003. (77) Options for Congress. Congress could decide tolook specifically at whether the federal requirements for facility disaster and evacuation plans areadequate, and adequately enforced. If it did so, it might consider options to improve generalemergency preparedness in healthcare facilities, including the elements of planning, staffing,training, stockpiling of supplies, evacuation procedures, and coordination with emergencymanagement authorities. In addition, the role of the HRSA hospital preparedness grant program asa mechanism for coordinated disaster planning in healthcare could be examined. As previously discussed, the NDMS was created in the 1980s under the U.S. Public HealthService in HHS, and was transferred to DHS under FEMA in the 2003. The cited intent of thistransfer, proposed by the Administration, was to assure a coordinated federal response to terrorismand other disasters. The Government Accountability Office (GAO) supported the transfer. (78) But since then, a reviewof DHS medical response capabilities, conducted at the request of then-Secretary Tom Ridge in2004, found "... that the nation's medical leadership works in isolation, its medical responsecapability is fragmented and ill-prepared to deal with a mass casualty event and that DHS lacks anadequate medical support capability for its field operating units." (79) Further, some NDMSteam members have complained that the program has not received adequate administrative supportunder FEMA. (80) Twoorganizational issues may be relevant to this concern. First, some NDMS team members have stated that their mission -- to provide direct medicalservices -- is not understood by FEMA management. (81) The Lowell report had recommended the appointment of a DHSAssistant Secretary for Medical Readiness to address this concern. (82) In July 2005, DHSSecretary Michael Chertoff announced his proposal to reorganize DHS following a comprehensivereview, which became known as the "Second Stage Review" or 2SR. (83) Chertoff announced thathe proposed to split the existing Emergency Preparedness and Response Directorate (which housedFEMA and NDMS) into two separate directorates, for distinct activities in preparedness andresponse, respectively. He announced the appointment of a chief medical officer (CMO), a positionthat had not previously existed in DHS, within the proposed preparedness directorate, as follows: ...as part of our consolidated preparedness team, I willappoint a chief medical officer within the preparedness directorate. This position will be filled byan outstanding physician who will be my principal advisor on medical preparedness and a high-levelDHS representative to coordinate with our partners at the Department of Health and HumanServices, the Department of Agriculture and state governments. The chief medical officer and his team will haveprimary responsibility for working with HHS, Agriculture and other departments in completingcomprehensive plans for executing our responsibilities to prevent and mitigate biologically-basedattacks on human health or on our food supply. (84) The following day, Chertoff announced the appointment of Dr. Jeffrey Runge to the post. (85) Under the new structure, NDMS remains within FEMA, while the CMO is within the newDirectorate for Preparedness. While NDMS is logically a response asset, some critics say theproposed structure may blunt the benefit that NDMS might have received from leadership providedby the new CMO position, since that individual would be in a different directorate. A second organizational concern with the transfer of NDMS to DHS is that NDMS andFEMA take different temporal approaches to deployment in response to a disaster. Historically,DMAT teams trained to be able to deploy rapidly and set up self-supporting field hospitals in austereconditions, without external water or power sources, within the first 72 hours after a disaster, before other federal assets arrive. (86) FEMA has historically operated under the planning assumptionthat while it would mount a response as soon as possible, state and local officials were responsiblefor emergency response in the first 72 hours following a disaster. (87) After Hurricane Katrina,a DMAT team member stated that FEMA was unable to support the historical rapid-deploymentcapability of NDMS. (88) NDMS teams are required to submit after-action reports following deployment, in order thatresponse planners can benefit from lessons learned in disaster response. Some analyses of theNDMS response to Hurricane Katrina response have become available, and more are expected,including one from DHS. (89) Policymakers likely will review the mission of NDMS and itsalignment with national goals for terrorism and disaster response. NDMS program authority expiresat the end of FY2006. Congress may decide to review the mission of NDMS and the role of DHSand FEMA in supporting it, in general, and specifically in response to Hurricane Katrina, as itconsiders reauthorization of the program. Despite the deployment of all FEMA DMAT teams in the wake of Hurricane Katrina, therewere reports of overwhelmed field hospitals and triage centers, and urgent calls from hospitals formore medical personnel. On September 3, HHS issued a call for more volunteer health professionals(VHPs) to deploy, as federalized employees, to the affected areas. All officers of the U.S. PublicHealth Service were also put on alert for possible deployment. (90) The NDMS, which wastransferred from HHS to the DHS in 2002, remains authorized within the Public Health Service Act,where it is stated that the Secretary of HHS can augment emergency response personnel by deployingvolunteers as intermittent disaster response personnel under NDMS. (91) Volunteers could alsopotentially be deployed as temporary volunteers in the Public Health Service, or as temporary federalemployees. (92) BySeptember 19, the call for additional personnel had been lifted. The licensing of medical professionals is the responsibility of state authorities. FederalizedVHPs must hold a current license in at least one U.S. jurisdiction, and the federal agency responsiblefor deployment bears the burden of verifying credentials. Federalized VHPs are considered to befederal employees for purposes of liability and compensation. VHPs can also deploy at the requestof affected states, as long as their state's licensure and certification are recognized by the requestingstate. A number of legal mechanisms govern reciprocity in order to assure that VHPs are protectedfrom liability in the requesting state. (93) One of the more challenging aspects of accepting mutual aid isthe ability to verify an individual's qualifications. The Health Resources and ServicesAdministration (HRSA) notes: According to reports, hospital administrators involvedin responding to the World Trade Center tragedy reported that they were unable to use medicalvolunteers when they were unable to verify the volunteer's basic identity, licensing, credentials(training, skills, and competencies), and employment. In effect, this precious, needed healthworkforce surge capacity could not be used. (94) Following the terrorist attacks of 2001, Congress established a program to develop a nationaldatabase for verifying the licensure and credentials of VHPs during emergencies. (95) The Emergency Systemfor Advance Registration of Volunteer Health Professionals (ESAR-VHP), administered by HRSA,is designed to assist state and local authorities in verifying the status of volunteer healthcare workersby developing standards for a nationwide database and providing funding and technical assistanceto states in linking to it. The program is in its early stages, with pilots beginning in several states,and was not ready for use in response to Hurricane Katrina. The program was funded at $8 millionin FY2005. The Administration requested $8 million for FY2006, and Congress provided $4 millionin final appropriations. Senate appropriators had commented that states could use their hospitalpreparedness grant funds to support this activity. Authority for the ESAR-VHP program expires atthe end of FY2006. While Congress has explicitly tasked HHS, through HRSA, with a federal role in creatinga nationwide system for health professionals volunteers, the DHS Chief Medical Officer (CMO) hasalso voiced an interest in coordinating this activity. (96) DHS is expected to publish, in the Federal Register, a notice ofdelegation of authority to the CMO. Until such time, comprehensive information on the scope ofthe responsibilities and activities of this office, and how the CMO will coordinate efforts with HHS,is not publicly available. The federal role in assisting states with licensure verification and other matters involved inusing VHPs during an emergency has been of interest to Congress. Relevant legislation introducedfollowing Hurricane Katrina includes S. 1638 , which would establish a NationalEmergency Health Professionals Volunteer Corps under the Secretary of HHS, among otherprovisions, and H.R. 3736 , which would provide Hurricane Katrina volunteers,including health workers, immunity from liability. The latter bill has passed the House and beenreferred to the Senate Judiciary Committee. In response to Hurricane Katrina, the HHS Office of the National Coordinator for HealthInformation Technology, working in collaboration with more than 150 public and private healthcareorganizations, established an online service for authorized health professionals to gain electronicaccess to prescription medication records for evacuees. Medication data from a variety ofgovernment and commercial sources -- Medicaid, the Veteran's Health Administration, privateinsurers, and pharmacy benefit managers -- was indexed and made accessible through a singleInternet portal (www.katrinahealth.org) to any licensed physician or retail pharmacist. Comparableefforts made the immunization records of children who evacuated from Louisiana available to publichealth officials in host states, and, through the use of Medicaid billing records, allowed thereconstruction of rudimentary health records for some of those who were displaced. (97) HHS Secretary Leavitt noted that the disaster had made the case for a national system ofelectronic health records (EHR), and that such a system could be useful in general as well as forother emergencies such as pandemic influenza. The VA, which uses a system of electronic healthrecords for its beneficiaries, was able to provide uninterrupted care to several hundred veterans whowere evacuated from its medical centers in Biloxi, Mississippi, and New Orleans, Louisiana, due tothe hurricane. Congress has taken several steps in recent years to implement a nationwide healthinformation technology (health IT) infrastructure. (98) Several bills have been introduced in the 109th Congress toboost federal investment and leadership in health IT and provide incentives both for EHR adoptionand for the creation of regional health information networks, which are seen as an important steptowards the goal of interconnecting the health care system nationwide. (Examples include H.R. 2334 , S. 1262 and S. 1355 .) On November 18, 2005,the Senate passed a bipartisan health IT bill, S. 1418 , which has been referred to theHouse for further consideration. CRS Report RS22292, Hurricanes Katrina & Rita: Addressing the Victims' Mental Health andSubstance Abuse Treatment Needs, by [author name scrubbed]. CRS Report RS22279, Hurricane Katrina and Veteran s, by [author name scrubbed]. CRS Report RL33083 , Hurricane Katrina: Medicaid Issues , by Evelyne Baumrucker, [author name scrubbed],[author name scrubbed], Elicia Herz, [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report RS22254 , The Americans with Disabilities Act and Emergency Preparedness andResponse, by [author name scrubbed]. CRS Report RS22255 , Emergency Response: Civil Liability of Volunteer Health Professionals, byKathleen Swendiman and [author name scrubbed]. CRS Report RS22252 , Older Americans Act: Disaster Assistance for Older Persons After HurricaneKatrina , by [author name scrubbed]. CRS Report RS22235, Disaster Evacuation and Displacement Policy: Issues for Congress , by KeithBea. CRS Report RL32803, The National Preparedness System: Issues in the 109th Congress , by KeithBea. CRS Report RL32858 , Health Information Technology: Promoting Electronic Connectivity inHealthcare, by [author name scrubbed]. CRS Report RS22310 , Hurricane Katrina: HIPAA Privacy and Electronic Health Records ofEvacuees, by Gina Marie Stevens. CRS Report RL31719 , An Overview of the U.S. Public Health System in the Context of EmergencyPreparedness , by [author name scrubbed].

Hurricane Katrina struck the Gulf Coast in late August 2005, causing catastrophic winddamage and flooding in several states, and a massive dislocation of victims across the country. Thestorm was one of the worst natural disasters in the nation's history. Estimates are that more than1,200 people were killed and about 2 million displaced. Hurricane Rita, which made landfall alongthe Gulf Coast in late September 2005, was ultimately less lethal than Katrina, but promptedaggressive preparedness efforts by governments and citizens shaken by the devastation of the earlierstorm. In response to a series of disasters and terrorist attacks over the past decade, in particular theterror attacks of 2001, Congress, the Administration, state and local governments and the privatesector have made investments to improve disaster preparedness and response. New federalauthorities and programs to strengthen the nation's public health system were introduced incomprehensive legislation in 2002. Congress also created the Department of Homeland Security(DHS) in 2002 to provide national leadership for coordinated preparedness and response planning. A new National Response Plan (NRP), launched by DHS in December 2004, met its first major testin the response to Hurricane Katrina. According to the NRP, the Department of Health and Human Services (HHS) is tasked withcoordinating the response of the public health and medical sectors following a disaster. HHS workswith several other agencies to accomplish this mission, which includes assuring the safety of food,water and environments, treating the ranks of the ill and injured, and identifying the dead. HHSactivities are coordinated with those of other lead agencies under the overall leadership of DHS. Congress and others will review the response to Hurricanes Katrina and Rita with an eyetoward assessing how well the NRP worked as an instrument for coordinated national response, andhow well various agencies at the federal, state and local levels carried out their missions under theplan. Hurricane Katrina dealt some familiar blows in emergency response. The failure ofcommunication systems, and subsequent difficulties in coordination, challenged response efforts inthis disaster as with others before it. Hurricane Katrina also pushed some response elements, suchas surge capacity in the healthcare workforce, to their limits. The response to Hurricane Katrina hasalso called attention to the matter of disaster planning in healthcare facilities, and the potential roleof health information technology in expediting the care of displaced persons. Policymakers will nodoubt study these elements of the Katrina response and seek options for continued improvement innational disaster preparedness and response. This report discusses the NRP and its components for public health and medical response,provides information on key response activities carried out by agencies in HHS and DHS, anddiscusses certain issues in public health and medical preparedness that have been raised by theresponse to the 2005 Gulf Coast hurricanes. This report will be updated as circumstances warrant.

About 8.3 million children under age 19 in the United States, or 10.4% of children in this age group, had no health insurance for at least some of 2009. (Similarly, about 10.3% of children in this age group had no health insurance for at least some of 2008.) Uninsured children are, on average, less likely than insured children to have the recommended number of well-baby and well-child medical visits and less likely to receive standard immunizations. Children without health insurance also rely more on hospital emergency rooms for basic care and therefore receive such care in the least cost-efficient manner. A child's health insurance status depends largely on decisions made by his or her parents or guardians, and is highly dependant on whether these adults receive employer-sponsored coverage. If the child's parents receive employer-sponsored coverage, it is likely that the child will as well. For those children not covered by their parents' (or guardians') employer-sponsored insurance, public may be programs available. Medicaid is a means-tested entitlement program that finances the delivery of primary, acute, and long-term medical care. Each state designs and administers its own version of Medicaid under broad federal rules. The state Children's Health Insurance Program (CHIP) allows states to cover targeted low-income children with no health insurance in families with incomes above Medicaid eligibility levels. States may enroll targeted low-income children in CHIP-financed expansions of Medicaid, create new separate state CHIP programs, or devise combinations of both approaches. A small number of children without employer-sponsored coverage, Medicaid, or CHIP may have other health insurance coverage. Some disabled children are eligible for Medicare. Other children have insurance from policies purchased in the small-group market or from policies granted as a part of military benefits. This report examines the health insurance status of children under age 19 in 2009. Following a brief discussion of the data, the report looks at the relationship between the types of health insurance held by a child and the characteristics of the child and his or her parents (including age, other demographic characteristics, and ties to the labor market). Next, the report demonstrates the different conclusions that might be drawn from different analyses of the childhood uninsurance data. The report concludes with a discussion of trends in insurance status since 1999 for children under age 18; comparable data exist for years been 1999 and 2009, inclusive. This report uses 2009 data collected in the 2010 Current Population Survey (CPS) conducted by the Census Bureau of the U.S. Department of Commerce. The CPS is a monthly survey of non-institutionalized civilian households used primarily to collect employment data. The Annual Social and Economic Supplement (ASEC) to the CPS collects information on individual health insurance status, income, and poverty. The ASEC is also known as the March Supplement, because most of the surveys are completed in March, with many questions covering the prior year. About 100,000 addresses comprise the sample households to be interviewed. Statistical techniques adjust the data to represent all households in the nation. The March Supplement to the CPS is one of several widely used sources used to estimate the levels of uninsurance in the United States. The key variable in this report is whether each child was uninsured in 2009. More specifically, the uninsurance variable measures whether the child lacked health insurance for at least some part of 2009. This report, therefore, uses the term "uninsured" to mean uninsured at a point in 2009, not necessarily uninsured over the entire year. This section covers the relationships between health insurance and a child's and/or parent's demographic and employment characteristics. Table 1 reports the insurance status of children according to their personal characteristics. Looking at age, the percentage of uninsured children in 2009 ranged from 9.2% for children under age 6 to 12.5% for children between 13 and 18 years old. The percentage of children with public insurance decreased with the age of the child, while the percentage of those with employer-sponsored coverage increased with age. The percentage of children with employer-sponsored insurance was 52.1% for those children under age 6 compared with 60.6% for children between 13 and 18 years old. Of those children under age 6, 39.9% had public insurance, while 26.9% of children between 13 and 18 years old had public insurance in 2009. Examining differences in insurance across race and ethnicity indicates that uninsurance rates were highest among Hispanic children (17.5%), who had the lowest employer-sponsored coverage of any race/ethnic group (35.0%). On the other hand, uninsurance rates were lowest among white children (7.3%) who had the highest employer-sponsored coverage of any race/ethnic group (69.4%) Children who were black or Hispanic were more than twice as likely to have public coverage than children who were white or Asian. Children were less likely to be uninsured if they lived in the Northwest or Midwest (7.3% and 7.8%, respectively) than if they lived in the South or West (13.0% and 11.0%, respectively). Employer-sponsored health insurance covered about 63% of children in the Northeast and Midwest, and about 53% of children in the South and West. Citizens are more likely to have employer-sponsored coverage than noncitizens. Native-born and naturalized children had similar rates of employer-sponsored health insurance, at 57.7% and 58.3%, respectively. On the other hand, only 31.4% of children who were not citizens had employer-sponsored insurance. As shown in Table 2 , insurance coverage among children under age 19 who lived with at least one parent also differed by family structure. Approximately 8% of children living in a two-parent family were uninsured in 2009, compared with 12% of children living with a single mother and 16% of children living with a single father. Although children living with a single father were more likely to have employer-sponsored health insurance than those living with a single mother, children living with a single father were more likely than those living with a single mother to be uninsured because they were less likely to have public coverage. Private health insurance coverage varies with income. Among children in families living below the poverty threshold, 14.4 % had employer-sponsored coverage, 73.7% had Medicaid or other public coverage, and 14.7% were uninsured. As family income increased, children were more likely to have employer-sponsored coverage and less likely to have public coverage. A child's source of health insurance is strongly associated with his or her parents' coverage. Approximately 90% of children who lived with a parent with employer-sponsored coverage also had employer-sponsored coverage. Likewise, 97.4% of children who lived with a parent with public coverage also had public coverage. However, among children who lived with an uninsured parent (or parents), 41.2% were uninsured, but 52.8% had public coverage. This last difference could reflect the fact that children are more likely than their parents to be eligible for Medicaid and CHIP. As shown in Table 3 , among children under age 19 who live with at least one parent, there is a relationship between the insurance status of the child and the employment characteristics of the parent(s). In 2009, of those children with at least one parent working full-time for the entire year, 71.2% had employer-sponsored health insurance and 8.2% were uninsured. Of those children with at least one parent working part-year and/or part-time, 31.6% had employer-sponsored health insurance and 12.8% were uninsured. Public insurance coverage filled some of the gaps for those without employer-sponsored coverage. Public rates were 20.7% for children with a parent who worked full-time and full-year, and almost triple that (58.2%) for children whose parents were less attached to the labor force. As is usually the case, employer-sponsored coverage was less common for workers in small firms than for workers in larger firms. Employer-sponsored coverage rates were 27.4%, and uninsurance rates were 20.6% among children when the primary worker was in a firm with fewer than 10 employees. On the other hand, employer-sponsored coverage rates were 76.3%, and uninsurance rates were 5.0% among children when the primary worker was in a firm with at least 1,000 workers. This section demonstrates that, in evaluating groups of uninsured children, it is important to decide on an appropriate comparison group. Although family status for children living with at least one parent is used as an example, the issues covered in this section are applicable to other traits as well. The conclusion is that different representations of the same data can lead to different conclusions if care is not taken when evaluating the data. Figure 1 looks at the total number of uninsured children and displays the percentage of uninsured children living with at least one parent by family structure. From this picture alone, one could conclude that uninsurance was highest among two-parent families. This is because almost 60% of the total pool of uninsured children live with two parents, while about 31% of the total pool of uninsured children live with a single mother, with the remaining 11% living with a single father. In this example, it is important to remember that all comparisons are relative to the total number of uninsured children. Different conclusions, however, might be drawn if the analysis compares the percentage of uninsured children within each group's family structure. These comparisons are illustrated in Figure 2 for two-parent families, single-father families, and single-mother families, respectively. Even though Figure 1 shows that those living in two-parent households are the largest group of uninsured children, Figure 2 demonstrate that children living in two-parent families are less likely to be uninsured than children living with only one parent. This apparent paradox—that the group least likely to be uninsured makes up the largest portion of the uninsured—also exists when looking at other characteristics. It comes about because the group representing the largest share of the relevant population (i.e., children living in two-parent families) can have the largest number of uninsured children even if they have the lowest uninsurance rate. These differences raise important issues for policy makers considering policy options to reduce the number of uninsured. For example, proposals that may affect the greatest number of children in two-parent families (which comprise almost 59% of the uninsured children) may not affect the greatest number of children living in single-father families (of whom 16% are uninsured). This report has, until this point, documented the health insurance and uninsurance patterns of children under age 19 in 2009. The focus of the report now switches to an examination of trends in insurance and uninsurance between 1999 and 2009, a period including two economic recessions. The data used in this section come from the CPS and are available in a consistent way only since 1999 for children under age 18 . It is not possible to predict whether the percentage of uninsured children will increase or decrease during a recession. Those working may lose their jobs, and thus their employer-sponsored health insurance. These employment effects would lead to an increase in the uninsurance rate for children because not all parents who lose their employer-sponsored coverage will extend their insurance through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provisions or purchase insurance in the individual market. On the other hand, a drop in parental income during the economic downturn may allow children to become eligible for the need-based entitlement programs of Medicaid and CHIP. If the newly eligible do indeed enroll, the uninsurance rate may not increase (or may even decrease) during an economic recession. In addition, Congress and/or state legislators may choose to change an insurance program's eligibility or benefits in response to a recession. For example, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) provided financial assistance for many individuals to maintain their health coverage under COBRA, effective February 17, 2009. This should have reduced the number of children who would have otherwise been uninsured after early February 2009. Finally, because the unemployment rate is slow to recover after a recession, and because employment is a determinant of insurance status, any effects of unemployment on uninsurance may linger past the end of the recession. Figure 3 presents the national percentages of children under age 18 who were uninsured, were covered by employer-sponsored health insurance, and were covered by public health insurance between 1999 and 2009. The gray shaded areas in Figure 3 represent periods of economic recessions. The uninsurance rate ranged from a high of 12.5% in 1999 to a low of 9.0% in 2008. There was therefore a 3.5 percentage-point spread between the high and low uninsurance rates over the 10-year period. Neither the short recession in 2001 nor the longer recession in 2008 and 2009 seemed to have much of an effect on the uninsurance rate of children. When looking simply at the uninsurance rate, the effects of the economy on the children's uninsurance rate do not seem especially meaningful. Nevertheless, these uninsurance data mask two larger changes in children's insurance status over the 10-year interval. First, the number of children covered by employer-sponsored insurance fell from 65.2% in 1999 to 55.8% in 2009. Employer-sponsored insurance fell during both recessions, and it did not subsequently increase after the first recession. In short, the falling rate of employer-sponsored insurance (in and of itself) pushed toward an increase in the uninsurance rate for children. At the same time, however, the number of children covered by public health insurance (predominately Medicaid and CHIP) increased over the 10-year period. In 1999, 20.3% of children under age 18 were covered by public insurance, but by 2009, 33.8% of children under age 18 were covered by public insurance. Several factors may have contributed to the increase in public insurance. First, ARRA provided a temporary increase in the percentages used to determine federal Medicaid payments to states. To be eligible for this matching increase, the states could not restrict their existing Medicaid eligibility standards. Therefore as more children became eligible for Medicaid when their parents lost their jobs and health insurance, ARRA's maintenance of effort requirement for Medicaid kept eligibility standards unchanged. This should have reduced the number of children who might have otherwise been uninsured had states restricted eligibility. Second, enrollment in CHIP increased throughout the decade. In particular, CHIP was enacted in 1997, and enrollment across the states began within several years. The increase in the take-up of CHIP over the past decade is thought to have been a contributor to the increase in public coverage. Beyond these statutory changes, there may have been changes in parental take-up of public health insurance for their children. First, as parents lost their jobs and other income and/or assets, more children could have met the need-based criteria for eligibility. In addition, the parents of children who were always eligible may have chosen to take up the benefits for their children. In any case, between 1999 and 2009, the offsetting downward trend in children covered by employer-sponsored health insurance and upward trend in children covered by public health insurance attenuated variations in the percentage of uninsured children.

About 8.3 million children under age 19 in the United States, or 10.4% of children in this age group, had no health insurance for at least some of 2009. (Similarly, about 10.3% of children in this age group had no health insurance for at least some of 2008.) Children living in families below the poverty threshold, children not living with at least one parent, Hispanic children, and children whose parents did not have health insurance were especially likely to be uninsured. On the other hand, children whose parents had employer-sponsored coverage were themselves likely to have employer-sponsored coverage. An extensive body of research suggests that children without health insurance are, on average, less likely than insured children to have the recommended number of well-baby and well-child medical visits and less likely to receive standard immunizations. This report examines the characteristics of insured and uninsured children in 2009 (the latest year for which data are available) using data from the (March) Annual Social and Economic Supplement to the 2010 Current Population Survey (CPS). The first part of the report compares broad groups of children. Those particularly likely to be uninsured in 2009 included the groups mentioned above, as well as children between ages 13 and 18, children living in the South, and children who are not U.S citizens. Groups particularly likely to receive publicly funded insurance included children of single mothers, black children, and children in families with incomes lower than the federal poverty threshold. The second section of the report compares two methods of measuring uninsured children. Using family structure as an example, the report analyzes uninsurance both in terms of the percentage of each family status in the total pool of uninsured children (e.g., 58.9% of the pool of uninsured children were in two-parent families) and in terms of the percentage of each family status who were uninsured (e.g., 8.3% of those in two-parent families were uninsured). This difference may be important for policy makers considering policy options to reduce the number of uninsured children. The final part of the report examines the rate of uninsured children under 18 over the past 10 years (the years for which comparable data are available). The uninsurance rate has been relatively flat over this period. This relative constancy in the children's uninsurance rate, however, masks a decline in children covered by employer-sponsored insurance and a concurrent increase in children covered by public insurance.

The global financial and economic crisis is unprecedented in many ways yet not so unique that the experience of other countries is bereft of lessons to be learned. Among the major industrialized economies of the world, Japan's lost decade of the 1990s (what some call Japan's Great Recession ), when it encountered a period of prolonged stagnation caused by the bursting of speculative bubbles and a prolonged banking crisis, is often cited as relevant for policymakers today. The drop in prices on Japan's equity markets combined with a sharp decline in land prices generated losses of about ¥1,500 trillion ($14 trillion) or roughly three times Japan's gross domestic product at that time. As of early 2009, one estimate is that the current global financial crisis may have generated losses in the capital valuation of financial assets world-wide of as much as $50 trillion or about the equivalent of the combined gross domestic product (GDP) of the world. (As equity markets recover, some of these losses may be reversed.) A study by the Joint Economic Committee of Congress concluded that "a series of fiscal and monetary blunders by the Japanese government transformed the inevitable post-bubble recession into a "lost decade" of deflation and stagnation. When the U.S. Treasury planned the $700 billion rescue package (Emergency Economic Stabilization Act of 2008, P.L. P.L. 110-343 ) to address the U.S. financial crisis, it reportedly examined the experience of Japan as that country grappled with its banking crisis in the 1990s. In fiscal policy, the Japanese experience has been used both as an example of stimulus packages that did not work and as a rationale for making stimulus packages large enough to help ensure that they would work. In monetary policy, the Bank of Japan's zero-interest rate policy demonstrated the futility of attempting to "push a string" (induce investment and consumer credit purchases through low borrowing rates). It also demonstrated the importance of strengthening the balance sheets of banks in order for lending to recover and the role of the Deposit Insurance Corporation of Japan in helping to rid the system of "toxic bank assets." The Japanese experience also may be instructive in resolving problems of "zombie corporations" (companies that technically are bankrupt but are being "kept alive" through loans and other financial support), in dealing with nationalization and subsequent privatization of insolvent banks, and in coping with deflation. Japan financed its fiscal stimuli by relying on issuing new debt. As a result, government debt as a percent of gross domestic product has soared to 167% of GDP. The Japanese experience, combined with that of the Great Depression, has provided a new framework for understanding and analyzing financial crises and policy. Traditionally, economists have viewed the causes of the Great Depression through a macroeconomic lens and have focused on monetary and fiscal policy. In terms of monetary policy, the conclusion of scholars has been that a contraction in the money supply was a primary cause of the length and severity of the Great Depression and that the depression could have been avoided through a more judicious application of monetary policy. This interpretation and its implicit policy recommendations were outlined by Ben Bernanke when he was a member of the Federal Reserve Board in a 2004 lecture on role of the Federal Reserve and of monetary factors in the origin and propagation of the Great Depression. On the fiscal policy side, particularly after the publication of John Maynard Keynes' General Theory of Employment, Interest , and Money , economists have pointed out that the depression ended only after spending for war provided the increase in aggregate demand needed for recovery. In the case of Japan's lost decade of the 1990s, policy analysts advocated expansionary monetary and fiscal policies but also added a microeconomic aspect. They argued that Japan needed to make structural changes in the form of deregulation and privatization of government enterprises in order to make its economy more efficient. For policymakers, the framework for analysis and the lens through which a financial crisis is viewed often provides the rationale for subsequent policy prescriptions. If one believes that misguided monetary policy caused and prolonged the Great Depression, then policy prescriptions tend to focus on actions that will inject reserves into the banking system and increase the supply of money in the economy. If one sees the problem as a lack of aggregate demand, the implicit policy prescription tends to focus on fiscal stimuli. If one believes that the problem is structural—on the supply side—then the remedies tend toward deregulation and economic efficiency. In Japan's case, a study by economist Richard Koo argues that Japan's problem was not completely monetary, fiscal, or structural. He presents evidence that the Japanese economy suffered a "balance sheet recession" and goes a step further by applying the balance-sheet approach to analysis of the Great Depression and the current global financial crisis. He asserts that a balance-sheet analysis explains the problem better than relying on traditional macro- and microeconomic analysis. Koo's premise is that a financial crisis that generates huge losses in wealth (financial assets in particular) causes both firms and households to place priority on repairing their balance sheets. For firms, such a priority implies behavior to minimize debt rather than to maximize profit. For households, it implies increasing savings at the expense of consumption. Under a balance sheet recession, lowering interest rates and increasing the money supply do not generate comparable increases in lending because neither households nor firms are inclined to add more debt until their liabilities are brought more into balance with their lower levels of assets. Under a balance-sheet recession, once monetary policy has reached a limit (zero interest rates), direct government purchases of debt and removing debt from company or household balance sheets tends to be more effective than injecting funds into banks to induce them to lend when potential borrowers are hunkering down and trying to rebalance their assets and liabilities. Also, if households and businesses are not willing to spend, then stimulative fiscal policy may be the next-best option in promoting economic recovery. The London Economist has noted that "history suggests that balance-sheet recessions are long and that the recoveries which eventually follow them are feeble. This report reviews the major actions by the Japanese government in dealing with its crisis and highlights some of the lessons learned from their experience. Like the current U.S. financial crisis, Japan's began with stock market and real estate bubbles. During the latter half of the 1980s, Japan's monetary authorities flooded the market with liquidity (money) in order to enable businesses to cope with the rising value of the yen. Businesses did invest in new capital equipment to become more competitive in international markets, but the excess liquidity also found its way into speculation in Japan's stock market, in real estate ventures, and in foreign investments. At that time, the market value of both land and equities was rising so fast that investors and speculators could hardly miss. Investors tended to ignore risks. The larger mistake for them was not to borrow and invest and consequently not be positioned to reap the returns from rising markets. Banks considered most loans with real estate as collateral as being unquestionably secure. Then the bubbles burst. As indicated in Figure 1 , Japan's Nikkei stock market average had peaked in 1989 (at 40,000) and dropped by 50% in one year and more than 78% (to about 8,700) by the end of 2002. Japan's banks are allowed to hold equities as part of their capital base. The value of the unrealized capital gains on such stock holdings dropped from $355 billion in 1989 to about $40 billion in 2002. This drastically reduced key capital reserves for many banks. Also, by 2000, commercial land values in the six major metropolitan areas had fallen by 80% from their peak level in 1991. Residential and industrial land values also had fallen by nearly 20%. The bursting of this economic bubble caused the value of collateral underlying many bank loans to drop below the value of their loan principal. Also, commercial real estate ventures, especially office buildings, became unprofitable as rents fell. What began as a financial and banking crisis soon caused the overall Japanese economy to slow. As the economy stagnated, companies faced excess capacity, excess inventories, and lower profits. Also as more and more loans turned sour, more and more of the underlying real estate had to be sold at "bargain" prices. In 1995, Japan's banks reported $280 billion in non-performing loans, but this figure turned out to be vastly understated. Unlike the situation in the United States under the current global economic crisis, Japanese financial institutions tended not to bundle and repackage their loans as collateralized debt obligations or rely as extensively on derivatives and credit default swaps. Mortgage defaults in Japan also tended to be on commercial property, not on private residences. The country also had no subprime or Alternate-A loans, but lending in Japan, particularly commercial lending, often was relational (based on connections and relations) rather than being purely market based. Therefore, many commercial loans had been extended partly because of close corporate ties (rather than arms-length due diligence) and turned sour. Before the definition of a non-performing loan was tightened, moreover, Japanese banks often extended small additional loans to borrowers in default in order for the borrower to make a payment of interest and to keep the loan from being reported as non-performing. The adverse effects of the bursting of Japan's real estate and stock bubbles soon spread to the entire economy. Economic growth rates fell from more than 5% per year during the late 1980s to less than 2% per year during the first half of the 1990s with a slight increase in growth in 1996 as the economy began a temporary recovery but then dropped into recession in 1998 and 1999 as fiscal policy tightened and the 1997-98 Asian Financial Crisis developed. Growth remained anemic through the early years of the new century as the recession of 2001 took its toll on Japan too. After 2001, economic growth rates did not recover to their pre-crisis levels. For Japan, the lost decade of the 1990s became an extended L-shaped recession (rather than a U- or V-shaped downturn and recovery). The bursting of Japan's stock and real estate bubbles in 1989 and 1990 had been induced by the Bank of Japan by a tightening of monetary policy (mainly through increases in interest rates), although it is not clear that the monetary authorities anticipated the severity and depth of the downturn in the economy. As the banking crisis developed, the government's initial strategy was forbearance (patience while not forcing banks to report paper losses or disclose all non-performing loans), protecting depositors by strengthening deposit protection, providing emergency liquidity, and assisting in mergers of some failed institutions. The basic attitude at the time was that Japan's banking system was like a convoy of ships. The government oversaw and intervened extensively to ensure not only that banks followed its policies but that stronger banks helped weaker banks in order to keep the convoy of domestic banks moving along together. If possible, no major bank would be allowed to sink (although some eventually did). An issue related to forbearance and the bank convoy problems was the "community banking mentality" under which banks tended to view clients as a part of their community and to eschew short-term profit maximization in favor of maximizing profits over the lifetime of the borrowing firm. This helps to explain why commercial banks continued to lend to firms that were already in default in their repayments ("zombie companies"), a practice that often resulted in even more non-performing loans being generated. In 1992, the government authorized the creation of the Cooperative Credit Purchasing Company (CCPC) to help banks dispose of non-performing loans. This was patterned somewhat after the Resolution Trust Corporation in the United States (that operated from 1989-1995) and dealt only with loans with real estate as collateral. In 1993, the top 21 banks sold ¥1.3 trillion in non-performing loans to the CCPC, an amount that accounted for 54% of all loans written off in that year. The way that the CCPC worked was that the selling bank would extend credit to the CCPC for the entire purchase cost of the non-performing loan plus all processing expenses. The bank then would be able to count the gap between the loan principal and the selling price as a capital loss for tax purposes. When the collateral underlying the loan was sold, the CCPC then repaid the credit extended by the selling bank. About half of the underlying value of the non-performing loans was recovered by the CCPC through sales of the underlying assets. The hope of the government was that if it could keep banks operating, their profits from operations and capital gains from equity holdings could fund the write-offs of bad loans. Even with the decline in stock prices, banks had acquired much of their holdings of equities years before at par value, and most still carried unrealized capital gains. In addition, the low (and from 1995 zero) interest rate policy of the Bank of Japan allowed banks to generate higher-than-usual profits by the larger difference between their borrowing and lending rates of interest. Despite billions of dollars in write-offs, however, nonperforming loans appeared as fast as they were being taken off the books. Over the crisis, Japan's banks wrote off a cumulative total of $318 billion (¥37.2 trillion) in non-performing loans, but new ones appeared so fast that the total outstanding amount continued to increase and peaked in March 2002 at $330 billion (¥43.2 trillion) or 8.4% of total lending. On the fiscal policy side, Japan's government announced stimulus packages in 1992, twice in 1993, in 1994, and twice in 1995. (See Table 1 .) In addition, the government's budget provided considerable fiscal stimulus. The new spending in each package amounted to between 0.3% and 1.5% of GDP. The economy responded after 1993 by slowly beginning to recover. In 1995, five years into Japan's crisis, the situation worsened following the bankruptcy of several specialized housing loan companies ( jusen ). In 1996, the government made its first injection of capital to purchase assets from ailing housing lenders. This rescue operation proved to be quite politically unpopular and may have contributed later to tentativeness by the government to take stronger policies to combat the recession. According to a leading Japanese economist, by 1995 the problem of the burst speculative bubble that caused the failures of several financial institutions was over. The "sorry state of the Japanese economy since 1995 [was] the result of weak fiscal, monetary, and supervision policies." A series of policy errors by Japan made the small problem of a burst bubble much larger than need have been the case. In 1996, many thought the economy was well on the road to recovery, but much of the rise in aggregate demand could be traced to the spending for reconstruction in the aftermath of the Kansai earthquake and to consumers buying durables in anticipation of a rise in the consumption tax (national sales tax) that occurred in 1997. By 1997, Japan's banking sector was in a full systemic crisis. The government responded by making $250 billion (¥30 trillion) available of which $108 billion (¥13 trillion) went to banks and $142 billion (¥17 trillion) to the Deposit Insurance Corporation of Japan. In 1998, the government bought the bankrupt Long-Term Credit Bank and Nippon Credit Bank. These two banks had no consumer deposit system but borrowed funds on financial markets to lend on a long-term basis to businesses. These banks were eventually sold to private investors. The government also took over the management of many financial institutions. In March 1998, the government injected another $14 billion (¥1.8 trillion) to bolster bank balance sheets and in March 1999 injected another $62.5 billion (¥7.5 trillion). By October 1998, the government had invested $495 billion (¥60 trillion yen), or 12% of gross domestic product, for the financial support of banks. Through a combination of capital injections, new laws and regulations, stronger oversight, a reorganization of the banking sector, moderate economic recovery, and several years of banks working off their non-performing loans, the Japanese banking sector eventually recovered. By September 2005, the banks reported 3.5% of their total lending as non-performing, a level considered to be tolerable. In combating the effects of the crisis, the Japanese government pursued a combination of monetary policy, direct intervention, and fiscal stimulus packages. As shown in Table 1 , the government announced nine stimulus packages during the 1990s. (There also was a negative stimulus in April 1997 when the government raised its consumption tax [national sales tax] from 3% to 5% in an attempt to reduce its fiscal deficit.) The total amounts for the packages are somewhat misleading because some of the packages incorporated items that had already been included in previous budgets or packages. Other items, such as funds for construction, may not have been actually spent until the next fiscal year. Also, parts of the packages awaited parliamentary approval and may not actually have been funded. The Japanese government, therefore, usually indicated how much of each package was new spending. The Japanese government referred to the new spending as "real water" ( mamizu ). The figures for the percentages of gross domestic product (GDP) listed in the "Total" column, therefore, should be considered to be upper bounds. The table also lists the percentages of GDP based on the share of new spending only. Note that in 1993, 1995, and 1998 there were two stimulus packages announced per year. In those cases, the combined total stimulus as a percent of GDP was 4.0% for 1993, 3.4% for 1995, and 8.4% for 1998. The various bank rescue operations in Japan were administered primarily by the Deposit Insurance Corporation of Japan (DICJ). When a financial institution fails, the DICJ may extend assistance to another financial institution that purchases assets or merges with the failed financial institution in order to facilitate the transaction. The DICJ also works to prevent financial institutions from failing. The forms of assistance include a direct money grant, a loan or deposit of funds, purchase of assets, a guarantee or assumption of debts, a subscription of preferred stock, and loss sharing. Not all of the activities of the DICJ, however, are related to the bailout packages. It also has ongoing operations associated with its traditional function of insuring bank deposits. The annual reports of the DICJ, however, provide detail on the disposition of $399 billion of the $495 billion in funds announced in Japan's financial assistance packages. As shown in Table 2 , as of March 2007, the DICJ had provided financial assistance in the amount of $399 billion. This included 180 cases with grants of $159 billion, asset purchases of $83 billion, capital injections of $106 billion, and other assistance (mostly loans) of $51 billion. The grants were funded by $110 billion (¥13 trillion) in DICJ bonds issued (repaid from taxpayer funds) and from premiums from deposit insurance. Of the asset purchases of $83 billion, the DICJ recovered $79 billion. The asset purchases included $54 billion in assets from failed financial institutions (of which $60 billion had been recovered) and $25 billion in shares purchased (of which $14 billion had been recovered). Capital injections of $106 billion came under five different rescue packages and included subscriptions to preferred or common stock, purchases of subordinated bonds, and the extending of subordinated loans. The DICJ had injected capital into 25 different banks. As of March 2007, $31.3 billion of these assets was still held by the DICJ in the form of preferred shares, common shares, and subordinated loans. The $51 billion in the "Other" category included loans to banks which were under special public management, taking delivery of assets under warranty for latent defects, compensation for losses, lending to assuming financial institutions, and debt assumption. The last capital injection reported by the DICJ was in March 2003. The Resolution and Collection Corporation (RCC), a subsidiary of the DICJ, borrows funds from the DICJ to purchase and dispose of assets (within three years) from sound financial institutions and some under special public management. As of March 2007, the RCC had purchased assets with claims of $34.5 billion (¥4.0 trillion) for a discounted price of $3.0 billion (¥355.7 billion). These assets had been sold for $5.2 billion (¥609.4 billion) for a gain of 172% for the RCC. In essence, the RCC paid about 9 cents on a dollar for the troubled assets and was able to dispose of them at a profit. The DICJ consults with the Purchase Price Examination Board (an advisory body to the DICJ) with respect to the price it pays for assets. The RCC made no purchases in FY2006 (ending in March 2007). As Japan's economy stagnated and the size of the government's fiscal stimulus escalated, Japan's government debt also soared. This is consistent with other financial crises in the world in which public debt typically doubles, even adjusting for inflation, in the three years following a crisis. As shown in Figure 2 , Japan's central government debt as a percent of GDP rose from 47% in 1990 to 65% in 1995 and to 106% in 2000. By comparison, in 1992, the percentages for both the United States and Japan were at 48%, while in 2008 the United States was at 40% while Japan was at 167%. In economic theory, there is what is called Ricardian equivalence. Named after English economist David Ricardo (1772-1823), the Ricardian equivalence theorem asserts that government deficits are anticipated by individuals who increase their saving because they realize that borrowing today has to be repaid later. The implication of this theorem is that when a government tries to stimulate demand by increasing government spending to be financed by debt, total demand remains unchanged because the public will save funds from the extra government spending in order to pay for future tax increases that will be initiated to pay off the debt. One analysis of Japan's experience in the 1990s, however, concluded that although Ricardian equivalence effects did exist, they were not large enough to be relevant to fiscal policy. In other words, fiscal stimulus packages had multiplier effects of about the size expected despite the relatively high saving rates in Japan and public awareness of the rising government debt. Even "wasteful" public spending had the expected multiplier effect. As for tax cuts, those targeted to the most liquidity constrained tended to have the largest effects. Another analysis concluded that the fiscal stimulus over the course of the 1990s was necessary since the limitations on monetary stimulus (zero interest rates) left little choice but to do so. However, by pursuing stimulus without a more vigorous effort to clean up the non-performing loan problem or broader economic deregulation, the impact of fiscal deficits on restoring growth had been muted. In 1996, when Japanese authorities thought the recession might be over, attention turned toward "reconstructing government finances" (reducing the budget deficit). By 1995, the central government financed 28% of its budget through borrowing. Japan's Fiscal Structural Reform Act, implemented from Japan's fiscal year (JFY) 1997, included targets of reducing the ratio of government debt to Gross Domestic Product to 60% and the ratio of the government deficit to GDP to 3% by the year 2003. This tightening of fiscal policy, however, apparently occurred too soon and is thought to have prolonged the recession. As one analysis concluded, the government had erred in overestimating the strength of the economic recovery in 1996. By 2003, instead of 60%, the government debt-to-GDP ratio had risen to 141%, and instead of 3%, the government deficit to GDP ratio had increased to 5.4%. The Japanese experience also highlights the great difficulty in reducing the "debt burden" in an economy that continues to stagnate. Even during the 2002-2007 period of relatively strong economic growth, the size of the national debt continued to grow. The servicing of the national debt in Japan requires both interest payments and payments for redemptions plus administrative costs. The Japanese government reports two categories of expenditures for servicing the debt. The first is Interest Paid on the debt and the second is National Debt Service (also referred to as Bond Expenditures in the budget). National Debt Service includes (1) interest paid; (2) redemption of the national debt (an amount equal to 1.6% of the total government bonds outstanding at the beginning of the previous fiscal year and an amount not less than half of any surplus in the government account for each of the preceding two fiscal years); and (3) administrative expenses. The bottom of Figure 2 shows interest payments as a percentage of federal government expenditures for the United States and Japan. For Japan, the share of expenditures for interest has declined from about 17% in the early 1990s to 11.5% in 2007. This decline occurred despite Japan's ballooning national debt primarily because of the drop in interest rates as part of the government's monetary policy. For the United States, the share of interest in outlays also fell from around 15% for most of the 1990s to 8.3% in 2008. The question for both nations is whether this trend can continue given the large fiscal deficits being incurred in 2009. In particular, will investors have to be coaxed to hold a larger share of government bonds in their portfolios with higher rates of interest and will they have to be compensated for what may be an increasing risk that governments will inflate away the value of their assets or even default on debts in the future. The following are various lessons and observations that observers have gleaned from the Japanese experience. Authorities underestimated the nature and seriousness of the banking problem at first. Most thought the financial problems would resolve themselves through economic growth and by keeping central bank interest rates low in order to increase bank margins and profitability. There was a slow recognition of the extent of non-performing loans and the carrying of "zombie" firms that technically were bankrupt but were kept alive by banks. This delayed resolution of the problem. Transparency and an updating of definitions and reporting requirements with respect to non-performing loans was important in realizing the true extent of the problems. Many of the rescues of ailing financial firms by a healthier financial institution required a government injection of capital in some form. There appeared to be a lack of domestic or external constraints and of political leadership that would have urged authorities to take more decisive action earlier. The government began by creating new institutions to handle emergency financial assistance but later transferred such activities to the Deposit Insurance Corporation of Japan (DICJ), an institution that already was working with troubled financial institutions. The DICJ also was given permanent authority to assist ailing financial institutions when so ordered by the Prime Minister. The Japanese government injected capital into financial institutions in several ways depending on the situation. In most cases, the DICJ could use its discretion in determining the nature of the assistance. Troubled assets were bought at a steep discount from their face value from sound financial institutions (to inject capital) and disposed of without unduly disturbing markets—usually within three years. The two banks that were nationalized were later sold to private investors. Capital injections also took the form of subscriptions to stock, grants, and subordinated loans. Even with the $495 billion financial support packages, between 1998 and 2003, Japan's banks wrote off some $318 billion in non-performing loans. The burden was shared. Government holdings of corporate shares have generated dividend income and capital gains for the DICJ. Since there are fewer banks in Japan, the authorities could focus recovery efforts on several large banks and fewer than 200 smaller financial institutions (there are about 8,500 banks in the United States) which facilitated information gathering and coordination. When Japan announced an early financial rescue package, it placed stringent conditions on the assistance that banks were unwilling to accept. The net result was that the banks ignored the package and tried to bolster their balance sheets by not lending. This was seen as worsening the economic conditions for the country. Most of the assistance to failing institutions, however, carried conditions that were enforced by the DICJ. New technologies, globalization, and the blurring of boundaries between types of financial products and institutions made risk management increasingly difficult for financial regulators. The bursting of the real estate bubble in Japan caused more difficulty for banks than the bursting of the bubble in stocks because the decline in real estate values affected the value of collateral on much bank lending. Japan is considered to have acted too slowly with respect to monetary policy, fiscal policy, and the resolution of problems in the banking sector. Once the economy began to recover, fiscal policy is thought to have tightened too soon.

During the 1990s and into the early years of the 21st century, Japan experienced prolonged recessionary economic conditions triggered by the bursting of a bubble in its equity and real estate markets and an ensuing banking crisis. Although the current global financial crisis is much more than Japan's "Great Recession" writ large, many have turned to Japan's experience to either support or oppose various policies and to improve general understanding of the underlying forces of financial crises. In fiscal policy, the Japanese experience has been used both as an example of stimulus packages that did not work and as a rationale for making stimulus packages large enough to help ensure that they would work. Fiscal stimulus did have the desired economic effect in Japan, but it mainly substituted for depressed bank lending and consumer spending. Recovery had to wait until the balance sheets of banks and households had been rehabilitated. Japan also shifted its policy focus toward reducing its fiscal deficit "too early" after authorities thought the recession had ended in 1996. The ensuing increase in taxes along with reduced fiscal stimulus (along with the 1997-98 Asian Financial Crisis) pushed the economy back into recession. In monetary policy, the Bank of Japan's zero-interest rate policy demonstrated the futility of attempting to induce investment and consumer credit purchases through low borrowing rates. The Japanese experience also may be instructive in resolving problems of companies that technically are bankrupt but are being kept alive through outside financial support and in dealing with nationalization and subsequent privatization of insolvent banks. Japan's case also illustrates that national debt may continue to rise for years after the financial crisis has ended. With respect to rehabilitating banks, Japan's five bank rescue packages may hold some lessons for the United States. Most of the packages were administered by the Deposit Insurance Corporation of Japan (DICJ). The packages had an announced value of $495 billion. The DICJ reports that it provided $399 billion to Japan's troubled financial institutions of which it has recovered $195 billion. Overcoming the crisis in Japan's banks took a combination of capital injections, new laws and regulations, stronger oversight, a reorganization of the banking sector, moderate economic recovery, and several years of banks working off their non-performing loans. This report will be updated as circumstances warrant.

Militant Islamist groups have operated in Southeast Asia for decades. The region, home to more than 625 million people, has numerous countries with large Muslim populations, including Indonesia, the world's most populous Muslim-majority nation and the world's third most populous democracy (after India and the United States). The region is home to several longstanding and sometimes violent separatist movements, as well as pockets of Islamist radicalism, which have led to instances of violence over the past 30 years, particularly during the 2000s. Many observers have noted the success of some Southeast Asian governments' efforts combatting violent militancy and degrading some of the region's foremost terrorist groups, including the pan-regional, but largely Indonesian based, Jemaah Islamiyah and the Philippines' Abu Sayyaf. The United States has offered considerable counterterrorism assistance to Southeast Asian governments, particularly since the September 11, 2001, attacks. These include helping Indonesia create a centralized antiterrorism unit and providing U.S. advisory troops on the Southern Philippine island of Basilan to help the Armed Forces of the Philippines combat violent groups in the country's deep South. The rise of the Islamic State (IS) in Iraq and Syria since 2014, however, has raised the possibility of new and heightened terrorism risks in Southeast Asia. A January 2016 terrorist attack in Jakarta, Indonesia, that killed eight individuals, four of them civilians, demonstrated that militants in the region are seeking support or inspiration from the Islamic State, increasing the risks of terrorism in Southeast Asia—risks that could harm United States citizens or adversely affect U.S. security interests in the region. The State Department's 2015 Country Reports on Terrorism stated that, "countries in the East Asia and Pacific region faced the threat of terrorist attacks, flows of foreign terrorist fighters to and from Iraq and Syria, and groups and individuals espousing support for the Islamic State of Iraq and the Levant (ISIL)." The Trump Administration has indicated that combatting IS is one of its highest priorities. A January 2017 foreign policy statement posted on the White House website stated that, "Defeating ISIS and other radical Islamic terror groups will be our highest priority.... [T]he Trump Administration will work with international partners to cut off funding for terrorist groups, to expand intelligence sharing, and to engage in cyberwarfare to disrupt and disable propaganda and recruiting." In Southeast Asia, despite perceptions among analysts that risks are growing, the region generally has not been seen as a front-line threat on par with some other parts of the world, such as the Middle East or northern Africa. As Congress considers U.S. policy towards Southeast Asia, it may wish to consider several questions: What is the nature and extent of radicalization in Southeast Asia, and does it constitute a threat to U.S. interests in the region? If so, how, and to what extent? What is the nature of threats to U.S. security interests that radicalism poses in Southeast Asia, and how acute are they? Are these threats increasing in significance? Are threat levels affected by the rise of the Islamic State? If so, in what ways? How effective are Southeast Asian governments' capabilities to monitor and combat the threat of terrorism in their homelands, and to coordinate efforts when those threats spread across borders? Where these capabilities are insufficient, could U.S. assistance help address capability gaps? If so, then what are the most effective legislative and oversight tools that Congress has at its disposal to ensure that U.S. assistance is used effectively towards these ends? What priority should policymakers place on supporting counterterrorism efforts in Southeast Asia, compared with other U.S. security, diplomatic and economic goals? What are the most effective legislative and oversight tools that Congress has at its disposal to help shape the development and ordering of those priorities? What tools does Congress have at its disposal to ensure that U.S. support for Southeast Asian counterterrorism efforts does not encourage and enable countries to unduly curtail human rights and the rule of law? Congress may wish to consider, for example, conditionalities on assistance, and the implementation of existing vetting procedures and requirements. What lessons might be drawn from Southeast Asian efforts to degrade terrorist groups and de-radicalize individuals harboring militant views, and is the Administration effectively evaluating such lessons? Are these lessons applicable in other parts of the world as well? Southeast Asia is home to large Sunni Muslim populations—around 240 million people region- wide, or 40% of Southeast Asia's overall population and over 15% of the world's estimated Muslim population – making it one of the primary demographic centers of the Islamic world. The vast majority of Southeast Asian Muslims have traditionally subscribed to moderate, syncretic forms of the religion. More conservative Sunni communities, however, have grown with support from donors in the Arab Gulf states since the late 20 th century and small pockets of radicalism have been active for decades. Militant Islamist groups in Southeast Asia have widely different origins. Longstanding separatist movements in parts of the Indonesian archipelago, particularly in Aceh, have also created safe havens for violent groups. The Philippines and Thailand—dominated, respectively, by Catholic and Buddhist majorities—have fought separatist movements in their Muslim-majority southern regions for decades, and grievances in those regions have led to extremism and violence. Islam played a role in anti-U.S. insurgency in the Philippines from the earliest stages of U.S. colonial involvement in the Philippines in the late 19 th century. Malaysia, another Muslim-majority nation, has not had a strong indigenous terrorist movement, but like the other nations in the region, its porous borders have allowed terrorists to operate from its shores. Some observers also believe Malaysia has been an active source and transit point for terrorist financing. With the notable exception of the Jemaah Islamiyah network in the early 2000s, the linkages among violent Southeast Asian groups, and links between them and groups centered in the Middle East, traditionally have been weak. Most Southeast Asian militant groups have operated only in their own country or islands, and focused on domestic issues such as promoting the adoption of Islamic law ( sharia ) and seeking independence from central government control. However, the war in Afghanistan and the rise of globalized social media contributed to the radicalization of Islam in Southeast Asia, and Jemaah Islamiyah was widely linked to Al Qaeda, and to the Abu Sayyaf Group in the Philippines. Likewise, over the past two years, the rise of the Islamic State has led to a new phase of Islamist militancy in Southeast Asia, as in the Middle East and across the Muslim world. Terrorism experts say IS offers inspiration, and the potential for training and material support, for militants in Southeast Asia. IS has conducted online recruitment efforts in Indonesia's national language (called "Bahasa Indonesia") and in the Malay language. Analysts estimate that hundreds of Southeast Asians have travelled to the Middle East to fight with IS—just as some did in the late 1990s in Afghanistan with Al Qaeda. Terrorism experts describe a Southeast Asian "military arm" of the Islamic State known as Katibah Nusantara, made up of Indonesians, Malaysians and others, operating in Syria. Several Southeast Asian governments, including Indonesia, Malaysia, and Singapore, have intensified counterterror efforts since 2014, outlawing calls for support of IS and strengthening policing and border-control efforts. It is difficult to estimate with precision how many individuals from the region have traveled to the Middle East to join the Islamic State fight, or how much financial support the group has derived from Southeast Asia. Authorities in Indonesia, Malaysia, the Philippines, and Singapore, however, have all expressed concerns that the return of battle-trained militants from the Middle East who could conduct attacks in-country or train others to do so poses a threat. Some analysts have noted that Southeast Asian counterterrorism efforts in the 2000s and early 2010s largely broke up or weakened large terrorist groups in the region such as JI and Abu Sayyaf. However, many observers argue that this has led to a dangerous situation in which small splinter groups that have survived may now have incentives to use violence to demonstrate their effectiveness and bolster their legitimacy. In so doing, they have sought to attract material support from IS (or other outside groups such as Al Qaeda), and to recruit new members. One other potential concern is that terrorist activity may increase as competition grows between the Islamic State and Al Qaeda over the leadership, definition, and goals of the global community of jihadist-Salafist Sunni Muslims. Some argue this rivalry has created "a rift within the region's Islamist fraternity by dividing them into Al-Qaeda loyalists and Islamic State followers." Some officials in the region are concerned that in this new phase, militants may shift strategy and tactics. New attacks may seek to emulate the November 2015 Paris attacks to attack soft targets. There is a potentially larger pool of battle-hardened fighters that could return home from Syria or Iraq to carry out such attacks or to spread radicalism to others. There appears to be increasing use of social media as a recruitment tool that can inspire lone-wolf attacks and draw converts to the IS cause. While it is too early to draw conclusions, the January 2016 Jakarta attack, which targeted a Starbucks and a large shopping mall in addition to a police station, may also point to a return to focusing on Western targets in the region. The Islamic State may also be expanding its activities into Southeast Asia and elsewhere as a way of internationalizing its struggle and compensating for losses in Syria and Iraq. It may also seek to gain the allegiance of existing Islamist groups as a way of expanding its regional network. The threat of terrorism in or emanating from Southeast Asia has implications for numerous U.S. interests. From the late 2000s, the region gained growing prominence in U.S. foreign-policy initiatives under the Obama Administration's "strategic rebalance" or "pivot" to the Asia-Pacific region. U.S. security relations with several Southeast Asian countries have deepened against the backdrop of rising strategic competition with China. It is unclear at this point whether these developments will continue under the Trump Administration. Rising Islamist militancy could impact stability and threaten U.S. interests in the region, and beyond, in several ways: It could lead to a direct attack against U.S. citizens or interests in the region, as well as against the United States. It could also act as a catalyst for recruitment for terrorist activity in Southeast Asian countries, increasing risks for both local and Western governments. It could serve as an inspiration for those people thinking of joining terrorist fighters in Iraq, Syria, or elsewhere. It could provide cells that help finance terrorist causes in-country, in the Middle East, and beyond. It could heighten the threat of attack by Islamist militants against U.S. partners and allies in Southeast Asia, which in turn could limit the ways and extent to which they support U.S.-led coalition activities against the Islamic State and al Qaeda. Terrorist attacks have the potential to exacerbate regional tensions, and distract Southeast Asian governments from other initiatives the United States supports. An increased U.S. military presence in the region could become a propaganda or physical target for militants. The return of foreign terrorist fighters from Iraq and Syria, and the spread of the Islamic State's ideology through social media, could lead to further attacks and threaten partners, allies, and U.S. security interests. To address terrorist threats emanating from Southeast Asia, the United States has pursued a variety of efforts to enhance cooperation and build capacity with nations in the region. The United States has coordinated, participated in, or advised a number of global and regional counterterrorism-related policymaking or information exchange bodies in which Asian governments participate: The Global Counterterrorism Forum is a multilateral body launched in 2011, whose goal is to reduce the vulnerability of people to terrorism by effectively preventing, combating, and prosecuting terrorist acts and countering incitement and recruitment to terrorism; The ASEAN Defense Ministers' Meeting Plus (ADMM Plus) Experts' Working Group on Counterterrorism focuses on strengthening security and defense cooperation in the region; The United Nations Office on Drugs and Crime (UNODC) Terrorism Prevention Branch is responsible for providing assistance to countries toward ratification and implementation of legal instruments against terrorism; The Association of Southeast Asian Nations Regional Forum (ARF) fosters dialogue and consultation on political and security issues, including regional counterterrorism activities; The U.S. Department of State's Regional Strategic Initiative has supported Ambassadors and their Country Teams in developing regional approaches to counterterrorism; The Financial Action Task Force (FATF) is an international policymaking and standard-setting body dedicated to combating money laundering and terrorist financing; FATF-style regional bodies bring together governments in the region to conduct mutual self-assessments and promote best practices; Malaysia and Singapore are members of the Global Coalition to Counter ISIL, an informal grouping that grew out of U.N.-centered efforts to combat IS. U.S. counterterrorism assistance has generally been welcomed by Southeast Asian governments. In 2015 testimony before Congress, then-commander of the U.S. Pacific Command, Admiral Samuel Locklear, noted that Southeast Asian perceptions that the region faces heightened risks from the potential return of fighters from the Middle East led some governments in the region to have a greater appetite for assistance: ... the numbers that are coming back, we don't have good fidelity on that at this point in time. But what it has done, it has opened up our information-sharing with all the countries in the region that are concerned about this problem, which all of them are. And this isn't just a mil-to-mil [military-to-military], this is a whole government agency, FBI, those types of agencies. Many analysts argue that strategic counterterror responses need to address the root causes behind Islamist discontent in order to diminish the grievances that may help fuel radicalization. These root causes have global, regional, national and local components. Tactically, many argue for a focus on enhancing regional counterterror capabilities and networks, tracking released militants, keeping prisons from becoming centers for militant networking and recruitment, controlling porous borders, and contesting social media spaces inhabited by militants. At times in the past, some Southeast Asian governments have appeared to be ambivalent or even resistant to U.S. pressure to be more aggressive in their pursuit of terrorists, in part to avoid alienating both mainstream Islamic and secular nationalist groups. However, Southeast Asian responses have become more assertive as governments over the years have come to view terrorism and militancy as threats to their own stability. At a November 2015 summit, leaders of the East Asia Summit expressed "grave concern about the spread of violent extremism and terrorism that undermines local communities and threatens peace and security, including in the Asia-Pacific region." The Obama Administration placed emphasis on programs that support Combatting Violent Extremism (CVE) in U.S. counterterrorism assistance strategy, seeking to address root causes that draw individuals towards violent radicalism. The United States hosted a Summit on Countering Violent Extremism in Washington DC in February 2015, and the State Department renamed the Bureau of Counterterrorism in February 2016 to the Bureau of Counterterrorism and Countering Violent Extremism, seeking greater funding for such programs. The Trump Administration's focus may differ from that of the Obama Administration. In February 2017, several media reports indicated that the Administration would review and possibly revamp U.S. CVE programs, focusing them on countering what the Administration determines to be "radical Islamic terrorism." Some observers, including some Members of Congress, have criticized such a shift, arguing that it could harm the credibility of U.S. counterterrorism programs with U.S. partners overseas. The U.S. government provides Anti-Terrorism Assistance (ATA) out of the Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR) foreign assistance account for Indonesia, Malaysia, the Philippines, and Thailand. In Indonesia, NADR-ATA programs provide training and equipment to police officers to build their capacity to deter, detect, and respond to terrorist threats. Anti-terrorism assistance to Malaysia focuses on training and border security to prevent foreign terrorists from entering or transiting through Malaysia. In the Philippines, U.S. assistance includes programs to "enhance the strategic and tactical skills, as well as the investigative capabilities, of regional civilian security forces, particularly in Mindanao." NADR-ATA funding for Thailand aims to help strengthen border controls, train police in hostage negotiation, and bolster explosive ordnance detection capabilities. Other NADR funding for these countries supports combating weapons of mass destruction. (See Table 1 .) In addition to these NADR programs, the Administration's FY2017 request states that Economic Support Funding "will be used to expand CVE's counter-narrative and counter-messaging programming to delegitimize the ideology, narratives, tactics, and recruitment efforts of ISIL and other violent extremist groups, targeting in particular communities in the Levant, Gulf, North Africa, Western Balkans and Southeast Asia that are significant sources of foreign fighters." Southeast Asia is a diverse region, comprising three Muslim-majority states (Indonesia, Malaysia, and Brunei), and several countries with substantial Muslim minorities (the Philippines, Thailand, Singapore, and Burma). This section will discuss specific issues in Indonesia, the Philippines and Malaysia, the three Southeast Asian countries where observers consider terrorism risks that span borders or are directed at Western targets to be highest. It will also discuss Australia, a nation where the threat of terrorism is at least partly derived from its open immigration policies and links to Southeast Asia. Thailand and Singapore will also be discussed. Indonesia is Southeast Asia's most populous nation, and the world's largest Muslim-majority state. It is also the world's third most populous democracy after India and the United States. It has dealt with violent militancy for decades, particularly since the 1940s, when Islamist groups were among the most active forces fighting Dutch colonial troops. Separatist movements in parts of the country, particularly Aceh, have created safe havens for militant groups to operate and recruit. Some 87% of Indonesia's 253 million people are Sunni Muslims, with the vast majority subscribing to moderate, syncretic forms of the religion. Religious diversity is enshrined in the constitution. However, Indonesia has been the site of several of the region's deadliest terrorist attacks: Several bombings in Jakarta and tourist center Bali hit Western targets in the 2000s, and the January 2016 attack in Jakarta was a signal event for many, demonstrating that the rise of the Islamic State has inspired some militants to conduct attacks in Indonesia. The Jakarta attack highlighted both strengths and weaknesses in Indonesia's counterterrorism capabilities, observers note, and also offered a window to the heightened risks that the country now faces. Immediately after the attack, Indonesian police officials blamed an Indonesian/Malaysian military arm of IS operating in Syria called Katibah Nusantara, which they said had worked with IS supporters in Indonesia to plan the attacks. Other experts later called that link tenuous, arguing that the attack had been planned and carried out locally, by a group seeking to prove itself to the Islamic State. The conflicting reports highlighted Indonesia's difficulty in tracking militant groups that have splintered from larger groups that were active in the 2000s, particularly Jemaah Islamiyah. Some observers noted, however, that the attacks, although lethal, caused comparatively little damage, demonstrating that Indonesia's efforts to weaken the capability of militants may have prevented deeper violence. Observers have noted that other recent militant attacks in Indonesia have been decidedly low-tech and ineffective in causing considerable damage. Others said the response by President Joko Widodo, who condemned the attacks but said "the people should not be afraid and should not be defeated by these terrorist attacks," set a reassuring tone that diminished their overall effect. Virtually all the primary militant groups operating in Indonesia bear links to Jemaah Islamiyah (JI), which experts believe has been substantially degraded since the early 2000s, when it cooperated with Al Qaeda, carried out attacks in Indonesia that killed hundreds, and at one time triggered concerns that it could emerge as a destabilizing regional force. The arrest or killing of numerous JI leaders since 2002 has created a series of smaller, less organized splinter groups. Some terrorism experts argue that such smaller splinter groups may be highly incentivized to undertake future attacks. As one report stated, "Leaders of Indonesia's tiny pro-ISIS camp are competing to prove their fighting credentials." Abu Bakar Baasyir, JI's imprisoned intellectual figurehead who had deep Al Qaeda links, made a public declaration of allegiance to IS from prison in July 2014. Indonesian counterterrorism officials may face an increasingly complex task in identifying and disrupting recruitment networks that are different from the ones they have known over recent years. Some analysts believe that Indonesia's prisons are among the nation's most important centers of terrorist recruitment. According to one report, there were 270 convicted terrorists housed in 26 Indonesian prisons as of January 2015, with another 90 terrorism suspects under detention or awaiting trial at a paramilitary police detention center in suburban Jakarta. According to this report, Indonesian prison authorities have improved their supervision of radical prison inmates in recent years to keep them from forming prison networks. The fact that Baasyir and 23 other prisoners nevertheless were able to publicly pledge loyalty to the Islamic State while under incarceration indicates that the challenges facing Indonesian authorities could be considerable. Experts generally believe it is difficult to accurately map JI splinter groups and other active groups, given rapidly shifting loyalties. The Jakarta attack appears to have been carried out by members of a group known as Partisans of the Caliphate (Jamaah Anshar Khilafah, JAK), whose ideological leader is detained cleric Aman Abdurrahman, a former JI leader. Other groups are active in Java, Maluku, Aceh, and elsewhere. One loosely-organized Aceh-based group, known as Jamaah Ansharut Tauhid (JAT), gained prominence in the late 2000s, but was weakened after the Indonesian police raided their training camp in Aceh in February 2010. Another prominent group that originated from sectarian violence in Maluku was Mujahedin Indonesia Timur (Mujahidin of Eastern Indonesia, or MIT), which held territory near Poso, Sulawesi, for several years until 2016, when its leader, Santoso, alias Abu Wardah, was killed by Indonesian security forces. The organization reportedly attracted recruits from outside Indonesia, including ethnic Uyghurs (also spelled Uighurs) originally from the People's Republic of China. In the past, militant recruitment in Indonesia was inspired largely by events at home. International Islamist conflicts, however, have more recently become a source of inspiration for Indonesian militants. Analysts believe the present weakness of Indonesia's largest terror networks is a driver of this development, as weakened militant groups seek to remain relevant. According to some experts, networks that have played roles in recruiting for domestic militant causes are taking on new roles, recruiting and facilitating individuals' travel to Syria via European destinations to fight alongside the IS. As an illustration of how loyalties can morph, according to one expert on militant groups in Indonesia, JI is "... reburnishing its reputation as a jihadi organization through its channels to Syrian Islamist rebels." Indonesia has taken numerous steps to counter the rise of militant groups since 2014, when the Islamic State began to attract greater attention. It has outlawed any public expression of support for IS and blocked numerous websites related to the Islamic State. Indonesia's counterterrorism efforts are police-led, with Detachment 88 (Densus 88)—the elite counterterrorism unit of the police—leading operations and investigations. Counterterrorism units from the Indonesian military are sometimes called upon to support domestic counterterrorism operations and responses. One key debate underway in Indonesia is whether the nation's current antiterrorism laws give the national police sufficient ability to monitor and address perceived terrorist threats. President Widodo's government has drafted amendments to the current Anti-Terrorism Law, which dates to 2003, the year after the first Bali bombings. The new legislation could broaden definitions of terrorism and allow police to proactively detain suspected terrorists for up to 90 days without charge or access to legal representation and for longer periods after that. It would also reportedly broaden definitions of criminal support for terrorism, and allow the prosecution of those who travel to the Middle East and are suspected of supporting IS. Observers note that Indonesia's largest Muslim organization, Nahdlatul Ulama, has supported a strengthening of counterterrorism laws, which is a departure from its posture when Indonesia drafted its current counterterrorism laws in 2003, and possibly a sign that the mainstream of Indonesian Islamic leaders may now support such measures. However, human rights concerns remain. Human Rights Watch has called on Indonesia to reject amendments to the laws that are "unnecessarily broad and vague," and that would "unjustifiably restrict freedom of expression." The United States and Australia have supported the development of Indonesia's counterterrorism capabilities, including helping Indonesia develop the elite counterterrorism unit Detachment 88, responsible for coordinating counterterrorism policy and enforcing Indonesia's antiterrorism laws. The United States has offered training to the leadership and members of the unit, as well as other military and national police personnel. U.S.-Indonesian counterterror capacity-building programs from the outset have also included financial intelligence unit training to strengthen anti-money laundering, counterterror intelligence analysts training, an analyst exchange program with the Treasury Department, and training and assistance to establish a border security system as part of the Terrorist Interdiction Program. Indonesia participates in counterterrorism efforts through several international, multilateral, and regional fora including the U.N., the Global Counterterrorism Forum (GCTF), ASEAN, APEC, and others. In August 2014, with co-chair Australia, Indonesia launched the GCTF's new Working Group on Detention and Reintegration. Indonesia has also participated in the Regional Defense Counter Terrorism Fellowship Program, which includes intelligence cooperation, civil-military cooperation in combating terrorism, and maritime security. Indonesia has also participated in the Theater Security Cooperation Program with the U.S. Pacific Command. This participation began over a decade ago by involving Indonesia in counterterrorism seminars promoting cooperation on security as well as subject matter expert exchanges. Muslim separatist movements, communist rebels, and Islamist terrorist groups have battled Philippine military forces for over four decades. In 2016, the predominantly Catholic Philippines was ranked 12 th out of 130 countries on the Global Terrorism Index, which measures terrorist incidents and related fatalities, injuries, and property damages. In addition to indigenous Islamist terrorist groups, Al Qaeda operated a cell in Manila that was particularly active in the early to mid-1990s, and Jemaah Islamiyah was known to be active in the country in the 1990s and early 2000s. After 2001, when the Bush Administration designated the Philippines as a front-line state in the global war on terrorism, joint Philippine-U.S. efforts significantly reduced Islamist terrorist threats in the Philippines. Although weakened, an increase in activity by the Abu Sayyaf Group (ASG) since 2014 and the rise of the Islamic State in the Middle East have raised concerns about possible resurgent terrorist threats in the Philippines. The Armed Forces of the Philippines (AFP) continues to militarily engage Islamist terrorist organizations such as the ASG and splinter groups of two separatist insurgencies, the Moro Islamic Liberation Front (MILF) and the Moro National Liberation Front (MNLF). The most established, indigenous terrorist organization with ties to jihadist networks is the Abu Sayyaf Group, based in Sulu in the southern Philippines. The United States listed the ASG as a Foreign Terrorist Organization (FTO) in 1997. At its peak in the mid-2000s, the ASG posed a significant terrorist threat and maintained ties with Jemaah Islamiyah and factions of the MILF. The ASG has carried out hostage-takings for ransom, killings, and bombings since the early 1990s and provided sanctuary for Jemaah Islamiyah. Members of the ASG and JI are believed to have maintained tenuous links with Al Qaeda. The February 2004 bombing of a ferry in Manila Bay, which killed over 100 people, was found to be the work of Abu Sayyaf and the Rajah Solaiman Movement (RSM), another extremist organization based in the southern Philippines. In February 2005, the ASG and RSM carried out simultaneous bombings in three cities, which killed 16 people, while the Philippine government uncovered plots to carry out additional attacks in Manila, including one targeting the United States Embassy. Over time, the ASG has become more of a criminal organization rather than an ideological one, funded by kidnappings for ransom, extortion, and drug trafficking. Its membership decreased from 1,000-2,000 in 2002 to about 300-400 members, according to various estimates. Since 2014, however, the ASG has stepped up its criminal activities, pledged allegiance to IS, and vowed to unite Islamist extremist groups in the Philippines. Other organizations that have expressed support for the Islamic State include splinter groups of the MILF and MNLF, such as the Bangsamoro Islamic Freedom Fighters (BIFF), which do not support a peace agreement through which Muslims in Mindanao would gain substantial autonomy but not independence. Another group, Ansarul Khilafah Philippines (Supporters of the Caliphate in the Philippines or AKP), based in southern Mindanao, is believed to include former MILF commanders and to be linked to both the BIFF and Jemaah Islamiyah. The AKP reportedly pledged allegiance to the Islamic State and warned of attacks on civilian targets, although some Philippine military officials view it largely as a criminal gang with little military power and "no proven links" to the Islamic State. The Maute group, a radical Islamist organization based in southwestern Mindanao, is suspected of carrying out one major attack and planning another in 2016. In 2014, the government of then-President Benigno Aquino and the MILF signed a peace agreement, the Comprehensive Agreement on the Bangsamoro. The resulting Bangsamoro Basic Law (BBL) provided for substantial political and economic autonomy for the Muslim Moros in portions of Mindanao and Sulu. According to many observers, the BBL also brought hope of greater security and economic development in areas that have been a breeding ground for insurgent and extremist groups. The agreement was not implemented due to opposition in the Philippine Congress. Some experts argue the rejection of the BBL may fuel local recruitment to Islamist extremist groups. President Rodrigo Duterte, who entered office in July 2016, stated that he wants to start negotiations on a new Bangsamoro agreement in 2017. Many experts argue that after a period of decline, terrorist threats in the Philippines are growing. The ASG has demonstrated a renewed capacity to engage in acts of violence, including bombings, ambushes on military forces and government property, and beheadings of captives. The ASG's hostage-takings for ransom, numbering about 20 per year, including of foreign tourists, fishermen, and sailors, have increased. Ransom money reportedly has enabled the ASG to obtain arms and ammunition, pay off local communities, and bribe security officials. Analysts have expressed concern about three developments: the rise of the Islamic State as an inspiration; the aim of various terrorist groups in the Philippines to join forces; and the international dispersion of IS fighters. Meanwhile, however, the Philippine military continues to pursue Islamist extremist groups aggressively and with some success, and terrorist attacks have been confined to the south. Some analysts state that the ASG and other groups potentially may commit "sympathy attacks" or offer safe haven to pan-Islamist groups or individuals from Southeast Asia and elsewhere who have ties to IS. Some terrorist organizations are believed to be uniting under an umbrella body, Dawlatul Islamiyah Waliyatul Masrik (DIWM). In the past year, some experts have expressed concern that as the Islamic State loses ground in the Middle East, it may seek to expand in Southeast Asia, and its Southeast Asian recruits may return to the region, particularly to the Philippines, to set up terrorist cells. Roughly 10 foreign IS fighters from Southeast Asia and the Middle East and several foreign jihadist cells are alleged to be training with indigenous terrorist groups in the Philippines, according to some reports; Philippine military officials, however, claim that there is no confirmed evidence of operational links or direct collaboration between the Islamic State and Islamist groups in the Philippines. Although there have been reports of Filipino Muslims among IS forces in Syria, some experts say that it is more likely that some Filipino overseas workers residing in the Middle East, rather than Filipino Muslims from Mindanao, have joined the Islamic State. Since President Duterte took office, at least three major terrorist incidents have occurred. In September 2016, a bomb attack in Davao, where Duterte formerly served as mayor, killed 15 people. In November 2016, a home-made bomb was found near the U.S. Embassy in Manila. The Maute group, an Islamist organization that has pledged allegiance to IS, is suspected in both cases. One day after the discovery of the bomb in Manila, the car of members of Duterte's advance security team was hit by an explosive device as they traveled to Marawi, a city in Mindanao, resulting in injuries to nine people. The Philippine government's counterterrorism efforts include military, political, economic, and ideological components. The Anti-Terrorism Council (ATC), created in 2007, is the lead agency charged with carrying out the Human Security Act of 2007, the principal national terrorism law. Coordination among bureaucratic agencies and between military and law enforcement organizations, overlapping jurisdictions, and lack of equipment reportedly remain problems. In January 2017, the Duterte Administration launched the Development Support and Security Plan (DSSP) to succeed the Internal Peace and Security Plan (IPSP). The IPSP (2011-2016) was credited for "significantly clearing" communist militants in 71 out of 76 provinces. Although AFP officials have not provided details about their military strategy, as part of the DSSP, the government reportedly has deployed 51 battalions in western and central Mindanao and aims to "significantly reduce the strength of terrorist groups" in the Philippines within six months. From July 2016 through December 2016, government forces reportedly launched hundreds of raids resulting in the deaths of over 150 ASG militants. The AFP also has targeted BIFF, AKP, and the Maute Group, and has killed several of their top leaders. The central government and the Moro Islamic Liberation Front (MILF) have been cooperating on counterterrorism efforts. The Anti-Terrorism Council has worked with the MILF on programs to counter extremism in Islamic schools. In 2016, the MILF formed a task force to counter IS recruitment activities in Mindanao. The MILF also signed an agreement with the Duterte Administration in support of the President's controversial campaign against the illegal drug trade, which has helped to fund extremist groups in the south. The Philippines cooperates with countries and organizations in Southeast Asia on counterterrorism efforts. In 2016, the Philippines, Indonesia, and Malaysia agreed to jointly patrol the Sulu Sea and surrounding waters in order to fight piracy and kidnappings by Islamist extremist groups. The Philippines is a member of the Asia-Pacific Group on Money Laundering. The Thailand-based multilateral organization is committed to the implementation and enforcement of international standards to prevent money laundering and terrorist financing. In 2015, the 10 nations of the Association of Southeast Asian Nations (ASEAN), of which the Philippines is a member, adopted the Langkawi Declaration on the Global Movement of Moderates, "Recognizing that moderation is a core value in the pursuit of long-lasting peace and a tool to diffuse tensions, negate radicalism and counter extremism in all forms and manifestations." The parties to the Declaration agreed to "Promote moderation as an ASEAN value that promotes peace, security and development." A lack of economic opportunities continues to help foster a breeding ground for extremist ideologies, groups, and recruitment as well as corruption and criminal activities, particularly in the southern Philippines, according to many experts. The Philippine government has been "one of the leading adopters of community-based development in conflict-affected areas." The government's Resilient Communities in Conflict Affected Communities program (PAMANA) supports health and education efforts, assistance with land claims, and local government capacity-building in conflict-affected areas, including programs for former combatants and counter-radicalization programs for captured ASG and BIFF fighters. Between 2002 and 2014, the U.S. Joint Special Operations Task Force–Philippines (JSOTF-P), a rotating force of roughly 500 U.S. military personnel, assisted the AFP in its fight against the Abu Sayyaf Group. Philippine-U.S. counterterrorism cooperation, including both military and humanitarian efforts, helped to reduce the membership, potency, and ideological influence of the ASG. JSOTF-P forces began to withdraw in 2014, due to several factors: the weakening of the Abu Sayyaf Group; the improving capabilities of Philippine military forces; and the peace agreement between the Government of the Philippines and the Moro Islamic Liberation Front. However, since 2014, the ASG has increased its activity, the government has been slow to implement a plan to replace military with police forces to maintain security, and the peace process has stalled. Roughly 100 U.S. Special Operations personnel remain in Mindanao on a rotational basis to provide advice and assistance to the Philippine military in counterterrorism operations. President Duterte in November 2016 expressed a desire to remove U.S. military forces from the Philippines by the time he leaves office in 2022. However, Philippine National Defense officials in November 2016 subsequently stated that U.S.-AFP counterterrorism cooperation would continue for the time being. The United States provides other support for counterterrorism efforts in the Philippines. U.S. foreign assistance to the Philippines places a high priority on "addressing the root causes of terrorism in Mindanao." Program areas include promoting good governance and the delivery of basic social and economic services; the participation of civil society; basic education; and public health services. In addition, the Department of State administers programs that aim to strengthen the ability of Philippine law enforcement to engage local communities, identify youth with the potential of becoming radicalized, and support community efforts to build inter-ethnic harmony. Antiterrorism assistance includes training police, including maritime law enforcement personnel, in investigative techniques as well as helping them to track and interdict criminal and terrorist organizations. In 2016 and 2017, the Armed Forces of the Philippines (AFP) received $33 million and $9.6 million, respectively, in Department of Defense counterterrorism assistance. The U.S. government also works with the Philippine Anti-Terrorism Council to pursue cases involving terrorist finance. The Enhanced Defense Cooperation Agreement (EDCA), finalized between the two governments in April 2014 and sanctioned by the Philippine Supreme Court in January 2016, allows for the increased presence of U.S. military forces, ships, aircraft, and equipment in the Philippines on a rotational basis and U.S. access to Philippine military bases. Philippine President Rodrigo Duterte, inaugurated as President in June 2016 after EDCA was finalized, has expressed skepticism about numerous aspects of his country's reliance on the United States, but has also stated that he will stand by the EDCA agreement. The Philippines has offered five military bases for U.S. access under EDCA, including Lumbia Air Base in southern Mindanao. The inclusion of Lumbia reportedly reflected concerns about terrorism and efforts by IS to influence local militants in that region. Unlike many of its neighbors in Southeast Asia, Malaysia does not appear to have well established indigenous separatist groups or insurgents that engage in terrorist activities. Violent Islamist extremist groups have held meetings in or channeled funds and supplies through Malaysia in scattered instances over the past 25 years, but Malaysian law enforcement appears to have been largely successful in preventing those groups from gaining a foothold in the country. However, Malaysia is not immune to the consequences of the Islamic State's rise. Malaysia faces terrorist threats on several levels: fighters returning from conflict zones, strengthening of regional terrorist groups, radicalization of individuals (including, for example, the possibility of "lone wolf" attacks) and potential further inroads by the IS and/or Al Qaeda. Some Malaysians reportedly have provided funds to some insurgent and terrorist groups in Iraq and Syria, have facilitated others' support of these groups, and some have traveled to Iraq and Syria to fight or serve on the front lines. Verifiable figures are not available, but most news reports cite estimates of 100 or more Malaysians actively working with the Islamic State or rebel groups in the Middle East. Some Malaysians have provided small-scale financial support to insurgent and terrorist groups in the Middle East. According to police reports, most financial transfers that support or potentially support militant groups are conducted with cash or through the hawala informal value transfer system, making it difficult to completely stop funding of terrorist groups. Recent arrests in Malaysia may indicate increased international terror linkages with elements in Malaysia. Malaysian police arrested seven men, both foreign and Malaysian, who are believed to have links with the IS and Al Qaeda in late 2016. These men are believed to have been involved in a number of terrorist contexts. One was reportedly gathering information about an international school in Kuala Lumpur while another tried to smuggle weapons to Poso, Sulawesi, in Indonesia and attempted to infiltrate Burma to launch attacks there. Another individual was reportedly planning an attack on entertainment spots in Kulala Lumpur. At least one of the suspects is thought to have coordinated his activities with a Malaysian in Syria. In further police action, four members of an IS linked terrorist cell were arrested in Sabah in January 2017. The group included a Malaysian, a Filipino, and two Bangladeshis. The cell is thought to be commanded by Malaysian Mahmud Ahmad and to have links with Abu Sayyaf in the Philippines. The IS's only successful attack thus far in Malaysia was at the Movida nightclub in Puchong, Selangor, on June 28, 2016, which injured eight people. It was reported that the Movida attack was ordered by IS member Muhamad Wanndy Mohamad Jedi from Malacca, who is based in Syria. Police action following the Movida attack reportedly broke up planned attacks against targets in Putrajaya and Johor. The practice of Islam in Malaysia is generally regarded by many observers as relatively moderate. Nevertheless, the Islamic State, as well as websites and social media pages supportive of it, has drawn support from some extremists and elicited fascination in Malaysian youth. Malaysian IS supporters and sympathizers are active online and, some argue, create a fertile environment for recruitment and further radicalization. According to a Pew Research Center survey conducted in spring 2015, 67% of Malaysian Muslims have an unfavorable opinion of IS, but 12% have a favorable opinion. The opposition Pan-Malaysia Islamic Party (known by its Malay acronym PAS) publicly disavowed support for IS, but in 2014 senior PAS figures had praised the "sacrifice" of a former PAS youth leader who died fighting in Syria. Muslim Brotherhood leader Ismail Faruqui has been described as a mentor of opposition political leader Anwar Ibrahim, formerly Malaysia's Deputy Prime Minister and now an opposition leader. The two were reportedly among the founders of the International Institute for Islamic Thought (IIIT). Malaysian Prime Minister Najib Razak and other senior government officials have denounced the Islamic State and have urged Malaysians to withhold support for it and related groups. It was not until September 2014 that the Malaysian government began to freeze assets and funds belonging to individuals or groups involved with the Islamic State. The National Fatwa Council ruled in October 2014 that the participation of Malaysian Muslims in militant groups in Iraq and Syria is contrary to Islamic law and their deaths are not categorized as martyrdom. Malaysia, then a member of the Security Council, fully supported U.N. Security Council Resolution 2178, which aims to galvanize international action to combat terrorism in general and the problems posed by foreign terrorist fighters in particular. At the same time, the Malaysian government urged the United States and European countries to address the underlying factors that produce terrorism and to win "hearts and minds" rather than solely using force to counter terrorism. In a speech to the U.N. General Assembly in 2014, Najib promoted Malaysia's model of moderate Islam and encouraged individuals, religious leaders, and nations "to advocate for Islamic principles within a framework of tolerance, understanding and peace." The emerging danger of terrorists connected to the Islamic State and similar groups has prompted Malaysian law enforcement authorities to be more vigilant. Along with many other South and Southeast Asian countries, Malaysia fears that experienced and radicalized jihadists will return from Syria and Iraq to carry out attacks in their home country; Malaysian officials have raised the possibility of a "Paris-style" attack. The head of the police counterterrorism unit said that IS veterans are "also planning to carry out attacks in Malaysia against the Malaysian government, because for them Malaysia is not an Islamic government; it is OK to topple Malaysia through armed struggle." Police have apprehended several Malaysian militants returning from Syria and have arrested dozens of other Malaysians who allegedly intended to emigrate from Malaysia to join terrorist groups in the Middle East. As of mid-March 2016, Malaysian authorities had detained over 160 people connected to the Islamic State. Malaysia, like others, faces the threat that IS ideology will inspire individuals to carry out their own attacks and/or form militant groups in the country, even without connections to existing terrorist groups. In August 2014, Malaysian police arrested 19 people involved with a group plotting what officials called "amateurish" bombings against domestic targets and arrested another 17 suspects on similar charges in April 2015. According to the Malaysian government, a group inspired by the Islamic State plotted to kidnap Prime Minister Najib and other senior figures, but the police foiled the plan. Malaysian authorities are particularly concerned that the territories of Sabah and Sarawak could become a haven for terrorist groups or come under threat from rejuvenated militant groups in nearby areas of the Philippines and Indonesia. Malaysia's 2015 defense budget indicates a shift of attention and resources to Sabah, including two new battalions and new police and military outposts there. In response to intensified concerns about terrorism in Malaysia, the Najib government secured passage of new anti-terrorism legislation, the Prevention of Terrorism Act (POTA), in April 2015. This new law provides sweeping powers to law enforcement authorities to detain suspects without trial for up to 60 days, extendable indefinitely with approval from a Prevention of Terrorism panel. The POTA is especially controversial because the Malaysian government gained these enhanced police powers at a time when many see a growing crackdown on political dissent. Many observers inside and outside of Malaysia, including the United Nations High Commissioner for Human Rights, have raised serious concerns about the institution of indefinite detention without trial and the potential for abuse. Malaysian officials assert that POTA provides law enforcement measures that are necessary for countering the more dangerous terrorist threat. Malaysia launched the integrated National Special Operations Force (NSOF) in late 2016. The NSOF will be the first responders to terror threats and attacks in Malaysia. Its personnel will be drawn from the army, navy, coast guard and police. This quick reaction force will comprise 170 personnel and will be based near Kuala Lumpur. In response to the increased risks of terrorism threats in the region, in 2014 Malaysia stepped up its counterterrorism cooperation with other Southeast Asian countries and with the United States. The Malaysian Minister of Defense emphasized the need for greater intelligence sharing with Australia, Middle Eastern countries, Indonesia, and the Philippines. The Malaysian Home Minister traveled to the United States in October 2014 to meet with officials in the FBI and Department of Homeland Security, stating, "We exchange information about the involvement of Malaysians who are suspected of being terrorists and foreign terrorists who allegedly used Malaysia as a transit to move to other countries." In September 2015, Malaysia agreed to join the U.S.-led Global Coalition to Counter ISIL and participate in the coalition's counter-messaging group. Malaysia established a Regional Digital Counter-Messaging Communication Center in 2016 to counter IS messages on social media and to present more appealing alternatives. Reportedly, China is considering providing support to the new center. Malaysia already hosts the Southeast Asia Regional Center for Counterterrorism (SEARCCT), which conducts counterterrorism training workshops for officials in the region. Malaysia established its Advanced Passenger Screening System in 2014. In 2015, Malaysia signed the U.S. Homeland Security Presidential Directive No. 6 and a bilateral agreement for Preventing and Combating Serious Crime, which provide for the exchange of information (even biometric and DNA data) on suspected terrorists between U.S. and Malaysian law enforcement authorities. The Malaysian Home Minister stated in March 2016 that the Immigration Department had fulfilled the condition to transmit reports within 24 hours to Interpol on any loss or theft of Malaysian passports. Thailand is at risk of terrorism for several reasons: a homegrown separatist insurgency in its majority-Muslim southern provinces, relatively open and long borders that allow for international transit of transnational actors and a proliferation of human trafficking networks, and a central government consumed with its own political challenges. A U.S. treaty ally since 1954, Thailand has been shaken by extensive political turmoil and two military coups in the past nine years. Since the May 2014 coup, former Army Commander Prayuth Chan-ocha has served as Prime Minister and head of the military junta known as the National Council for Peace and Order (NCPO). Although Prayuth declared an end to martial law on April 1, 2015, the junta retains authoritarian powers under a special security measure in the interim constitution. Although the NCPO initially promised that elections would be held in mid-2017, polls have been delayed into 2018, and many observers think that the junta is unwilling to relinquish power even if the polls are held. After the death of Thailand's king in October 2016, the transition to a new king and his demands for changes to the constitution cast further uncertainty about Thailand's political situation. Thailand has endured a persistent separatist insurgency in its Muslim-majority southern provinces since the 1940s. The conflict has been particularly active in the last decade; since 2004, violence involving insurgents and security forces has left over 6,700 people dead and over 12,000 wounded, according to local NGOs. In 2016, a series of attacks in areas popular with foreign tourists drew concern that the insurgency was expanding beyond the southernmost three provinces. Experts consider the goals of the militant groups active in the area to be mostly separatist rather than jihadist or anti-Western. Many observers stress that there is no convincing evidence of serious Jemaah Islamiyah involvement in the attacks, and that the overall long-term goal of the movement in the south remains the creation of an independent state with Islamic governance. Some of the older insurgent organizations, which previously were linked to JI, reportedly have received financial support from foreign Islamic groups, and have leaders who have trained in camps in Libya and Afghanistan. The insurgency has, at times, heightened tensions between Thailand and Malaysia, since many of the insurgents' leaders are thought to cross the border fairly easily. Despite these links, foreign elements do not appear to have engaged significantly in the violence. Terrorist threats to Thailand are not limited to the southern provinces. On August 17, 2015, a bomb exploded in a busy Bangkok shopping area, killing 20 and wounding over 120. Two Chinese nationals allegedly linked to the Uyghur militant groups were arrested for involvement in the attack. Uyghurs are an ethnic group living primarily in northwestern China that that have been subjected to "severe official repression" by Beijing, according to the State Department's Human Rights Report. Thai authorities claim that the attack was motivated by the repatriation of a large group of ethnic Uyghurs to China weeks before and Bangkok's dismantling of a human trafficking ring. Successive governments in Bangkok—consumed by the political turmoil in Bangkok for the past decade—have struggled to contain the conflict in the South. As the current military government remains preoccupied with its steps toward restoring democratic rule, its strategy to contain conflict in the South has yielded some success, with violence initially declining after picking up again in 2016. The efforts included training local leaders to help protect and patrol their communities from insurgents and participating in peace talks with an umbrella organization of six separatist groups brokered by Malaysia. However, if a pattern of targeting tourist areas or Bangkok develops, the central government may consider unleashing a more aggressive offensive on the militants. The United States and Thailand have had strong intelligence cooperation, but it is unclear if the tension between the countries due to the military coups has prompted a downgrade of that aspect of the relationship. After the September 11, 2001, attacks on the United States, the two countries' intelligence agencies reportedly shared facilities and information daily. The most public result of enhanced coordination was the arrest of suspected Jemaah Islamiyah leader Hambali outside of Bangkok in August 2003. The CIA also maintained at least one black site—where terrorist suspects can be held beyond U.S. jurisdiction—in Thailand. It is unclear whether this degree of cooperation has continued as Bangkok has reacted to criticism from the United States about Thailand's suspension of democratic rule. It remains unclear whether the Trump Administration will emphasize intelligence sharing with Thailand or other powers in the region. Many analysts note that Thailand's geographical position and relatively open borders that cater to the large tourism industry mean that intelligence sharing with Bangkok could be a valuable resource in tracking the movement of transnational operatives. By most estimates, Muslim radicals represent an extremely small part of Australia's minority Islamic population. Australia has approximately half a million Muslims out of a total population of approximately 23.5 million. While Afghan camaleers were among the first Muslims in Australia, many of Australia's Muslims today are of Lebanese, Turkish, Bosnian, Syrian, or other descent. According to one report, 60% of those embracing radicalism in Australia are of Lebanese heritage. Analysts observe that the vast majority of Australia's Muslims reportedly are moderate in their beliefs. By one estimate Islamist radicals represent 0.2% of the Muslim population of Australia. Others in Australia emphasize that "radicalisation and terrorism are two different phenomena" and that counter-radicalization is but one of many counterterror policy options. The history of radical Islamist inspired attacks in Australia can be traced to 1915 when two men of Afghan and Pakistani background attacked a train near Broken Hill, New South Wales, killing four and wounding seven. The attack was motivated by religious grievances over the prohibition of halal slaughter and political allegiance to the Ottoman Sultan, with whom Australia as a part of the British Empire was then at war. Terrorist activity in Australia appears to have increased in recent years due to the effects the Islamic State has had on Islamist militants. The increase in militant activity takes the form of recruitment of those who would fight for the Islamic State in Syria and Iraq, the provision of financial or other support to those fighting with the Islamic State in the Middle East, and domestic terrorist attacks carried out by individuals and groups who have followed the Islamic State on social media or possibly have been influenced at Islamic centers in Australia. Other radical Islamist militant groups originating outside Australia have also been active in Australia or called on jihadists to target Australia. Examples of such activity include an unsuccessful Al Qaeda and Indonesia-based Jemaah Islamiyah (JI) directed plot to attack Jewish and Israeli targets in Sydney during the 2000 Olympics, a Lashkar-e-Taiba (LeT) plot that was foiled in 2003, and a similarly thwarted 2009 Al Shabab associated plot to attack the Holsworthy Army Barracks in Sydney. Al Qaeda has also mentioned Australia when calling for attacks against the United States and its allies. Terrorists also have targeted Australians in neighboring Indonesia. Two of the largest attacks in Indonesia, both attributed to JI, were centered on Australian targets: An October 12, 2002, bombing of two crowded nightclubs in Bali killed 88 Australians and seven Americans, and JI carried out a bombing of the Australian Embassy in Jakarta in September 2004. (JI also carried out attacks on other Western targets, both in Jakarta and Bali.) Some within JI at that time reportedly set as their goal the establishment of an Islamic state that would encompass Indonesia, Malaysia, the southern Philippines, and Northern Australia. The Lowy Institute, known as Australia's most prominent think tank, estimated in February 2015 that "around 90 Australians were fighting for Jihadist groups in Syria and Iraq, that up to 30 have returned, and that over 20 have died." Between December 2014 and October 2015, Australian authorities reportedly charged 24 people with terrorism-related crimes as a result of nine counterterrorism operations. This total constituted more than a third of all terrorism-related arrests since 2001. The Al Risalah Salafist Centre in Sydney, a center closely associated with radicalism and recruitment of IS fighters, was among those sites raided by police in September 2014 in Operation Appleby . The Appleby counterterrorism operation in Sydney and Brisbane was the largest in Australian history involving 800 officers and is thought to have disrupted planned demonstration executions. Afghan-born Baryalei was reported to have possibly been killed in October 2014, shortly after the Appleby raids. The taking of 17 hostages by self-styled Sheikh Man Haron Monis at the Lindt Cafe at Martin Place in central Sydney in December 2014 did much to reinforce Australian's views of the severity of the terrorist threat from Islamist radicalism. During the 16-hour siege, Monis, who had converted from Shia to Sunni Islam, asked for an IS flag. Police stormed the cafe after Monis killed one of the hostages. As the police stormed the cafe, Monis and another hostage were killed. Monis used Facebook to pledge his allegiance to the "Caliph of the Muslims" six days prior to taking hostages. Reportedly, he had also been under investigation by the Australian Secret Intelligence Organization (ASIO). There has not been a major terrorist attack in Australia since the Lindt Cafe attack in 2014. That said, a number of plots reportedly have been foiled, including a January 2017 plot to attack a train station and a cathedral in Melbourne. An electrician was also arrested in February 2017 for allegedly designing a device to warn against incoming guided munitions used by coalition forces in Iraq and Syria and for designing and modeling systems to help IS develop a long range guided missile capability. There have been a number of smaller incidents including a stabbing in September 2016. These actions have reportedly led to 57 arrests. An estimated 70 Australians have been killed while fighting with IS in Syria and Iraq. Analysts estimate that approximately 100 Australians are fighting with IS and that this represents a decrease from a previous peak of 120. Australia has undertaken a number of measures to improve its ability to counter Islamist militancy within Australia. Australia has enacted new security laws including enhanced data retention capabilities and has increased funding for intelligence agencies and police. In 2014, Prime Minister Abbott amended counterterror legislation to grant intelligence agencies "greater powers to monitor citizens suspected of participating in or otherwise supporting jihadist violence and made it easier to prosecute people promoting extremist propaganda." Former Prime Minister Abbott named Ambassador Greg Moriarty National Counterterrorism Coordinator and head of the then newly-formed Counterterrorism Coordination Office. More recently, a new National Terrorism Threat Advisory System was put in place in November 2015. Following a 2015 attack on police by a 15-year-old, legislation was enacted that lowered the age of control orders for monitoring suspects from 16 to 14. Prime Minister Malcolm Turnbull appears to some observers to be taking a more conciliatory approach towards the Muslim community in Australia than former Prime Minister Abbott. Turnbull met with the Islamic Council of Victoria and visited the Islamic Museum of Australia and has spoken of the need for conciliation with the Australian Muslim community. This contrasts with the approach of Abbott whom the Council had accused of "fearmongering." It is reported that Prime Minister Turnbull has consulted Cabinet about integrating the Australian Federal Police, the Australian Secret Intelligence Organization and the Australian Border Force into one agency to better coordinate Australia's counter terrorism effort. A joint Australian and New Zealand military mission has trained 17,000 Iraqi troops since May 2015. The Royal Australian Air Force and Australian special forces are also contributing to the campaign to liberate Mosul, Iraq. Under laws enacted in 2015, IS terrorist Khaled Sharrouf was stripped of his Australian citizenship. When President Obama met with Prime Minister Malcolm Turnbull in January 2016 he praised Australia for its counterterror efforts in Afghanistan, Syria, and Iraq "but also [for] countering violent extremism globally." Australia has contributed to the International Coalition Against Terrorism (ICAT), and related efforts. It has sent rotations of Special Forces troops plus regular troops to Iraq and Afghanistan. About 780 Australian Defence Force personnel are deployed as part of Operation OKRA in Iraq and Syria. Australia also has approximately 250 defense personnel deployed in Afghanistan under Operation Highroad . The Highroad forces support the NATO-led Resolute Support mission which replaced the International Security Assistance Force (ISAF). Australia lost 41 personnel with a further 261 injured during the ISAF mission. This support stems from Australia's shared perspective with the United States and the West of the Islamist threat and from Australia's commitment to its alliance relationship with the United States. Australia and the United States also work together in intelligence sharing through the Five Eyes intelligence network which also includes Canada, New Zealand, and the United Kingdom. Australian and Indonesian counterterror cooperation improved significantly following cooperation on the investigation into the 2002 Bali blasts. Australia and Indonesia signed a Memorandum of Understanding on Combating International Terrorism in December 2015 which "will underpin counter-terror cooperation with Indonesia to 2018." Australian Federal Police continue to be deployed across Indonesia as part of a joint effort to "counter terrorism and transnational crime and to build stronger ties with the Indonesian National Police." Australia has partnered with Indonesia and other states in the region to build states' counterterrorism capabilities through the Jakarta Centre for Law Enforcement Cooperation (JCLEC). The Centre is intended as a resource for Indonesia and Southeast Asia "in the fight against transnational crime with a focus on counterterrorism." The Centre has worked with the Southeast Asia Regional Centre for Counterterrorism (SEARCCT) in Kuala Lumpur, the International Law Enforcement Academy in Bangkok, and the ad hoc working group on law enforcement and legal issues established by the Bali Ministerial Meeting on Counter Terrorism. Australia and New Zealand are working together both as members of the counter IS coalition in Iraq, as part of their joint Australia-New Zealand Building Partner Capacity mission to train Iraqi army units, and in reinforcing efforts to prevent domestic terrorism through the Australia-New Zealand Counterterrorism Committee. Australia and New Zealand agree that community engagement is "vital to tackle radicalisation and violent extremism" and that it is "vital also to continue to work in cooperation with partner governments in the region to support initiatives to counter violent extremism." Singapore, the region's wealthiest nation, was the target of at least one failed terrorist plot in the 2000s, and could be a potential target for further attacks originated at home or in other countries. In 2016, the Singapore government claimed that it had foiled "several" recent terrorist plots, including one that was made public with the arrest of a terror cell in Indonesia reportedly planning a rocket attack. The government has also increasingly been warning of the threat of the Islamic State, as well as of home-grown radicals. A terrorist attack on the city-state could jeopardize its standing as the region's financial and logistical hub. The small city-state conducts active intelligence sharing with its neighboring states and runs de-radicalization programs in its own Muslim communities, which make up around 14% of its population. Singapore sponsored a regional seminar on de-radicalization in 2015. In 2001, the Jemaah Islamiyah network reportedly planned a series of attacks on the city, including the U.S. Embassy, U.S. military vessels, and other Western companies. Singapore responded aggressively, arresting several suspected Islamic militants and holding them under their Internal Security Act (ISA) without trial. Singapore has continued to use its ISA to target suspected terrorists, including the arrest of 27 radicalized Islamist Bangladeshis in January 2016, which Singapore claimed was the first such discovery of a jihadist cell of foreigners. Singaporean officials maintain that important port facilities and other major targets remain vulnerable. Singapore is a transit point for a wide range of individuals, including suspected terrorists from neighboring countries, and its active port is a trans-shipment point. Prior to 2014, some U.S. officials had expressed concerns about the strength of Singapore's cooperation with U.S. law enforcement goals. The State Department's 2014 country report on terrorism, however, said that "Singapore and the United States [have] expanded counterterrorism cooperation, including increased information sharing on known and suspected terrorists. U.S. agencies welcomed the closer engagement and continued to see the potential for more strategic and productive agency-to-agency relationships." The State Department's 2015 country report on terrorism noted continued progress, stating that, "Singapore and the United States increased cooperation on counterterrorism efforts and expanded information sharing in 2015." Among stated U.S. priorities are improvements in Singapore's port security, where the Department of Homeland Security indicated that it hoped to see Singapore make greater use of advance manifests to screen containers through its busy port, and improvements to the bilateral extradition treaty. Violent militancy has been a threat in Southeast Asia for many years, increasing in intensity in the years following the September 11, 2001, attacks in the United States, and then seemingly easing in the late 2000s-early 2010s, as Southeast Asian governments' efforts to degrade domestic militant groups appeared to bear fruit. The rise of the Islamic State and the potential it raises for militant recruitment in Southeast Asia and beyond raises new challenges that may guide U.S. counterterrorism policy. Most analysts assess that terrorist threats in Southeast Asia remain lower than in some other regions. The State Department's 2015 Country Reports on Terrorism said in its Overall Strategic Assessment that Asian countries "actively sought to address threats and degrade the ability of terrorist groups to operate. Governments worked to strengthen legal frameworks, investigated and prosecuted terrorism cases, increased regional cooperation and information sharing, and addressed critical border and aviation security gaps." However, risks remain that Southeast Asia could still be subject to terrorism—either locally organized "lone wolf" attacks or more organized and larger-scale trans-national efforts. Many of the region's most prominent militant groups and individuals have publicly expressed support for the Islamic State, and analysts report substantial IS recruitment activity aimed at the region's large Muslim populations. Analysts have expressed concern about the region's ability to monitor and track new threats arising from the potential return of battle-trained individuals from the Middle East. It remains difficult to assess whether concrete operational and planning linkages have been established between the Islamic State and Southeast Asian militants, or whether the region's generally successful counterterrorism efforts continue to marginalize militant groups. The course of the region's counterterrorism activities—and the effectiveness of U.S. counterterrorism efforts in Southeast Asia—are likely to remain priority issues for the United States and governments in the region. In part for these reasons, Congress may opt to consider the legislative and oversight tools at its disposal to help develop and shape the ordering and pursuit of priorities to counter terrorism and violent extremism in Southeast Asia.

Southeast Asia is home to more than 625 million people and around 15% of the world's Muslim population. The region has faced the threat of terrorism for decades, but threats in Southeast Asia have never been considered as great as threats in some other regions. However, the rise of the Islamic State poses new, heightened challenges for Southeast Asian governments and for U.S. policy towards the region. Southeast Asia has numerous dynamic economies and three Muslim-majority states, including the world's largest Muslim-majority nation, Indonesia, which also is the world's third largest democracy (by population) after India and the United States. Although the mainstream of Islamic practice across the region is comparatively tolerant of other religions, Southeast Asia is also home to several longstanding and sometimes violent separatist movements and pockets of Islamist radicalism, which have led to instances of violence over the past 30 years. These were particularly acute during the 2000s, when several attacks in Indonesia killed hundreds of Indonesians and dozens of Westerners. The threat seemingly eased in the late 2000s-early 2010s, with the success of some Southeast Asian governments' efforts to combat violent militancy and degrade some of the region's foremost terrorist groups. Several Southeast Asian governments, including Indonesia, Malaysia, and Singapore, have intensified counterterror efforts since 2014, outlawing calls for support of the Islamic State and strengthening policing and border-control efforts. Nevertheless, the challenges that governments in the region face were exemplified in January 2016 by a violent attack in Jakarta, Indonesia, that killed eight people, including four civilians. There are several factors that characterize the terrorism threat in Southeast Asia. The region's largest Muslim-majority nations, Indonesia and Malaysia, have long been known for moderate forms of Islam and the protection of religious diversity—policies that have widespread popular support but which raise resentments among small numbers of conservative actors. In other Southeast Asian countries with substantial Muslim populations, including the Philippines and Thailand, simmering resentments in Muslim-majority regions have been fed by perceived cultural and economic repression, leading to separatist movements that have posed threats to domestic groups—and in the case of the Philippines, to Western targets. Threats are evolving with the rise of the Islamic State, which has conducted extensive recruitment in Indonesia's national language (called "Bahasa Indonesia") and in the Malay language widely spoken in the region. Though the number of Southeast Asians who have traveled to the Middle East to fight with the Islamic State is considerably lower than numbers from other regions, such as Europe, North Africa, and South Asia, observers estimate that hundreds of Southeast Asians have joined the fight, raising concerns that battle-trained individuals may return to the region and conduct attacks. Southeast Asia's borders are comparatively porous, raising concerns about trans-border threats that may lead to attacks in third-party states, such as Singapore. This raises the issue of border controls, an important factor for addressing terrorism. Governments in the region have sought better coordination and intelligence sharing—efforts that have been supported by the United States. The Trump Administration has indicated that combatting terrorism broadly, and IS specifically, is among its highest foreign-policy priorities. This has implications for numerous other U.S. interests, as U.S. policy towards the Asia-Pacific region balances a wide range of security and economic goals. The United States has offered counterterrorism assistance to several Southeast Asian nations. These include helping Indonesia create a centralized antiterrorism unit and providing U.S. troops on the Southern Philippine island of Basilan to help the Armed Forces of the Philippines combat violent groups in the country's deep South. Congress may wish to evaluate the effectiveness of such assistance, and examine funding levels for counterterrorism assistance. Congress may also wish to consider the relationship between counterterrorism assistance and other U.S. goals in the region, including the development of human rights and civil society in Southeast Asia. This report will be updated periodically.

From the mid-1980s to the end of FY2003, federal agencies had been authorized to enter intoEnergy Savings Performance Contracts (ESPCs) with contractors that privately financed andinstalled energy conservation measures in federal buildings and facilities. In return, the contractorsreceived specified shares of any resulting energy cost savings. The term "energy conservationmeasure" (ECM) applies to energy-efficiency improvements such as energy- and water-savingequipment, and renewable energy systems such as solar energy panels. (1) The contractor, referred to as an Energy Service Company (ESCO), provided the design,acquisition, installation, testing, operation, maintenance, and repair services for the ECM. TheESCO also had to guarantee a fixed amount of energy and cost savings throughout the term of thecontract, and bore the risk of the ECM's failure to produce a projected energy savings. The sum ofthe ECM cost and its reduced level of energy cost could not exceed the pre-ESPC energy cost. Theterm "energy savings" was applied to the measured reduction in the base cost of energy used by anexisting federally owned building or facility, as established through methods specified in thecontract. To date more than 340 ESPCs have been awarded, according to the Department of Energy(DOE), and no ESCO has failed to produce an energy and cost savings. (2) A recent Department ofDefense (DOD) proposal would have expanded ESPCs' application beyond fixed facilities intomobile systems. ESPCs were suggested as means of replacing the engines of the Air Force's agingB-52 bomber fleet with more efficient jet engines that would burn less fuel, thus qualifying as energyconservation measures. (3) Congress is currently considering ESPC reauthorization. Even though authorizing legislationhas expired, ESPCs awarded prior to the expiration date of October 1, 2003, continue in effect untiltheir completion dates. This report reviews the legislative history of ESPCs, the federal program topromote them, the Congressional Budget Office's (CBO's) scoring rationale, and ESPCs' cost andbenefits. The report also discuss the debate as to whether ESPCs offer the best contract means forinstalling ECMs, and policy considerations for Congress. Though Energy Savings Performance Contracts were authorized in 1992, they built on earlierCongressional mandates to improve the energy efficiency of federal buildings. Subsequentlegislation required federal agencies to audit their effectiveness, authorized federal agencies to retain50% of the resulting savings, raised the dollar threshold for notifying Congress, and temporarilyextended their authorization. The enabling legislation is summarized below. EPAct directed DOE to develop rules for federal use of ESPCs consistent with FederalAcquisition Regulations (FAR). DOE published the final energy savings performance contractingregulations (10 C.F.R. 436) in April 1995. (5) These provisions superseded those in the FAR. Federal agencieswere encouraged to make use of ESPCs' innovative contracting mechanisms, namely, the use ofprivate sector financing that did not require prior appropriations. (6) The financing supportedenergy-efficiency improvements to help reduce energy costs and meet federal energy reduction goals. DOE's rules also required that federal agencies document progress toward energy savinggoals by submitting an annual report, implementation plan, energy scorecard, and energymanagement data report to the President and Congress. (7) The annual report describes energy management activities infederal facilities program operations, and progress in implementing NECPA requirements and inattaining the energy-efficiency improvement goals of Executive Order 13123, Greening theGovernment Through Efficient Energy Management. (8) The order directs federal agencies to maximize their use ofavailable alternative financing contracting mechanisms, such as ESPCs. DOE's Federal Energy Management Program (FEMP) established a "Qualified List of EnergyService Companies." (9) Thelist includes all private industry firms that submitted an application and were qualified by a ReviewBoard, consisting of Federal Interagency Energy Management Task Force representatives and DOEstaff. Recognizing that awarding a stand-alone ESPC could be very complex and time-consuming,FEMP also created streamlined "Super ESPCs" as umbrella contracts that allowed agencies toundertake multiple ESPCs under one contract. Federal agencies reported new EPSC commitments through an annual Energy Scorecard thatlisted the number of contracts, projected annual savings in millions of British thermal units (Btu),total investment value, cumulative guaranteed cost savings, and contract award value. For FY1998, FEMP reported that federal agencies awarded $79 million in conventionalESPCs and another $6.6 million as Super ESPCs, excluding the Department of Defense. (10) By FY2000, conventionalawards rose to $225 million as Super ESPC awards rose to $62 million (for a total of $287 million),including Defense. (11) For FY2003, FEMP estimates that the private sector committed $252 million to finance ESPCs. Figure 1 shows the value of Super ESPCs versus conventional ESPCs awarded between FY1998and FY2003 in nominal dollars. Few if any conventional ESPCs are reported as being awarded after2001, as indicated by the abrupt drop-off of the graph curve. How effective are ESPCs' contribution to meeting federal energy reduction goals? FederalESPC projects have achieved about a 30% higher energy savings (per-square-foot basis) thanmunicipal/state governments, universities, schools, and hospitals (MUSH). (12) The median for federalenergy savings is about 18,000 Btu per square foot (Btu/ft 2 ) compared to 14,000 Btu/ft 2 for MUSH. Annual federal government electricity consumption also declined from 1992 to 2002 by 1.14 billionkilowatt-hours. (13) Figure 1. Super ESPC vs. Conventional ESPC How do the savings translate in terms of net economic benefit? In an analysis of 214 federalprojects, using a 7% discount (interest) rate, Lawrence Berkeley National Laboratory (LBNL)projected $550 million in benefits that would go to the taxpayer. (14) ESPC savings projections may or may not be achieved depending upon whether the buildingor facility is fully used after the energy improvement. (15) If savings were smaller than projected, future operation andmaintenance (O&M) spending would need to be larger than projected. The ESPCs' savings freedup funds that otherwise would have been appropriated for O&M. (16) Though authorized for up to 25 years, ESPC contract terms have been averaging 14 years inlength. (17) Normally,ESPC cost savings are used to pay the contractor first and then offset other base operating expensesafter the contract completion. (18) In an unconventional approach, DOD deferred some ESPCs' costsavings until contract completion to shorten the contract term and accelerate payoff of the energyconservation improvement. These contracts reduced energy consumption but did not reduce the totalcost of operation until contract expiration. Although CBO would score such ESPCs as futurefinancial obligations, the length of the obligation would be reduced, as would the interest chargesthat the ESCO would pass on to the government (discussed below). The federal market for ESPCs has produced at least 340 projects valued at approximately$1.6 billion in private sector investments. (19) In comparison to ESPCs, $3.17 billion in appropriated funds wasinvested in energy-reducing capital improvements between FY1985 and FY2001.Appropriations-funded projects peaked at $288 million in FY1995 and declined to $131 million byFY2001. Figure 2 shows the rate of spending between 1985 and 2001. Figure 2. Appropriations-Funded Energy Conservation Measures Are the costs of energy conservation measures installed under ESPCs as favorable as thecosts obtained through competitive sourcing with appropriated funds? To answer the question, OakRidge National Laboratory (ORNL) conducted a cost evaluation comparing energy projectscompleted under ESPCs with those completed under appropriated funds. (20) ORNL's evaluationconcluded that the "pricing under Super-ESPCs, using a design-build approach negotiated for bestvalue, was as good as the pricing obtained for the appropriations-funded projects in the traditional'bid-to-specification' competitive program." In sum, ORNL found that energy conservation measurescompleted under an ESPC were no more costly than those completed under direct appropriations. Are energy conservation measures under appropriated funds more time- consuming thanunder ESPCs? Based on data for 71 awarded projects, ORNL found that Super ESPCs averaged 15months to award the contract and 12 months for design and construction -- 27 months in durationfrom start to finish for an average implementation price of $3.26 million. (21) Based on data for 23energy projects, appropriations-funded projects averaged 63 months in duration. Only 12 of the 39ECMs studied were ultimately funded (some projects having more than one ECM). How does project financing compare between ESPCs and appropriations-funded contracts? Since ESCOs pay interest charges on money borrowed to finance the energy conservation measures,they recover the cost over the life cycle of the ESPC. Under an appropriations-funded project, acontractor's commercial finance charges would also be passed through as part the project's cost, butthe length of financing and therefore cost of financing would be considerably less than with ESPCs. A key measure for comparing the ESPC funding alternative to appropriations-funded projectslies in the life-cycle cost. This accounts for the costs of the initial survey and feasibility study,installation, and owning and operating the ECM over its useful life. ORNL devised parametrictables (22) to assist federalmanagers in deciding whether to fund ECMs through ESPCs or wait for appropriated funding. Forproject duration times between 28 and 68 months, ORNL found that appropriations-funded projectshad lower life-cycle costs as long as the up-front survey/study costs stayed below 18% of thedesign/completion costs. (23) However, when the annual energy savings fromappropriations-funded projects decreased by as little as 2% from the projected savings, the projectsbegin to lose their competitiveness with ESPCs. Under the 1990 Budget Enforcement Act (BEA, P.L. 101-508 ) pay-as-you-go (PAYGO)rules, increases in mandatory spending scored by CBO had to be offset by mandatory spending cutsor increased revenues. These enforcement mechanisms were extended through FY2002 in theBudget Enforcement Act of 1997 ( P.L. 105-33 ). In addition, the BEA imposed limits ondiscretionary spending, that is, on funds provided through the annual appropriations process. Under the BEA budget constraints from FY1991 through FY2002, CBO remained silent onscoring the budgetary cost of ESPCs. After an extensive review of whether ESPCs imposed a futurefinancial obligation on the federal government, CBO began scoring ESPCs as mandatory spending,coinciding with the expiration of the BEA. (24) The CBO scoring reflects how ESPCs create futurecommitments to appropriations. It is consistent with how appropriations-funded energy conservationprojects would be scored throughout the budget. CBO assumed in scoring H.R. 6 thatbecause the federal building inventory is aging, ESPCs would continue to be awarded at least at thesame rate as in FY2003. (25) Thus, authorizing an extension of ESPCs as included in the H.R.6 conference report could commit upwards of $2.5 billion over the next 10 years, basedon an estimated $252 million commitment in FY2003. Since the 1970s, both the executive branch and Congress have promoted energy efficiencywithin federal agencies. When the federal government's energy-efficiency and conservationprograms received severe budget cuts in the 1980s, Shared Energy Savings and later Energy SavingsPerformance Contracts were devised as part of the strategy to meet federal energy reduction goals. Appropriations-funded energy conservation projects have been declining since FY1995, and federalmanagers have increasingly turned to ESPCs as a remedy to fund energy conservation measures. EPAct had authorized federal agencies to incur obligations through ESPCs to finance energyconservation measures provided that guaranteed savings exceeded the debt service requirements. Nevertheless, CBO scores ESPCs as future commitments to appropriations, consistent with thescoring of commitments for appropriations-funded energy conservation projects throughout thebudget. O&M funds that would pay for ESPCs must be appropriated. Upwards of $2.5 billion overthe next 10 years would be scored as a future commitment if ESPCs were reauthorized. In effect, the federal government borrows money when it authorizes energy-efficiencyimprovements through ESPCs. When there is a deficit, the Treasury must also borrow moneyneeded by government to pay its bills, which government borrows by selling Treasury securities suchas T-bills, notes, Treasury Inflation-Protected securities, and savings bonds to the public. Proponents of ESPCs may argue that ESPCs represent a financially smart choice because ofthe guarantee that all costs, including debt repayment, will be covered by the cost savings producedby new ECMs. Further, the real cost of energy conservation measures under ESPCs is zero giventhat the capital improvement costs and reduced energy costs are less than what the governmentwould continue to pay without the improvements. Further arguments may be made that ESPCsrequire shorter lead times than improvements made with appropriated funds. Hence, energyreductions can be achieved sooner with ESPCs, as supported by the ORNL study. However, thelife-cycle cost of the ECM favors appropriations-funded projects within certain parameters, andESPC funding under other parameters. ESPCs were devised by Congress as a means of decreasing future obligations by reducingoperation and maintenance spending on energy. In recognizing that ESPCs do impose futurefinancial obligations, as scored by CBO, Congress may consider retaining the sunset provision. Despite declining appropriations for energy-efficiency improvements and the necessity tolimit future financial obligations, Congress may still choose to encourage energy-efficiencyimprovements in federal facilities. Congress may decide once again to extend the sunset provision,as had been authorized in the 1998 legislation. Further, Congress may consider amending theprovisions of ESPCs to promote early payback strategies to reduce long-term obligations, orexpanding their application to mobile systems for additional energy-savings potential.

Since the 1970s, both the executive branch and Congress have promoted energy efficiencywithin federal agencies. When the federal government's energy-efficiency and conservationprograms received severe budget cuts in the 1980's, Shared Energy Savings and later Energy SavingsPerformance Contracts were devised as part of the strategy to meet federal energy reduction goals. Energy Savings Performance Contracts (ESPCs) offered federal agencies a novel means ofmaking energy-efficiency improvements to aging buildings and facilities. In return for privatelyfinancing and installing energy conservation measures, a contractor received a specified share of anyresulting energy cost savings. The contractor, referred to as an Energy Service Company (ESCO),guaranteed a fixed amount of energy and cost savings throughout the term of the contract, and borethe risk of the improvement's failure to produce a projected energy savings. The sum of theimprovement's cost and its reduced level of energy cost could not exceed the pre-ESPC energy cost. The term "energy conservation measure" (ECM) was applied to energy-efficiency improvementssuch as energy- and water-saving equipment, and renewable energy systems such as solar energypanels. ESPCs were authorized in 1992 by amendments to the National Energy Conservation PolicyAct. Federal agencies' authorization to enter into ESPCs expired October 1, 2003. Legislativeattempts to reauthorize ESPCs in the 108th Congress stalled when the Congressional Budget Office(CBO) scored ESPCs as mandatory spending that imposed a future financial obligation on the federalgovernment. To date more than 340 ESPCs have been awarded with a total value of approximately $1.6billion in private sector investments. None have failed to produce energy and cost savings. Incomparison to ESPCs, $3.17 billion in appropriated funds was invested in energy-reducing capitalimprovements between FY1985 and FY2001, peaking at $288 million in FY1995 and declining to$131 million by FY2001. As appropriations-funded energy conservation projects have beendeclining since FY1995, federal managers have increasingly turned to ESPCs to fund energyconservation measures. Options for Congress include taking no further action on the sunset provision that endedagencies' authorization to enter into ESPCs, extending the sunset provision, or extending the ESPCauthorization with amendments. Such amendments could include reducing the maximum contractlength and expanding the contract scope to non-building applications. This report will be updatedas the situation warrants.

The Attorney General announced on June 10, 2002, that an American citizen, Jose Padilla,also known as Abdullah Muhajir, was arrested May 8, 2002 upon his return from Pakistan, allegedlywith the intent of participating in a plot to use a radiological bomb against unknown targets withinthe United States. Padilla was detained under a court order as a material witness until theDepartment of Justice faced a court deadline to either bring charges or release him. Afterprosecutors reportedly either lacked the physical evidence or were unwilling to disclose classifiedevidence necessary to bring charges against Padilla, President Bush signed an unspecified orderdeclaring him to be an "enemy combatant," and transferred him to the custody of the Department ofDefense. (9) TheAdministration takes the position that the law of war allows the United States to detain indefinitelymembers, agents or associates of Al Qaeda and other terrorist organizations, without charging themwith a crime under either criminal statutes or the international law of war, notwithstanding theirAmerican citizenship. (10) The Administration also initially denied Padilla access to his attorney, (11) arguing that he has noconstitutional right to an attorney because he has not been charged with a crime. (12) After a federal judge ruledthat Padilla has a right to challenge his detention and the concomitant right to consult with anattorney, (13) the government moved for a reconsideration of the order based on its assertion that no conditions werepossible that would permit Padilla to communicate with his lawyer without endangering nationalsecurity, which the judge considered but rejected. (14) The judge certified the case for interlocutory appeal to the U.S.Court of Appeals for the Second Circuit, including the issue of the President's authority to orderPadilla's detention as an enemy combatant. (15) The Second Circuit held that the President does not have theinherent authority, nor has Congress authorized him to declare U.S. citizens captured on U.S.territory in non-combat circumstances to be enemy combatants and place them under militaryjurisdiction. (16) Thegovernment granted Padilla a limited right to meet with his attorney under government monitoringand appealed the decision to the Supreme Court, which heard the case on expedited appeal. TheCourt disposed of the case without deciding the merits, in a 5-4 order vacating the decision belowand holding that the petition should have been brought in the Fourth Circuit, where Padilla is beingheld, rather than New York. The Supreme Court decided the petition of another American citizen who was detainedwithout charges as an "enemy combatant" on the same day. (17) Yaser Eser Hamdi, whohad been captured in Afghanistan, was initially detained at the U.S. Naval Station in GuantánamoBay, Cuba with other detainees captured in Afghanistan and other countries, until it was discoveredthat he was born in Baton Rouge and thus had a colorable claim to U.S. citizenship. He was thentransferred to a high-security naval brig in South Carolina, where he was held in military custodywithout criminal charge. After an attorney filed a petition for habeas corpus on his behalf, thegovernment asserted it had the unreviewable prerogative to detain him without trial and withoutproviding him access to an attorney, as a necessary exercise of the President's authority asCommander-in-Chief to provide for national security and defense. (18) The Fourth Circuit largelyagreed with the government's position, reversing two orders issued by the district court and orderingthe case dismissed. (19) The Supreme Court reversed in part, affirming the President's authority to detain Hamdi as an"enemy combatant" under the AUMF, but ruling that Hamdi was entitled to a hearing to challengehis status. (20) Thegovernment subsequently negotiated an agreement that would allow Hamdi to return to SaudiArabia, obviating the need for a hearing and a determination of whether Hamdi was entitled to theassistance of counsel. The government interprets the decision in Hamdi to apply to Padilla as wellas the detainees at Guantánamo Bay. These two cases are distinguishable because the government reportedly captured Hamdi onthe battlefield, possibly creating a presumption that he is a combatant. (21) Unlike Padilla, Hamdi wasnot alleged to have committed specific acts which could violate the law of war if committed by alawful soldier. Padilla, even if he were a legitimate enemy combatant, would not likely be entitledto combat immunity for his alleged involvement in an enemy plot to commit acts of terrorism onAmerican soil. (22) Inboth cases, the Government invoked its authority under the international law of war, and thePresident's authority as Commander-In-Chief, to justify the detention. (23) The Administration alsoargued that if congressional authorization were necessary, it could be found in the Authorization toUse Force ("AUMF") (24) and other statutes. The Supreme Court agreed that the AUMF authorizes the detention ofcombatants captured during hostilities, but did not elaborate on the scope of that authority, nor didit decide whether the President has inherent authority to order detentions or if other statutoryauthority also applied. The law of war divides persons in the midst of an armed conflict into two broad categories:combatants and civilians. (25) This fundamental distinction determines the international legalstatus of persons participating in or affected by combat, and determines the legal protections affordedto such persons as well as the legal consequences of their conduct. (26) Combatants are thosepersons who are authorized by international law to fight in accordance with the law of war on behalfof a party to the conflict. (27) Civilians are not authorized to fight, but are protected fromdeliberate targeting by combatants as long as they do not take up arms. In order to protect civilians,the law of war requires combatants to conduct military operations in a manner designed to minimizecivilian casualties and to limit the amount of damage and suffering to that which can be justified bymilitary necessity. To limit exposure of civilians to military attacks, combatants are required, as ageneral rule, to distinguish themselves from civilians. Combatants who fail to distinguishthemselves from civilians run the risk of being denied the privilege to be treated as prisoners of warif captured by the enemy. The treatment of all persons who fall into the hands of the enemy during an internationalarmed conflict depends upon the status of the person as determined under the four GenevaConventions of 1949. Under these conventions, parties to an armed conflict have the right to captureand intern enemy soldiers (28) as well as civilians who pose a danger to the security of thestate, (29) at least for theduration of hostilities. (30) The right to detain enemy combatants is not based on the supposition that the prisoner is "guilty" asan enemy for any crimes against the Detaining Power, either as an individual or as an agent of theopposing state. POWs are detained for security purposes, to remove those soldiers as a threat fromthe battlefield. The law of war encourages capture and detention of enemy combatants as a morehumane alternative to accomplish the same purpose than by wounding or killing them. Enemy civilians may be interned for similar reasons, although the law of war does not permitthem to be treated as lawful military targets. As citizens of an enemy country, they may be presumedto owe allegiance to the enemy. The law of war traditionally allowed for their internment and theconfiscation of their property, not because they are suspected of having committed a crime or evenof harboring ill will toward the host or occupying power; but rather, they are held in order to preventtheir acting on behalf of the enemy and to deprive the enemy of resources it might use in its warefforts. Congress has delegated to the President the authority, during a declared war or byproclamation, to provide for the restriction, internment or removal of enemy aliens deemeddangerous. (31) TheSupreme Court has upheld internment programs promulgated under the Alien Enemy Act. (32) This form of detention,like the detention of POWs, is administrative rather than punitive, and thus no criminal trial isrequired. (33) The Detaining Power may punish enemy soldiers and civilians for crimes committed priorto their capture as well as during captivity, but only after a fair trial in accordance with the relevantconvention and other applicable international law. However, it is unclear whether a person who isneither a POW nor an enemy alien may be detained without criminal charges, (34) and if such detention islawful, what process is due the detainee under the Constitution or international law. The conditionsof detention may also give rise to the question of whether they amount to punishment, in this case,notwithstanding DoD's recognition that the purpose for detaining "enemy combatants" is not punitivein nature. (35) The Department of Justice reads the Hamdi decision as supporting its reliance primarily ontwo cases to support its contention that the Constitution permits the detention without criminalcharge of American citizens under certain circumstances. The government argues that the 1942Supreme Court decision in Ex parte Quirin (the German saboteurs case) and the 9th Circuit case Inre Territo , read together, permit the government to hold American citizens as "enemy combatants,"regardless of their membership in any legitimate military organization. Others, however, distinguishthose cases as dealing with occurrences during a war declared by Congress and involving membersof the armed forces of hostile enemy states, and further argue that the Civil War case Ex parteMilligan forecloses this theory. After eight Nazi saboteurs were caught by the Federal Bureau of Investigation (FBI), thePresident issued a proclamation declaring that "the safety of the United States demands that allenemies who have entered upon the territory of the United States as part of an invasion or predatoryincursion, or who have entered in order to commit sabotage, espionage or other hostile or warlikeacts, should be promptly tried in accordance with the law of war." (36) The eight Germansaboteurs (one of whom claimed U.S. citizenship) were tried by military commission for enteringthe United States by submarine, shedding their military uniforms, and conspiring to use explosiveson certain war industries and war utilities. In the case of Ex parte Quirin , the Supreme Court deniedtheir writs of habeas corpus (although upholding their right to petition for the writ, despite languagein the Presidential proclamation purporting to bar judicial review), holding that trial by such acommission did not offend the Constitution and was authorized by statute. (37) It also found thecitizenship of the saboteurs irrelevant to the determination of whether the saboteurs were "enemybelligerents" within the meaning of the Hague Convention and the law of war. (38) To reach its decision, the Court applied the international common law of war, as Congresshad incorporated it by reference through Article 15 of the Articles of War, (39) and the President'sproclamation that [A]ll persons who are subjects, citizens or residents ofany nation at war with the United States or who give obedience to or act under the direction of anysuch nation, and who during time of war enter or attempt to enter the United States ... through coastalor boundary defenses, and are charged with committing or attempting or preparing to commitsabotage, espionage, hostile or warlike acts, or violations of the law of war, shall be subject to thelaw of war and to the jurisdiction of military tribunals. (40) Whether the accused could have been detained as "enemy combatants" without any intent totry them before a military tribunal was not a question before the Court, (41) but the Court suggestedthe possibility. It stated: By universal agreement and practice, the law of wardraws a distinction between the armed forces and the peaceful populations of belligerent nations andalso between those who are lawful and unlawful combatants. Lawful combatants are subject tocapture and detention as prisoners of war by opposing military forces. Unlawful combatants arelikewise subject to capture and detention , but in addition they are subject to trial and punishment bymilitary tribunals for acts which render their belligerency unlawful. (42) In its discussion of the status of "unlawful combatant," the Court did not distinguish betweenenemy soldiers who forfeit the right to be treated as prisoners of war by failing to distinguishthemselves as belligerents, as the petitioners had done, and civilians who commit hostile acts duringwar without having the right to participate in combat. Both types of individuals may be called"unlawful combatants," yet the circumstances that give rise to their status differ in ways that may belegally significant. (43) However, the Court did recognize that the petitioners fit into the first category, (44) and expressly limited itsopinion to the facts of the case: We have no occasion now to define with meticulouscare the ultimate boundaries of the jurisdiction of military tribunals to try persons according to thelaw of war. It is enough that petitioners here, upon the conceded facts, were plainly within thoseboundaries, and were held in good faith for trial by military commission, charged with being enemieswho, with the purpose of destroying war materials and utilities, entered or after entry remained inour territory without uniform -- an offense against the law of war. We hold only that those particularacts constitute an offense against the law of war which the Constitution authorizes to be tried bymilitary commission. (45) In the case In re Territo , (46) an American citizen who had been inducted into the Italian armywas captured during battle in Italy and transferred to a detention center for prisoners of war in theUnited States. He petitioned for a writ of habeas corpus , arguing that his U.S. citizenship foreclosedhis being held as a POW. The court disagreed, finding that citizenship does not necessarily "affect[]the status of one captured on the field of battle." (47) The court stated: Those who have written texts upon the subject ofprisoners of war agree that all persons who are active in opposing an army in war may be capturedand except for spies and other non-uniformed plotters and actors for the enemy are prisoners of war. (48) The petitioner argued that the Geneva Convention did not apply in cases such as his. Thecourt found no authority in support of that contention, noting that "[i]n war, all residents of theenemy country are enemies." (49) The court also cited approvingly the following passage: A neutral, or a citizen of the United States, domiciledin the enemy country, not only in respect to his property but also as to his capacity to sue, is deemedas much an alien enemy as a person actually born under the allegiance and residing within thedominions of the hostile nation. (50) While recognizing that Quirin was not directly in point, it found the discussion of U.S. citizenshipto be "indicative of the proper conclusion": Citizens who associate themselves with the military armof the enemy government, and with its aid, guidance and direction enter this country bent on hostileacts are enemy belligerents within the meaning of the Hague Convention and the law of war. (51) The court had no occasion to consider whether a citizen who becomes associated with anarmed group not affiliated with an enemy government and not otherwise covered under the termsof the Hague Convention could be detained without charge pursuant to the law of war, (52) particularly those notcaptured by the military during battle. Confining the Territo and Quirin opinions to their facts, they may not provide a solid foundation for the President's designation and detention of Padilla as an enemy combatant. It maybe argued that the language referring to the capture and detention of unlawful combatants --seemingly without indictment on criminal charges -- is dicta ; the petitioners in those cases did notchallenge the contention that they served in the armed forces of an enemy state with which theUnited States was engaged in a declared war. We are unaware of any U.S. precedent confirming theconstitutional power of the President to detain indefinitely a person accused of being an unlawfulcombatant due to mere membership in or association with a group that does not qualify as alegitimate belligerent, with or without the authorization of Congress. (53) The Supreme Courtrejected a similar contention in the Civil War case of Ex parte Milligan , discussed infra , whereCongress had limited the authority to detain persons in military custody. At most, arguably, the two cases above may be read to demonstrate that, at least in thecontext of a declared war against a recognized state, U.S. citizenship is not constitutionally relevantto the treatment of members of enemy forces under the law of war. Neither case addresses theconstitutionality of the process used to determine who is a member of an enemy force and whethera detainee qualifies for POW privileges. Inasmuch as the President has determined that Al Qaedais not a state but a criminal organization to which the Geneva Convention does not apply, (54) and inasmuch as the HagueConvention would seem to apply to neither Al Qaeda nor the Taliban for the same reasons that havebeen given to preclude their treatment as prisoners of war, (55) it may be argued that AlQaeda is not directly subject to the law of war and therefore its members may not be detained as"enemy combatants" pursuant to it solely on the basis of their association with Al Qaeda. (56) Taliban fighters capturedin Afghanistan are a closer fit within the traditional understanding of who may be treated as enemycombatants, but may be able to contest the determination that they are not entitled to POWstatus. (57) In Ex parte Milligan, (58) the Supreme Court addressed the question whether a civiliancitizen of Indiana who was allegedly a member of the Sons of Liberty, an organized group ofconspirators with alleged links to the Confederate States that planned to commit acts of sabotageagainst the North, could constitutionally be tried by military commission. The Court recognizedmilitary commission jurisdiction over violations of the "laws and usages of war," but stated thoselaws and usages "... can never be applied to citizens in states which have upheld the authority of thegovernment, and where the courts are open and their process unobstructed." (59) The Supreme Courtexplained its reasoning: It will be borne in mind that this is not a question of thepower to proclaim martial law, when war exists in a community and the courts and civil authoritiesare overthrown. Nor is it a question what rule a military commander, at the head of his army, canimpose on states in rebellion to cripple their resources and quell the insurrection .... Martial lawcannot arise from a threatened invasion. The necessity must be actual and present; the invasion real,such as effectively closes the courts and deposes the civil administration. (60) The government had argued in the alternative that Milligan could be held as a prisoner of war"as if he had been taken in action with arms in his hands," (61) and thus excluded fromthe privileges of a statute requiring courts to free persons detained without charge. The governmentargued: Finally, if the military tribunal has no jurisdiction, thepetitioner may be held as a prisoner of war, aiding with arms the enemies of the United States, andheld, under the authority of the United States, until the war terminates, then to be handed over by themilitary to the civil authorities, to be tried for his crimes under the acts of Congress, and before thecourts which he has selected. (62) Milligan, however, argued "that it had been 'wholly out of his power to have acquired belligerentrights, or to have placed himself in such relation to the government as to have enabled him to violatethe laws of war,'" (63) ashe was charged. The Court appears to have agreed with Milligan, replying: It is not easy to see how he can be treated as a prisonerof war, when he lived in Indiana for the past twenty years, was arrested there, and had not been,during the late troubles, a resident of any of the states in rebellion. If in Indiana he conspired withbad men to assist the enemy, he is punishable for it in the courts of Indiana; but, when tried for theoffence, he cannot plead the rights of war; for he was not engaged in legal acts of hostility againstthe government, and only such persons, when captured, are prisoners of war. If he cannot enjoy theimmunities attaching to the character of a prisoner of war, how can he be subject to their pains andpenalties? (64) In Quirin , the Supreme Court distinguished its holding from Milligan, finding that thepetitioners were enemy belligerents and that the charge made out a valid allegation of an offenseagainst the law of war for which the President was authorized to order trial by a militarycommission. (65) TheCourt noted that Milligan had not been a part of or associated with the armed forces of the enemy,and therefore was a non-belligerent, not subject to the law of war. (66) The Sons of Liberty, itseems, did not qualify as a belligerent for the purposes of the law of war, even though it was allegedto be plotting hostile acts on behalf of the Confederacy. Milligan was interpreted by some statecourts to preclude the trial by military commission of persons accused of participating in guerrillaactivities in Union territory, (67) and despite Congress' efforts to immunize executive officials foractions done under military authority during the Civil War, (68) the Supreme Court ofIllinois upheld damages awarded to Madison Y. Johnson, who, accused of being "a belligerent" butnever charged with any offense, was confined under orders issued by the Secretary of War. (69) The Hamdi Court found that Milligan did not apply to a U.S. citizen captured in Afghanistan. Justice O'Connor wrote that Milligan does not undermine our holding about the Government'sauthority to seize enemy combatants, as we define that term today. In that case, the Court maderepeated reference to the fact that its inquiry into whether the military tribunal had jurisdiction to tryand punish Milligan turned in large part on the fact that Milligan was not a prisoner of war, but aresident of Indiana arrested while at home there. That fact was central to its conclusion. HadMilligan been captured while he was assisting Confederate soldiers by carrying a rifle against Uniontroops on a Confederate battlefield, the holding of the Court might well have been different. TheCourt's repeated explanations that Milligan was not a prisoner of war suggest that had these differentcircumstances been present he could have been detained under military authority for the duration ofthe conflict, whether or not he was a citizen. (70) The government cites Moyer v. Peabody (71) to support its contention that the President has the authorityduring war, subject only to extremely deferential review by the courts, to detain an individual thegovernment believes to be dangerous or likely to assist the enemy. (72) The government furtherasserts that the case supports the historical "unavailability" of due process rights, such as the rightto counsel, in the case of enemy combatants. (73) In Moyer , the Supreme Court declined to grant relief to theplaintiff in a civil suit against the governor of Colorado based on the former's detention withoutcharge during a miners' strike (deemed by the governor to be an insurrection), stating: So long as such arrests are made in good faith and inthe honest belief that they are needed in order to head the insurrection off, the governor is the finaljudge and cannot be subjected to an action after he is out of office, on the ground that he had notreasonable ground for his belief. (74) The Court based its views in part on the laws and constitution of the state of Colorado, whichempowered the governor to repel or suppress insurrections by calling out the militia, which the Courtnoted, envisioned the ordinary use of soldiers to that end; that he may killpersons who resist, and, of course, that he may use the milder measure of seizing the bodies of thosewhom he considers to stand in the way of restoring peace. Such arrests are not necessarily forpunishment, but are by way of precaution, to prevent the exercise of hostile power. (75) The Court further clarified: If we suppose a governor with a very long term ofoffice, it may be that a case could be imagined in which the length of the imprisonment would raisea different question. But there is nothing in the duration of the plaintiff's detention or in theallegations of the complaint that would warrant submitting the judgment of the governor to revisionby a jury. It is not alleged that his judgment was not honest, if that be material, or that the plaintiffwas detained after fears of the insurrection were at an end. Based on the context of the case, the holding may be limited to actual battles and situations ofmartial law where troops are authorized to use deadly force as necessary. (76) While the Court notes that"[p]ublic danger warrants the substitution of executive process for judicial process," (77) it also noted that [t]his was admitted with regard to killing men in theactual clash of arms; and we think it obvious, although it was disputed, that the same is true oftemporary detention to prevent apprehended harm. As no one would deny that there was immunityfor ordering a company to fire upon a mob in insurrection, and that a state law authorizing thegovernor to deprive citizens of life under such circumstances was consistent with the 14thAmendment, we are of opinion that the same is true of a law authorizing by implication what wasdone in this case. (78) It may also be argued that, as a claim for civil damages rather than a direct challenge in theform of a petition for habeas corpus , the Moyer case does not stand for a general executive authorityto detain individuals deemed to be dangerous, without the ordinary constitutional restrictions. Asan interpretation of Colorado's constitution rather than that of the United States, the decision maynot apply to Presidential action. Other courts have reached the opposite conclusion -- that thosewrongfully detained by order of the President may recover damages from their captors. (79) The following sections give a brief treatment of the twentieth-century history of theinternment of individuals who are deemed "enemies" or determined to be too dangerous to remainat liberty during a national emergency. A survey of the history reveals that persons who areconsidered likely to act as an enemy agent on U.S. territory traditionally have been treated as alienenemies rather than prisoners of war or "enemy combatants" by the military, even when theindividuals were members of the armed forces of enemy nations, although in the latter case theymight also be tried by military commission or court-martial, if accused of a crime. Persons actingwithin the territory of the United States on behalf of an enemy state who were not members of thearmed forces of that state, including American citizens accused of spying or sabotage, have beentried in federal court. Individuals captured on the battlefield abroad have been handled in accordancewith government regulations interpreting the law of war. (80) The Alien Enemy Act was originally enacted in 1798 as part of the Alien and SeditionAct, (81) but saw greateruse during World War I than in previous wars. (82) The statute grants the President broad authority, during a declaredwar or presidentially proclaimed "predatory invasion," to institute restrictions affecting alienenemies, including possible detention and deportation. On April 6, 1917, the date Congress declaredwar against Germany, President Wilson issued a Proclamation under the Alien Enemy Act warningalien enemies against violations of the law or hostilities against the United States. (83) Offenders would besubject not only to the applicable penalties prescribed by the domestic laws they violated, but wouldalso be subject to restraint, required to give security, or subject to removal from the United Statesunder regulations promulgated by the President. (84) The government urged the courts to uphold the constitutionality of the act as a properexercise of Congress' power over the persons and property of alien enemies found on U.S. territoryduring war, a power it argued derives from the power of Congress to declare war and make rulesconcerning captures on land and water, (85) and which was also consistent with the powers residing insovereign nations under international law. The law was vital to national security because "[a]n armyof spies, incendiaries, and propagandists may be more dangerous than an army of soldiers." (86) The President reportedto Congress a list of 21 instances of "improper activities of German officials, agents, andsympathizers in the United States" prior to the declaration of war. (87) The government furtherargued that the statute did not require a hearing prior to internment, because the power and duty ofthe President was to act to prevent harm in the context of war, which required the ability to act basedon suspicion rather than only on proven facts. (88) While the act would permit regulations affecting all persons within the statutory definitionof alien enemy, (89) it wasthe practice of the United States to apply restrictions only to alien enemies who were found toconstitute an active danger to the state. (90) Aliens affected by orders promulgated under the act did not haverecourse to the courts to object to the orders on the grounds that the determination was not made inaccordance with due process of law, but could bring habeas corpus petitions to challenge their statusas enemy aliens. (91) In at least two instances, enemy spies or saboteurs entered the territory of the United Statesand were subsequently arrested. Pablo Waberski admitted to U.S. secret agents to being a spy sentby the Germans to "blow things up in the United States." Waberski, who was posing as a Russiannational, was arrested upon crossing the border from Mexico into the United States and charged with"lurking as a spy" under article 82 of the Articles of War. (92) Attorney General T. W. Gregory opined in a letter to thePresident that the jurisdiction of the military to try Waberski by military tribunal was improper,noting that the prisoner had not entered any camp or fortification, did not appear to have been inEurope during the war, and thus could not have come through the fighting lines or field of militaryoperations. (93) Anensuing disagreement between the Departments of War and Justice over the respective jurisdictionsof the FBI and military counterintelligence to conduct domestic surveillance was resolved bycompromise. (94) Waberski, an officer of the German armed forces whose real name turned out to be LotharWitzke, was sentenced to death by a military commission. Subsequently, the new Attorney General,A. Mitchell Palmer, reversed the earlier AG opinion based on a new understanding of the facts ofthe case, including proof that the prisoner was a German citizen and that there were militaryencampments close to the area where he was arrested. (95) President Wilson commuted Witzke's sentence to lifeimprisonment at hard labor in Fort Leavenworth and later pardoned him, possibly due to lingeringdoubts about the propriety of the military tribunal's jurisdiction to try the accused spy, (96) even though Congress haddefined the crime of spying and provided by statute that it was an offense triable by militarycommission. (97) The question of military jurisdiction over accused enemy spies arose again in the case of United States ex rel. Wessels v. McDonald , (98) a habeas corpus proceeding brought by Herman Wessels tochallenge his detention by military authorities while he was awaiting court-martial for spying. Theaccused was an officer in the German Imperial Navy who used a forged Swiss passport to enter theUnited States and operated as an enemy agent in New York City. He was initially detained as analien enemy pursuant to a warrant issued in accordance with statute. He contested his detention onthe basis that the port of New York was not in the theater of battle and courts in New York wereopen and functioning, arguing Milligan required that he be tried by an Article III court. (99) The court found that itsinquiry was confined to determining whether jurisdiction by court martial was valid, which itanswered affirmatively after examining relevant statutes and finding that, under international law,the act of spying was not technically a crime. (100) The court concluded that the constitutional safeguardsavailable to criminal defendants did not apply, noting that whoever "joins the forces of an enemyalien surrenders th[e] right to constitutional protections." The Supreme Court did not have theopportunity to address the merits of the case, having dismissed the appeal per stipulation of theparties. (101) However,two American citizens who were alleged to have conspired to commit espionage with Wessels weretried and acquitted of treason in federal court, (102) and subsequently released. In 1918, a bill was introduced in the Senate to provide for trial by court-martial of personsnot in the military who were accused of espionage, sabotage, or other conduct that could hurt the wareffort. (103) In a letterto Representative John E. Raker explaining his opposition to the idea, Attorney General T.W.Gregory provided statistics about war-related arrests and prosecutions. (104) According to the letter,of 508 espionage cases that had reached a disposition, 335 had resulted in convictions, 31 personswere acquitted, and 125 cases were dismissed. (105) Sedition and disloyalty charges had yielded 110 convictionsand 90 dismissals or acquittals. (106) Acknowledging that the statistics were incomplete, theAttorney General concluded that the statistics did not show a cause for concern. (107) He also reiterated hisposition that trial of civilians for offenses committed outside of military territory by court-martialwould be unconstitutional, and attributed the complaints about the inadequacies of the laws or theirenforcement to: the fact that people, under the emotional stress of thewar, easily magnify rumor into fact, or treat an accusation of disloyalty as though it were equal toproof of disloyalty. No reason, however, has as yet developed which would justify punishing menfor crime without trying them in accordance with the time-honored American method of arriving atthe truth. (108) The record does not disclose any mention of the option of deeming suspects to be unlawfulcombatants based on their alleged association with the enemy, detaining them without any kind oftrial. During the Second World War, President Roosevelt made numerous proclamations underthe Alien Enemy Act for the purpose of interning aliens deemed dangerous or likely to engage inespionage or sabotage. (109) At the outset of the war, the internments were effected undercivil authority of the Attorney General, who established "prohibited areas" in which no aliens ofJapanese, Italian, or German descent were permitted to enter or remain, as well as a host of otherrestraints on affected aliens. The President, acting under statutory authority, delegated to theAttorney General the authority to prescribe regulations for the execution of the program. AttorneyGeneral Francis Biddle created the Alien Enemy Control Unit to review the recommendations ofhearing boards handling the cases of the more than 2,500 enemy aliens in the temporary custody ofthe Immigration and Naturalization Service (INS). (110) In February of 1942, the President extended the program to cover certain citizens (111) as well as enemyaliens, and turned over the authority to prescribe "military areas" to the Secretary of War, who furtherdelegated the responsibilities under the order with respect to the west coast to the CommandingGeneral of the Western Defense Command. The new order, Executive Order 9066, (112) clearly amended thepolicy established under the earlier proclamations regarding aliens and restricted areas, but did notrely on the authority of Alien Enemy Act, as the previous proclamations had done. (113) Although theDepartment of Justice denied that the transfer of authority to the Department of War was motivatedby a desire to avoid constitutional issues with regard to the restriction or detention of citizens, theHouse Select Committee Investigating National Defense Migration found the shift in authoritysignificant, as it appeared to rely on the nation's war powers directly, and could find no support inthe Alien Enemy Act with respect to citizens. (114) The summary exercise of authority under that act to restrainaliens was thought by the Committee to be untenable in the case of U.S. citizens, and the WarDepartment felt congressional authorization was necessary to provide authority for itsenforcement. (115) Congress granted the War Department's request, enacting with only minor changes theproposed legislation providing for punishment for the knowing violation of any exclusion orderissued pursuant to Executive Order 9066 or similar executive order. (116) A policy of massevacuation from the West Coast of persons of Japanese descent -- citizens as well as aliens --followed, which soon transformed into a system of compulsive internment at "relocationcenters." (117) Personsof German and Italian descent (and others) were treated more selectively, receiving prompt (thoughprobably not full and fair) loyalty hearings (118) to determine whether they should be interned, paroled, orreleased. The disparity of treatment was explained by the theory that it would be impossible or tootime-consuming to attempt to distinguish the loyal from the disloyal among persons of Japanesedescent. (119) In a series of cases, the Supreme Court limited but did not explicitly strike down theinternment program. In the Hirabayashi case, the Supreme Court found the curfew imposed uponpersons of Japanese ancestry to be constitutional as a valid war-time security measure, even asimplemented against U.S. citizens, emphasizing the importance of congressional ratification of theExecutive Order. (120) Hirabayashi was also indicted for violating an order excluding him from virtually the entire westcoast, but the Court did not review the constitutionality of the exclusion measure because thesentences for the two charges were to run concurrently. (121) Because the restrictions affected citizens solely because oftheir Japanese descent, the Court framed the relevant inquiry as a question of equal protection,asking whether in the light of all the facts and circumstancesthere was any substantial basis for the conclusion, in which Congress and the military commanderunited, that the curfew as applied was a protective measure necessary to meet the threat of sabotageand espionage which would substantially affect the war effort and which might reasonably beexpected to aid a threatened enemy invasion. (122) In a concurring opinion, Justice Douglas added that in effect, due process considerations didnot apply to ensure that only individuals who were actually disloyal were affected by the restrictions,even if it were to turn out that only a small percentage of Japanese-Americans were actuallydisloyal. (123) However, he noted that a more serious question would arise if a citizen did not have an opportunityat some point to demonstrate his loyalty in order to be reclassified and no longer subject to therestrictions. (124) In Korematsu , (125) the Supreme Court upheld the conviction of an Americancitizen for remaining in his home, despite the fact that it was located on a newly declared "MilitaryArea" and was thus off-limits to persons of Japanese descent. Fred Korematsu also challenged thedetention of Japanese-Americans in internment camps, but the Court declined to consider theconstitutionality of the detention itself, as Korematsu's conviction was for violating the exclusionorder only. The Court, in effect, validated the treatment of citizens in a manner similar to that ofenemy aliens by reading Executive Order 9066 together with the act of Congress ratifying it assufficient authority under the combined war powers of the President and Congress, thus avoidinghaving to address the statutory scope of the Alien Enemy Act. In Ex parte Endo , (126) however, decided the same day as Korematsu , the SupremeCourt did not find adequate statutory underpinnings to support the internment of loyal citizens. TheCourt ruled that the authority to exclude persons of Japanese ancestry from declared military areasdid not encompass the authority to detain concededly loyal Americans. Such authority, it found,could not be implied from the power to protect against espionage and sabotage during wartime. (127) The Court declined todecide the constitutional issue presented by the evacuation and internment program, insteadinterpreting the executive order, along with the act of March 27, 1942 (congressional ratification ofthe order), (128) narrowly to give it the greatest chance of surviving constitutional review. (129) Accordingly, the Courtnoted that detention in Relocation Centers was not mentioned in the statute or executive order, butwas developed during the implementation of the program. As such, the authority to detain citizenscould only be found by implication in the act, and must therefore be found to serve the endsCongress and the President had intended to reach. Since the detention of a loyal citizen did notfurther the campaign against espionage and sabotage, it could not be authorized by implication. The Court avoided the question of whether internment of citizens would be constitutionallypermissible where loyalty were at issue or where Congress explicitly authorized it, but the Court'suse of the term "concededly loyal" to limit the scope of the finding may be read to suggest that thereis a Fifth Amendment guarantee of due process applicable to a determination of loyalty ordangerousness. While the Fifth Amendment would not require the same process that is due in acriminal case, it would likely require at least reasonable notice of the allegations and an opportunityfor the detainee to be heard. At least one American with no ethnic ties to or association with an enemy country wassubjected to an exclusion order issued pursuant to Executive Order 9066. Homer Wilcox, a nativeof Ohio, was excluded from his home in San Diego and removed by military force to Nevada,although the exclusion board had determined that he had no association with any enemy and wasmore aptly described as a "harmless crackpot." (130) He was the manager of a religious publication that preachedpacifism, and was indicted along with several others for fraud in connection with thepublication. (131) Thedistrict court awarded damages in favor of Wilcox, but the circuit court reversed, finding theexclusion within the authority of the military command under Executive Order 9066 and 18 U.S.C.§ 1383, and holding that the evidence concerning plaintiff's activities andassociations provided a reasonable ground for the belief by defendant ... that plaintiff had committedacts of disloyalty and was engaged in a type of subversive activity and leadership which mightinstigate others to carry out activities which would facilitate the commission of espionage andsabotage and encourage them to oppose measures taken for the military security of Military AreasNos. 1 and 2, and that plaintiff's presence in the said areas from which he had been excluded wouldincrease the likelihood of espionage and sabotage and would constitute a danger to military securityof those areas. (132) The court also found that the act of Congress penalizing violations of military orders underExecutive Order 9066 did not preclude General De Witt from using military personnel to forciblyeject Wilcox from his home. (133) The Japanese internment program has since been widely discredited, (134) the convictions of somepersons for violating the orders have been vacated, (135) and the victims have received compensation, (136) but theconstitutionalityof detention of citizens during war who are deemed dangerous has never expressly been ruled perse unconstitutional. (137) In the cases of citizens of other ethnic backgrounds who wereinterned or otherwise subject to restrictions under Executive Order 9066, courts played a role indetermining whether the restrictions were justified, sometimes resulting in the removal ofrestrictions. (138) Because these persons were afforded a limited hearing to determine their dangerousness, a court laterruled that the Equal Protection Clause of the Constitution did not require that they receivecompensation equal to that which Congress granted in 1988 to Japanese-American internees. (139) It may be argued that Hirabayashi and the other cases validating Executive Order 9066 (upto a point) support the constitutionality of preventive detention of citizens during war, at least insofaras the determination of dangerousness of the individual interned is supported by some evidence andsome semblance of due process is accorded the internee. However, it was emphasized in these casesthat Congress had specifically ratified Executive Order 9066 by enacting 18 U.S.C. § 1383,providing a penalty for violation of military orders issued under the Executive Order. Thus, eventhough the restrictions and internments occurred in the midst of a declared war, a presidential ordercoupled with specific legislation appear to have been required to validate the measures. Theinternment of Japanese-American citizens without individualized determination of dangerousnesswas found not to be authorized by the Executive Order and ratifying legislation (the Court therebyavoiding the constitutional issue), although the President had issued a separate Executive Order toset up the War Relocation Authority (140) and Congress had given its tacit support for the internmentsby appropriating funds for the effort. (141) The only persons who were treated as enemy combatants pursuant to Proclamation No.2561 (142) weremembers of the German military who had been captured after landing on U.S. beaches from Germansubmarines. (143) Collaborators and persons who harbored such saboteurs were tried in federal courts for treason orviolations of other statutes. (144) Hans Haupt, the father of one of the saboteurs, was sentencedto death for treason, but this sentence was overturned on the ground that procedures used during thetrial violated the defendant's rights. (145) On retrial, Haupt was sentenced to life imprisonment, but hissentence was later commuted on the condition that he leave the country. Another person chargedwith treason for his part in the saboteurs' conspiracy, Helmut Leiner, was acquitted of treason butthen interned as an enemy alien. (146) Anthony Cramer, an American citizen convicted of treasonfor assisting one of the saboteurs to carry out financial transactions, had his conviction overturnedby the Supreme Court on the grounds that the overt acts on which the charge was based wereinsufficient to prove treason. (147) Emil Krepper, a pastor living in New Jersey, came undersuspicion because his name was found printed in secret ink on the saboteur's handkerchief, althoughhe never met with any of the saboteurs. He was indicted for violating TWEA and receiving a salaryfrom the German government without reporting his activity as a foreign agent. (148) These cases involving collaborators with the Quirin eight, as well as other unrelated casesof sabotage or collaboration with the enemy during World War II, did not result in any militarydeterminations that those accused were enemy combatants. It is thus not clear what kind ofassociation with Germany or with other enemy saboteurs, short of actual membership in the Germanarmed forces, would have enabled the military to detain them as enemy combatants under the lawof war. (149) It appearsthat Quirin was not interpreted at the time as having established executive authority to detain personsbased on their alleged hostile intent, particularly without any kind of a trial. After the Quirin decision, the Attorney General asked Congress to pass legislation tostrengthen criminal law relating to internal security during wartime. (150) Attorney GeneralBiddle wrote that new law was necessary to cover serious gaps and inadequacies in criminal law,which he argued did not provide sufficient punishment for hostile enemy acts perpetrated on theterritory of the United States. (151) The House Committee on the Judiciary endorsed the proposedWar Security Act, pointing to the fact that it had been necessary to try the eight Nazi saboteurs bymilitary commission due to the inadequacy of the penal code to punish the accused for acts that hadnot yet been carried out. (152) It also suggested that military jurisdiction might beunavailable to try enemy saboteurs who had not "landed as part of a small invasion bent upon actsof illegal hostilities." (153) The bill passed in the House of Representatives, but was notsubsequently taken up in the Senate. After the close of World War II, the Congress turned its attention to the threat ofcommunism. Recognizing that the Communist Party presented a different kind of threat from thatof a strictly military attack, members of Congress sought to address the internal threat withinnovative legislation. (154) Introduced in the wake of the North Korean attack on SouthKorea, the Internal Security Act (ISA) of 1950 (155) was the culmination of many legislative efforts to providemeans to fight what was viewed as a foreign conspiracy to infiltrate the United States and overthrowthe government by means of a combination of propaganda, espionage, sabotage, and terroristacts. (156) TheAttorney General presented to the Congress a draft bill that would strengthen the espionage statutes,amend the Foreign Agents Registration Act, and provide authority for U.S. intelligence agencies tointercept communications. (157) According to the Attorney General, the legislation wasnecessary because [t]he swift and more devastating weapons of modernwarfare coupled with the treacherous operations of those who would weaken our country internally,preliminary to and in conjunction with external attack, have made it imperative that we strengthenand maintain an alert and effective peacetime vigilance. (158) S. 4037 combined the proposed legislation with other bills related to nationalsecurity, including measures to exclude and expel subversive aliens, to detain or supervise aliensawaiting deportation, and to deny members of communist organizations the right to travel on a U.S.passport. The bill also contained a requirement for Communist-controlled organizations andCommunist-front organizations (159) to register as such. President Truman and opponents of theso-called McCarran Act thought the registration requirements and other provisions likely to be eitherunconstitutional or ineffective, and expressed concern about possible far-reaching civil libertiesimplications. (160) Opponents of the McCarran Act sought to substitute a new bill designed to address thesecurity concerns in what they viewed as a more tailored manner. Senator Kilgore introduced theEmergency Detention Act (161) (Kilgore bill) to authorize the President to declare a nationalemergency under certain conditions, during which the Attorney General could enact regulations forthe preventive incarceration of persons suspected of subversive ties. At the time of the debate, 18U.S.C. § 1383 was still on the books and would have ostensibly supported the declaration of militaryareas and the enforcement of certain restrictions against aliens or citizens deemed dangerous. Proponents of the Kilgore bill argued that the proposed legislation would create a program forinternment of enemies that would contain sufficient procedural safeguards to render it invulnerableto court invalidation based on Ex parte Endo . (162) The final version of the ISA contained both the McCarran Act and the Emergency DetentionAct. President Truman vetoed the bill, voicing his continued opposition to the McCarran Act. ThePresident did not take a firm position with regard to the Emergency Detention Act, stating that it may be that legislation of this type should be on thestatute books. But the provisions in [the ISA] would very probably prove ineffective to achieve theobjective sought, since they would not suspend the writ of habeas corpus, and under our legal systemto detain a man not charged with a crime would raise serious constitutional questions unless the writof habeas corpus were suspended. (163) The President recommended further study on the matter of preventive detention for national securitypurposes. Congress passed the ISA over the President's veto. (164) The Emergency Detention Act, Title II of the ISA, authorized the President to declare an"Internal Security Emergency" in the event of an invasion of the territory of the United States or itspossessions, a declaration of war by Congress, or insurrection within the United States in aid of aforeign enemy, where the President deemed implementation of the measures "essential to thepreservation, protection and defense of the Constitution." (165) The act authorized themaintenance of the internment and prisoner-of-war camps used during World War II for use duringsubsequent crises, and authorized the Attorney General, during national emergencies under the act,to issue warrants for the apprehension of "those persons as to whom there is a reasonable ground tobelieve that such persons probably will engage in, or conspire to engage in acts of sabotage orespionage." Detainees were to be taken before a preliminary hearing officer within 48 hours of theirarrest, where each detainee would be informed of the grounds for his detention and of his rights,which included the right to counsel, the privilege against self-incrimination, the right to introduceevidence and cross-examine witnesses. (166) The Attorney General was required to present evidence to thedetainee and to the hearing officer or board "to the fullest extent possible consistent with nationalsecurity." (167) Evidence that could be used to determine whether a person could be detained as dangerous includedevidence that a person received training from or had ever committed or conspired to commitespionage or sabotage on behalf of an entity of a foreign Communist party or the Communist Partyof the United States, or any other group that seeks the overthrow of the government of the UnitedStates by force. (168) No internal emergencies were declared pursuant to the Emergency Detention Act, despite theUnited States' involvement in active hostilities against Communist forces in Korea and Vietnam andthe continued suspicion regarding the existence of revolutionary and subversive elements within theUnited States. (169) Nevertheless, the continued existence of the act aroused concern among many citizens, who believedthe act could be used as an "instrumentality for apprehending and detaining citizens who holdunpopular beliefs and views." (170) Several bills were introduced to amend or repeal the act. (171) The JusticeDepartment supported the repeal of the act, opining that the potential advantage offered by the statutein times of emergency was outweighed by the benefits that repealing the detention statute wouldhave by allaying the fears and suspicions (however unfounded they might have been) of concernedcitizens. (172) Congress decided to repeal the Emergency Detention Act in toto in 1971, and enacted in itsplace a prohibition on the detention of American citizens except pursuant to an act of Congress. (173) The new language wasintended to prevent a return to the pre-1950 state of affairs, in which "citizens [might be] subject toarbitrary executive authority" without prior congressional action. (174) Executive Order 9066was formally rescinded in 1976. (175) Congress repealed 18 U.S.C. § 1383 later that year. (176) It may be argued that Congress, in passing the Emergency Detention Act in 1950, waslegislating based on its constitutional war powers, to provide for the preventive detention duringnational security emergencies of those who might be expected to act as enemy agents, though nottechnically within the definition of "alien enemies." It does not, therefore, appear that Congresscontemplated that the President already had the constitutional power to declare such individuals tobe enemy combatants, subject to detention under the law of war, except under very narrowcircumstances. The much earlier legislative history accompanying the passage of the Alien EnemyAct may also be interpreted to suggest that the internment of enemy spies and saboteurs in war wasnot ordinarily a military power that could be exercised by the President alone, or at least, not a powerwith which Congress could not constitutionally interfere. (177) The repeal of the Emergency Detention Act and the enactment of 18 U.S.C. § 4001(a) maybe interpreted to preclude the detention of American citizens as enemy agents or traitors unlessconvicted of a crime. If the law of war traditionally supports the detention of such persons as enemycombatants or unlawful combatants, it may be questioned why such an approach has not beenutilized during past conflicts, during which the internal security risk of hostile action by "fifthcolumnists," spies, and saboteurs was frequently perceived to equal the danger of military clasheson the battlefield. One U.S. citizen is known to remain in custody in the United States as an enemy combatant;the other has been released. It was reported that one Canadian citizen was being held in U.S. militarycustody in the United States after his arrest by the Canadian Security Intelligence Service. (178) It is unclear whetherthe man, Mohamed Mansour Jabarah, is considered an "enemy combatant," but he reportedly washeld for interrogation and not charged with any offense. A Qatari national who was lawfully presentin the United States has also been declared an "enemy combatant" and turned over to militarycustody. The man, Ali Saleh Kahlah Al-Marri, was originally detained as a material witness onDecember 12, 2001, in connection with the investigation into the attacks of September 11, 2001. He was later charged with credit card fraud and scheduled to stand trial beginning July 21, 2003. However, on June 23, 2003, President Bush designated him an "enemy combatant" and directed thathe be transferred to the Naval Consolidated Brig in Charleston, South Carolina, where he is currentlybeing held. His attorneys filed a petition for habeas corpus on his behalf in the District Court forthe Central District of Illinois, which dismissed the petition for improper venue. (179) Hamdi's case may be likened to Territo in that he was captured on a field of battle and wasnot charged with committing any offense. In Territo, the court cited the 1929 Geneva ConventionRelative to the Treatment of Prisoners of War as the legal authority for the detention of the petitioneras a prisoner of war, and the petitioner did not dispute that he had served as a member of the Italianarmed forces, with which the United States was then at war. The sole question before the court waswhether a U.S. citizen could lawfully be treated as a prisoner of war under U.S. law and the law ofwar. Territo did not contest his capture as a war prisoner or claim that his rights under the 1929Geneva Convention had been violated. Hamdi, however, reportedly claimed that he is not a member of Al Qaeda or the Taliban andwas present in Afghanistan only to provide humanitarian assistance. (180) The Fourth Circuitagreed that "[i]t has long been established that if Hamdi is indeed an 'enemy combatant' who wascaptured during hostilities in Afghanistan, the government's present detention of him is a lawfulone." (181) The FourthCircuit ordered the district judge to dismiss the petition, holding essentially that a determination bythe military that an individual is an enemy combatant is conclusive, so long as it is supported bysome evidence. (182) In the first interlocutory appeal, the Fourth Circuit vacated a district court order that theprisoner be provided immediate, unmonitored access to an attorney, urging the district court to showdeference to the government in its examination of the issue, but expressly declining to embrace the"sweeping proposition" that "with no meaningful judicial review, any American citizen alleged tobe an enemy combatant could be detained indefinitely without charges or counsel on thegovernment's say-so." (183) On remand, the district court ordered the government toprovide additional information to support its conclusion that Hamdi is an enemy combatant. (184) The court found thepetitioner to be entitled to due process of law under the Fifth Amendment, and expressed the intentto inquire into the authority of the person making the determination of Hamdi's status, whether thescreening criteria used to determine such status meet due process requirements, the national securityaims served by his continued detention, and whether the relevant military regulations andinternational law require a different procedure. (185) On appeal to the Fourth Circuit, the government argued that the proof already submitted tothe court, which consisted of a declaration by Michael Mobbs, a special advisor to the UnderSecretary of Defense for Policy, was sufficient as a matter of law to establish the legality of thedetention. (186) TheFourth Circuit agreed, (187) declaring that since the Hamdi petition conceded that Hamdihad been seized in Afghanistan during a time of military hostilities, there were no disputed facts thatwould necessitate the evidentiary hearing ordered by the district court, which could also involve asignificant interference with the war effort. (188) The court also disposed of the legal arguments put forth onHamdi's behalf, finding that 18 U.S.C. § 4001(a) does not apply and that the Geneva Conventionsare non-self-executing treaties and therefore do not give individuals a right of action. The courtvacated the production order issued by the district court and ordered the petition to be dismissed. The Supreme Court vacated the Fourth Circuit decision and remanded it to allow Hamdi ameaningful opportunity to contest his status as an "enemy combatant." However, the Justices couldnot reach a consensus for the rationale. Justice O'Connor, joined by the Chief Justice as well asJustices Kennedy and Breyer wrote the opinion for the Court. The plurality found that althoughdetention such as Hamdi's is an ordinary aspect of war-fighting and thus was authorized byimplication by the AUMF, "due process demands that a citizen held in the United States as an enemycombatant be given a meaningful opportunity to contest the factual basis for that detention beforea neutral decisionmaker. (189) Declaring that "a state of war is not a blank check for thePresident when it comes to the rights of the Nation's citizens," the Court rejected the Government'sview that separation of powers principles "mandate a heavily circumscribed role for the courts insuch circumstances." (190) It also rejected the Fourth Circuit's characterization of thecircumstances surrounding Hamdi's seizure as "undisputed," (191) and held that for Hamdito continue to be detained as an enemy combatant, (192) he would need to be found to have been "part of or supportingforces hostile to the United States or coalition partners" and "engaged in an armed conflict againstthe United States," (193) and that his detention was authorized only so long as activehostilities continue in Afghanistan. At the same time, the plurality did not call for a hearing that would comport with all of therequirements the Constitution applies to a criminal trial. Instead, a balancing test to weigh the riskof erroneous deprivation of a detainee's liberty interest against the government's interest in fightinga war may suffice. Such a procedure, the plurality suggested, could eliminate certain procedures thathave "questionable additional value in light of the burden on the Government," (194) so that "enemycombatant proceedings may be tailored to alleviate their uncommon potential to burden theExecutive at a time of ongoing military conflict." (195) However, at least in the case of citizens, the "some evidence"standard urged by the government would be insufficient. (196) The plurality emphasized that its interpretation of the AUMF's grant of authority for the useof "necessary and appropriate force" is "based on longstanding law-of-war principles," but that "[i]fthe practical circumstances of a given conflict are entirely unlike those of the conflicts that informedthe development of the law of war, that understanding may unravel." (197) Based on theconventional understanding of the conflict as limited to the hostilities in Afghanistan, the pluralitystated that "indefinite detention for the purpose of interrogation is not authorized." (198) The United States may detain, for the duration of thesehostilities, individuals legitimately determined to be Taliban combatants who "engaged in an armedconflict against the United States." If the record establishes that United States troops are stillinvolved in active combat in Afghanistan, those detentions are part of the exercise of "necessary andappropriate force," and therefore are authorized by the [AUMF]. Justice Souter, joined by Justice Ginsburg, agreed that Hamdi is entitled to due process,including the right to counsel (but without the qualifications suggested by Justice O'Connor), andjoined the plurality to provide sufficient votes to vacate the decision below. (199) However, finding noexplicit authority in the AUMF (or other statutes) to detain persons as enemy combatants, they wouldhave determined that 18 U.S.C. § 4001(a) precludes the detention of American citizens as enemycombatants altogether. Justice Scalia, joined by Justice Stevens, dissented from the pluralityopinion, arguing that the detention of a U.S. citizen under the circumstances described could onlyoccur after a trial on criminal charges or where Congress has suspended the Writ of Habeas Corpus. Only Justice Thomas would have affirmed the decision below. The Supreme Court did not resolve the case of Jose Padilla, who was arrested in Chicago andinitially alleged to be involved in a plot to detonate a "dirty bomb." Instead, a majority of fiveJustices vacated the Second Circuit's opinion favorable to Padilla based on the lack ofjurisdiction. (200) FourJustices would have found jurisdiction based on the "exceptional circumstances" of the case (201) and affirmed theholding below that detention is prohibited under 18 U.S.C. § 4001(a). The dissenters indicated theymight find preventive detention to be acceptable under some circumstances: Executive detention of subversive citizens, likedetention of enemy soldiers to keep them off the battlefield, may sometimes be justified to preventpersons from launching or becoming missiles of destruction. It may not, however, be justified bythe naked interest in using unlawful procedures to extract information. Incommunicado detentionfor months on end is such a procedure. Whether the information so procured is more or less reliablethan that acquired by more extreme forms of torture is of no consequence. For if this Nation is toremain true to the ideals symbolized by its flag, it must not wield the tools of tyrants even to resistan assault by the forces of tyranny. (202) The case is now in the Fourth Circuit. The District Court for the District of South Carolinagranted Padilla's motion for summary judgment and ordered the government to release Padilla frommilitary detention, while suggesting Padilla could be kept in civilian custody if charged with a crimeor determined to be a material witness. Padilla's attorneys had based their argument on thedissenting opinion of four Supreme Court Justices, who would have found Padilla's detention barredby the Non-Detention Act, and the language in Hamdi seemingly limiting the scope of authorizationto combatants captured in Afghanistan. The government argued that Padilla's detention is coveredunder the Hamdi decision's interpretation of the AUMF because he is alleged to have attended anAl Qaeda training camp in Afghanistan before traveling to Pakistan and then to the UnitedStates, (203) apparentlybased on information obtained from interrogations of Padilla and other persons detained as "enemycombatants." The judge disagreed, finding that express authority from Congress would be necessaryand that the AUMF contains no such authority: [S]ince Petitioner's alleged terrorist plans were thwartedwhen he was arrested on the material witness warrant, the Court finds that the President's subsequentdecision to detain Petitioner as an enemy combatant was neither necessary nor appropriate. (204) Accordingly, the court found that Padilla's detention is barred by 18 U.S.C. § 4001(a). The government further argued that even if Congress had not intended to permit the captureand detention of persons outside of the battlefield, the President's interpretation and application ofthe AUMF is entitled to great deference because he was operating under a broad grant of authorityfrom Congress in an area where he "possesses independent constitutional authority." (205) The court was notpersuaded: Certainly Respondent does not intend to argue here that,just because the President states that Petitioner's detention is "consistent with the laws of the UnitedStates, including the Authorization for Use of Military Force" that makes it so. Not only is such astatement in direct contravention to the well settled separation of powers doctrine, it is simply notthe law. Moreover, such a statement is deeply troubling. If such a position were ever adopted by thecourts, it would totally eviscerate the limits placed on Presidential authority to protect the citizenry'sindividual liberties. (206) The court disagreed that the President has inherent authority as Commander-in-Chief of theArmed Forces to determine wartime measures, quoting the Hamdi Court that [w]here the exercise of Commander-in-Chief powers,no matter how well intentioned, is challenged on the ground that it collides with the powers assignedby the Constitution to Congress, a fundamental role exists for the courts. (207) The government has appealed the case to the Fourth Circuit Court of Appeals, and has askedfor a stay of the district court's order to release Padilla from military detention. The governmentargues that the facts of Padilla's case are very similar to the facts behind Ex parte Quirin . A federaljudge in the Second Circuit had agreed with this argument, finding that the allegation that Padillatraveled to the United States to detonate a "dirty bomb" on behalf of Al Qaeda, if true, wouldvalidate the government's authority to detain him under military custody. (208) The petitioner arguedthat Quirin is inapposite, given that the eight saboteurs in 1942 were charged and tried by militarycommission, and were given access to an attorney. The Court of Appeals for the Second Circuitagreed with the petitioner, reversing the district court's finding. (209) The district court inthe Fourth Circuit followed the Second Circuit opinion. Padilla's attorneys argue that the case bears closer resemblance to the Civil War case Ex parte Milligan (210) than toeither the Quirin or Territo cases. The government argues that Milligan is inapposite to the petitionof Padilla on the grounds that Padilla, like petitioners in Quirin , is "a belligerent associated with theenemy who sought to enter the United States during wartime in an effort to aid the enemy'scommission of hostile acts, and who therefore is subject to the laws of war." (211) (This, presumably, isto be contrasted with the case of Milligan, who was a civilian and had never traveled outside the stateof Indiana.) The government does not allege that Padilla entered the country illegally or landed as partof a military offensive. (212) In Quirin , the petitioners were members of the German armedforces and admitted to having entered the country surreptitiously by way of German naval submarine. The government's argument appears to presume that there is no relevant difference between thelanding of the German saboteurs and Padilla's entry into the United States by means of a commercialflight, neither under disguise nor using false identification. (213) Under this theory, therelevant factor would appear to be whether the petitioner had ever left the country and traveled to"enemy territory," regardless of how he re-entered the country. However, it may be argued that under Quirin , the surreptitious nature of the petitioners'arrival onto the territory of the United States through coastal defenses, by means of enemy vesselsthat would have been lawful targets had the Navy or Coast Guard identified them as such, was amajor determinant of the petitioners' status as enemy combatants. (214) Had they entered thecountry openly and lawfully, they might not have lost their right to be treated as prisoners of war. Padilla's arrival by apparently lawful means arguably has no bearing on whether he is subject tomilitary jurisdiction. The government disputes Padilla's claim that the laws of war do not apply to Al Qaeda andthus could never apply to him. The government finds support for the opposite claim in the AUMFand The Prize Cases . (215) Because the President has, by Executive Order, recognizeda state of war against Al Qaeda, the government argues the laws of war must apply, and anyoneassociated with Al Qaeda may therefore properly be deemed to be an "enemy belligerent." However,it is not clear that Al Qaeda is a belligerent under the law of war, because such status wouldordinarily imply belligerent rights that the Administration has been unwilling to concede. The government argues that Milligan is inapposite; "whereas Milligan was not engaged inlegal acts of hostility against the government, ... the President determined that Padilla engaged inhostile and war-like acts." (216) However, the quoted language from Ex parte Quirin may besomewhat misleading, inasmuch as Milligan was indeed alleged to have engaged in hostile andwarlike acts, but these were not legal acts of hostility because Milligan was not a lawful combatant. Thus, whether Milligan applies may depend on the emphasis placed on the legality of the acts ofhostility of which Milligan was accused, rather than whether Milligan was engaged in acts ofhostility at all. The Milligan opinion seems to view the nature of the legality of the acts to be basedon Milligan's legitimacy as a belligerent rather than the nature of the acts. It may be argued thatPadilla, like Milligan, was not engaged in legal acts of hostility, because he is not a lawfulbelligerent. Milligan's membership in the Sons of Liberty did not secure his legitimacy as abelligerent, but neither did it give the government the right to detain him as a prisoner of war. (217) The government further argues that Milligan is inapposite in this case because Milligan, "notbeing a part of or associated with armed forces of the enemy," could not be held as a belligerent,while Padilla, in contrast, is alleged to be associated with the armed forces of the enemy. However,it might be recalled that the government had argued that Milligan was allegedly associated with theConfederate Army, a recognized belligerent, and that he was in effect accused of acting as anunlawful belligerent. (218) Therefore, it may be argued that the important distinction in Quirin was the nature and status of the enemy forces with whom he was associated, rather thanwhether he was associated with a hostile force at all. The petitioners in Quirin were all conceded tobe working for the armed forces of an enemy State in a declared war. What association with theenemy short of membership in its armed forces might have brought the saboteurs under militaryjurisdiction is unclear. The continuing validity of Milligan has been questioned by some scholars, even though the Quirin Court declined to overrule it, while others assert that the essential meaning of the case hasonly to do with situations of martial law or, perhaps, civil wars. Furthermore, it has been noted thatthe portion of the plurality in Milligan asserting that Congress could not constitutionally authorizethe President to use the military to detain and try civilians may be considered dicta withcorrespondingly less precedential value, inasmuch as Congress had implicitly denied such authority. However, the Hamdi Court, in distinguishing Milligan from Hamdi , placed emphasis on the fact thatMilligan was not considered a prisoner of war, suggesting that it may recognize the distinctionbetween Milligan and Quirin as a function of combatant status. The law of war permits belligerents to seize the bodies and property of enemy aliens. (219) The Administrationhas taken the view that the authority to detain "enemy combatants" belongs to the President alone,and that any interference in that authority by Congress would thus be unconstitutional. (220) However, theConstitution explicitly gives to Congress the power to make rules concerning captures on land andwater, (221) which haslong supported Congress' authority to regulate the capture and disposition of prizes of war as wellas confiscation of property belonging to enemy aliens. (222) Both sides point to the Steel Seizure Case (223) to provide a framework for the courts to decide the extent ofthe President's authority. In that Korean War-era case, the Supreme Court declared unconstitutionala presidential order seizing control of steel mills that had ceased production due to a labor dispute,an action justified by President Truman on the basis of wartime exigencies, despite the absence oflegislative authority. Justice Jackson set forth the following oft-cited formula to determine whetherPresidential authority is constitutional: 1. When the President acts pursuant to an express orimplied authorization of Congress, his authority is at its maximum, for it includes all that hepossesses in his own right plus all that Congress can delegate. . . . A seizure executed by thePresident pursuant to an Act of Congress would be supported by the strongest of presumptions andthe widest latitude of judicial interpretation, and the burden of persuasion would rest heavily uponany who might attack it. 2. When the President acts in absence of either acongressional grant or denial of authority, he can only rely upon his own independent powers, butthere is a zone of twilight in which he and Congress may have concurrent authority, or in which itsdistribution is uncertain. Therefore, congressional inertia, indifference or quiescence maysometimes, at least as a practical matter, enable, if not invite, measures on independent presidentialresponsibility. In this area, any actual test of power is likely to depend on the imperatives of eventsand contemporary imponderables rather than on abstract theories oflaw. 3. When the President takes measures incompatiblewith the expressed or implied will of Congress, his power is at its lowest ebb, for then he can relyonly upon his own constitutional powers minus any constitutional powers of Congress over thematter. Courts can sustain exclusive Presidential control in such a case only by disabling theCongress from acting upon the subject. Presidential claim to a power at once so conclusive andpreclusive must be scrutinized with caution, for what is at stake is the equilibrium established by ourconstitutional system. (224) The parties disagree as to where in this formula the present actions fall. Padilla and Hamdi,and their supporters generally argue that such constitutional authority, if it exists, is dependant uponspecific authorization by Congress, which they argue is missing (or even explicitly denied pursuantto 18 U.S.C. § 4001(a)) in the present circumstances, placing the controversy into the second or thirdcategory above. The government, on the other hand, sees the issue as one that falls squarely into thefirst category, asserting that Congressional authority for the detentions clearly exists, although suchauthority is not strictly necessary. Congressional authority, the government argues, may be foundin the Authorization to Use Force (225) and a provision of title 10, U.S.C., authorizing payment forexpenses related to detention of prisoners of war. Accordingly, the following sections examine theconstitutional authority to take prisoners in war and, if congressional authority is required, whetherCongress has provided it, or, with respect to U.S. citizens, prohibited it. The government argues, and the Supreme Court has agreed, that the identification anddetention of enemy combatants is encompassed within Congress' express authorization to thePresident "to use force against those 'nations, organizations, or persons he determines' wereresponsible for the September 11, 2001 terrorist attacks." The scope of that authority, however,remains open to debate. Some argue that since Congress only authorized force and did not formallydeclare war, that the absence of language explicitly addressing the detention of either alien enemiesor American citizens captured away from any battlefield cannot be read to imply such authority. (226) The government asserts that the lack of a formal declaration of war is not relevant to theexistence of a war and unnecessary to invoke the law of war. While a declaration is unnecessary forthe existence of an armed conflict according to the international law of war, it may be argued thata formal declaration is necessary to determine what law applies domestically, whether to aliens orcitizens. (227) Forexample, the Alien Enemy Act and the Trading with the Enemy Act (TWEA), (228) both of which regulatethe domestic conduct of persons during a war, expressly require a declared war and are not triggeredby the authorization to use force. (229) The Emergency Detention Act, in effect from 1950 to 1971,had similar requirements prior to the invocation of its measures. At least one statutory provision in the Uniform Code of Military Justice (UCMJ) that mightauthorize the military to detain certain civilians "in time of war" has been interpreted to mean onlya war declared by Congress. (230) There is also military jurisdiction to try any person "caughtlurking as a spy" during time of war, (231) including citizens, (232) or anyone suspected of aiding or abetting the enemy. (233) It has not been decidedwhether the phrase "in time of war" or reference to "the enemy" in the these articles of the UCMJalso require a declaration of war by Congress; however, the same reasoning applied in Averette (234) and followed in Robb could be found to apply here, at least with respect to persons who may not claim combatant status: A recognition [that the conflict in Vietnam qualifies asa war in the ordinary sense of the word] should not serve as a shortcut for a formal declaration ofwar, at least in the sensitive area of subjecting civilians to militaryjurisdiction On the other hand, the Manual for Courts Martial (MCM) defines "time of war" to include declaredwar as well as "a factual determination by the President that the existence of hostilities warrants afinding that a 'time of war'" exists for the punitive portions of the MCM. (235) Likewise, with respectto conduct on the part of military members, the MCM does not restrict references to "enemy" tomean an enemy government or its armed forces. (236) For example, the offense of "misbehavior before the enemy"does not require a declaration of war. (237) It should be noted that these offenses are associated withconduct on the battlefield. The government notes that its military practice has long been to detain enemy combatantsin conflicts where war was not formally declared and Congress did not expressly authorize thecapture of enemies. However, we are not aware of any modern court ruling as to whether and underwhat circumstances citizens may be held as "enemy combatants," where no formal declaration of warhas been enacted. Hamdi confirms that the authorization to employ ground troops against an enemyarmy necessarily encompasses the authority to capture battlefield enemies, because it is an essentialaspect of fighting a battle. International law does not permit the intentional killing of civilians orsoldiers who are hors de combat, preferring capture as the method of neutralizing enemies on thebattlefield. (238) However, the war powers involving conduct off the battlefield, such as those authorizing thedetention of alien enemies or regulating commerce with the enemy, are not necessarily a vital aspectof the use of the military, and have traditionally been subject to legislation and not implied bycircumstance. For example, the Supreme Court held that the President has no implied authority topromulgate regulations permitting the capture of enemy property during hostilities short of a declaredwar, even where Congress had authorized a "limited" war. (239) It may be argued that, because the internment of enemy aliens as potential spies and saboteurspursuant to the Alien Enemy Act (240) requires a declaration of war or a presidential proclamation,it would seem reasonable to infer that the express permission of Congress is necessary for otherforms of military detention of non-military persons within the United States, especially those whoare U.S. citizens. (241) To conclude otherwise would appear to require an assumption that Congress intended in this instanceto authorize the President to detain American citizens under fewer restrictions than apply in the caseof enemy aliens during a declared war. (242) However, it might also be argued that the United States is a battlefield in the war againstterrorism in more than just a metaphorical sense. The AUMF appears to authorize the use of forceanywhere in the world, including the territory of the United States, against any persons determinedby the President to have "planned, authorized, committed, or aided the terrorist attacks" or "harboredsuch organizations or persons." Under this view, the United States is under actual and continuingenemy attack, and Congress delegated to the President the authority to declare those persons hedetermined to be subject to the AUMF to be wartime enemies. The U.S. military would beauthorized to use force to kill or capture persons it identifies as "enemy combatants," even withinthe United States. (243) However, those seeking a less expansive interpretation of the AUMF might argue that it must beread, if possible, to conform to international law and the Constitution. Under this view, for example,it might be questioned whether those sources of law provide adequate basis for a war against allegedmembers of a criminal organization and those who harbor them. (244) Before the Second Circuit, the government argued that Congress also authorized thedetention of enemy combatants in 10 U.S.C. § 956(5), which authorizes the use of appropriatedfunds for "expenses incident to the maintenance, pay, and allowance of prisoners of war" as well as "other persons in the custody of the Army, Navy, or Air Force whose status is determined by theSecretary concerned to be similar to prisoners of war." The Administration interprets the phrase"similar to prisoners of war" to include "enemy combatants" who are not treated as prisoners of war.The Supreme Court plurality did not address this contention, having found the AUMF to provide thenecessary authority. The Second Circuit in Padilla rejected it based on its interpretation of Ex parteEndo requiring that language authorizing funds must "clearly" and "unmistakably" authorize thedetention of American citizens. (245) The government appears to have dropped the argument in theFourth Circuit, although that court found it persuasive. (246) It is not clear from the legislative history of 10 U.S.C. § 956(5) that Congress accepted thenotion that there is a category of wartime detainees separate from prisoners of war and interned alienenemies. The language was first codified into title 10, U.S.C. in 1984, but has long been includedin appropriations bills for the Department of Defense. It first appeared in the Third SupplementalNational Defense Appropriation Act of 1942, (247) when the Army requested an addition to the defenseappropriations bill to provide the authority for the Secretary of War to utilize any appropriation available for the MilitaryEstablishment under such regulation as the Secretary of War may prescribe for all expenses incidentto the maintenance, pay and allowances of prisoners of war, other persons in Army custody whosestatus is determined by the Secretary of War to be similar to prisoners of war, and persons detainedin Army custody, pursuant to Presidential proclamation. (248) It was explained that the expenses were in connection with keeping and maintaining prisonersof war and others in military custody not provided for by any appropriation; the example given wasthe construction of stockade authorized to be built in Honolulu and water supply for prisoners onOahu. (249) Thefollowing colloquy took place during Senate debate on the bill: Mr. DANAHER. Mr. President, will the Senator fromTennessee permit me to invite his attention to page 9 of the bill before he starts on a newtitle? Mr. McKELLAR. Certainly. Mr. DANAHER. In lines 2 and 3 on page 9, we find thatthe committee has amended the bill to provide 'for all expenses incident to the maintenance, pay, andallowances of prisoners of war," and notably, "other persons in Army custody whose status isdetermined by the Secretary of War to be similar to prisoners of war." That is new language,apparently, and I should like to have the Senator explain what other class of persons there may bein Army custody whose status is similar to that of prisoners of war. Mr. McKELLAR. Enemies who are found in thiscountry are taken up by the Army, and they have to be provided for. It was testified that at times itwas very necessary to arrest civilians and to provide for theircare. Mr. DANAHER. I have not the slightest doubt that itis necessary, Is there existing law under which they are at present being taken up by theArmy? Mr. McKELLAR. The Army did not want to take achance about it. Mr, DANAHER. Is there an existing law under whichsuch persons are today being taken up by the Army and being held asprisoners? Mr. McKELLAR. The advice to the Committee was thatthere is not, and in order to make it absolutely sure the committee thought there should be such a provision, and this provision was inserted. I am quite sure the Senator will, under the circumstances,agree that it should be included in the bill. Mr. DANAHER. I have not the slightest question thatit is absolutely necessary that certain classes of persons be taken up, not allowed to roam at large toour detriment. There is no question as to that. All I wish to know is where authority to do that isfound in the law. Is their status defined? Under what circumstances may they be taken up? If therebe no such authority anywhere, then I think we should very promptly and properly direct ourattention to such a field. We certainly are not going to authorize it merely by providing in anappropriation bill for an allotment of money to be paid after they are taken up. Mr. McKELLAR. The Senator misunderstands me. Theappropriation is not to pay for their being taken up, but it is to maintain them and to keep them safelyafter they are taken up by whatever authority, that this appropriation isrecommended. Mr. DANAHER. The Senator feels he is quite correctin saying that up to now there is no authorization provided by statute for their being taken up by the Army? Mr. McKELLAR. There is no authorization for takingcare of them and feeding them and imprisoning them, and no place to imprison them, as Iunderstand. Mr. DANAHER. I thank the Senator. (250) Prior to the amendment coming up for a vote, Senator Danaher took the occasion to look up whichsections of law provided authority for the Army to detain persons, and concluded the authority wasto be found in the Alien Enemy Act, 50 U.S.C. § 21, which he read into the Record in its entirety andexplained: I understand that since the first of the week the Presidenthas in fact issued proclamations under the authority of the section just quoted, and that so much ofthis section as applies to prisoners of war and those whom the Secretary of War may deem to besimilar in status to prisoners of war, is comprehended within the terms of the proclamations that areapplicable outside the immediate territorial limits of the United States. In view of the fact that thatimportant section does implement both the statute and the proclamations issued pursuant thereto, Ifeel that it is important that the Record should show what the situation is. (251) The amendment was agreed to. Similar language has appeared in subsequent defenseappropriations until 1983, when it was added to title 10 as a note to section 138, (252) and then codified in1984 in its present form. (253) The Senate debate did not question the President's authorityto detain prisoners of war, despite the absence of express statutory authority, but only questioned themeaning of "other persons similar to prisoners of war." The legislative history could be interpretedto demonstrate that the language was meant only to pay for the exercise of authority found elsewhere,in particular the provisions of 50 U.S.C. § 21. It is unlikely that 10 U.S.C. §956(5) would beinterpreted as amending 50 U.S.C. § 21 with respect to the requirement for a declared war orPresidential proclamation. As an appropriations measure, it probably could not be interpreted toauthorize by implication what Congress has not provided for elsewhere, nor is it likely that thelanguage would be interpreted to repeal by implication express language contradicting theinterpretation. Legislation regarding prisoners of war and enemy aliens subsequent to the DefenseAuthorization Act arguably supports the understanding that, at least on the territory of the UnitedStates, Congress did not contemplate that any persons would be interned in any status other than thatof prisoner of war or enemy alien. In 1945, at the request of the Attorney General Biddle, Congressenacted a provision making it a criminal offense to procure or aid in the escape of persons internedas prisoners of war or alien enemies. (254) The provision was recommended to fill a gap in the law,which provided for the punishment of persons who procure or aid the escape of prisoners properlyin the custody of the Attorney General or confined in any penal or correctional institution. (255) The petitioners in both Hamdi and Padilla asserted that Congress expressly has forbiddenthe detention of U.S. citizens without statutory authority, and that no statutory support for thedetention of U.S. citizens as "enemy combatants" can be found. They cite 18 U.S.C. § 4001(a),which provides: No citizen shall be imprisoned or otherwise detainedby the United States except pursuant to an Act of Congress. This language originated with the repeal of the Emergency Detention Act (256) in 1971. The legislativehistory demonstrates that Congress intended to prevent recurrence of internments in detention campssuch as those that had occurred during the Second World War with respect toJapanese-Americans. (257) The language "imprisoned or otherwise detained" in 18 U.S.C.§ 4001(a) has been construed literally by the Supreme Court to proscribe "detention of any kind bythe United States absent a congressional grant of authority to detain." (258) The four Justices ofthe Hamdi plurality and presumably Justice Thomas in his dissent agreed that it does not prohibitdetention pursuant to the law of war. Justices Souter and Ginsburg agreed with that as a generalprinciple, but would not have applied it to Hamdi because they argued that the government was notfollowing the customary law of war with respect to persons captured in Afghanistan. JusticesStevens and Scalia, in dissent, would have found the AUMF insufficiently clear to override theprohibition. (259) Petitioners for Padilla argue that the authorization found under the AUMF in Hamdi does notapply to Padilla's case. The Department of Justice takes the opposite view. Further, it notes that 18U.S.C. § 4001(b) refers to federal penal and correctional institutions, except for military or navalinstitutions, and thus concludes that § 4001(a) likewise refers only to federal penitentiaries. (260) The Fourth Circuitpreviously found in Hamdi III that § 4001(a) was not intended to apply to enemy combatants, sincethere was no evidence in the legislative record that Congress had intended to "overturn thelong-standing rule that an armed and hostile American citizen captured on the battlefield duringwartime may be treated like the enemy combatant that he is." (261) The Fourth Circuitdistinguished the facts of Hamdi's case from those in Padilla's, however. (262) The District Court forthe District of South Carolina found, as the Second Circuit had, that § 4001(a) does apply to U.S.prisoners in Padilla's situation. Congress has ample authority under Article I of the Constitution to regulate the capture anddetention of enemy combatants. (263) One bill has been introduced in the 109th Congress, theDetention of Enemy Combatants Act, H.R. 1076 , that would assert congressionalauthority to limit the detention of U.S. persons as enemy combatants to defined circumstances, aswell as address some of the due process concerns that have been raised. While it appears thatexpress statutory authorization to detain persons arrested away from any battlefield would clarifyconstitutional separation of powers issues, some constitutional questions may remain. The SupremeCourt has never expressly upheld the administrative detention or internment of U.S. citizens andnon-alien enemies during war as a preventive measure. The Detention of Enemy Combatants Act, H.R. 1076 , would assertcongressional authority to limit the detention of U.S. persons as enemy combatants to definedcircumstances and address some of the due process concerns that have been raised with respect tothe designation of enemy combatants. H.R. 1076 would authorize the President to detainU.S. citizens and residents who are determined to be "enemy combatants" in accordance withprocedures established by the Secretary of Defense in consultation with the Secretary of State andthe Attorney General. The bill would permit detainees to have access to attorneys to challenge thebasis for their detention, and would not suspend the writ of habeas corpus . The bill would not applyto combatants captured on a battlefield overseas or suspected criminals arrested abroad who are notU.S. citizens or residents. Section-by-section Analysis. Section 2. Findings. H.R. 1076 wouldfind that the United States and its allies are engaged in an armed conflict with Al Qaeda as justifiedunder international law for certain terrorist attacks. Paras. 1-6. The bill would take note of thedifficulties inherent in determining who is an enemy combatant in the context of the present war, butreaffirm the need to detain enemy combatants as appropriate "to protect the safety of the public andthose involved in the investigation and prosecution of terrorism, to facilitate the use of classifiedevidence without compromising intelligence or military efforts, to gather unimpeded vitalinformation from the detainee, and otherwise to protect national security interests." Para. 8-9. Further, the bill would find that the Executive must be allowed broad latitude to establish regulationsfor determining which U.S. citizens and residents may be detained, and that courts must give broaddeference to military judgment in such matters. Para. 10. It would verify that section 4001(a) of title18, U.S. Code "proscribes detention of any kind ... absent a congressional grant of authority todetain." Para. 11. The bill would find that Congress has authorized the President to detain U.S.persons "who are members of al Qaeda, or knowingly cooperated with members of al Qaeda in theplanning, authorizing, committing, aiding or abetting of one or more terrorist acts against the UnitedStates." Para. 12. The bill would find that constitutional protection does not cease during wartime,para. 13, and declare that it does not authorize the detention of U.S. persons as enemy combatants"indefinitely without charges and hold them incommunicado without a hearing and without accessto counsel on the basis of a unilateral determination that the person may be connected with anorganization that intends harm to the United States." Para. 14. It would reaffirm the right to habeascorpus, para. 15, and declare that Congress "has a responsibility for maintaining vigorous oversightof detention of [U.S. persons] to assure ... due process." Para. 16. Section 3. Detention of Enemy Combatants. Section3 authorizes the detention of enemy combatants, which it defines as U.S. persons or residents "whoare members of Al Qaeda or knowingly cooperated with a member of al Qaeda in the planning,authorizing, committing, aiding or abetting of one or more terrorist acts against the United States,"but who are not entitled to prisoner-of-war status. The authority to establish the standards, process,and criteria to be used for the "enemy combatant" designation would be delegated to the Secretaryof Defense, in consultation with the Secretary of State and the Attorney General. It would notrequire different procedures depending on the circumstances of capture or arrest of the designee, but,assuming the act would apply extraterritorially, presumably the military would continue using rulesof engagement developed for a particular military operation to identify enemy combatants duringbattle, at least until it could be determined whether a captured person is a U.S. person. Section 4. Procedural Requirements. The proceduralrules established under section 3 would be required to establish clear standards and procedures thatwould preserve the Government's ability to detain U.S. persons or residents who may threaten theUnited States or who might be able to furnish valuable intelligence. The rules would also berequired to contain procedures for the protection of classified information or information that, ifreleased, could impede the investigation of terrorism. Lastly, the rules would also have to providedetainees with timely access to judicial review (in the U.S. District Court for the District ofColumbia, according to sec. 5(b)) and access to counsel. Section 5. Detention. Section 5 would limit theduration of detention under the act to a period in which the President certifies that the war againstAl Qaeda is ongoing and that there is "an investigation with a view toward prosecution, aprosecution, or a post-trial proceeding" in the case of the detainee. Because it does not expresslylimit the latter requirement to proceedings before Article III courts, the condition might arguably besatisfied by trial by military commission or some other administrative tribunal. (264) The President wouldalso have to certify that detention is warranted to prevent the detainee "from aiding personsattempting to commit terrorist acts against the United States." The certification would have to berenewed after 180 days, with no limit on the number of successive certifications. Subsection (c)would authorize the Secretary of Defense to designate an appropriate location for the detentionsauthorized under the act, and would list minimal requirements for the condition of detention toensure humane treatment. Section 6. Reports to Congress. Section 6 wouldrequire an annual report to Congress identifying each individual "subject to, or detained pursuant tothe authority of [the] Act." It is unclear who would be "subject to" the provisions of H.R. 1076 but not detained pursuant to them. Perhaps the phrase "subject to ... the Act"is meant to cover those who are detained within the regular criminal justice system or pursuant tothe authority of immigration laws, but who fit the criteria to be deemed enemy combatants. Section 7. United States Person or Resident Defined. Section 7 borrows the definition of "U.S. person" from section 101(i) of the Foreign IntelligenceSurveillance Act of 1978 (50 U.S.C. 1801(i)), which currently covers a citizen of the United States, an alien lawfully admittedfor permanent residence (as defined in section 1101(a)(20) of title 8), an unincorporated associationa substantial number of members of which are citizens of the United States or aliens lawfullyadmitted for permanent residence, or a corporation which is incorporated in the United States, butdoes not include a corporation or an association which is a foreign power, as defined in subsection(a)(1), (2), or (3) of this section. "Lawfully admitted for permanent residence" is defined under 8 U.S.C. § 1101(a)(20) tomean "the status of having been lawfully accorded the privilege of residing permanently in theUnited States as an immigrant in accordance with the immigration laws, such status not havingchanged." Section 7 of H.R. 1076 also includes a separate subsection that defines "U.S.person or resident" to include "an alien lawfully admitted to the United States for permanentresidence." It is unclear whether this language is intended to cover a broader category of personsthan the definition already referenced in subsection (1). It appears that H.R. 1076 wouldnot reach aliens lawfully admitted to the United States on a temporary basis or who are awaiting finalapproval of their applications for permanent residence, nor would it reach aliens present in theUnited States unlawfully. This omission could be read either to imply that the President has theinherent authority under the Constitution to detain persons not covered under the definition in section7, or unless Congress has provided such authority elsewhere, it could be read to preclude thedetention of such persons as enemy combatants. Section 8. Termination of Authority. Section 8 is asunset provision terminating the above authority as of December 31, 2007. The authority wouldeffectively terminate earlier if the armed conflict with Al Qaeda were to end prior to that date. Petitioners on behalf of U.S. citizens held in military custody argue that 18 U.S.C. § 4001(a),which prohibits the detention of U.S. citizens except as authorized by an act of Congress, prohibitsthe military's detention of U.S. citizens as enemy combatants. While H.R. 1076 wouldappear to resolve the question of whether statutory law prohibits the detention of U.S. citizens asenemy combatants, it leaves open some legal questions pertaining to the detention of persons asenemy combatants that may arise under the Constitution and international law. Some Constitutional Questions. The SupremeCourt has never expressly upheld the administrative detention or internment of U.S. citizens andnon-alien enemies during war as a preventive measure. Congressional Authority. In Ex parte Milligan , (265) the Supreme Courtinvalidated a military detention and sentence of a civilian for violations of the law of war, despiteaccusations that Milligan conspired and committed hostile acts against the United States. (266) A plurality of the Milligan Court agreed that Congress was not empowered to authorize the President to assert militaryjurisdiction in areas not subject to martial law, but scholars disagree as to whether that portion of theopinion is binding as law or is merely dicta . The Administration may take the view that only thePresident, and not Congress, has the constitutional authority to detain enemy combatants, but itappears from the historical survey above that the contention lacks any solid legal precedent. The Korematsu (267) decision is frequently cited as upholding the internment ofJapanese-Americans during World War II, but the Supreme Court expressly limited its decision tothe legality of excluding these citizens from declared military areas. Ex parte Endo (268) invalidated thedetention of a U.S. citizen who was "concededly loyal" to the United States, possibly implying thatthe detention of disloyal citizens may be permissible under some circumstances, but leaving openthe question of what constitutional due process is required to determine the loyalty of persons thegovernment sought to intern. In 1950, Congress passed the Emergency Detention Act (EDA), (269) which authorized thePresident to declare an "Internal Security Emergency," during which the President could authorizethe apprehension and detention of any person deemed reasonably likely to engage in acts ofespionage or sabotage. However, this authority was never exercised, and the EDA was repealedwithout any court having had the opportunity to evaluate its constitutionality. (270) H.R. 1076 would guarantee access to counsel and the right to challenge detention by petitioning for a writ ofhabeas corpus, but gives the executive little other guidance as to what due process the act requires. Bill of Attainder. H.R. 1076 may besubject to criticism for possibly violating the constitutional prohibition of bills of attainder. (271) The Constitutionprohibits Congress from enacting legislation to punish specific persons or easily identifiable groupsof persons. (272) Section 3 of H.R. 1076 would authorize the President to detain persons based on theirmembership in Al Qaeda or knowing cooperation with a member of Al Qaeda. Although the statedpurpose for the detention appears to be preventive rather than punitive, the nature of the restraint andthe requirement that non-members of Al Qaeda act "knowingly" probably make it punitive for thepurpose of finding a bill of attainder. (273) However, section 5 would require a certification that there is"an ongoing investigation with a view toward prosecution, a prosecution, or a post-trial proceeding"and that the detention is warranted to prevent the person from contributing to terrorist acts againstthe United States. The requirement for an individualized finding of dangerousness would likelydefeat any challenges that the act amounts to a legislative determination of guilt. (274) Ex Post Facto Law. Similarly, H.R. 1076 could be subject to challenge as an impermissible ex post facto law. (275) Every law that makescriminal an act that was innocent at the time it was committed, or that increases the punishment toa crime already committed, is an ex post facto law prohibited by the Constitution. (276) The prohibition doesnot apply to laws of a non-criminal or non-punitive nature, (277) but cannot be evadedby clothing a punitive law in civil guise. (278) If a U.S. person were detained pursuant to the Detention ofEnemy Combatants Act for past membership in Al Qaeda, for example, or for cooperation withterrorists that took place prior to the enactment of the act, such detainee might challenge the act asimposing new burdens for past conduct, in violation of the Ex Post Facto Clause of the Constitution. However, detention under the act could continue only for so long as "an investigation with a viewtoward prosecution, a prosecution, or a post-trial proceeding" with respect to a particular detaineewere ongoing, and only if the President certifies that detention is warranted to prevent further actsof terrorism, in which case detention could be permissible under ordinary penal statutes. The legalityof the detention will likely depend on the extent to which the procedures put in place by theexecutive satisfy the constitutional requirements for a temporary deprivation of liberty. Due Process for Non-Resident Aliens. H.R. 1076 does not apply to non-resident aliens and other non-citizens not lawfullyadmitted for permanent residence in the United States. Although Hamdi may be read to apply dueprocess rights only in the case of U.S. citizens, legislation that applies in a different way tonon-resident aliens, for example without mandating any sort of hearing at all, may raiseconstitutional issues. Aliens in the United States, whatever their immigration status, are "persons"whose liberty interests are protected by the Fifth Amendment. (279) While the standardsfor administrative decisions relating to immigration status are not as extensive as due processrequirements for criminal procedures, other types of proceedings do not treat aliens as having fewerrights under the Constitution. Of course, the existence of a state of war might work as an exceptionto this general rule. During a declared war, enemy aliens are by statute subject to detention anddeportation based on their nationality, (280) in accordance with procedures set up by the executive branch. The Supreme Court validated such a program during World War II. (281) It may thus bepermissible for Congress, in the exercise of its war powers, to enact specific legislation defining whomay be interned as an enemy based on factors other than nationality, but it is not clear that thePresident has the authority to intern persons as enemies without specific authorization fromCongress. If non-permanent resident aliens are intended to be subject to detention as enemycombatants, it may be advisable to include them under the same authority that applies to citizens andaliens lawfully admitted for permanent residence in the United States. International Legal Issues. Because the detentionof enemy combatants is a means of conducting war, it is subject to the international law of war. (282) H.R. 1076would not authorize the detention of enemy combatants who are entitled to prisoner of war statusunder the Third Geneva Convention, (283) but it could be read to authorize the detention of civilianpersons protected by the Fourth Geneva Convention (284) under conditions that do not meet the requirements of thattreaty. It is not clear whether the 1949 Geneva Conventions apply in their entirety during the waragainst terrorism as they would in the case of an international war, or whether the war should becategorized as an "armed conflict not of an international character occurring in the territory of oneof the High Contracting Parties," in which case only common article 3 of the Geneva Conventionswould apply. (285) H.R. 1076 may satisfy U.S. obligations under common article 3. H.R. 1076 may come under criticism for failing to define "enemy combatant" as that termis ordinarily understood in the context of the law of war. As a general rule, combatants are soldiersand others who engage in combat. Combatants are lawful military targets during combat operations,but the law of war prefers capture and detention as a more humane alternative to killing or woundingthem. Aiders and abettors of the enemy (and terrorists) traditionally have been treated as criminalcivilians rather than enemy combatants, and are not ordinarily treated as lawful military targetsexcept perhaps in the extreme circumstances where the use of deadly force would be warrantedagainst a person committing or about to commit a hostile act. (286) The use of the phrase"enemy combatant" to describe both battlefield combatants and criminals arrested in areas where lawand order appear to prevail suggests that the use of military force is authorized as if a global battlewere taking place. It appears likely that the Supreme Court has not issued its last word on "enemy combatants"and executive detention as a means to prosecute the war on terrorism. (287) Lower courts that haveaddressed questions the Supreme Court left unanswered have not achieved a consensus, althoughit appears that the trend does not favor the expansive view of executive power urged by thegovernment. As a consequence, the extent to which the Congress has authorized the detentionwithout trial of American citizens as "enemy combatants" will likely remain an important issue fordetermining the validity of the Administration's tactics. While the broad language of theAuthorization for the Use of Military Force ("AUMF") (288) authorizes the use of such military force as the President deemsappropriate in order to prevent future acts of terrorism, it remains possible to argue that the AUMFwas not intended to authorize the President to assert all of the war powers usually reserved forformal declarations of war. (289) History shows that even during declared wars, additional statutory authority has been seenas necessary to validate the detention of citizens not members of any armed forces. Courts, however,have not explicitly ruled on the point with respect to circumstances like these. Congressional activitysince the Quirin decision suggests that Congress did not interpret Quirin as a significant departurefrom prior practice with regard to restriction of civil liberties during war. If that is the case, it maybe that Congress intended to authorize the capture and detention of individuals like Hamdi --persons captured on the battlefield during actual hostilities -- for so long as military operationsremain necessary, while withholding the authority to detain individuals like Padilla -- an accusedenemy agent operating domestically -- except in accordance with regular due process of law. IfCongress were to pass legislation authorizing the detention of persons as enemy combatants, futuredetentions would likely face fewer hurdles in court. (290) However, even with the express authorization of Congress,constitutional due process issues seem likely to arise.

The Supreme Court in 2004 issued three decisions related to the detention of "enemycombatants," including two that deal with U.S. citizens in military custody on American soil. In Hamdi v. Rumsfeld , a plurality held that a U.S. citizen allegedly captured during combat inAfghanistan and incarcerated at a Navy brig in South Carolina is entitled to notice and anopportunity to be heard by a neutral decision-maker regarding the government's reasons for detaininghim. The Court in Rumsfeld v. Padilla overturned a lower court's grant of habeas corpus to anotherU.S. citizen in military custody in South Carolina on jurisdictional grounds. The decisions affirmthe President's powers to detain "enemy combatants,"including those who are U.S. citizens, as partof the necessary force authorized by Congress after the terrorist attacks of September 11, 2001. However the Court appears to have limited the scope of individuals who may be treated as enemycombatants pursuant to that authority, and clarified that such detainees have some due process rightsunder the U.S. Constitution. This report, which will be updated as necessary, analyzes the authorityto detain American citizens who are suspected of being members, agents, or associates of Al Qaeda,the Taliban and possibly other terrorist organizations as "enemy combatants." The Department of Justice argues that the recent decisions, coupled with two World War IIera cases, Ex parte Quirin and In re Territo , support its contention that the President may order thatcertain U.S. citizens as well as non-citizens be held as enemy combatants pursuant to the law of warand Article II of the Constitution. Critics, however, question whether the decisions permit thedetention of U.S. citizens captured away from any actual battlefield, in order to prevent terrorist actsor gather intelligence; and some argue that Congress has prohibited such detention of U.S. citizenswhen it enacted 18 U.S.C. § 4001(a). This report provides background information regarding the cases of two U.S. citizens deemed "enemy combatants," Yaser Esam Hamdi, who has been returned to Saudi Arabia, and JosePadilla, who remains in military custody while the government appeals a district court order tocharge him with a crime or release him. A brief introduction to the law of war pertinent to thedetention of different categories of individuals is offered, followed by brief analyses of the mainlegal precedents invoked to support the President's actions, as well as Ex parte Milligan , which someargue supports the opposite conclusion. A discussion of U.S. practice during wartime to detainpersons deemed dangerous to the national security follows, including legislative history that mayhelp to shed light on Congress' intent in authorizing the use of force to fight terrorism. Finally, thereport briefly analyzes the proposed Detention of Enemy Combatants Act, H.R. 1076 ,which would authorize the President to detain U.S. citizens and residents who are determined to be"enemy combatants" in certain circumstances. The report concludes that historically, even duringdeclared wars, additional statutory authority has been seen as necessary to validate the detention ofcitizens not members of any armed forces, casting in some doubt the argument that the power todetain persons arrested in a context other than actual hostilities is necessarily implied by anauthorization to use force.